New York (CNN) Warren Buffett’s Berkshire Hathaway reported a jump in earnings in the first quarter of 2023 ahead of the Oracle of Omaha’s annual shareholder meeting.
Operating income increased to about $8.065 billion from a year earlier, the earnings release said Saturday. Operating income is the profit left over after deducting the costs of the main operations of a business.
Congress posted a profit of $35.5 billion in the first quarter.
The jump in earnings was due in part to the comeback of Berkshire’s insurance empire.
In the first quarter of 2022, the company’s insurance business showed a clear increase, from $167 million in revenue to $911 million. Insurance investment income increased from $1.17 billion to $1.97 billion.
Geico, owned by Berkshire Hathaway, had a pretax loss of $1.9 billion at the end of the year, after losing market share to competitor Progressive. Despite low claims volumes so far this year, it did better by posting a record profit of $703 million in Q1 this year.
However, Berkshire Energy Co. and freight railroad company BNSF reported lower earnings compared to the year-ago quarter.
Berkshire bought back nearly $4.4 billion in shares, and cash reserves grew to $130.6 billion from $128 billion in Q4 2022.
Buffett, 92, and Berkshire Vice Chairman Charlie Munger, 99, will take the stage on Saturday to answer questions from shareholders and discuss business and the broader economy at the annual meeting, billed as the “Woodstock for capitalists.”
Taken from the meeting
- Investors were looking forward to hearing from Oracle of Omaha about recent bank failures and the shake-up in the industry, and they were among the topics he covered. “It would have been disastrous,” Buffett said, if regulators had not withheld Silicon Valley bank depositors.
- Buffett also said that fear in banking is always contagious, but that establishing the FDIC is “very sensible” and that the agency and the U.S. government have no interest in letting banks fail. About First Republic Bank, Buffett said, “The CEO and the director should suffer, the future shareholders should not suffer, they did nothing.”
- The startups were skeptical of the hyperbolic hype surrounding AI, but said it would make a difference. “We’re going to see more robots in the world,” Munger said. “I’m personally skeptical of some of the hype in AI. I think old-fashioned intelligence works just fine.”
- Buffett commented on the commercial real estate market. There is a lot of office building vacancy, and high interest rates have caused developers to delay new construction projects. “We’re starting to see the consequences of people who can borrow at 2.5% and it’s not working at the current rate,” Buffett said.
- Buffett singled out the best trades in Berkshire’s vast portfolio. “Apple is different than any other business we’ve had. It’s going to be a better business,” Buffett said. Berkshire recently acquired a 5.6 percent stake in Apple, Reuters reported.
CNN’s Elisabeth Buchwald contributed to this report.