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Berkshire Hathaway Inc. (BRK.B - Free Report) delivered first-quarter 2023 operating earnings of $8.1 billion, which increased 12.6% year over year. The increase was driven by higher earnings at insurance underwriting, insurance-investment income, other controlled businesses and non-controlled businesses.
Berkshire Hathaway Inc. Price, Consensus and EPS Surprise
Revenues increased 20.5% year over year to $85.4 billion, attributable to an increase in revenues in Insurance and Other and Railroad, Utilities and Energy.
Costs and expenses increased 22.2% year over year to $76.1 billion, largely driven by an increase in costs and expenses in Insurance and Other and Railroad, Utilities and Energy.
Segment Performance
Berkshire Hathaway’s Insurance and Other segment revenues increased 7.7% year over year to $63.4 billion in the reported quarter on the back of higher insurance premiums earned, sales and service revenues, leasing revenues, interest, dividend and other investment income.
Insurance underwriting produced operating earnings of $911 million in the first quarter of 2023 compared with $167 million in 2022.
Railroad operating revenues increased 1.9% year over year, primarily attributable to a 14% increase in average revenue per car/unit resulting from higher fuel surcharge revenues driven by higher fuel prices and increased rates per car/unit. It was partially offset by a 10.3% decrease in unit volume.
Pre-tax earnings of Railroad decreased 8.8% year over year to $1.6 billion. Operating earnings from the Railroad business increased 8.8% year over year.
Total revenues at Manufacturing, Service and Retailing increased 3.1% year over year to $41.2 billion. Pre-tax earnings increased 2.4% year over year to $3.9 billion.
After-tax earnings from Manufacturing, Service and Retailing businesses decreased 1.4% year over year.
Financial Position
As of Mar 31, 2023, consolidated shareholders’ equity was $513 billion, up 6.5% from the level as of Dec 31, 2022. At quarter-end, cash and cash equivalents were $23.8 billion, down 26.2% from the level at the 2022 end.
Berkshire exited the first quarter of 2023 with a float of about $165 billion, up from $164 billion from the figure at year-end 2022.
Cash flow from operating activities totaled $8.7 billion in the reported quarter, up 27.3% from the year-ago period.
Berkshire Hathaway bought back shares worth $4.4 billion in the first quarter of 2023.
AXIS Capital Holdings Limited (AXS - Free Report) posted a first-quarter 2023 operating income of $2.33 per share, beating the Zacks Consensus Estimate by 23.2%. The bottom line increased 11.5% year over year. Total operating revenues of $1.3 billion missed the Zacks Consensus Estimate by 6.7%. The top line, however, rose 0.6% year over year on higher net investment income. Net investment income increased 47.2% year over year to $134 million, primarily attributable to an increase in income from fixed maturities due to improved yields.
Total expenses in the quarter under review increased 1.9% year over year to $1.14 billion, attributable to higher interest expense and financing costs. Pre-tax catastrophe and weather-related losses and net of reinsurance were $38 million, primarily attributable to New Zealand floods, Cyclone Gabrielle and other weather-related events. This compares favorably with the year-ago loss of $60 million. AXIS Capital’s underwriting income of $139.4 million increased 0.4% year over year. The combined ratio improved 50 bps to 90.9.
First American Financial Corporation (FAF - Free Report) reported first-quarter 2023 operating income per share of 49 cents, which beat the Zacks Consensus Estimate by a cent. The bottom line decreased 58.1% year over year. Operating revenues of $1.4 billion decreased 29% year over year. The top line beat the Zacks Consensus Estimate by 1.5%. The figure was in line with our estimate.
Investment income was $125 million in the first quarter, more than double year over year. The increase was primarily due to rising interest rates, which drove higher interest income from the cash and investment portfolio, escrow balances and tax-deferred property exchange balances. The impact of higher interest rates was partly offset by lower average balances, primarily in the company’s escrow and tax-deferred exchange balances. The figure was lower than our estimate of $144 million.
American Financial Group, Inc. (AFG - Free Report) reported first-quarter 2023 net operating earnings per share of $2.89, which surpassed the Zacks Consensus Estimate by 0.3% as well as our estimate of $2.72 per share. The bottom line decreased 18.8% year over year. Total revenues of $1.7 billion increased 11.3% year over year in the quarter. The growth came on the back of higher P&C insurance net earned premiums and other income. The top line beat the Zacks Consensus Estimate by 4.5% and matched our estimate of $1.7 billion.
P&C insurance net earned premiums of $1.4 billion climbed 10.4% year over year. Net investment income decreased 5.6% year over year to $217 million in the quarter under review. The figure was higher than our estimate of $169.3 million. Total cost and expenses increased 20.3% year over year to $1.4 billion due to higher P&C insurance losses and expenses, cost of managed investment entities and other expenses. The figure matched our estimate of $1.4 billion.
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Berkshire Hathaway (BRK.B) Q1 Earnings & Revenues Rise Y/Y
Berkshire Hathaway Inc. (BRK.B - Free Report) delivered first-quarter 2023 operating earnings of $8.1 billion, which increased 12.6% year over year. The increase was driven by higher earnings at insurance underwriting, insurance-investment income, other controlled businesses and non-controlled businesses.
Berkshire Hathaway Inc. Price, Consensus and EPS Surprise
Berkshire Hathaway Inc. price-consensus-eps-surprise-chart | Berkshire Hathaway Inc. Quote
Behind the Headlines
Revenues increased 20.5% year over year to $85.4 billion, attributable to an increase in revenues in Insurance and Other and Railroad, Utilities and Energy.
Costs and expenses increased 22.2% year over year to $76.1 billion, largely driven by an increase in costs and expenses in Insurance and Other and Railroad, Utilities and Energy.
Segment Performance
Berkshire Hathaway’s Insurance and Other segment revenues increased 7.7% year over year to $63.4 billion in the reported quarter on the back of higher insurance premiums earned, sales and service revenues, leasing revenues, interest, dividend and other investment income.
Insurance underwriting produced operating earnings of $911 million in the first quarter of 2023 compared with $167 million in 2022.
Railroad operating revenues increased 1.9% year over year, primarily attributable to a 14% increase in average revenue per car/unit resulting from higher fuel surcharge revenues driven by higher fuel prices and increased rates per car/unit. It was partially offset by a 10.3% decrease in unit volume.
Pre-tax earnings of Railroad decreased 8.8% year over year to $1.6 billion.
Operating earnings from the Railroad business increased 8.8% year over year.
Total revenues at Manufacturing, Service and Retailing increased 3.1% year over year to $41.2 billion. Pre-tax earnings increased 2.4% year over year to $3.9 billion.
After-tax earnings from Manufacturing, Service and Retailing businesses decreased 1.4% year over year.
Financial Position
As of Mar 31, 2023, consolidated shareholders’ equity was $513 billion, up 6.5% from the level as of Dec 31, 2022. At quarter-end, cash and cash equivalents were $23.8 billion, down 26.2% from the level at the 2022 end.
Berkshire exited the first quarter of 2023 with a float of about $165 billion, up from $164 billion from the figure at year-end 2022.
Cash flow from operating activities totaled $8.7 billion in the reported quarter, up 27.3% from the year-ago period.
Berkshire Hathaway bought back shares worth $4.4 billion in the first quarter of 2023.
Zacks Rank
Berkshire currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Some Other P&C Insurers
AXIS Capital Holdings Limited (AXS - Free Report) posted a first-quarter 2023 operating income of $2.33 per share, beating the Zacks Consensus Estimate by 23.2%. The bottom line increased 11.5% year over year. Total operating revenues of $1.3 billion missed the Zacks Consensus Estimate by 6.7%. The top line, however, rose 0.6% year over year on higher net investment income. Net investment income increased 47.2% year over year to $134 million, primarily attributable to an increase in income from fixed maturities due to improved yields.
Total expenses in the quarter under review increased 1.9% year over year to $1.14 billion, attributable to higher interest expense and financing costs. Pre-tax catastrophe and weather-related losses and net of reinsurance were $38 million, primarily attributable to New Zealand floods, Cyclone Gabrielle and other weather-related events. This compares favorably with the year-ago loss of $60 million. AXIS Capital’s underwriting income of $139.4 million increased 0.4% year over year. The combined ratio improved 50 bps to 90.9.
First American Financial Corporation (FAF - Free Report) reported first-quarter 2023 operating income per share of 49 cents, which beat the Zacks Consensus Estimate by a cent. The bottom line decreased 58.1% year over year. Operating revenues of $1.4 billion decreased 29% year over year. The top line beat the Zacks Consensus Estimate by 1.5%. The figure was in line with our estimate.
Investment income was $125 million in the first quarter, more than double year over year. The increase was primarily due to rising interest rates, which drove higher interest income from the cash and investment portfolio, escrow balances and tax-deferred property exchange balances. The impact of higher interest rates was partly offset by lower average balances, primarily in the company’s escrow and tax-deferred exchange balances. The figure was lower than our estimate of $144 million.
American Financial Group, Inc. (AFG - Free Report) reported first-quarter 2023 net operating earnings per share of $2.89, which surpassed the Zacks Consensus Estimate by 0.3% as well as our estimate of $2.72 per share. The bottom line decreased 18.8% year over year. Total revenues of $1.7 billion increased 11.3% year over year in the quarter. The growth came on the back of higher P&C insurance net earned premiums and other income. The top line beat the Zacks Consensus Estimate by 4.5% and matched our estimate of $1.7 billion.
P&C insurance net earned premiums of $1.4 billion climbed 10.4% year over year. Net investment income decreased 5.6% year over year to $217 million in the quarter under review. The figure was higher than our estimate of $169.3 million. Total cost and expenses increased 20.3% year over year to $1.4 billion due to higher P&C insurance losses and expenses, cost of managed investment entities and other expenses. The figure matched our estimate of $1.4 billion.