Berkshire Hathaway(BRK_A) - 2018 Q4 - Annual Report

Financial Performance - Net earnings attributable to Berkshire Hathaway shareholders decreased to $4.021 billion in 2018 from$44.940 billion in 2017, reflecting a significant drop due to one-time tax benefits in the prior year[131]. - Net earnings for 2018 were $4,322 million, a significant decrease from$45,353 million in 2017, reflecting a decline of approximately 90.5%[253]. - Comprehensive income attributable to Berkshire Hathaway shareholders was $1,810 million in 2018, down from$66,213 million in 2017[253]. - The company reported a net earnings per average equivalent Class A share of $2,446 in 2018, compared to$27,326 in 2017[251]. - Investment gains (losses) for 2018 were $(22,155) million, a stark contrast to the$1,410 million gain in 2017[251]. Insurance Operations - After-tax earnings from insurance underwriting improved to approximately $1.566 billion in 2018, compared to after-tax losses of approximately$2.219 billion in 2017, driven by reduced estimated liabilities and lower catastrophe losses[131]. - GEICO's premiums written increased by 11.7% to $34.123 billion in 2018, reflecting a 3.3$17.737 billion in 2018, primarily due to approximately $18 billion in losses from equity securities[133]. - The company recorded liabilities for unpaid losses and loss adjustment expenses totaling approximately$110 billion, with 84% related to GEICO and the Berkshire Hathaway Reinsurance Group[217]. Revenue and Earnings Growth - Manufacturing, service, and retailing businesses saw a 29% increase in after-tax earnings in 2018, totaling $9.364 billion, attributed to lower effective tax rates and a 13$4.0 billion, supported by increased unit volume and higher average revenue per car[131]. - BNSF's revenues reached $23.855 billion in 2018, an increase of$2.468 billion (11.5%) compared to 2017[164]. - Berkshire Hathaway Energy's total revenues in 2018 were $19.987 billion, an increase from$18.854 billion in 2017, with pre-tax earnings of $2.472 billion[170]. - Revenues for natural gas pipelines increased by$217 million (22%) in 2018 compared to 2017, driven by higher transportation revenues and increased sales volumes[176]. Tax and Regulatory Changes - Berkshire Hathaway's effective income tax rate decreased to 21.4% in 2018 from 32.0% in 2017, contributing to improved after-tax earnings across various segments[137]. - The effective income tax rate for BNSF decreased to 24.0% in 2018 from 37.4% in 2017, largely due to the Tax Cuts and Jobs Act (TCJA)[166]. - Effective income tax rate for BHE was 23.4% in 2018, a decrease from 32.8% in 2017, primarily due to lower U.S. Federal corporate income tax rates[180]. Investment and Asset Management - Net investment income increased to $4.554 billion in 2018, up from$3.887 billion in 2017, reflecting a 17.1% growth[156]. - Float approximated $123 billion at the end of 2018, an increase from$114 billion in 2017, driven by the acquisition of MLMIC and growth in insurance operations[160]. - The fair value of equity securities was $172.8 billion as of December 31, 2018, with a hypothetical 30$(22.729) billion on equity securities held at the end of 2018[312]. - Berkshire's investment in Kraft Heinz had a fair value of approximately $14.0 billion as of December 31, 2018, down from$25.3 billion in 2017, reflecting equity method losses of approximately $2.7 billion in 2018[308]. Operational Expenses and Liabilities - Total operating expenses for BNSF increased by$1.888 billion (13.6%) to $16.992 billion in 2018[164]. - The company incurred estimated pre-tax losses of approximately$1.6 billion from significant catastrophe events in 2018, compared to $3.0 billion in 2017[134]. - The company has significant purchase obligations totaling$47.264 billion, with $15.709 billion due in 2019[215]. - Operating lease obligations are estimated at$9.013 billion, with $1.360 billion due in 2019[215]. - The company reported a foreign currency translation loss of$1.424 billion in 2018, compared to a gain of $2.151 billion in 2017[237]. Acquisitions and Investments - The acquisition of Medical Liability Mutual Insurance Company was completed for approximately$2.5 billion, with fair value of assets at $6.1 billion and liabilities at$3.6 billion[296]. - The acquisition of Precision Castparts Corp. was funded with approximately $32.7 billion, including existing cash and credit facilities[296]. - The total consideration for bolt-on acquisitions was approximately$1.0 billion in 2018, $2.7 billion in 2017, and$1.4 billion in 2016[296]. - The company anticipates that a one percentage point change in bodily injury claim severities could result in a $275 million increase or decrease in recorded liabilities[218]. - The company has established valuation allowances for certain deferred tax assets when realization is not likely[290].