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1、BERKSHIREHATHAWAYINC.2023ANNUAL REPORT BERKSHIRE HATHAWAY INC.2023 ANNUAL REPORT TABLE OF CONTENTS Charlie Munger The Architect of Berkshire Hathaway.2 Chairmans Letter*.3-16 Berkshires Performance vs.the S&P 500.17 Property/Casualty Insurance.18 Shareholder Event and Meeting Information.19 Form 10-

2、K Business Description.K-1 Risk Factors.K-25 Cybersecurity.K-28 Description of Properties.K-29 Legal Proceedings.K-32 Managements Discussion.K-35 Managements Report on Internal Controls.K-66 Independent Auditors Report.K-67 Consolidated Financial Statements.K-70 Notes to Consolidated Financial State

3、ments.K-75 Appendices Operating Companies.A-1 Stock Transfer Agent.A-2 Directors and Officers of the Company .Inside Back Cover*Copyright 2024 By Warren E.Buffett All Rights Reserved 1 Charlie Munger The Architect of Berkshire Hathaway Charlie Munger died on November 28,just 33 days before his 100th

4、 birthday.Though born and raised in Omaha,he spent 80%of his life domiciled elsewhere.Consequently,it was not until 1959 when he was 35 that I first met him.In 1962,he decided that he should take up money management.Three years later he told me correctly!that I had made a dumb decision in buying con

5、trol of Berkshire.But,he assured me,since I had already made the move,he would tell me how to correct my mistake.In what I next relate,bear in mind that Charlie and his family did not have a dime invested in the small investing partnership that I was then managing and whose money I had used for the

6、Berkshire purchase.Moreover,neither of us expected that Charlie would ever own a share of Berkshire stock.Nevertheless,Charlie,in 1965,promptly advised me:“Warren,forget about ever buying another company like Berkshire.But now that you control Berkshire,add to it wonderful businesses purchased at fa

7、ir prices and give up buying fair businesses at wonderful prices.In other words,abandon everything you learned from your hero,Ben Graham.It works but only when practiced at small scale.”With much back-sliding I subsequently followed his instructions.Many years later,Charlie became my partner in runn

8、ing Berkshire and,repeatedly,jerked me back to sanity when my old habits surfaced.Until his death,he continued in this role and together we,along with those who early on invested with us,ended up far better off than Charlie and I had ever dreamed possible.In reality,Charlie was the“architect”of the

9、present Berkshire,and I acted as the“general contractor”to carry out the day-by-day construction of his vision.Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades.In a way his relationship with me was part older brother,part loving f

10、ather.Even when he knew he was right,he gave me the reins,and when I blundered he never never reminded me of my mistake.In the physical world,great buildings are linked to their architect while those who had poured the concrete or installed the windows are soon forgotten.Berkshire has become a great

11、 company.Though I have long been in charge of the construction crew;Charlie should forever be credited with being the architect.2 BERKSHIRE HATHAWAY INC.To the Shareholders of Berkshire Hathaway Inc.:Berkshire has more than three million shareholder accounts.I am charged with writing a letter every

12、year that will be useful to this diverse and ever-changing group of owners,many of whom wish to learn more about their investment.Charlie Munger,for decades my partner in managing Berkshire,viewed this obligation identically and would expect me to communicate with you this year in the regular manner

13、.He and I were of one mind regarding our responsibilities to Berkshire shareholders.*Writers find it useful to picture the reader they seek,and often they are hoping to attract a mass audience.At Berkshire,we have a more limited target:investors who trust Berkshire with their savings without any exp

14、ectation of resale(resembling in attitude people who save in order to buy a farm or rental property rather than people who prefer using their excess funds to purchase lottery tickets or“hot”stocks).Over the years,Berkshire has attracted an unusual number of such“lifetime”shareholders and their heirs

15、.We cherish their presence and believe they are entitled to hear every year both the good and bad news,delivered directly from their CEO and not from an investor-relations officer or communications consultant forever serving up optimism and syrupy mush.In visualizing the owners that Berkshire seeks,

16、I am lucky to have the perfect mental model,my sister,Bertie.Let me introduce her.For openers,Bertie is smart,wise and likes to challenge my thinking.We have never,however,had a shouting match or anything close to a ruptured relationship.We never will.Furthermore,Bertie,and her three daughters as we

17、ll,have a large portion of their savings in Berkshire shares.Their ownership spans decades,and every year Bertie will read what I have to say.My job is to anticipate her questions and give her honest answers.3 Bertie,like most of you,understands many accounting terms,but she is not ready for a CPA e

18、xam.She follows business news reading four newspapers daily but doesnt consider herself an economic expert.She is sensible very sensible instinctively knowing that pundits should always be ignored.After all,if she could reliably predict tomorrows winners,would she freely share her valuable insights

19、and thereby increase competitive buying?That would be like finding gold and then handing a map to the neighbors showing its location.Bertie understands the power for good or bad of incentives,the weaknesses of humans,the“tells”that can be recognized when observing human behavior.She knows who is“sel

20、ling”and who can be trusted.In short,she is nobodys fool.So,what would interest Bertie this year?Operating Results,Fact and Fiction Lets begin with the numbers.The official annual report begins on K-1 and extends for 124 pages.It is filled with a vast amount of information some important,some trivia

21、l.Among its disclosures many owners,along with financial reporters,will focus on page K-72.There,they will find the proverbial“bottom line”labeled“Net earnings(loss).”The numbers read$90 billion for 2021,($23 billion)for 2022 and$96 billion for 2023.What in the world is going on?You seek guidance an

22、d are told that the procedures for calculating these“earnings”are promulgated by a sober and credentialed Financial Accounting Standards Board(“FASB”),mandated by a dedicated and hard-working Securities and Exchange Commission(“SEC”)and audited by the world-class professionals at Deloitte&Touche(“D&

23、T”).On page K-67,D&T pulls no punches:“In our opinion,the financial statements.present fairly,in all material respects(italics mine),the financial position of the Company.and the results of its operations.for each of the three years in the period ended December 31,2023.”So sanctified,this worse-than

24、-useless“net income”figure quickly gets transmitted throughout the world via the internet and media.All parties believe they have done their job and,legally,they have.We,however,are left uncomfortable.At Berkshire,our view is that“earnings”should be a sensible concept that Bertie will find somewhat

25、useful but only as a starting point in evaluating a business.Accordingly,Berkshire also reports to Bertie and you what we call“operating earnings.”Here is the story they tell:$27.6 billion for 2021;$30.9 billion for 2022 and$37.4 billion for 2023.4 The primary difference between the mandated figures

26、 and the ones Berkshire prefers is that we exclude unrealized capital gains or losses that at times can exceed$5 billion a day.Ironically,our preference was pretty much the rule until 2018,when the“improvement”was mandated.Galileos experience,several centuries ago,should have taught us not to mess w

27、ith mandates from on high.But,at Berkshire,we can be stubborn.*Make no mistake about the significance of capital gains:I expect them to be a very important component of Berkshires value accretion during the decades ahead.Why else would we commit huge dollar amounts of your money(and Berties)to marke

28、table equities just as I have been doing with my own funds throughout my investing lifetime?I cant remember a period since March 11,1942 the date of my first stock purchase that I have not had a majority of my net worth in equities,U.S.-based equities.And so far,so good.The Dow Jones Industrial Aver

29、age fell below 100 on that fateful day in 1942 when I“pulled the trigger.”I was down about$5 by the time school was out.Soon,things turned around and now that index hovers around 38,000.America has been a terrific country for investors.All they have needed to do is sit quietly,listening to no one.It

30、 is more than silly,however,to make judgments about Berkshires investment value based on“earnings”that incorporate the capricious day-by-day and,yes,even year-by-year movements of the stock market.As Ben Graham taught me,“In the short run the market acts as a voting machine;in the long run it become

31、s a weighing machine.”What We Do Our goal at Berkshire is simple:We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring.Within capitalism,some businesses will flourish for a very long time while others will prove to be sinkholes.Its harder th

32、an you would think to predict which will be the winners and losers.And those who tell you they know the answer are usually either self-delusional or snake-oil salesmen.At Berkshire,we particularly favor the rare enterprise that can deploy additional capital at high returns in the future.Owning only

33、one of these companies and simply sitting tight can deliver wealth almost beyond measure.Even heirs to such a holding can ugh!sometimes live a lifetime of leisure.We also hope these favored businesses are run by able and trustworthy managers,though that is a more difficult judgment to make,however,a

34、nd Berkshire has had its share of disappointments.5 In 1863,Hugh McCulloch,the first Comptroller of the United States,sent a letter to all national banks.His instructions included this warning:“Never deal with a rascal under the expectation that you can prevent him from cheating you.”Many bankers wh

35、o thought they could“manage”the rascal problem have learned the wisdom of Mr.McCullochs advice and I have as well.People are not that easy to read.Sincerity and empathy can easily be faked.That is as true now as it was in 1863.This combination of the two necessities Ive described for acquiring busin

36、esses has for long been our goal in purchases and,for a while,we had an abundance of candidates to evaluate.If I missed one and I missed plenty another always came along.Those days are long behind us;size did us in,though increased competition for purchases was also a factor.Berkshire now has by far

37、 the largest GAAP net worth recorded by any American business.Record operating income and a strong stock market led to a yearend figure of$561 billion.The total GAAP net worth for the other 499 S&P companies a whos who of American business was$8.9 trillion in 2022.(The 2023 number for the S&P has no

38、t yet been tallied but is unlikely to materially exceed$9.5 trillion.)By this measure,Berkshire now occupies nearly 6%of the universe in which it operates.Doubling our huge base is simply not possible within,say,a five-year period,particularly because we are highly averse to issuing shares(an act th

39、at immediately juices net worth).There remain only a handful of companies in this country capable of truly moving the needle at Berkshire,and they have been endlessly picked over by us and by others.Some we can value;some we cant.And,if we can,they have to be attractively priced.Outside the U.S.,the

40、re are essentially no candidates that are meaningful options for capital deployment at Berkshire.All in all,we have no possibility of eye-popping performance.Nevertheless,managing Berkshire is mostly fun and always interesting.On the positive side,after 59 years of assemblage,the company now owns ei

41、ther a portion or 100%of various businesses that,on a weighted basis,have somewhat better prospects than exist at most large American companies.By both luck and pluck,a few huge winners have emerged from a great many dozens of decisions.And we now have a small cadre of long-time managers who never m

42、use about going elsewhere and who regard 65 as just another birthday.*Berkshire benefits from an unusual constancy and clarity of purpose.While we emphasize treating our employees,communities and suppliers well who wouldnt wish to do so?our allegiance will always be to our country and our shareholde

43、rs.We never forget that,though your money is comingled with ours,it does not belong to us.6 With that focus,and with our present mix of businesses,Berkshire should do a bit better than the average American corporation and,more important,should also operate with materially less risk of permanent loss

44、 of capital.Anything beyond“slightly better,”though,is wishful thinking.This modest aspiration wasnt the case when Bertie went all-in on Berkshire but it is now.Our Not-So-Secret Weapon Occasionally,markets and/or the economy will cause stocks and bonds of some large and fundamentally good businesse

45、s to be strikingly mispriced.Indeed,markets can and will unpredictably seize up or even vanish as they did for four months in 1914 and for a few days in 2001.If you believe that American investors are now more stable than in the past,think back to September 2008.Speed of communication and the wonder

46、s of technology facilitate instant worldwide paralysis,and we have come a long way since smoke signals.Such instant panics wont happen often but they will happen.Berkshires ability to immediately respond to market seizures with both huge sums and certainty of performance may offer us an occasional l

47、arge-scale opportunity.Though the stock market is massively larger than it was in our early years,todays active participants are neither more emotionally stable nor better taught than when I was in school.For whatever reasons,markets now exhibit far more casino-like behavior than they did when I was

48、 young.The casino now resides in many homes and daily tempts the occupants.One fact of financial life should never be forgotten.Wall Street to use the term in its figurative sense would like its customers to make money,but what truly causes its denizens juices to flow is feverish activity.At such ti

49、mes,whatever foolishness can be marketed will be vigorously marketed not by everyone but always by someone.Occasionally,the scene turns ugly.The politicians then become enraged;the most flagrant perpetrators of misdeeds slip away,rich and unpunished;and your friend next door becomes bewildered,poore

50、r and sometimes vengeful.Money,he learns,has trumped morality.One investment rule at Berkshire has not and will not change:Never risk permanent loss of capital.Thanks to the American tailwind and the power of compound interest,the arena in which we operate has been and will be rewarding if you make

51、a couple of good decisions during a lifetime and avoid serious mistakes.*I believe Berkshire can handle financial disasters of a magnitude beyond any heretofore experienced.This ability is one we will not relinquish.When economic upsets occur,as they will,Berkshires goal will be to function as an as

52、set to the country just as it was in a very minor way in 2008-9 and to help extinguish the financial fire rather than to be among the many companies that,inadvertently or otherwise,ignited the conflagration.7 Our goal is realistic.Berkshires strength comes from its Niagara of diverse earnings delive

53、red after interest costs,taxes and substantial charges for depreciation and amortization(“EBITDA”is a banned measurement at Berkshire).We also operate with minimal requirements for cash,even if the country encounters a prolonged period of global economic weakness,fear and near-paralysis.Berkshire do

54、es not currently pay dividends,and its share repurchases are 100%discretionary.Annual debt maturities are never material.Your company also holds a cash and U.S.Treasury bill position far in excess of what conventional wisdom deems necessary.During the 2008 panic,Berkshire generated cash from operati

55、ons and did not rely in any manner on commercial paper,bank lines or debt markets.We did not predict the time of an economic paralysis but we were always prepared for one.Extreme fiscal conservatism is a corporate pledge we make to those who have joined us in ownership of Berkshire.In most years ind

56、eed in most decades our caution will likely prove to be unneeded behavior akin to an insurance policy on a fortress-like building thought to be fireproof.But Berkshire does not want to inflict permanent financial damage quotational shrinkage for extended periods cant be avoided on Bertie or any of t

57、he individuals who have trusted us with their savings.Berkshire is built to last.Non-controlled Businesses That Leave Us Comfortable Last year I mentioned two of Berkshires long-duration partial-ownership positions Coca-Cola and American Express.These are not huge commitments like our Apple position

58、.Each only accounts for 4-5%of Berkshires GAAP net worth.But they are meaningful assets and also illustrate our thought processes.American Express began operations in 1850,and Coca-Cola was launched in an Atlanta drug store in 1886.(Berkshire is not big on newcomers.)Both companies tried expanding i

59、nto unrelated areas over the years and both found little success in these attempts.In the past but definitely not now both were even mismanaged.But each was hugely successful in its base business,reshaped here and there as conditions called for.And,crucially,their products“traveled.”Both Coke and AM

60、EX became recognizable names worldwide as did their core products,and the consumption of liquids and the need for unquestioned financial trust are timeless essentials of our world.8 During 2023,we did not buy or sell a share of either AMEX or Coke extending our own Rip Van Winkle slumber that has no

61、w lasted well over two decades.Both companies again rewarded our inaction last year by increasing their earnings and dividends.Indeed,our share of AMEX earnings in 2023 considerably exceeded the$1.3 billion cost of our long-ago purchase.Both AMEX and Coke will almost certainly increase their dividen

62、ds in 2024 about 16%in the case of AMEX and we will most certainly leave our holdings untouched throughout the year.Could I create a better worldwide business than these two enjoy?As Bertie will tell you:“No way.”Though Berkshire did not purchase shares of either company in 2023,your indirect owners

63、hip of both Coke and AMEX increased a bit last year because of share repurchases we made at Berkshire.Such repurchases work to increase your participation in every asset that Berkshire owns.To this obvious but often overlooked truth,I add my usual caveat:All stock repurchases should be price-depende

64、nt.What is sensible at a discount to business-value becomes stupid if done at a premium.The lesson from Coke and AMEX?When you find a truly wonderful business,stick with it.Patience pays,and one wonderful business can offset the many mediocre decisions that are inevitable.*This year,I would like to

65、describe two other investments that we expect to maintain indefinitely.Like Coke and AMEX,these commitments are not huge relative to our resources.They are worthwhile,however,and we were able to increase both positions during 2023.At yearend,Berkshire owned 27.8%of Occidental Petroleums common share

66、s and also owned warrants that,for more than five years,give us the option to materially increase our ownership at a fixed price.Though we very much like our ownership,as well as the option,Berkshire has no interest in purchasing or managing Occidental.We particularly like its vast oil and gas holdi

67、ngs in the United States,as well as its leadership in carbon-capture initiatives,though the economic feasibility of this technique has yet to be proven.Both of these activities are very much in our countrys interest.Not so long ago,the U.S.was woefully dependent on foreign oil,and carbon capture had

68、 no meaningful constituency.Indeed,in 1975,U.S.production was eight million barrels of oil-equivalent per day(“BOEPD”),a level far short of the countrys needs.From the favorable energy position that facilitated the U.S.mobilization in World War II,the country had retreated to become heavily dependen

69、t on foreign potentially unstable suppliers.Further declines in oil production were predicted along with future increases in usage.9 For a long time,the pessimism appeared to be correct,with production falling to five million BOEPD by 2007.Meanwhile,the U.S.government created a Strategic Petroleum R

70、eserve(“SPR”)in 1975 to alleviate though not come close to eliminating this erosion of American self-sufficiency.And then Hallelujah!shale economics became feasible in 2011,and our energy dependency ended.Now,U.S.production is more than 13 million BOEPD,and OPEC no longer has the upper hand.Occident

71、al itself has annual U.S.oil production that each year comes close to matching the entire inventory of the SPR.Our country would be very very nervous today if domestic production had remained at five million BOEPD,and it found itself hugely dependent on non-U.S.sources.At that level,the SPR would ha

72、ve been emptied within months if foreign oil became unavailable.Under Vicki Hollubs leadership,Occidental is doing the right things for both its country and its owners.No one knows what oil prices will do over the next month,year,or decade.But Vicki does know how to separate oil from rock,and thats

73、an uncommon talent,valuable to her shareholders and to her country.*Additionally,Berkshire continues to hold its passive and long-term interest in five very large Japanese companies,each of which operates in a highly-diversified manner somewhat similar to the way Berkshire itself is run.We increased

74、 our holdings in all five last year after Greg Abel and I made a trip to Tokyo to talk with their managements.Berkshire now owns about 9%of each of the five.(A minor point:Japanese companies calculate outstanding shares in a manner different from the practice in the U.S.)Berkshire has also pledged t

75、o each company that it will not purchase shares that will take our holdings beyond 9.9%.Our cost for the five totals 1.6 trillion,and the yearend market value of the five was 2.9 trillion.However,the yen has weakened in recent years and our yearend unrealized gain in dollars was 61%or$8 billion.Neit

76、her Greg nor I believe we can forecast market prices of major currencies.We also dont believe we can hire anyone with this ability.Therefore,Berkshire has financed most of its Japanese position with the proceeds from 1.3 trillion of bonds.This debt has been very well-received in Japan,and I believe

77、Berkshire has more yen-denominated debt outstanding than any other American company.The weakened yen has produced a yearend gain for Berkshire of$1.9 billion,a sum that,pursuant to GAAP rules,has periodically been recognized in income over the 2020-23 period.In certain important ways,all five compan

78、ies Itochu,Marubeni,Mitsubishi,Mitsui and Sumitomo follow shareholder-friendly policies that are much superior to those customarily practiced in the U.S.Since we began our Japanese purchases,each of the five has reduced the number of its outstanding shares at attractive prices.10 Meanwhile,the manag

79、ements of all five companies have been far less aggressive about their own compensation than is typical in the United States.Note as well that each of the five is applying only about 13 of its earnings to dividends.The large sums the five retain are used both to build their many businesses and,to a

80、lesser degree,to repurchase shares.Like Berkshire,the five companies are reluctant to issue shares.An additional benefit for Berkshire is the possibility that our investment may lead to opportunities for us to partner around the world with five large,well-managed and well-respected companies.Their i

81、nterests are far more broad than ours.And,on their side,the Japanese CEOs have the comfort of knowing that Berkshire will always possess huge liquid resources that can be instantly available for such partnerships,whatever their size may be.Our Japanese purchases began on July 4,2019.Given Berkshires

82、 present size,building positions through open-market purchases takes a lot of patience and an extended period of“friendly”prices.The process is like turning a battleship.That is an important disadvantage which we did not face in our early days at Berkshire.The Scorecard in 2023 Every quarter we issu

83、e a press release that reports our summarized operating earnings(or loss)in a manner similar to what is shown below.Here is the full-year compilation:(in$millions)2023 2022 Insurance-underwriting.$5,428$(30)Insurance-investment income.9,567 6,484 Railroad.5,087 5,946 Utilities and energy.2,331 3,904

84、 Other businesses and miscellaneous items.14,937 14,549 Operating earnings.$37,350$30,853 At Berkshires annual gathering on May 6,2023,I presented the first quarters results which had been released early that morning.I followed with a short summary of the outlook for the full year:(1)most of our non

85、-insurance businesses faced lower earnings in 2023;(2)that decline would be cushioned by decent results at our two largest non-insurance businesses,BNSF and Berkshire Hathaway Energy(“BHE”)which,combined,had accounted for more than 30%of operating earnings in 2022;(3)our investment income was certai

86、n to materially grow because the huge U.S.Treasury bill position held by Berkshire had finally begun to pay us far more than the pittance we had been receiving and(4)insurance would likely do well,both because its underwriting earnings are not correlated to earnings elsewhere in the economy and,beyo

87、nd that,property-casualty insurance prices had strengthened.11 Insurance came through as expected.I erred,however,in my expectations for both BNSF and BHE.Lets take a look at each.*Rail is essential to Americas economic future.It is clearly the most efficient way measured by cost,fuel usage and carb

88、on intensity of moving heavy materials to distant destinations.Trucking wins for short hauls,but many goods that Americans need must travel to customers many hundreds or even several thousands of miles away.The country cant run without rail,and the industrys capital needs will always be huge.Indeed,

89、compared to most American businesses,railroads eat capital.BNSF is the largest of six major rail systems that blanket North America.Our railroad carries its 23,759 miles of main track,99 tunnels,13,495 bridges,7,521 locomotives and assorted other fixed assets at$70 billion on its balance sheet.But m

90、y guess is that it would cost at least$500 billion to replicate those assets and decades to complete the job.BNSF must annually spend more than its depreciation charge to simply maintain its present level of business.This reality is bad for owners,whatever the industry in which they have invested,bu

91、t it is particularly disadvantageous in capital-intensive industries.At BNSF,the outlays in excess of GAAP depreciation charges since our purchase 14 years ago have totaled a staggering$22 billion or more than$112 billion annually.Ouch!That sort of gap means BNSF dividends paid to Berkshire,its owne

92、r,will regularly fall considerably short of BNSFs reported earnings unless we regularly increase the railroads debt.And that we do not intend to do.Consequently,Berkshire is receiving an acceptable return on its purchase price,though less than it might appear,and also a pittance on the replacement v

93、alue of the property.Thats no surprise to me or Berkshires board of directors.It explains why we could buy BNSF in 2010 at a small fraction of its replacement value.North Americas rail system moves huge quantities of coal,grain,autos,imported and exported goods,etc.one-way for long distances and tho

94、se trips often create a revenue problem for back-hauls.Weather conditions are extreme and frequently hamper or even stymie the utilization of track,bridges and equipment.Flooding can be a nightmare.None of this is a surprise.While I sit in an always-comfortable office,railroading is an outdoor activ

95、ity with many employees working under trying and sometimes dangerous conditions.An evolving problem is that a growing percentage of Americans are not looking for the difficult,and often lonely,employment conditions inherent in some rail operations.Engineers must deal with the fact that among an Amer

96、ican population of 335 million,some forlorn or mentally-disturbed Americans are going to elect suicide by lying in front of a 100-car,extraordinarily heavy train that cant be stopped in less than a mile or more.Would you like to be the helpless engineer?This trauma happens about once a day in North

97、America;it is far more common in Europe and will always be with us.12 Wage negotiations in the rail industry can end up in the hands of the President and Congress.Additionally,American railroads are required to carry many dangerous products every day that the industry would much rather avoid.The wor

98、ds“common carrier”define railroad responsibilities.Last year BNSFs earnings declined more than I expected,as revenues fell.Though fuel costs also fell,wage increases,promulgated in Washington,were far beyond the countrys inflation goals.This differential may recur in future negotiations.Though BNSF

99、carries more freight and spends more on capital expenditures than any of the five other major North American railroads,its profit margins have slipped relative to all five since our purchase.I believe that our vast service territory is second to none and that therefore our margin comparisons can and

100、 should improve.I am particularly proud of both BNSFs contribution to the country and the people who work in sub-zero outdoor jobs in North Dakota and Montana winters to keep Americas commercial arteries open.Railroads dont get much attention when they are working but,were they unavailable,the void

101、would be noticed immediately throughout America.A century from now,BNSF will continue to be a major asset of the country and of Berkshire.You can count on that.*Our second and even more severe earnings disappointment last year occurred at BHE.Most of its large electric-utility businesses,as well as

102、its extensive gas pipelines,performed about as expected.But the regulatory climate in a few states has raised the specter of zero profitability or even bankruptcy(an actual outcome at Californias largest utility and a current threat in Hawaii).In such jurisdictions,it is difficult to project both ea

103、rnings and asset values in what was once regarded as among the most stable industries in America.For more than a century,electric utilities raised huge sums to finance their growth through a state-by-state promise of a fixed return on equity(sometimes with a small bonus for superior performance).Wit

104、h this approach,massive investments were made for capacity that would likely be required a few years down the road.That forward-looking regulation reflected the reality that utilities build generating and transmission assets that often take many years to construct.BHEs extensive multi-state transmis

105、sion project in the West was initiated in 2006 and remains some years from completion.Eventually,it will serve 10 states comprising 30%of the acreage in the continental United States.With this model employed by both private and public-power systems,the lights stayed on,even if population growth or i

106、ndustrial demand exceeded expectations.The“margin of safety”approach seemed sensible to regulators,investors and the public.Now,the fixed-but-satisfactory-return pact has been broken in a few states,and investors are becoming apprehensive that such ruptures may spread.Climate change adds to their wo

107、rries.Underground transmission may be required but who,a few decades ago,wanted to pay the staggering costs for such construction?13 At Berkshire,we have made a best estimate for the amount of losses that have occurred.These costs arose from forest fires,whose frequency and intensity have increased

108、and will likely continue to increase if convective storms become more frequent.It will be many years until we know the final tally from BHEs forest-fire losses and can intelligently make decisions about the desirability of future investments in vulnerable western states.It remains to be seen whether

109、 the regulatory environment will change elsewhere.Other electric utilities may face survival problems resembling those of Pacific Gas and Electric and Hawaiian Electric.A confiscatory resolution of our present problems would obviously be a negative for BHE,but both that company and Berkshire itself

110、are structured to survive negative surprises.We regularly get these in our insurance business,where our basic product is risk assumption,and they will occur elsewhere.Berkshire can sustain financial surprises but we will not knowingly throw good money after bad.Whatever the case at Berkshire,the fin

111、al result for the utility industry may be ominous:Certain utilities might no longer attract the savings of American citizens and will be forced to adopt the public-power model.Nebraska made this choice in the 1930s and there are many public-power operations throughout the country.Eventually,voters,t

112、axpayers and users will decide which model they prefer.When the dust settles,Americas power needs and the consequent capital expenditure will be staggering.I did not anticipate or even consider the adverse developments in regulatory returns and,along with Berkshires two partners at BHE,I made a cost

113、ly mistake in not doing so.*Enough about problems:Our insurance business performed exceptionally well last year,setting records in sales,float and underwriting profits.Property-casualty insurance(“P/C”)provides the core of Berkshires well-being and growth.We have been in the business for 57 years an

114、d despite our nearly 5,000-fold increase in volume from$17 million to$83 billion we have much room to grow.Beyond that,we have learned too often,painfully a good deal about what types of insurance business and what sort of people to avoid.The most important lesson is that our underwriters can be thi

115、n,fat,male,female,young,old,foreign or domestic.But they cant be optimists at the office,however desirable that quality may generally be in life.Surprises in the P/C business which can occur decades after six-month or one-year policies have expired are almost always negative.The industrys accounting

116、 is designed to recognize this reality,but estimation mistakes can be huge.And when charlatans are involved,detection is often both slow and costly.Berkshire will always attempt to be accurate in its estimates of future loss payments but inflation both monetary and the“legal”variety is a wild card.1

117、4 Ive told the story of our insurance operations so many times that I will simply direct newcomers to page 18.Here,I will only repeat that our position would not be what it is if Ajit Jain had not joined Berkshire in 1986.Before that lucky day aside from an almost unbelievably wonderful experience w

118、ith GEICO that began early in 1951 and will never end I was largely wandering in the wilderness,as I struggled to build our insurance operation.Ajits achievements since joining Berkshire have been supported by a large cast of hugely-talented insurance executives in our various P/C operations.Their n

119、ames and faces are unknown to most of the press and the public.Berkshires lineup of managers,however,is to P/C insurance what Cooperstowns honorees are to baseball.Bertie,you can feel good about the fact that you own a piece of an incredible P/C operation that now operates worldwide with unmatched f

120、inancial resources,reputation and talent.It carried the day in 2023.What is it with Omaha?Come to Berkshires annual gathering on May 4,2024.On stage you will see the three managers who now bear the prime responsibilities for steering your company.What,you may wonder,do the three have in common?They

121、certainly dont look alike.Lets dig deeper.Greg Abel,who runs all non-insurance operations for Berkshire and in all respects is ready to be CEO of Berkshire tomorrow was born and raised in Canada(he still plays hockey).In the 1990s,however,Greg lived for six years in Omaha just a few blocks away from

122、 me.During that period,I never met him.A decade or so earlier,Ajit Jain,who was born,raised and educated in India,lived with his family in Omaha only a mile or so from my home(where Ive lived since 1958).Both Ajit and his wife,Tinku,have many Omaha friends,though its been more than three decades sin

123、ce they moved to New York(in order to be where much of the action in reinsurance takes place).Missing from the stage this year will be Charlie.He and I were both born in Omaha about two miles from where you will sit at our May get-together.In his first ten years,Charlie lived about a half-mile from

124、where Berkshire has long maintained its office.Both Charlie and I spent our early years in Omaha public schools and were indelibly shaped by our Omaha childhood.We didnt meet,however,until much later.(A footnote that may surprise you:Charlie lived under 15 of Americas 45 presidents.People refer to P

125、resident Biden as#46,but that numbering counts Grover Cleveland as both#22 and#24 because his terms were not consecutive.America is a very young country.)15 Moving to the corporate level,Berkshire itself relocated in 1970 from its 81 years of residence in New England to settle in Omaha,leaving its t

126、roubles behind and blossoming in its new home.As a final punctuation point to the“Omaha Effect,”Bertie yes that Bertie spent her early formative years in a middle-class neighborhood in Omaha and,many decades later,emerged as one of the countrys great investors.You may be thinking that she put all of

127、 her money in Berkshire and then simply sat on it.But thats not true.After starting a family in 1956,Bertie was active financially for 20 years:holding bonds,putting 13 of her funds in a publicly-held mutual fund and trading stocks with some frequency.Her potential remained unnoticed.Then,in 1980,wh

128、en 46,and independent of any urgings from her brother,Bertie decided to make her move.Retaining only the mutual fund and Berkshire,she made no new trades during the next 43 years.During that period,she became very rich,even after making large philanthropic gifts(think nine figures).Millions of Ameri

129、can investors could have followed her reasoning which involved only the common sense she had somehow absorbed as a child in Omaha.And,taking no chances,Bertie returns to Omaha every May to be re-energized.*So what is going on?Is it Omahas water?Is it Omahas air?Is it some strange planetary phenomeno

130、n akin to that which has produced Jamaicas sprinters,Kenyas marathon runners,or Russias chess experts?Must we wait until AI someday yields the answer to this puzzle?Keep an open mind.Come to Omaha in May,inhale the air,drink the water and say“hi”to Bertie and her good-looking daughters.Who knows?The

131、re is no downside,and,in any event,you will have a good time and meet a huge crowd of friendly people.To top things off,we will have available the new 4th edition of Poor Charlies Almanack.Pick up a copy.Charlies wisdom will improve your life as it has mine.February 24,2024 Warren E.Buffett Chairman

132、 of the Board 16 Berkshires Performance vs.the S&P 500 Annual Percentage Change Year in Per-Share Market Value of Berkshire in S&P 500 with Dividends Included 1965.49.5 10.0 1966.(3.4)(11.7)1967.13.3 30.9 1968.77.8 11.0 1969.19.4(8.4)1970.(4.6)3.9 1971.80.5 14.6 1972.8.1 18.9 1973.(2.5)(14.8)1974.(4

133、8.7)(26.4)1975.2.5 37.2 1976.129.3 23.6 1977.46.8(7.4)1978.14.5 6.4 1979.102.5 18.2 1980.32.8 32.3 1981.31.8(5.0)1982.38.4 21.4 1983.69.0 22.4 1984.(2.7)6.1 1985.93.7 31.6 1986.14.2 18.6 1987.4.6 5.1 1988.59.3 16.6 1989.84.6 31.7 1990.(23.1)(3.1)1991.35.6 30.5 1992.29.8 7.6 1993.38.9 10.1 1994.25.0

134、1.3 1995.57.4 37.6 1996.6.2 23.0 1997.34.9 33.4 1998.52.2 28.6 1999.(19.9)21.0 2000.26.6(9.1)2001.6.5(11.9)2002.(3.8)(22.1)2003.15.8 28.7 2004.4.3 10.9 2005.0.8 4.9 2006.24.1 15.8 2007.28.7 5.5 2008.(31.8)(37.0)2009.2.7 26.5 2010.21.4 15.1 2011.(4.7)2.1 2012.16.8 16.0 2013.32.7 32.4 2014.27.0 13.7 2

135、015.(12.5)1.4 2016.23.4 12.0 2017.21.9 21.8 2018.2.8(4.4)2019.11.0 31.5 2020.2.4 18.4 2021.29.6 28.7 2022.4.0(18.1)2023.15.8 26.3 Compounded Annual Gain 1965-2023.19.8%10.2%Overall Gain 1964-2023.4,384,748%31,223%Note:Data are for calendar years with these exceptions:1965 and 1966,year ended 9/30;19

136、67,15 months ended 12/31.17 BERKSHIRE HATHAWAY INC.PROPERTY/CASUALTY INSURANCE*Our property/casualty(“P/C”)insurance business has been the engine propelling Berkshires growth since 1967,the year we acquired National Indemnity and its sister company,National Fire&Marine,for$8.6 million.Today,National

137、 Indemnity is the largest P/C company in the world as measured by net worth.Insurance is a business of promises,and Berkshires ability to honor its commitments is unmatched.One reason we were attracted to the P/C business was the industrys business model:P/C insurers receive premiums upfront and pay

138、 claims later.In extreme cases,such as claims arising from exposure to asbestos,or severe workplace accidents,payments can stretch over many decades.This collect-now,pay-later model leaves P/C companies holding large sums money we call“float”that will eventually go to others.Meanwhile,insurers get t

139、o invest this float for their own benefit.Though individual policies and claims come and go,the amount of float an insurer holds usually remains fairly stable in relation to premium volume.Consequently,as our business grows,so does our float.And how it has grown,as the following table shows:Year Flo

140、at(in millions)1970$39 1980 237 1990 1,632 2000 27,871 2010 65,832 2020 138,503 2022 164,109 2023 168,895 We may in time experience a decline in float.If so,the decline will be very gradual at the outside no more than 3%in any year.The nature of our insurance contracts is such that we can never be s

141、ubject to immediate or near-term demands for sums that are of significance to our cash resources.That structure is by design and is a key component in the unequaled financial strength of our insurance companies.That strength will never be compromised.If our premiums exceed the total of our expenses

142、and eventual losses,our insurance operation registers an underwriting profit that adds to the investment income the float produces.When such a profit is earned,we enjoy the use of free money and,better yet,get paid for holding it.For the P/C industry as a whole,the financial value of float is now fa

143、r less than it was for many years.Thats because the standard investment strategy for almost all P/C companies is heavily and properly skewed toward high-grade bonds.Changes in interest rates therefore matter enormously to these companies,and during the last decade the bond market has offered patheti

144、cally low rates.Consequently,insurers suffered,as year by year they were forced by maturities or issuer-call provisions to recycle their“old”investment portfolios into new holdings providing much lower yields.Where once these insurers could safely earn 5 cents or 6 cents on each dollar of float,they

145、 now take in only 2 cents or 3 cents.Some insurers may try to mitigate their loss of revenue by buying lower-quality bonds or non-liquid“alternative”investments promising higher yields.But those are dangerous games and activities that most institutions are ill-equipped to play.Berkshires situation i

146、s more favorable than that of insurers in general.Most important,our unrivaled mountain of capital,abundance of cash and a huge and diverse stream of non-insurance earnings allow us far more investment flexibility than is generally available to other companies in the industry.The many choices open t

147、o us are always advantageous and sometimes have presented us with major opportunities.Our P/C companies have meanwhile had an excellent underwriting record.Berkshire has now operated at an underwriting profit for 18 of the last 20 years,the exceptions being 2017 and 2022.In 2017 our pre-tax loss was

148、 a whopping$3.2 billion.In 2022 the loss was minimal.For the entire 20-year span,our pre-tax gain totaled$29.2 billion.That record is no accident:Disciplined risk evaluation is the daily focus of our insurance managers,who know that the rewards of float can be drowned by poor underwriting results.Al

149、l insurers give that message lip service.At Berkshire it is a religion,Old Testament style.As I have repeatedly done in the past,I will emphasize now that happy outcomes in insurance are far from a sure thing:Danger always lurks.Mistakes in assessing insurance risks can be huge and can take many yea

150、rs even decades to surface and ripen.(Think asbestos.)A major catastrophe that will dwarf hurricanes Katrina and Ian will occur perhaps tomorrow,perhaps many decades from now.“The Big One”may come from a traditional source,such as wind or earthquake,or it may be a total surprise involving,say,a cybe

151、r attack having disastrous consequences beyond anything insurers now contemplate.When such a mega-catastrophe strikes,Berkshire will get its share of the losses and they will be big very big.Unlike many other insurers,however,handling the loss will not come close to straining our resources,and we wi

152、ll be eager to add to our business the next day.*Reproduced from Berkshire Hathaway Inc.2019 Annual Report and updated through 2023 18 BERKSHIRE HATHAWAY INC.SHAREHOLDER EVENT INFORMATION SHAREHOLDER MEETING SCHEDULE SATURDAY,MAY 4 CHI Health Center 7:00am Doors Open 8:45am Movie 9:15am Q&A Session

153、Noon Lunch Break 1:00pm Q&A Session 3:00pm Recess 4:00pm Annual Shareholders Meeting Details:Becky Quick,of CNBC will review questions that shareholders have submitted by e-mail and select those she believes will have the widest interest.Questions can be submitted to Becky at .We will have a drawing

154、 at 8:15am at each of the 11 microphone locations for those shareholders wishing to ask questions themselves.At the meeting,Warren will alternate the questions asked by Becky and the shareholders in attendance.At the morning session,Warren as well as Greg and Ajit will be available to answer questio

155、ns.At the afternoon session,Warren and Greg will be available to answer questions.The Berkshire Q&A Session will be broadcast on CNBC and webcast in English and Mandarin beginning at 8:30am central time.Visit SHAREHOLDER EVENTS INFORMATION Friday,May 3 Shareholder Shopping Day-CHI Health CenterNoon

156、5pm Details:An extended afternoon of shopping for our shareholders.Borsheims Shareholder-Only Shopping Night6pm 8pm Saturday,May 4 NFMs Berkshire Picnic5:30pm 8pm Details:NFM will be hosting a Berkshire Picnic at the Omaha store with food and live entertainment.Sunday,May 5 Berkshire Hathaway“Invest

157、 in Yourself”5K presented by Brooks8am 11am Details:Run,Jog,or Walk towards the best version of yourself at the Invest in Yourself 5K presented by Brooks Running.Brooks and Berkshire Hathaway encourage you to join us for the annual 5K through the streets of Downtown Omaha.The event starts and finish

158、es at Gene Leahy Mall.Register at .Borsheims Shareholder-Only Shopping Day11am 4pm NFM Shareholder Discount Period Wednesday,April 24 through Tuesday,May 7(Discounts also available in Dallas/Fort Worth,Kansas City and Des Moines Stores.)Store Hours:Sunday Friday:11am 8pm|Saturday:10am 8pm Borsheims

159、Shareholder Discount Period Saturday,April 27 through Sunday,May 12 Store Hours:Monday Friday*:10am 6pm Saturday*:10am 5pm|Sunday*Closed*Shareholder-Only Shopping Night,Friday,May 3/6 8pm*Shareholder Shopping Day,Saturday,May 4/10am 5pm*Shareholder-Only Shopping Day Sunday,May 5/11am 4pm Books for S

160、hareholders The Bookworm will be back with a selection of books.Shareholders receive a 20%discount.The books selected for sale at the Berkshire annual meeting are available year round at .Shareholders with credentials also receive the 20%shareholder discount Friday,May 3 through Monday,May 6,at The

161、Bookworm,90th and Center Street.19 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2023ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECUR

162、ITIES EXCHANGE ACT OF1934For the transition period fromtoCommission file number 001-14905BERKSHIRE HATHAWAY INC.(Exact name of Registrant as specified in its charter)Delaware47-0813844State or other jurisdiction ofincorporation or organization(I.R.S.EmployerIdentification No.)3555 Farnam Street,Omah

163、a,Nebraska68131(Address of principal executive office)(Zip Code)Registrants telephone number,including area code(402)346-1400Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolsName of each exchange on which registeredClass A Common StockClass B Common Stock1.

164、300%Senior Notes due 20240.000%Senior Notes due 20251.125%Senior Notes due 20272.150%Senior Notes due 20281.500%Senior Notes due 20302.000%Senior Notes due 20341.625%Senior Notes due 20352.375%Senior Notes due 20390.500%Senior Notes due 20412.625%Senior Notes due 2059BRK.ABRK.BBRK24BRK25BRK27BRK28BR

165、K30BRK34BRK35BRK39BRK41BRK59New York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock Exch

166、angeSecurities registered pursuant to Section 12(g)of the Act:NONEIndicate by check mark if the Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15

167、(d)of the Act.Yes No Indicate by check mark whether the Registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities ExchangeAct of 1934 during the preceding 12 months(or for such shorter period that the Registrant was required to file such reports),and(2)has beens

168、ubject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant toRule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shor

169、ter period that the Registrant wasrequired to submit such files).Yes No Indicate by check mark whether the Registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reportingcompany,or an emerging growth company.See the definitions of“large accelerated filer,”“ac

170、celerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the Registrant has elec

171、ted not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the Registrant has filed a report on and attestation to its managements assessment of the effectivene

172、ss of itsinternal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered publicaccounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financ

173、ial statements of the Registrantincluded in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-basedcompensation received by any of the R

174、egistrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No State the aggregate market value of the voting stock held by non-affiliates of the Registrant as of

175、June 30,2023:$625,500,000,000Indicate the number of shares outstanding of each of the Registrants classes of common stock:February 12,2024Class A common stock,$5 par value566,618 sharesFebruary 12,2024Class B common stock,$0.0033 par value1,310,805,008 sharesDOCUMENTS INCORPORATED BY REFERENCEPortio

176、ns of the Proxy Statement for the Registrants Annual Meeting to be held May 4,2024 are incorporated in Part III.Table of ContentsPage No.Part IItem 1.Business DescriptionK-1Item 1A.Risk FactorsK-25Item 1B.Unresolved Staff CommentsK-28Item 1C.CybersecurityK-28Item 2.Description of PropertiesK-29Item

177、3.Legal ProceedingsK-32Item 4.Mine Safety DisclosuresK-32Part IIItem 5.Market for Registrants Common Equity,Related Security Holder Matters and IssuerPurchases of Equity SecuritiesK-32Item 6.ReservedK-34Item 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsK-35It

178、em 7A.Quantitative and Qualitative Disclosures About Market RiskK-66Item 8.Financial Statements and Supplementary DataK-67Consolidated Balance Sheets December 31,2023 and December 31,2022K-70Consolidated Statements of EarningsYears Ended December 31,2023,December 31,2022,and December 31,2021K-72Cons

179、olidated Statements of Comprehensive IncomeYears Ended December 31,2023,December 31,2022,and December 31,2021K-73Consolidated Statements of Changes in Shareholders EquityYears Ended December 31,2023,December 31,2022,and December 31,2021K-73Consolidated Statements of Cash FlowsYears Ended December 31

180、,2023,December 31,2022,and December 31,2021K-74Notes to Consolidated Financial StatementsK-75Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureK-118Item 9A.Controls and ProceduresK-118Item 9B.Other InformationK-118Item 9C.Disclosure Regarding Foreign Jurisdic

181、tions that Prevent InspectionK-118Part IIIItem 10.Directors,Executive Officers and Corporate GovernanceK-118Item 11.Executive CompensationK-118Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder MattersK-118Item 13.Certain Relationships and Related Transacti

182、ons and Director IndependenceK-118Item 14.Principal Accountant Fees and ServicesK-118Part IVItem 15.Exhibits and Financial Statement SchedulesK-118Exhibit IndexK-122SignaturesK-124.K-1Part IItem 1.Business DescriptionBerkshire Hathaway Inc.(“Berkshire,”“Company”or“Registrant”)is a holding company ow

183、ning subsidiaries engagedin numerous diverse business activities.The most important of these are insurance businesses conducted on both a primarybasis and a reinsurance basis,a freight rail transportation business and a group of utility and energy generation and distributionbusinesses.Berkshire also

184、 owns and operates numerous other businesses engaged in a variety of manufacturing,services,retailing and other activities.Berkshire is domiciled in the state of Delaware,and its corporate headquarters is in Omaha,Nebraska.Berkshires operating businesses are managed on an unusually decentralized bas

185、is.There are few centralized orintegrated business functions.Berkshires senior management team participates in and is ultimately responsible for significantcapital allocation decisions,investment activities and the selection of the Chief Executive to head each of the operatingbusinesses.Berkshires s

186、enior management is also responsible for establishing and monitoring Berkshires corporate governancepractices,including monitoring governance efforts,including those at the operating businesses,and participating in theresolution of governance-related issues as needed.Berkshires Board of Directors is

187、 responsible for assuring an appropriatesuccessor to the Chief Executive Officer.The Berkshire Code of Business Conduct and Ethics emphasizes,among other things,the commitment to ethics and compliance with government laws and regulations and provides basic standards for ethical andlegal behavior of

188、its employees.Human capital and resources are an integral and essential component of Berkshires businesses.Berkshire and itssubsidiary business units employed approximately 396,500 people worldwide at the end of 2023,of which approximately 80%were in the United States(“U.S.”)and 20%were represented

189、by unions.Employees engage in a wide variety of occupations.Consistent with Berkshires decentralized management philosophy,Berkshires operating businesses individually establishspecific policies and practices concerning the attraction and retention of personnel within their organizations.Given the w

190、idevariations in the nature and size of business activities,specific policies and practices may vary widely among Berkshiresoperating subsidiaries.Policies and practices commonly address,among other things:maintaining a safe work environmentand minimizing or eliminating workplace injuries;offering c

191、ompetitive compensation,which includes various health insuranceand retirement benefits,as well as incentives to recognize and reward performance;wellness programs;training,learning andcareer advancement opportunities;and hiring practices intended to identify qualified candidates and promote diversit

192、y andinclusionintheworkforce.BerkshirescombinedU.S.workforcedemographics,basedonU.S.EqualEmploymentOpportunityCommission guidelines,are available on its website(https:/),under sustainability.Insurance and Reinsurance BusinessesBerkshires insurance and reinsurance business activities are conducted th

193、rough numerous domestic and foreign-basedinsurance subsidiaries.Berkshires insurance subsidiaries provide insurance and reinsurance of property and casualty risks aswell as life and health risks worldwide.Berkshires insurance businesses employed approximately 43,000 people at the end of2023.For purp

194、oses of this discussion,entities that provide insurance or reinsurance are referred to as insurers.Indirectorprimaryinsuranceactivities,theinsurerassumestheriskoflossfrompersonsororganizationsthataredirectlysubject to the risks.Such risks may relate to property,casualty(or liability),life,accident,h

195、ealth,financial or other perils thatarise from an insurable event.In reinsurance activities,the insurer assumes defined portions of risks that other direct insurersor reinsurers assumed in their own insuring activities.Insurance and reinsurance are generally subject to regulatory oversight throughou

196、t the world.Except for regulatoryconsiderations,there are virtually no barriers to entry into the insurance and reinsurance industry.Competitors may be domesticor foreign,as well as licensed or unlicensed.The number of competitors within the industry is not known.Insurers compete onthe basis of reli

197、ability,financial strength and stability,financial ratings,underwriting consistency,service,business ethics,price,performance,capacity,policy terms and coverage conditions.Insurers based in the U.S.are subject to regulation by their states of domicile and by those states in which they arelicensed to

198、 write policies on an admitted basis.The primary focus of state regulation is to monitor financial solvency of insurersand otherwise protect policyholder interests.States establish minimum capital levels for insurance companies and establishguidelines for permissible business and investment activiti

199、es and have the authority to suspend or revoke a companys authorityto do business.States regulate the payment of shareholder dividends by insurance companies and other transactions withaffiliates.K-2Insurers that market,sell and service insurance policies in the states where they are licensed are re

200、ferred to as admittedinsurers.Admitted insurers are generally required to obtain regulatory approval of their policy forms and premium rates.Non-admitted insurance markets have developed to provide insurance that is otherwise unavailable through admitted insurers.Non-admitted insurance,often referre

201、d to as“excess and surplus”lines,is procured by either state-licensed surplus lines brokerswho place risks with insurers not licensed in that state or by the insured partys direct procurement from non-admitted insurers.Non-admitted insurance is subject to considerably less regulation with respect to

202、 policy rates and forms.Reinsurers arenormally not required to obtain regulatory approval of premium rates or reinsurance contracts.The insurance regulators of every state participate in the National Association of Insurance Commissioners(“NAIC”).TheNAICadoptsforms,instructionsandaccountingprocedure

203、sforusebyU.S.insurersinpreparingandfilingannualstatutoryfinancial statements.However,an insurers state of domicile has ultimate authority over these matters.In addition,the NAICdevelops or adopts statutory accounting principles,model laws,regulations and programs for use by its members.Such mattersd

204、eal with regulatory oversight of solvency,risk management,compliance with financial regulation standards and risk-basedcapital reporting requirements.U.S.states,through the NAIC,and international insurance regulators through the International Association of InsuranceSupervisors(“IAIS”)have been deve

205、loping standards and best practices focused on establishing a common set of principles(“Insurance Core Principles”)and framework(“ComFrame”)for the regulation of large multi-national insurance groups.TheIAIS is developing capital standards for internationally active insurance groups(“Insurance Capit

206、al Standard”)based on aconsolidated group approach and is also evaluating a potentially comparable group capital standard based on the aggregationof regulated entities and their underlying local capital requirements(“Aggregation Method”).The IAIS is also developingstandards that address supervision,

207、coordination of regulators,risk management and governance.While the IAIS standards do not have legal effect,U.S.state insurance departments and the NAIC are implementingvarious group supervision regulatory tools and mandates that are responsive to certain IAIS standards.U.S.state regulatorshave form

208、ed supervisory colleges intended to promote communication and cooperation amongst the various domestic andinternational insurance regulators.The Nebraska Department of Insurance acts as the lead supervisor for Berkshires insurancecompanies and chairs the Berkshire supervisory college.U.S.state regul

209、ators require insurance groups to file an annual report and an Own Risk Solvency Assessment or ORSA,with the groups lead supervisor.The NAIC adopted a group capital calculation based on methodology similar to theAggregation Method,which leverages the NAICs existing risk based capital calculation met

210、hods.The NAICs group capitalcalculation is a tool designed to help the lead supervisor understand the capital adequacy across an insurance group.The NAICis also developing further tools,including various liquidity assessments,that will likely be imposed on insurance groups in thefuture.Berkshires in

211、surance companies maintain capital strength at exceptionally high levels,which differentiates them fromtheir competitors.The combined statutory surplus of Berkshires U.S.-based insurers was approximately$303 billion atDecember 31,2023.Berkshires major insurance subsidiaries are rated AA+by Standard&

212、Poors and A+(superior)by A.M.Best with respect to their financial condition and claims paying ability.The Terrorism Risk Insurance Act of 2002 established a Terrorism Insurance Program(“Program”)within the U.S.Department of the Treasury to provide federal reinsurance of certified terrorism losses in

213、curred by U.S.commercial propertyand casualty insurers.The Program currently extends to December 31,2027 through the Terrorism Risk Insurance ProgramReauthorization Act of 2019.Hereinafter these Acts are collectively referred to as TRIA.The Department of the Treasury isresponsible for certifying act

214、s of terrorism under TRIA.Federal reinsurance under TRIA may apply if the industry insured lossfor certified events occurring during the calendar year exceeds$200 million.To be eligible for reinsurance under TRIA,insurers must make insurance coverage available for acts of terrorism byproviding polic

215、yholders with clear and conspicuous notice of the amount of premium that will be charged for the coverage andthe federal share of insured losses resulting from an act of terrorism.TRIA excludes certain forms of direct insurance,such aspersonal and commercial auto,burglary,theft,surety and certain pr

216、ofessional liability lines.Reinsurers are not required to offerterrorism coverage and are not eligible for federal reinsurance of terrorism losses.In the event of a certified act of terrorism,the federal government will reimburse insurers(conditioned on theirsatisfaction of policyholder notification

217、 requirements)for 80%of their insured losses in excess of the insurers group deductible.Under the Program,the deductible is 20%of the aggregate direct subject earned premium for relevant commercial lines ofbusiness in the immediately preceding calendar year.The aggregate deductible for Berkshires in

218、surance group is expected toapproximate$2.5 billion in 2024.There is also an aggregate program limit of$100 billion on the amount of the federalreinsurance coverage for each TRIA year.K-3The extent of insurance regulation varies widely among the countries where Berkshires non-U.S.operations conductb

219、usiness.Each country imposes licensing,solvency,auditing and financial reporting requirements,although the type and extentof the requirements may differ substantially by jurisdiction.Significant variations can also be found in the size,structure and resources of the local non-U.S.regulatory departme

220、ntsthat oversee insurance activities.Certain regulators maintain close relationships with subject insurers and others operate a risk-based approach.Berkshires non-U.S.insurance operations are conducted through subsidiaries and branches of subsidiaries.Berkshireinsurance subsidiaries are located in s

221、everal countries,including Germany,the United Kingdom(“U.K.”),Ireland,Luxembourg,Australia and South Africa,and also maintain branches in several other countries.Most of these foreignjurisdictions impose local capital requirements.Other legal requirements involve discretionary licensing procedures,l

222、ocalretention of funds and records,and data privacy and protection programs.Berkshires international insurance companies arealso subject to multinational application of certain U.S.laws.There are various regulatory bodies and initiatives that impact Berkshire in multiple international jurisdictions

223、and thepotential for significant effect on the Berkshire insurance group could be heightened due to industry and economicdevelopments.In 2016,the U.K.voted in a national referendum to withdraw from the European Union(“EU”)(“Brexit”),which resulted in the U.K.s withdrawal from the EU on January 31,20

224、20.In anticipation of the U.K.leaving the EU,BerkshireHathaway European Insurance DAC in Ireland was established to permit property and casualty insurance and reinsurancebusinesses to continue to operate in the EU.Berkshire also continues to maintain a substantial presence in London followingBrexit.

225、Berkshires insurance underwriting operations include the following groups:(1)GEICO,(2)Berkshire HathawayPrimary Group and(3)Berkshire Hathaway Reinsurance Group.Alleghany Corporation(“Alleghany”),based in New York,New York,was acquired by Berkshire on October 19,2022.Alleghanys operating subsidiarie

226、s include property and casualtyreinsurance and insurance,as well as a portfolio of non-insurance businesses.Alleghanys primary insurance businesses areincluded in the Berkshire Hathaway Primary Group and its reinsurance businesses are included in the Berkshire HathawayReinsurance Group.Alleghanys no

227、n-insurance businesses are included in the manufacturing and services segments.Except for retroactive reinsurance and periodic payment annuity products,which generate significant amounts of up-front premiums along with estimated claims expected to be paid over long time periods(creating“float,”see I

228、nvestmentssection),Berkshire expects to achieve an underwriting profit over time and that its managers will reject inadequately pricedrisks.Underwriting profit is defined as earned premiums less incurred losses,loss adjustment expenses and policy acquisitionandotherunderwritingexpenses.Underwritingp

229、rofitdoesnotincludeincomeearnedfrominvestments.Additionalinformationrelated to each of Berkshires underwriting groups follows.GEICOGEICO is headquartered in Chevy Chase,Maryland.GEICOs insurance subsidiaries are led by GovernmentEmployees Insurance Company and include several other GEICO insurance e

230、ntities.The GEICO insurance companies offerprivate passenger automobile insurance to individuals in all 50 states and the District of Columbia,and also offer insurance formotorcycles,all-terrainvehicles,recreationalvehicles,boatsandsmallcommercialfleets.Marketingisprimarilythroughdirectresponse meth

231、ods in which applications for insurance are submitted directly to the companies via the Internet or by telephone,and to a lesser extent,through captive agents.GEICO also operates as an insurance agency for other insurance carriers thatoffer homeowners,renters,condominium,life and identity protection

232、 insurance to individuals desiring insurance coveragesother than those offered by GEICO insurance entities.GEICO competes for private passenger automobile insurance customers in the preferred,standard and non-standard riskmarkets with other companies that sell directly to the customer and with compa

233、nies that use agency sales forces,includingState Farm,Allstate,Progressive and USAA.According to the most recently published A.M.Best data for 2022,the five largestautomobile insurers had a combined market share of approximately 61.2%based on written premiums,with GEICOs marketshare being the third

234、largest at approximately 13.8%.Seasonal variations in GEICOs insurance business are not significant.However,extraordinary weather conditions orother events and factors may have a significant effect upon the frequency or severity of automobile claims.K-4State insurance departments stringently regulat

235、e private passenger auto insurance policies and rates.Competition forprivate passenger automobile insurance tends to focus on price and level of customer service provided.GEICOs cost-efficientdirect response marketing methods and emphasis on customer satisfaction enable it to offer competitive rates

236、 and value to itscustomers.GEICO primarily uses its own claims staff to manage and settle claims.The name and reputation of GEICO arematerial assets and those assets and other service marks are protected through appropriate registrations.Berkshire Hathaway Primary GroupThe Berkshire Hathaway Primary

237、 Group(“BH Primary”)is a collection ofindependently managed insurers that provide a wide variety of insurance coverages to policyholders located principally in theU.S.These various operations are discussed below.National Indemnity Company(“NICO”),domiciled in Nebraska,and certain affiliates(“NICO Pr

238、imary”)underwritecommercial automobile and general liability insurance on an admitted basis and on an excess and surplus basis.Insurancecoverage is offered nationwide primarily through insurance agents and brokers.The Berkshire Hathaway Homestate Companies(“BHHC”)are a group of insurers offering wor

239、kers compensation,commercialautomobileandcommercialpropertycoveragestoadiverseclientbase.BHHChasanationalreach,withtheabilityto provide first-dollar and small to large deductible workers compensation coverage to employers in all states,except thosewhere coverage is available only through state-opera

240、ted workers compensation funds.NICO Primary and BHHC are eachbased in Omaha,Nebraska.Berkshire Hathaway Specialty Insurance Company(“BHSI”)offers commercial property and casualty,executive andprofessional,and various other insurance coverages through BHSI and other Berkshire insurance affiliates.BHS

241、I writesprimary and excess policies on an admitted and non-admitted basis in the U.S.,and on a local or foreign non-admitted basisoutside the U.S.BHSI is based in Boston,Massachusetts,with other regional offices in the U.S.BHSI also maintainsinternational offices and branches in Australia,Canada,New

242、 Zealand and across several other countries in Asia and Europe.BHSI writes business through wholesale and retail insurance brokers,as well as managing general agents.Alleghanys property and casualty insurance business is conducted in the U.S.on both an admitted and non-admittedbasis through RSUI Gro

243、up,Inc.and its subsidiaries(“RSUI”)and CapSpecialty,Inc.and its subsidiaries(“CapSpecialty”).RSUI and CapSpecialty primarily write specialty insurance in the property,umbrella/excess liability,professional liability,directors and officers liability and general liability lines of business.Insurance i

244、s written through independent wholesaleinsurance brokers,retail agents and managing general agents.MedPro Group(“MedPro”)is a leading provider of healthcare liability(“HCL”)insurance.MedPro provides customizedHCL insurance,claims,patient safety and risk solutions to physicians,surgeons,dentists and

245、other healthcare professionals,aswell as hospitals,senior care and other healthcare facilities.Additionally,MedPro provides HCL insurance solutions tointernational markets through other Berkshire insurance affiliates,delivers liability insurance to other professionals,and offersspecialized accident

246、and health insurance solutions to colleges and other customers through its subsidiaries and other Berkshireinsurance affiliates.MedPro is based in Fort Wayne,Indiana.U.S.Liability Insurance Company(“USLI”)includes a group of five specialty insurers that underwrite commercial,professional and persona

247、l lines of insurance on an admitted basis,as well as on an excess and surplus basis.USLI marketspolicies in all 50 states,the District of Columbia and Canada through wholesale and retail insurance agents.USLI companiesalso underwrite and market a wide variety of specialty insurance products.USLI is

248、based in Wayne,Pennsylvania.BerkshireHathaway GUARD Insurance Companies(“GUARD”)is a group of five insurance companies that provide a full suite ofcommercial insurance products,as well as homeowners policies to over 450,000 small to mid-sized businesses andhomeowners.These offerings are made through

249、 independent agents and retail and wholesale brokers.GUARD is based inWilkes-Barre,Pennsylvania.Berkshire Hathaway Direct Insurance Company and its affiliates(“BH Direct”)offer commercial insurance products(including workers compensation,property,auto,general and professional liability)to small busi

250、ness customers.BH Directsproducts are primarily sold through two internet-based distribution platforms,biBERK.com and T.BHDirect writes policies on an admitted basis and is based in Stamford,Connecticut.MLMIC Insurance Company(“MLMIC”)writes medical professional liability insurance policies in New Y

251、ork State through brokers and on a direct basis to medical anddental professionals,health care providers and hospitals.MLMIC is based in Albany,New York.K-5Berkshire Hathaway Reinsurance GroupBerkshires combined global reinsurance business,referred to as theBerkshire Hathaway Reinsurance Group(“BHRG

252、”),offers a wide range of coverages on property,casualty,life and healthrisks to insurers and reinsurers worldwide.BHRG conducts business activities in 26 countries.Reinsurance business is writtenthrough NICO and affiliates(“NICO Group”),General Re Corporation and its subsidiaries(“General Re Group”

253、)andTransatlantic Reinsurance Company and affiliates(“TransRe Group”).The NICO Group and General Re Group underwritingoperations in the U.S.are based in Stamford,Connecticut and the TransRe Group is based in New York,New York.Reinsurance contracts are normally classified as treaty or facultative con

254、tracts.Treaty reinsurance refers to reinsurancecoverage for all or a portion of a specified group or class of risks ceded by a direct insurer or reinsurer,while facultativereinsurance involves coverage of specific individual underlying risks.Reinsurance contracts are further classified as quota-shar

255、e or excess.Under quota-share(proportional or pro-rata)reinsurance,the reinsurer shares proportionally in the originalpremiums and losses of the direct insurer or reinsurer.Excess(or non-proportional)reinsurance provides for theindemnification of the direct insurer or reinsurer for all or a portion

256、of the loss in excess of an agreed upon amount or“retention.”Both quota-share and excess reinsurance contracts may provide for aggregate limits of indemnification.The type and volume of business written is dependent on market conditions,including prevailing premium rates andcoverage terms.The level

257、of underwriting activities often fluctuates significantly from year to year depending on the perceivedlevelofpriceadequacyinspecificinsuranceandreinsurancemarketsaswellasfromthetimingofparticularlylargereinsurancetransactions.Property/casualtyThe NICO Group offers traditional property/casualty reins

258、urance on both an excess-of-loss and a quota-share basis,catastrophe excess-of-loss treaty and facultative reinsurance,and primary insurance on an excess-of-loss basis for large orunusual risks.The type and volume of business written by the NICO Group may vary significantly from period to periodresu

259、lting from changes in perceived premium rate adequacy and from unique or large transactions.For the past several years,a significant portion of NICO Groups annual reinsurance premium derived from a 20%quota-share agreement with InsuranceAustralia Group Limited(“IAG”).This quota-share agreement was r

260、enewed and extended effective January 1,2023,with anexpiration of December 31,2029.IAG is a multi-line insurer in Australia,New Zealand and other Asia-Pacific countries.The General Re Group includes a global property and casualty reinsurance business.Reinsurance contracts are writtenon both a quota-

261、share and excess basis for multiple lines of business.Contracts are primarily in the form of treaties,and to alesser degree,on a facultative basis.The General Re Group conducts business in North America,primarily marketed on a directbasis through General Reinsurance Corporation(“GRC”),which is licen

262、sed in the District of Columbia and all states,exceptHawaii,where it is an accredited reinsurer.GRC also conducts operations in North America through numerous branch officesin the U.S.and Canada.In North America,the General Re Group includes General Star National Insurance Company,General Star Indem

263、nityCompany and Genesis Insurance Company,which offer a broad array of specialty and surplus lines and property,casualty andprofessional liability coverages.These companies offer solutions for the unique needs of public entity,commercial and captivecustomers and their business is marketed through a

264、select group of wholesale brokers,managing general underwriters andprogram administrators.The General Re Groups international reinsurance business is primarily written on a direct basis through GeneralReinsurance AG,based in Cologne,Germany,and subsidiaries and branches in numerous other countries,a

265、s well as throughbrokers,including Faraday Underwriting Limited(“Faraday”),a subsidiary.Faraday owns the managing agent of Syndicate435 at Lloyds of London and provides capacity and participates in 100%of the results of Syndicate 435.The TransRe Group provides pro-rata and excess-of-loss reinsurance

266、 across various property and casualty lines ofbusiness.Contracts are written on both a treaty and facultative basis to insurance and other reinsurance companies in the U.S.and in foreign markets through subsidiaries and branches in numerous countries.Business is written primarily through brokers,and

267、 to a lesser extent on a direct basis.Life/healthThe General Re Group also conducts a global life and health reinsurance business.In 2023,net premiums written wereprimarily in the Asia-Pacific,U.S.and Western Europe regions.The General Re Group underwrites life,disability,supplemental health,critica

268、l illness and long-term care risks on a direct basis.K-6Berkshire Hathaway Life Insurance Company of Nebraska(“BHLN”)and its affiliates write reinsurance coveringvarious forms of traditional life insurance exposures several years ago.BHLN and affiliates also reinsure certain guaranteedminimum death,

269、income and similar risks on closed-blocks of variable annuity risks,which are in run-off.Retroactive reinsuranceRetroactive reinsurance contracts indemnify ceding companies for adverse development of claims arising from lossevents that have already occurred under property and casualty policies issue

270、d in prior years.Coverage under such contracts isprovided on an excess basis(above a stated retention)or for losses payable after the inception of the contract with no additionalceding company retention.Contracts are normally subject to aggregate limits of indemnification,which can be exceptionallyl

271、arge in amount.Significant amounts of asbestos,environmental and latent injury claims may arise under these contracts.The concept of time-value-of-money is an important element in establishing retroactive reinsurance contract prices andterms since loss payments may occur over decades.Normally,expect

272、ed ultimate losses payable under these policies areexpected to exceed premiums,thus producing underwriting losses through the amortization of deferred charge assetsestablished with respect to these contracts.Nevertheless,this business is written,in part,because of the large amounts ofpolicyholder fu

273、nds generated for investment,the economic benefit of which is reflected through investment results in futureperiods.Periodic payment annuityBHLN writes periodic payment annuity insurance policies and reinsures annuity-like obligations.Under these policies,BHLN receives upfront consideration and agre

274、es in the future to make periodic payments that often extend for decades.Thesepolicies generally relate to the settlement of underlying personal injury or workers compensation claims of other insurers,known as structured settlements.Consistent with retroactive reinsurance contracts,time-value-of-mon

275、ey is an important factorin establishing annuity premiums,and underwriting losses are expected from the periodic accretion of time-value discountedliabilities.BHLN significantly curtailed its periodic payment annuity business in 2023 in response to changing economic andmarket conditions.Investments

276、of insurance businessesBerkshires insurance subsidiaries hold significant levels of invested assets.Investment portfolios are managed by Berkshires Chief Executive Officer and Berkshires other investment managers.Investments include a very large portfolio of publicly traded equity securities,which a

277、re unusually concentrated in relativelyfew companies,as well as fixed maturity securities and short-term investments.Generally,there are no target allocations byinvestment type or attempts to match investment asset and insurance liability durations.However,investment portfolios havehistorically incl

278、uded a much greater proportion of equity securities than is customary in the insurance industry.Invested assets derive from shareholder capital as well as funds provided from policyholders through insurance andreinsurance business(“float”).Float represents the approximate net policyholder funds gene

279、rated through underwritingactivities that are held for investment.The major components of float are unpaid losses and loss adjustment expenses,life,annuity and health benefit liabilities(excluding the effects of discount rate changes that are recorded in accumulated othercomprehensive income),unearn

280、ed premiums and other policyholder liabilities less premium and reinsurance receivables,deferred policy acquisition costs and deferred charges on assumed retroactive reinsurance contracts.On a consolidated basis,float has grown from approximately$123 billion at the end of 2018 to approximately$169 b

281、illion at the end of 2023.The costof float can be measured as the net pre-tax underwriting earnings(or loss)as a percentage of average float.Railroad BusinessBurlington Northern Santa FeBurlington Northern Santa Fe,LLC(“BNSF”)is based in Fort Worth,Texas,and through BNSF Railway Company(“BNSF Railwa

282、y”)operates one of the largest railroad systems in North America.BNSF Railway had approximately 37,000employees at the end of 2023,of whom approximately 32,000 were members of a labor union.In serving the Midwest,Pacific Northwest,Western,Southwestern and Southeastern regions and certain ports of th

283、eU.S.,BNSF Railway transports a range of products and commodities derived from manufacturing,agricultural and naturalresource industries.Freight revenues are covered by contractual agreements of varying durations or common carrier publishedprices or company quotations.BNSFs financial performance is

284、influenced by,among other things,general and industryeconomic conditions at the international,national and regional levels.BNSF Railways primary routes,including trackage rights,allow it to access major cities and certain ports in the westernand southern U.S.as well as parts of Canada and Mexico.In

285、addition to major cities and ports,BNSF Railway efficiently servesmany smaller markets by working closely with approximately 200 shortline railroads.BNSF Railway has also entered intomarketing agreements with other rail carriers,expanding the marketing reach for each railroad and their customers.For

286、 theyear ending December 31,2023,34%of freight revenues were derived from consumer products,25%from industrial products,24%from agricultural products and 17%from coal.K-7Regulatory MattersBNSF is subject to federal,state and local laws and regulations generally applicable to its businesses.Rail oper

287、ations aresubject to the regulatory jurisdiction of the Surface Transportation Board(“STB”),the Federal Railroad Administration of theU.S.Department of Transportation(“DOT”),the Occupational Safety and Health Administration(“OSHA”),theEnvironmental Protection Agency(“EPA”),as well as other federal a

288、nd state regulatory agencies and Canadian regulatoryagencies for operations in Canada.The STB has jurisdiction over disputes and complaints involving certain rates,routes andservices,the sale or abandonment of rail lines,applications for line extensions and construction,and the merger with oracquisi

289、tion of control of rail common carriers.The outcome of STB proceedings can affect the profitability of BNSF Railwaysbusiness.The DOT,OSHA and EPA have jurisdiction under several federal statutes over a number of safety,health,andenvironmental aspects of rail operations,including the transportation o

290、f hazardous materials.BNSF Railway is required totransport these materials to the extent of its common carrier obligation.State agencies regulate some health,safety,andenvironmental aspects of rail operations in areas not otherwise preempted by federal law.Environmental MattersBNSFs rail operations,

291、as well as those of its competitors,are also subject to extensive federal,state and localenvironmental regulations covering discharges to the ground or waters,air emissions,toxic substances and the generation,handling,storage,transportation and disposal of waste and hazardous materials.Such regulati

292、ons effectively increase the costsand liabilities associated with rail operations.Environmental risks are also inherent in rail operations,which frequently involvetransporting chemicals and other hazardous materials.Many of BNSFs land holdings are or have been used for industrial or transportation-r

293、elated purposes or leased tocommercial or industrial companies whose activities may have resulted in discharges onto the property.Under federal statutes(in particular,the Comprehensive Environmental Response,Compensation and Liability Act)and state statutes,BNSF may beheld jointly and severally liab

294、le for cleanup and enforcement costs associated with a particular site without regard to fault orthe legality of the original conduct.BNSF may also be subject to claims by third parties for investigation,cleanup,restorationor other environmental costs under environmental statutes or common law with

295、respect to properties they own that have beenimpacted by BNSF operations.Consumption of diesel fuel by locomotives accounted for approximately 80%of BNSF Railways greenhouse gas(“GHG”)emissions in its baseline year of 2018.BNSF management has committed to a broad sustainability model,applyingscience

296、 based approaches,that will provide a 30%reduction in BNSF Railways GHG-emissions by 2030 from its baselineyear of 2018.BNSF Railway intends to continue improvements in fuel efficiency and increased utilization of renewable dieselfuel.Long-term solutions,such as battery-electric and hydrogen locomot

297、ives,are also being evaluated and field-tested.CompetitionThe business environment in which BNSF Railway operates is highly competitive.Depending on the specific market,deregulated motor carriers and other railroads,as well as river barges,ships and pipelines,may exert pressure on price andservice l

298、evels.The presence of advanced,high service truck lines with expedited delivery,subsidized infrastructure andminimal empty mileage continues to affect the market for non-bulk,time-sensitive freight.The potential expansion of longercombination vehicles could further encroach upon markets traditionall

299、y served by railroads.In order to remain competitive,BNSF Railway and other railroads seek to develop and implement operating efficiencies to improve productivity.As railroads streamline,rationalize and otherwise enhance their franchises,competition among rail carriers intensifies.BNSF Railways prim

300、ary rail competitor in the Western region of the U.S.is the Union Pacific Railroad Company.Other ClassI railroads and numerous regional railroads and motor carriers also operate in parts of the same territories served by BNSFRailway.Utilities and Energy BusinessesBerkshires energy businesses include

301、 a 92%ownership interest in Berkshire Hathaway Energy Company(“BHE”),based in Des Moines,Iowa.In 2017,Berkshire acquired a 38.6%interest in Pilot Travel Centers,LLC(“PTC”),which isheadquartered in Knoxville,Tennessee.Through January 31,2023,the investment in PTC was accounted for using the equitymet

302、hod.On January 31,2023,Berkshire acquired an additional 41.4%interest and attained control of PTC for financialreporting purposes.PTC became a subsidiary in Berkshires Consolidated Financial Statements beginning February 1,2023.On January 16,2024,Berkshire acquired an additional 20%interest in PTC a

303、nd as of that date PTC became an indirect wholly-owned Berkshire subsidiary.PTCs business activities are primarily associated with fuel distribution and energy products andservices.K-8Berkshire Hathaway EnergyBHE is a global energy company with subsidiaries and affiliates that generate,transmit,stor

304、e,distribute and supplyenergy.BHEs domestic regulated energy interests are comprised of four regulated U.S.utility companies(collectively,“U.S.utilities”)serving approximately 5.3 million retail customers and five U.S.interstate natural gas pipeline companies withapproximately 21,000 miles of operat

305、ed pipeline having a design capacity of approximately 21 billion cubic feet of natural gasper day.Other energy businesses include electric transmission and distribution operations in Great Britain and Canada,adiversified portfolio of mostly renewable independent power projects and investments,and a

306、liquefied natural gas export,import and storage facility.BHE also owns a residential real estate brokerage firm in the U.S.and a large network of residentialreal estate brokerage franchises in the U.S.BHE employs approximately 24,000 people in connection with its variousoperations.General MattersBHE

307、s U.S.utilities include PacifiCorp,MidAmerican Energy Company(“MEC”)and NV Energy,Inc.s(“NVEnergy”)two regulated utility subsidiaries,Nevada Power Company(“Nevada Power”)and Sierra Pacific Power Company(“Sierra Pacific”).PacifiCorp is a regulated electric utility company headquartered in Oregon,serv

308、ing electric customers inportions of Utah,Oregon,Wyoming,Washington,Idaho and California.The combined service territorys diverse regionaleconomy ranges from rural,agricultural and mining areas to urban,manufacturing and government service centers.No singlesegment of the economy dominates the combine

309、d service territory,which helps mitigate PacifiCorps exposure to economicfluctuations.In addition to retail sales,PacifiCorp buys and sells electricity on a wholesale basis.MEC is a regulated electric and natural gas utility company headquartered in Iowa,serving electric and natural gascustomers pri

310、marily in Iowa and also in portions of Illinois,South Dakota and Nebraska.MECs diverse retail customer baseoperates in the electronic data storage,agricultural,manufacturing and government service centers industries.In addition toretail sales and natural gas transportation,MEC sells electricity and

311、natural gas on a wholesale basis.Nevada Power serves retail electric customers in southern Nevada and Sierra Pacific serves retail electric and natural gascustomers in northern Nevada.The combined Nevada Power/Sierra Pacific service territory economy includes retail customersin the gaming,mining,rec

312、reation,warehousing,manufacturing and governmental service centers sectors.In addition to retailsales and natural gas transportation,these utilities buy and sell electricity and natural gas on a wholesale basis.Asverticallyintegratedutilities,BHEsU.S.utilitiescollectivelyownapproximately30,100netmeg

313、awattsofgenerationcapacity in operation and under construction.The U.S.utilities business is subject to seasonal variations principally related tothe use of electricity for air conditioning and natural gas for heating.Typically,regulated electric revenues are higher in thesummer months,while regulat

314、ed natural gas revenues are higher in the winter months.The natural gas pipelines consist of BHE GT&S,LLC(“BHE GT&S”),Northern Natural Gas Company(“NorthernNatural”)and Kern River Gas Transmission Company(“Kern River”).BHE GT&S was acquired on November 1,2020.BHE GT&S,based in Virginia,operates thre

315、e interstate natural gas pipeline systems that consist of approximately 5,400miles of natural gas transmission,gathering and storage pipelines and operates seventeen underground natural gas storage fieldsin the eastern region of the U.S.BHE GT&Ss large underground natural gas storage assets and pipe

316、line systems are part of aninterconnected gas transmission network that provides transportation services to utilities and numerous other customers.BHEGT&S is also an industry leader in liquefied natural gas solutions through its investments in and ownership of several liquefiednatural gas facilities

317、 located throughout the eastern region of the U.S.Northern Natural,based in Nebraska,operates the largest interstate natural gas pipeline system in the U.S.,as measuredby pipeline miles,reaching from west Texas to Michigans Upper Peninsula.Northern Naturals pipeline system consists ofapproximately 1

318、4,200 miles of natural gas pipelines.Northern Naturals extensive pipeline system,which is interconnectedwith many interstate and intrastate pipelines in the national grid system,has access to supplies from multiple major supplybasins and provides transportation services to utilities and numerous oth

319、er customers.Northern Natural also operates threeunderground natural gas storage facilities and two liquefied natural gas storage peaking units.Northern Naturals pipelinesystem experiences significant seasonal swings in demand and revenue,with the highest demand typically occurring during themonths

320、of November through March.Kern River,based in Utah,operates an interstate natural gas pipeline system that consists of approximately 1,400 milesand extends from supply areas in the Rocky Mountains to consuming markets in Utah,Nevada and California.Kern Rivertransports natural gas for electric and na

321、tural gas distribution utilities,major oil and natural gas companies or affiliates of suchcompanies,electric generating companies,energy marketing and trading companies,and financial institutions.K-9Other energy businesses include Northern Powergrid(Northeast)plc and Northern Powergrid(Yorkshire)plc

322、,whichown a substantial electricity distribution network that delivers electricity to end-users in northeast England in an area coveringapproximately 10,000 square miles.These distribution companies primarily charge supply companies regulated tariffs for theuse of their distribution systems and serv

323、e about 4.0 million electricity end-users.AltaLink L.P.(“AltaLink”)is a regulatedelectric transmission-only utility company headquartered in Calgary,Alberta.AltaLinks high voltage transmission lines andrelated facilities transmit electricity from generating facilities to major load centers,cities an

324、d large industrial plants throughoutits 87,000 square mile service territory.AltaLink serves approximately 85%of Albertas population.BHE and its subsidiaries,also own interests in independent power projects having approximately 5,900 net megawatts of generation capacity that are inservice in Califor

325、nia,Texas,Illinois,Nebraska,Montana,Australia,New York,Arizona,Canada,Minnesota,Kansas,Iowaand Hawaii.These independent power projects sell power generated primarily from wind,solar,geothermal and hydro sourcesunder long-term contracts.Additionally,BHE subsidiaries and other Berkshire subsidiaries h

326、ave invested approximately$7.3billion to-date in wind projects sponsored by third parties,commonly referred to as tax equity investments.Regulatory MattersTheU.S.utilitiesaresubjecttocomprehensiveregulationbyvariousfederal,stateandlocalagencies.TheFederalEnergyRegulatory Commission(“FERC”)is an inde

327、pendent agency with broad authority to implement provisions of the FederalPowerAct,theEnergyPolicyActof2005andotherfederalstatutes.TheFERCregulatesratesforwholesalesalesofelectricity;transmission of electricity,including pricing and regional planning for the expansion of transmission systems;electri

328、c systemreliability;utility holding companies;accounting and records retention;securities issuances;construction and operation ofhydroelectric facilities;and other matters.The FERC also has the enforcement authority to assess civil penalties of up to$1.5million per day per violation of rules,regulat

329、ions and orders issued under the Federal Power Act.MEC is also subject toregulation by the Nuclear Regulatory Commission pursuant to the Atomic Energy Act of 1954,as amended,with respect to its25%ownership of the Quad Cities Nuclear Station.With certain limited exceptions,the U.S.utilities have an e

330、xclusive right to serve retail customers within their serviceterritories and,in turn,have an obligation to provide service to those customers.In some jurisdictions,certain classes ofcustomers may choose to purchase all or a portion of their energy from alternative energy suppliers,and in some jurisd

331、ictionsretail customers can generate all or a portion of their own energy.Historically,state regulatory commissions have establishedretail electric and natural gas rates on a cost-of-service basis,which are designed to allow a utility the opportunity to recoverwhat each state regulatory commission d

332、eems to be the utilitys reasonable costs of providing services,including theopportunity to earn a fair and reasonable return on its investments based on its cost of debt and equity.The retail electric ratesof U.S.utilities are generally based on the cost of providing traditional bundled services,inc

333、luding generation,transmissionand distribution services;however,rates are available for transmission-only and distribution-only services.Northern Powergrid(Northeast)plc and Northern Powergrid(Yorkshire)plc each charge fees for the use of theirdistribution systems that are controlled by a formula prescribed by the Gas and Electricity Markets Authority,the Britishelectricity regulatory body.The cur