Berkshire Hathaway(BRK_B) - 2023 Q4 - Annual Report

Retroactive Reinsurance Contracts - Gross unpaid losses for retroactive reinsurance contracts were $34.6 billion, with deferred charges at$ 9.5 billion as of December 31, 2023[25] - Estimated ultimate liabilities for retroactive reinsurance contracts increased by $1.1 billion in Q4 2023, primarily for asbestos, environmental, and casualty exposures, resulting in a$ 650 million pre-tax underwriting loss[12] - Amortization expense for deferred charges related to retroactive reinsurance contracts is estimated to be $900 million in 2024[12] Asbestos and Environmental Exposures - Estimated liabilities for asbestos and environmental exposures were approximately$ 12.2 billion at December 31, 2023[12] Equity Securities and Investments - The fair value of equity securities was $353.8 billion as of December 31, 2023, with a hypothetical 30% increase or decrease resulting in a change of$ 82.3 billion in net earnings[28] - The fair value of Precision Castparts Corp. (PCC) was approximately $32.6 billion, exceeding its carrying value of$ 29.7 billion by 10% as of December 31, 2023[27] - The fair value of three reporting units (PTC, Jazwares, and IPS) totaled approximately $21.5 billion, exceeding their carrying values by 1.5% as of December 31, 2023[27] - The company's equity securities portfolio was concentrated in five companies, representing approximately 79% of the total fair value as of December 31, 2023[14] - Investments in equity securities grew from$ 308.793 billion in 2022 to $353.842 billion in 2023[39] - Equity securities had a fair value of$ 353.842 billion as of December 31, 2023, with net unrealized gains of $244.426 billion[445] - Approximately 79% of the aggregate fair value of equity securities was concentrated in five companies: American Express, Apple, Bank of America, Coca-Cola, and Chevron[445] - Approximately 75% of the aggregate fair value was concentrated in five companies: American Express Company ($ 22.4 billion), Apple Inc. ( $119.0 billion), Bank of America Corporation ($ 34.2 billion), The Coca-Cola Company ( $25.4 billion), and Chevron Corporation ($ 30.0 billion)[454] - The company's investment gains (losses) on equity securities were $71.842 billion in 2023, compared to a loss of$ 67.047 billion in 2022[466] - Proceeds from sales of equity securities were approximately $40.6 billion in 2023,$ 33.7 billion in 2022, and $15.8 billion in 2021[466] Financial Performance - Net earnings for 2023 were$ 97.147 billion, compared to a net loss of $21.998 billion in 2022 and net earnings of$ 90.949 billion in 2021[42] - Comprehensive income for 2023 was $98.465 billion, compared to a comprehensive loss of$ 18.988 billion in 2022 and comprehensive income of $92.838 billion in 2021[42] - Total revenues for 2023 increased to$ 364.482 billion, up from $302.020 billion in 2022 and$ 276.185 billion in 2021[48] - Net earnings attributable to Berkshire Hathaway shareholders in 2023 were $96.223 billion, a significant improvement from a loss of$ 22.759 billion in 2022 and up from $89.937 billion in 2021[48] - Investment and derivative contract gains in 2023 were$ 74.855 billion, compared to a loss of $67.899 billion in 2022 and gains of$ 78.542 billion in 2021[48] - Net earnings attributable to Berkshire Hathaway shareholders surged to $96.223 billion in 2023, a substantial recovery from a loss of$ 22.759 billion in 2022[381] - Comprehensive income attributable to shareholders reached $97.512 billion in 2023, compared to a loss of$ 19.688 billion in 2022[381] Cash and Cash Equivalents - Cash and cash equivalents increased from $32.260 billion in 2022 to$ 33.672 billion in 2023[39] - The company's cash and cash equivalents include short-term investments in U.S. Treasury Bills with maturities exceeding three months and less than one year[52] - Cash and cash equivalents increased to $5.566 billion in December 2023 from$ 2.777 billion in December 2022, reflecting a significant liquidity improvement[381] Assets and Liabilities - Total assets increased from $948.465 billion in 2022 to$ 1.069.978 trillion in 2023[39] - Retained earnings rose from $511.127 billion in 2022 to$ 607.350 billion in 2023[47] - Unpaid losses and loss adjustment expenses increased from $107.472 billion in 2022 to$ 111.082 billion in 2023[47] - Consolidated claim liabilities as of December 31, 2023 were approximately $146 billion, with 76% related to GEICO and the Berkshire Hathaway Reinsurance Group[58] - Periodic payment annuities liabilities increased to$ 11,212 million in 2023 from $10,640 million in 2022[333] - Life and health liabilities decreased to$ 5,749 million in 2023 from $5,879 million in 2022[333] - The funded status at December 31, 2023 reflected in assets was$ 1,823 million and in liabilities was $1,211 million, compared to$ 1,510 million in assets and $1,656 million in liabilities at December 31, 2022[345] - The accumulated benefit obligation (ABO) was$ 12.3 billion at December 31, 2023, up from $12.2 billion at December 31, 2022[345] - Goodwill at year-end 2023 was$ 84,626 million, compared to $78,119 million in 2022 and$ 73,875 million in 2021[358] - The company's identifiable assets at year-end 2023 were $1,069,978 million, up from$ 948,465 million in 2022 and $959,388 million in 2021[358] - Assets acquired totaled$ 28.52 billion, with liabilities assumed at $14.155 billion, resulting in net assets of$ 14.365 billion[440] - Alleghany assets acquired amounted to $35.59 billion, with liabilities assumed at$ 24.085 billion, leading to net assets of $11.505 billion[440] Insurance Premiums and Revenues - Insurance premiums earned in 2023 were$ 83.403 billion, compared to $74.576 billion in 2022 and$ 69.460 billion in 2021[48] - Sales and service revenues in 2023 were $155.687 billion, slightly down from$ 157.518 billion in 2022 but up from $145.043 billion in 2021[48] - Freight rail transportation revenues in 2023 were$ 23.791 billion, down from $25.802 billion in 2022 but up from$ 23.177 billion in 2021[48] - Utility and energy operating revenues in 2023 surged to $72.693 billion, compared to$ 21.023 billion in 2022 and $18.891 billion in 2021[48] - Premiums Written for Property/Casualty in 2023 reached$ 61,990 million, a 9.3% increase from $56,700 million in 2022[359] - Assumed premiums for Property/Casualty in 2023 were$ 20,751 million, up 37% from $15,143 million in 2022[359] - Total premiums earned for Property/Casualty in 2023 were$ 78,331 million, a 13.9% increase from $68,770 million in 2022[359] - United States premiums for Property/Casualty in 2023 were$ 67,831 million, a 13.7% increase from $59,648 million in 2022[359] - Asia Pacific premiums for Property/Casualty in 2023 were$ 5,306 million, a 12.9% increase from $4,699 million in 2022[359] - Consolidated sales, service and leasing revenues were$ 164.1 billion in 2023, $165.0 billion in 2022, and$ 151.0 billion in 2021[373] - Sales, service and leasing revenues attributable to the United States were 85% in 2023, 86% in 2022, and 85% in 2021[373] - Railroad, utilities, and energy revenues were $101.4 billion in 2023,$ 52.1 billion in 2022, and $48.2 billion in 2021[373] - Railroad, utilities, and energy revenues attributable to the United States were 94% in 2023 and 96% in both 2022 and 2021[373] Debt and Financing - Berkshire repaid approximately$ 4.3 billion of maturing senior notes and issued ¥286.4 billion (approximately $2.05 billion) of senior notes in 2023[336] - BHE subsidiaries issued$ 4.2 billion of term debt in 2023 with a weighted average interest rate of 5.7% and maturity dates ranging from 2033 to 2055[337] - BHE subsidiaries issued $5.1 billion of term debt in 2024 with a weighted average interest rate of 5.4% and maturity dates ranging from 2029 to 2055[337] - Unused lines of credit and commercial paper capacity were approximately$ 9.4 billion at December 31, 2023, with $6.0 billion related to BHE and its subsidiaries[337] - Parent Company debt maturities over the next five years are as follows: 2024—$ 1.9 billion; 2025— $2.0 billion; 2026—$ 4.4 billion; 2027— $2.0 billion; and 2028—$ 1.4 billion[383] Taxes and Regulatory Changes - Net unrecognized tax benefits were $480 million at December 31, 2023, compared to$ 440 million at December 31, 2022[340] - The Inflation Reduction Act of 2022 introduced a 15% corporate alternative minimum income tax effective for tax years beginning after December 31, 2022[340] - The Pillar Two model rules introduce a new global minimum tax of 15% intended to be effective on January 1, 2024[340] - Income taxes paid increased to $5.630 billion in 2023 from$ 2.259 billion in 2022[383] Wildfire Losses and Legal Cases - PacifiCorp recorded estimated pre-tax probable Wildfire losses of $1.9 billion in 2023, up from$ 225 million in 2022[363] - Net Wildfire losses after expected insurance recoveries were $1.7 billion in 2023, compared to$ 64 million in 2022[363] - PacifiCorp paid $631 million in settlements in 2023 related to the 2020 Wildfires, up from$ 53 million in 2022[363] - Cumulative charges for estimated probable Wildfire losses through December 31, 2023, were $2.4 billion before expected insurance recoveries[363] - Plaintiffs in the James case seek damages approximating$ 8 billion, excluding potential doubling or trebling of damages[365] - HomeServices of America, Inc. faces potential damages of up to $5.4 billion in the Burnett antitrust case, excluding attorneys' fees and prejudgment interest[375] - The jury in the Burnett case awarded$ 1.8 billion in damages, which could be trebled under federal law[375] - HomeServices of America, Inc. is defending against eleven antitrust cases, with potential losses from the other ten cases currently unquantifiable[375] Acquisitions and Investments - The company acquired all outstanding common stock of Alleghany Corporation for $11.5 billion in October 2022[383] - The company acquired an additional 41.4% interest in Pilot Travel Centers, LLC (PTC) for approximately$ 8.2 billion, increasing its interest to 80%[439] - PTC's revenues and net earnings attributable to Berkshire shareholders for the eleven months ending December 31, 2023 were $51.7 billion and$ 603 million, respectively[439] - The company recognized a one-time, non-cash remeasurement gain of approximately $3.0 billion from the fair value adjustment of its previously held 38.6% investment in PTC[439] - The company acquired Pilot Corporation's noncontrolling interest in PTC for$ 2.6 billion, increasing its interest in PTC to 100%[439] - Goodwill from the PTC acquisition is expected to be deductible for income tax purposes[439] - Berkshire Hathaway Energy subsidiary acquired an additional 50% interest in Cove Point LNG for $3.3 billion, increasing economic interest from 25% to 75%[442] - The company invested$ 10 billion in non-voting Cumulative Perpetual Preferred Stock of Occidental Petroleum Corporation in 2019, with an aggregate liquidation value of approximately $8.5 billion as of December 31, 2023[454] - Occidental issued mandatory redemption notifications for approximately$ 1.5 billion of the aggregate liquidation value at a price of 110% of the liquidation value, plus accrued and unpaid dividends in 2023[454] - The company owned 151.6 million shares of American Express Company common stock, representing 21% of the outstanding common stock as of December 31, 2023[454] - The company owned 26.7% of Kraft Heinz outstanding common stock and 27.8% of Occidental common stock as of December 31, 2023[455] - Kraft Heinz reported net earnings attributable to common shareholders of $2.855 billion in 2023, up from$ 2.363 billion in 2022[465] - Occidental reported net earnings attributable to common shareholders of $4.471 billion for the twelve months ending September 30, 2023[466] Loans and Receivables - Loans and finance receivables before allowances and discounts were$ 26.289 billion as of December 31, 2023, with an allowance for credit losses of $950 million[469] - Performing loans increased to$ 5,716 million in 2023 from $4,368 million in 2022, a growth of 30.8%[471] - Non-performing loans decreased to 8 in 2023 from 11 in 2022, a reduction of 27.3%[471] - Commercial loan balances declined to$ 850 million in 2023 from $1.9 billion in 2022, a decrease of 55.3%[471] - Insurance premiums receivable increased to$ 19,052 million in 2023 from $18,395 million in 2022, a growth of 3.6%[472] - Trade receivables for railroad, utilities, and energy businesses rose to$ 6,034 million in 2023 from $4,182 million in 2022, an increase of 44.3%[472] - Aggregate provisions for credit losses were$ 513 million in 2023, up from $409 million in 2022, a rise of 25.4%[472] Inventory and Equipment - Raw materials inventory decreased to$ 6,026 million in 2023 from $6,381 million in 2022, a decline of 5.6%[473] - Railcars equipment held for lease increased to$ 10,031 million in 2023 from $9,612 million in 2022, a growth of 4.4%[475] - Customer relationships net carrying value for insurance and other businesses decreased to$ 20,404 million in 2023 from $20,591 million in 2022, a slight decline of 0.9%[476] - Trademarks and trade names net carrying value for railroad, utilities, and energy businesses surged to$ 3,494 million in 2023 from $178 million in 2022, a massive increase of 1863.5%[476] Other Comprehensive Income and Expenses - Foreign currency translation included in other comprehensive income was$ 749 million for 2023, compared to a loss of $2.05 billion in 2022[17] - Foreign currency translation gains were$ 782 million in 2023, compared to losses of $2.138 billion in 2022[42] - Long-duration insurance contract discount rate changes resulted in a loss of$ 237 million in 2023, compared to a gain of $7.177 billion in 2022[42] - Defined benefit pension plans contributed$ 578 million to other comprehensive income in 2023, compared to a loss of $253 million in 2022[42] - The company's defined contribution plan expense was approximately$ 1.1 billion in 2023, compared to $0.8 billion in 2022 and$ 1.0 billion in 2021[357] - The company's capital expenditures were $19,409 million in 2023, up from$ 15,464 million in 2022 and $13,276 million in 2021[358] Regulatory and Accounting Policies - Investments in fixed maturity securities are classified as available-for-sale and carried at fair value, with changes in fair value reported in earnings[53] - The aggregate market value of the voting stock held by non-affiliates as of June 30, 2023, was$ 625.5 billion[55] - The company's disclosure controls and procedures were deemed effective as of December 31, 2023[377] - Net cash flows from operating activities were $7.611 billion in 2023, slightly lower than$ 8.462 billion in 2022[383] - Income tax expense (benefit) for the three years ending December 31, 2023, with amounts in millions[408] - Non-performing loans are identified when the foreclosure process starts, with interest income recognition paused until foreclosure is cured or the loan is modified[410] - Property, plant, and equipment impairment evaluation based on estimated undiscounted cash flows and residual value, with impairment losses recorded if carrying value exceeds recoverable amounts[412] - Goodwill impairment evaluation at least annually, with impairment losses recorded if the carrying amount of a reporting unit exceeds its estimated fair value[413] - Regulatory assets and liabilities amortization into operating expenses and revenues over future periods, with assessments for probable future inclusion in regulatory rates[423] - Life, annuity, and health insurance benefits balance increased from $21,616 million at December 31, 2020, to$ 28,836 million