BERKSHIRE HATHAWAY INC – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Net earnings (loss) attributable to Berkshire Hathaway shareholders for each of
the past three years are disaggregated in the table that follows. Amounts are
after deducting income taxes and exclude earnings attributable to noncontrolling
interests (in millions).


                                                  2022           2021           2020
Insurance - underwriting                       $      (90 )   $      728     $      657
Insurance - investment income                       6,484          4,807          5,039
Railroad                                            5,946          5,990          5,161
Utilities and energy                                3,904          3,572          3,141
Manufacturing, service and retailing               12,512         11,120    

8,300

Investment and derivative contract gains
(losses)                                          (53,612 )       62,340    

31,591

Other*                                              2,037          1,238        (11,368 )
Net earnings (loss) attributable to Berkshire
Hathaway shareholders                          $  (22,819 )   $   89,795     $   42,521

* Includes goodwill and indefinite-lived intangible asset impairment charges of
$157 million in 2022, $259 million in 2021 and $11.0 billion in 2020, which
includes our share of charges recorded by Kraft Heinz.

Through our subsidiaries, we engage in numerous diverse business activities. We
manage our operating businesses on an unusually decentralized basis. There are
few centralized or integrated business functions. Our senior corporate
management team participates in and is ultimately responsible for significant
capital allocation decisions, investment activities and the selection of the
Chief Executive to head each of the operating businesses. The business segment
data (Note 25 to the accompanying Consolidated Financial Statements) should be
read in conjunction with this discussion.

The COVID-19 pandemic affected our operating businesses in varying ways and
degrees, particularly in 2020 and 2021. Significant disruptions of supply chains
and higher costs emerged in 2021 and persisted in 2022. Further, geopolitical
conflicts, including the Russia-Ukraine conflict, developed in 2022 and are
continuing in 2023. We cannot reliably predict future economic effects of these
events on our businesses. Nor can we reliably predict how these events will
alter the future consumption patterns of consumers and businesses we serve.

Insurance underwriting generated an after-tax loss of $90 million in 2022 and
after-tax earnings of $728 million in 2021 and $657 million in 2020. Insurance
underwriting results included after-tax losses from significant catastrophe
events of approximately $2.4 billion in 2022, $2.3 billion in 2021 and $750
million in 2020. Underwriting results in 2022 were also negatively impacted by
increases in private passenger automobile claims frequencies and severities at
GEICO, and favorably impacted by higher earnings from reinsurance underwriting
and foreign currency exchange rate gains arising from the remeasurement of
non-U.S. Dollar denominated liabilities of our U.S. insurance subsidiaries.

Underwriting results in 2021 were favorably impacted by reductions in incurred
losses for prior accident years under property and casualty insurance and
reinsurance contracts. Underwriting results in 2021 were negatively impacted by
higher private passenger auto claims frequencies and severities and by the
reduction in earned premium from the GEICO Giveback program, as well as from
high claims costs in the life reinsurance business. Underwriting results in 2020
included the effects of the pandemic, arising from premium reductions from the
GEICO Giveback program, significantly reduced claims frequencies for private
passenger automobile insurance and increased loss estimates for certain
commercial insurance coverages.

After-tax earnings from insurance investment income increased $1.7 billion in
2022 compared to 2021, attributable to increased dividend income and higher
interest rates. After-tax earnings from insurance investment income in 2021 and
2020 were negatively affected by low interest rates on our substantial holdings
of cash and U.S. Treasury Bills.

                                      K-33
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Results of Operations (Continued)

After-tax earnings of our railroad, BNSF were relatively unchanged in 2022
compared to 2021 and increased 16.1% in 2021 versus 2020. Results in 2022
reflected higher revenue per car/unit, substantially offset by lower overall
freight volumes and higher fuel and other operating costs. The earnings increase
in 2021 reflected overall higher freight volumes, higher average revenue per
car/unit and improved productivity, partly offset by higher average fuel prices
and volume related costs. Earnings in 2020 reflected relatively low railroad
operating revenues from reduced shipping volumes, attributable to the COVID-19
pandemic, partly offset by lower operating costs and the effects of productivity
improvements.

After-tax earnings of our utilities and energy business increased 9.3% in 2022
compared to 2021 and 13.7% in 2021 versus 2020. The increase in 2022 reflected
higher earnings from other energy businesses, including tax equity investments
and the Northern Powergrid businesses, as well as from the natural gas pipeline
businesses, partly offset by lower earnings from the real estate brokerage
business. The increase in 2021 reflected higher earnings from the U.S. utilities
and natural gas pipelines businesses.

Earnings from our manufacturing, service and retailing businesses increased
12.5% in 2022 compared to 2021 and 34.0% in 2021 versus 2020. Operating results
in 2022 were mixed among our various businesses. While customer demand for
products and services was relatively good in 2022, demand began to weaken in the
second half of the year at certain of our businesses. We experienced the
negative effects of higher materials, freight, labor and other input costs
through much of 2022. Many of our businesses generated significantly higher
earnings in 2021 compared to 2020, attributable to relatively strong customer
demand for products and higher selling prices, partially offset by higher
materials, freight and other input costs attributable to ongoing disruptions in
global supply chains.

Investment and derivative contract gains (losses) in each of the three years
presented predominantly derived from our investments in equity securities and
included significant net unrealized gains and losses from market price changes.
We believe that investment gains and losses on investments in equity securities,
whether realized from dispositions or unrealized from changes in market prices,
are generally meaningless in understanding our reported quarterly or annual
results or evaluating the economic performance of our operating businesses.
These gains and losses have caused and will continue to cause significant
volatility in our periodic earnings.

Other earnings included after-tax foreign exchange rate gains of approximately
$1.3 billion in 2022 and $1.0 billion in 2021 and after-tax losses of $764
million in 2020 related to the non-U.S. Dollar denominated debt issued by
Berkshire and its U.S.-based finance subsidiary, Berkshire Hathaway Finance
Corporation ("BHFC"). Other earnings also included after-tax goodwill and
indefinite-lived intangible asset impairment charges of $157 million in 2022,
$259 million in 2021 and $11.0 billion in 2020. Such amounts included our share
of impairment charges recorded by Kraft Heinz. Approximately $9.8 billion of the
charges in 2020 were attributable to impairments of goodwill and
indefinite-lived intangible assets recorded in connection with Berkshire's
acquisition of Precision Castparts in 2016.

Insurance-Underwriting

Our management views our insurance businesses as possessing two distinct
activities - underwriting and investing. Underwriting decisions are the
responsibility of the unit managers, while investing decisions are the
responsibility of Berkshire's Chairman and CEO, Warren E. Buffett and
Berkshire's corporate investment managers. Accordingly, we evaluate performance
of underwriting operations without any allocation of investment income or
investment gains and losses. We consider investment income as an integral
component of our aggregate insurance operating results. However, we consider
investment gains and losses, whether realized or unrealized, as non-operating.
We believe that such gains and losses are not meaningful in understanding the
periodic operating results of our insurance businesses.

The timing and magnitude of catastrophe losses can produce significant
volatility in our periodic underwriting results, particularly with respect to
our reinsurance businesses. We currently consider pre-tax incurred losses
exceeding $150 million from a current year catastrophic event to be significant.
Significant catastrophe events in 2022 included Hurricane Ian and floods in
Australia, while significant events in 2021 included Hurricane Ida, floods in
Europe and Winter Storm Uri.

Changes in estimates for unpaid losses and loss adjustment expenses, including
amounts established for occurrences in prior years, can also significantly
affect our periodic underwriting results. Unpaid loss estimates, including
estimates under retroactive reinsurance contracts, were approximately $143
billion as of December 31, 2022 and $125 billion as of December 31, 2021. Our
periodic underwriting results may also include significant foreign currency
transaction gains and losses arising from the changes in the valuation of
non-U.S. Dollar denominated liabilities of our U.S. based insurance subsidiaries
due to foreign currency exchange rate fluctuations.

                                      K-34
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Underwriting (Continued)

We provide primary insurance and reinsurance products covering property and
casualty risks, as well as life and health risks. Our insurance and reinsurance
businesses are GEICO, Berkshire Hathaway Primary Group ("BH Primary") and
Berkshire Hathaway Reinsurance Group ("BHRG"). On October 19, 2022, Berkshire
acquired Alleghany Corporation ("Alleghany"), which operates property and
casualty insurance and reinsurance businesses. These businesses were included in
the BH Primary and BHRG underwriting results beginning as of that date.

We strive to produce pre-tax underwriting earnings (premiums earned less losses
incurred and underwriting expenses) over the long term in all business
categories, except for BHRG's retroactive reinsurance and periodic payment
annuity contracts. Time-value-of-money is an important element in establishing
prices for these contracts. We normally receive all premiums at the contract
inception date, which are immediately available for investment. Ultimate claim
payments can extend for decades and are expected to exceed premiums, producing
underwriting losses over the claim settlement periods, primarily through
deferred charge amortization and discount accretion charges.

Underwriting results of our insurance businesses are summarized below (dollars
in millions).


                                            2022        2021         2020
Pre-tax underwriting earnings (loss):
GEICO                                     $ (1,880 )   $ 1,259     $  3,428
Berkshire Hathaway Primary Group               393         607          110

Berkshire Hathaway Reinsurance Group 1,389 (930 ) (2,700 )
Pre-tax underwriting earnings

                  (98 )       936          838

Income taxes and noncontrolling interests (8 ) 208 181
Net underwriting earnings (loss) $ (90 ) $ 728 $ 657
Effective income tax rate

                      8.5 %      22.2 %       21.5 %




GEICO

GEICO writes private passenger automobile insurance, offering coverages to
insureds in all 50 states and the District of Columbia. GEICO markets its
policies mainly by direct response methods where most customers apply for
coverage directly to the company via the Internet or over the telephone. A
summary of GEICO's underwriting results follows (dollars in millions).

                                             2022                      2021                      2020
                                      Amount         %          Amount         %          Amount         %
Premiums written                     $ 39,107                  $ 38,395                  $ 34,928
Premiums earned                      $ 38,984        100.0     $ 37,706        100.0     $ 35,093        100.0
Losses and loss adjustment expenses    36,297         93.1       30,999         82.2       26,018         74.1
Underwriting expenses                   4,567         11.7        5,448         14.5        5,647         16.1
Total losses and expenses              40,864        104.8       36,447         96.7       31,665         90.2
Pre-tax underwriting earnings (loss) $ (1,880 )                $  1,259                  $  3,428




GEICO's pre-tax underwriting results in each of the past three years were
significantly affected by changes in average claims frequencies and severities.
Beginning in the first quarter of 2020 and continuing through the first quarter
of 2021, average claims frequencies were significantly below historical levels
from the effects of less driving by policyholders during the COVID-19 pandemic.
These effects were partially offset by higher average claims severities and
lower premiums earned from the GEICO Giveback program, which provided a 15%
premium reduction to all new or renewing voluntary auto and motorcycle policies
between April 8, 2020 and October 7, 2020. Starting in the second quarter of
2021, average claims frequencies began to increase as driving by policyholders
increased. GEICO's pre-tax underwriting losses in 2022 reflected significant
increases in average claims severities, primarily due to significant cost
inflation in property and physical damage claims, which began to accelerate in
the second half of 2021 and have continued through 2022. Increases in used car
prices are producing increased claims severities on total losses and shortages
of car parts are contributing to elevated claims severities on partial losses.
In addition, injury claims severities continued to trend higher in 2022.

                                      K-35
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Underwriting (Continued)

GEICO (Continued)

2022 versus 2021

Premiums written increased $712 million (1.9%) in 2022 compared to 2021,
reflecting increases in average premiums per auto policy due to rate increases,
which were substantially offset by a decrease in policies-in-force. Voluntary
auto policies-in-force declined 8.9% in 2022 compared to 2021 while average
premiums per voluntary auto policy increased 11.3%. Premiums earned increased
$1.3 billion (3.4%) in 2022 compared to 2021, partially attributable to a
reduction in 2021 of approximately $475 million from the remaining impact of the
GEICO Giveback program.

Losses and loss adjustment expenses increased $5.3 billion (17.1%) in 2022
compared to 2021. GEICO's ratio of losses and loss adjustment expenses to
premiums earned (the "loss ratio") was 93.1% in 2022, an increase of 10.9
percentage points over 2021. The increase was primarily attributable to higher
claims frequencies and severities, as well as lower reductions of ultimate loss
estimates for prior years' events.

Claims frequencies in 2022 were higher for all coverages, including property
damage (one to two percent range), bodily injury and collision (four to five
percent range) and personal injury (three to four percent range). Average claims
severities in 2022 were higher for all coverages, including property damage
(twenty-one to twenty-two percent range), collision (fourteen to sixteen percent
range) and bodily injury (nine to eleven percent range). Losses and loss
adjustment expenses reflected reductions in the ultimate loss estimates for
prior years' loss events of $653 million in 2022 compared to $1.8 billion in
2021. The reductions in 2022 reflected decreases in all major coverages except
collision and property damage coverages, while the reductions in 2021 were
across all major coverages. Losses and loss adjustment expenses were
approximately $400 million from Hurricane Ian in 2022 and $375 million from
Hurricane Ida in 2021.

Underwriting expenses decreased $881 million (16.2%) in 2022 compared to 2021,
primarily due to significant reductions in advertising costs and lower
employee-related costs. GEICO's expense ratio (underwriting expense to premiums
earned) was 11.7% in 2022, a decrease of 2.8 percentage points compared to 2021,
attributable to both the decrease in expenses as well as the increase in earned
premiums.

GEICO has successfully obtained premium rate increase approvals from certain
states in response to the significant claims costs increases it has experienced
in recent years. As a result, we currently expect GEICO to generate an
underwriting profit in 2023.

2021 versus 2020

Premiums written in 2021 increased $3.5 billion (9.9%) compared to 2020, which
included a reduction of approximately $2.9 billion attributable to the GEICO
Giveback program. Premiums earned in 2021 increased $2.6 billion (7.4%) compared
to 2020. The GEICO Giveback Program reduced earned premiums by approximately
$2.5 billion in 2020 with the remainder of the impact included in 2021.
Voluntary auto policies-in-force in 2021 were slightly higher compared to 2020.

Losses and loss adjustment expenses increased $5.0 billion (19.1%) compared to
2020. GEICO's loss ratio increased 8.1 percentage points compared to 2020. The
increase in the loss ratio reflected an increase in average claims frequencies
and severities and higher losses from significant catastrophe events, partially
offset by increased reductions of ultimate estimated losses for claims occurring
in prior years.

Claims frequencies in 2021 were higher for all coverages, including property
damage and bodily injury (thirteen to fourteen percent range), personal injury
(sixteen to seventeen percent range) and collision (twenty-one to twenty-two
percent range). Average claims severities in 2021 were also higher for property
damage coverage (two to three percent range), collision coverage (fifteen to
sixteen percent range) and bodily injury coverage (eight to ten percent range).
Ultimate claim loss estimates for claims occurring in prior years were reduced
approximately $1.8 billion in 2021 and $253 million in 2020. Losses incurred
attributable to Hurricane Ida in 2021 were $375 million, while losses in 2020
were $81 million from significant catastrophe events.

Underwriting expenses decreased $199 million (3.5%) compared to 2020, reflecting
lower advertising expenses. GEICO's expense ratio decreased 1.6 percentage
points in 2021, reflecting lower expenses and higher premiums earned.

                                      K-36
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Underwriting (Continued)

Berkshire Hathaway Primary Group

The Berkshire Hathaway Primary Group consists of several independently managed
businesses that provide a variety of primarily commercial insurance solutions,
including healthcare professional liability, workers' compensation, automobile,
general liability, property and specialty coverages for small, medium and large
clients. BH Primary's larger insurers include Berkshire Hathaway Specialty
Insurance ("BH Specialty"), Berkshire Hathaway Homestate Companies ("BHHC"),
MedPro Group, Berkshire Hathaway GUARD Insurance Companies ("GUARD"), National
Indemnity Company ("NICO Primary") and U.S. Liability Insurance Company
("USLI"). This group also includes Alleghany's RSUI Group Inc. and CapSpecialty,
Inc. ("Alleghany Insurance") beginning October 19, 2022. A summary of BH Primary
underwriting results follows (dollars in millions).


                                            2022                      2021                      2020
                                     Amount         %          Amount         %          Amount         %
Premiums written                    $ 14,619                  $ 12,595                  $ 10,212
Premiums earned                     $ 13,746        100.0     $ 11,575        100.0     $  9,615        100.0
Losses and loss adjustment expenses    9,889         71.9        8,107         70.0        7,129         74.1
Underwriting expenses                  3,464         25.2        2,861         24.8        2,376         24.7
Total losses and expenses             13,353         97.1       10,968         94.8        9,505         98.8

Pre-tax underwriting earnings       $    393                  $    607                  $    110




Premiums written increased $2.0 billion (16.1%) in 2022 compared to 2021,
reflecting increases at BH Specialty (16%), USLI (16%), BHHC (15%) and MedPro
Group (10%), and from the inclusion of Alleghany Insurance ($435 million).
Premiums written increased $2.4 billion (23.3%) in 2021 compared to 2020,
primarily due to increases from BH Specialty (36%), MedPro Group (16%), NICO
Primary (25%), GUARD (7%) and USLI (20%). The increases in each year were across
a variety of coverages and in several markets.

BH Primary's loss ratio increased 1.9 percentage points compared to 2021, which
decreased 4.1 percentage points versus 2020. Incurred losses from significant
catastrophe events were $641 million in 2022 ($554 from Hurricane Ian), $433
million in 2021 ($239 million from Hurricane Ida) and $207 million in 2020 ($160
million from Hurricanes Laura and Sally). Incurred losses in 2020 also included
increased liabilities attributable to the pandemic of $167 million. Incurred
losses and loss adjustment expenses reflected net reductions in estimated
ultimate liabilities for prior years' loss events of $428 million in 2022, $631
million in 2021 and $265 million in 2020. BH Primary insurers continue to write
significant levels of workers' compensation, commercial and professional
liability insurance and the related claim costs may be subject to high severity
and long claim-tails. Claims liabilities could be greater than anticipated due
to a variety of factors.

Underwriting expenses increased $603 million (21.1%) in 2022 compared to 2021,
while underwriting expenses increased $485 million (20.4%) in 2021 compared to
2020. These increases reflected the increases in premiums earned and changes in
business mix.

Berkshire Hathaway Reinsurance Group

The Berkshire Hathaway Reinsurance Group ("BHRG") offers excess-of-loss and
quota-share reinsurance coverages on property and casualty risks to insurers and
reinsurers worldwide through several subsidiaries, led by National Indemnity
Company ("NICO"), General Reinsurance Corporation, General Reinsurance AG and,
beginning October 19, 2022, Alleghany's Transatlantic Reinsurance Company and
affiliates ("TransRe Group"). We also write life and health reinsurance
coverages through General Re Life Corporation, General Reinsurance AG and
Berkshire Hathaway Life Insurance Company of Nebraska ("BHLN"). We assume
property and casualty risks under retroactive reinsurance contracts written
through NICO and we write periodic payment annuity contracts through BHLN.

                                      K-37
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

A summary of BHRG's premiums and pre-tax underwriting earnings follows (dollars
in millions).


                                                             Pre-tax underwriting
                                Premiums earned                 earnings (loss)
                           2022       2021       2020      2022      2021      2020
Property/casualty        $ 16,040   $ 13,740   $ 12,214   $ 2,180   $  667   $   (799 )
Life/health                 5,279      5,648      5,861       292     (421 )      (18 )
Retroactive reinsurance         -        136         38      (668 )   (782 )   (1,248 )
Periodic payment annuity      582        658        566      (532 )   (508 )     (617 )
Variable annuity               14         15         14       117      114        (18 )
                         $ 21,915   $ 20,197   $ 18,693   $ 1,389   $ (930 ) $ (2,700 )


Property/casualty

A summary of property/casualty reinsurance underwriting results follows (dollars
in millions).


                                             2022                     2021                     2020
                                      Amount         %         Amount         %         Amount         %
Premiums written                     $ 16,962                 $ 14,149                 $ 13,295
Premiums earned                      $ 16,040       100.0     $ 13,740       100.0     $ 12,214        100.0
Losses and loss adjustment expenses    10,605        66.1        9,878        71.9        9,898         81.0
Underwriting expenses                   3,255        20.3        3,195        23.2        3,115         25.5
Total losses and expenses              13,860        86.4       13,073        95.1       13,013        106.5
Pre-tax underwriting earnings (loss) $  2,180                 $    667                 $   (799 )




Premiums written increased $2.8 billion (19.9%) in 2022 compared to 2021,
primarily due to net increases in new property business and higher rates, and
the inclusion of the TransRe Group ($986 million), partially offset by
unfavorable foreign currency translation effects. Premiums written increased
$854 million (6.4%) in 2021 compared to 2020, primarily attributable to net new
business, increased participations and improved prices on renewals and favorable
currency translation effects. The increase was primarily attributable to
property coverages.

Losses and loss adjustment expenses increased $727 million (7.4%) in 2022
compared to 2021 and were relatively unchanged in 2021 compared to 2020. Losses
incurred from significant catastrophe events were $2.0 billion in 2022 ($1.6
billion from Hurricane Ian), $2.1 billion ($933 million from Hurricane Ida) in
2021 and $667 million in 2020 ($357 million in the aggregate from Hurricanes
Laura and Sally). Losses incurred in 2020 also included $964 million
attributable to the COVID-19 pandemic. Losses and loss adjustment expenses
included reductions in estimated ultimate liabilities for prior years' events of
$1.6 billion in 2022 and $718 million in 2021 and increases of $162 million in
2020.

Underwriting expenses as percentages of premiums earned decreased 2.9 percentage
points in 2022 compared to 2021, primarily attributable to foreign currency
exchange rate effects and changes in business mix. Underwriting expenses
included foreign currency exchange gains of $371 million in 2022 compared to
$173 million in 2021, related to the remeasurement of certain non-U.S. Dollar
denominated liabilities of our U.S. insurance subsidiaries. The expense ratio in
2021 decreased 2.3 percentage points compared to 2020, primarily attributable to
changes in business mix and foreign currency effects.

                                      K-38
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Life/health

A summary of our life/health reinsurance underwriting results follows (dollars
in millions).


                                       2022                     2021                     2020
                               Amount         %         Amount         %         Amount         %
Premiums written               $ 5,185                  $ 5,621                  $ 5,848
Premiums earned                $ 5,279        100.0     $ 5,648        100.0     $ 5,861        100.0
Life and health insurance
benefits                         4,004         75.8       4,933         87.3       4,883         83.3
Underwriting expenses              983         18.7       1,136         20.2         996         17.0
Total benefits and expenses      4,987         94.5       6,069        107.5       5,879        100.3
Pre-tax underwriting earnings
(loss)                         $   292                  $  (421 )           

$ (18 )

Life/health premiums written decreased $436 million (7.8%) in 2022 compared to
2021 which decreased 3.9% from 2020. The decrease in 2022 was primarily due to
unfavorable foreign currency translation effects ($289 million) and decreased
volume in the Asia Pacific region. Premiums written in 2020 included $710
million from a contract that covered U.S. health risks that did not renew in
2021. Otherwise, premiums written in 2021 increased 9.4% versus 2020, primarily
due to volume growth in the Asia Pacific region and favorable foreign currency
translation effects. Life and health benefits declined $929 million (18.8%) in
2022 compared to 2021, primarily due to relatively high pandemic-related
mortality claims in the U.S., South Africa, India and Latin America in 2021.
Underwriting earnings in 2020 were negatively affected by increased life
benefits from COVID-19-related claims and from increased liabilities from
changes in assumptions used in estimating disability benefit liabilities in
Australia, which were mostly offset by lower other life claims and reduced
losses from U.S. long-term care business in run-off.

Retroactive reinsurance

Retroactive reinsurance underwriting results primarily derive from the runoff of
contracts written several years ago. Pre-tax underwriting losses in each year
derived from the amortization of deferred charges and changes in the estimated
timing and amounts of future claim payments. Underwriting results also include
foreign currency exchange gains and losses from the effects of changes in
foreign currency exchange rates on non-U.S. Dollar denominated liabilities of
our U.S. subsidiaries. Pre-tax foreign currency gains were $168 million in 2022
and $58 million in 2021 versus pre-tax losses of $171 million in 2020.

Pre-tax underwriting losses before foreign currency gains/losses were $836
million in 2022, $840 million in 2021 and $1.1 billion in 2020, primarily from
deferred charge amortization. Underwriting results also reflected the effects of
changes in the estimates of the timing of future payments and amounts of
ultimate claim liabilities. Estimated ultimate claim liabilities for prior
years' contracts were increased $86 million in 2022 and reduced $974 million in
2021, which net of related changes in unamortized deferred charges, produced
relatively insignificant effects on underwriting earnings.

Gross unpaid losses assumed under retroactive reinsurance contracts were $35.4
billion at December 31, 2022, a decline of $2.4 billion since December 31, 2021,
primarily attributable to paid claims. Unamortized deferred charges related to
retroactive reinsurance contracts were $9.9 billion at December 31, 2022, a
decline of $769 million since December 31, 2021. Deferred charge amortization
will be included in underwriting earnings over the expected remaining claims
settlement periods.

Periodic payment annuity

Periodic payment annuity premiums earned decreased $76 million (11.6%) in 2022
compared to 2021, which increased $92 million (16.3%) compared to 2020. Periodic
payment annuity business is both price and demand sensitive and the supply of
available business is affected by the timing of underlying legal claim
settlements. Our volumes written may change rapidly due to changes in prices,
which are affected by prevailing interest rates, the perceived risks and
durations associated with the expected annuity payments, as well as the level of
competition.

                                      K-39
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Our periodic payment annuity contracts normally produce pre-tax underwriting
losses from the recurring accretion of time-value discounted annuity
liabilities, which includes discount accruals on liabilities of contracts
without life contingencies. Underwriting results also include gains or losses
from foreign currency exchange rate changes on non-U.S. Dollar denominated
liabilities of our U.S. subsidiaries. Pre-tax underwriting results included
foreign currency gains of $164 million in 2022 and $18 million in 2021, and
pre-tax losses of $67 million in 2020.

Pre-tax underwriting losses before foreign currency exchange effects were $696
million in 2022, $526 million in 2021 and $550 million in 2020. Pre-tax losses
in 2022 included approximately $130 million attributable to the termination of a
reinsurance contract, in which the settlement paid exceeded the carrying value
of the liabilities. Pre-tax losses in 2021 were partially offset by the effects
of higher mortality and by higher interest rates applicable to settlements under
certain contracts. Discounted liabilities were $15.4 billion at December 31,
2022, which included $3.9 billion for contracts without life contingencies, and
had a weighted average discount rate of approximately 3.9%. Upon the adoption of
ASU 2018-12 in 2023, the discount rates on contracts with life-contingent
liabilities will be adjusted quarterly based upon prevailing interest rates
which could have a significant effect on our recorded liabilities. The periodic
effect from discount rate changes will be reflected in other comprehensive
income.

Variable annuity

Variable annuity guarantee reinsurance contracts produced pre-tax gains of $117
million in 2022 and $114 million in 2021, and pre-tax losses of $18 million in
2020. The results from these contracts are affected by changes in securities
markets, interest rates and foreign currency exchange rates, which can be
volatile, and from the periodic amortization of expected profit margins.
Underwriting earnings in 2022 and 2021 were primarily attributable to the net
effects of interest rate increases and changes in securities markets.

Insurance-Investment Income

A summary of net investment income attributable to our insurance operations
follows (dollars in millions).

Percentage change

                                   2022          2021          2020       2022 vs 2021     2021 vs 2020
Dividend income                  $   6,039     $   5,060     $   4,890             19.3 %            3.5 %
Interest and other investment
income                               1,685           589         1,059            186.1            (44.4 )

Pre-tax net investment income 7,724 5,649 5,949

        36.7             (5.0 )
Income taxes and noncontrolling
interests                            1,240           842           910
Net investment income            $   6,484     $   4,807     $   5,039
Effective income tax rate             16.0 %        14.9 %        15.3 %




Dividend income increased $979 million (19.3%) in 2022 compared to 2021 and
increased $170 million (3.5%) in 2021 versus 2020. The increase in 2022
reflected an overall increase in equity security investments during 2022.
Dividend income also varies from period to period due to changes in the
investment portfolio and the frequency and timing of dividends from certain
investees. Dividend income included $46 million in 2022, $121 million in 2021
and $26 million in 2020 from investments in preferred stock of Berkshire
Hathaway Energy. Such amounts are deducted from earnings of the utilities and
energy segment.

Interest and other investment income increased $1.1 billion (186.1%) in 2022
compared to 2021, primarily due to significant increases in interest income due
to interest rate increases during the year, as well as the inclusion of interest
income on assets of Alleghany's insurance subsidiaries. Interest and other
investment income in 2021 declined 44.4% compared to 2020, primarily due to
lower income from short-term investments and fixed maturity securities. We
continue to hold substantial balances of cash, cash equivalents and short-term
U.S. Treasury Bills. We continue to believe that maintaining ample liquidity is
paramount and we insist on safety over yield with respect to short-term
investments.

                                      K-40
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Insurance-Investment Income (Continued)

Invested assets of our insurance businesses derive from shareholder capital and
from net liabilities under insurance and reinsurance contracts or "float." The
major components of float are unpaid losses and loss adjustment expenses,
including liabilities under retroactive reinsurance contracts, life, annuity and
health insurance benefit liabilities, unearned premiums and other liabilities
due to policyholders, reduced by insurance premiums and reinsurance receivables,
deferred charges assumed under retroactive reinsurance contracts and deferred
policy acquisition costs. Float approximated $164 billion at December 31, 2022,
$147 billion at December 31, 2021 and $138 billion at December 31, 2020. Float
at December 31, 2022 included approximately $14 billion attributable to
Alleghany's insurance and reinsurance businesses. Our combined insurance
operations generated pre-tax underwriting losses of $98 million in 2022, and the
cost of float was nominal. In 2021 and 2020, our combined insurance operations
generated pre-tax underwriting gains, and consequently, the cost of float in
each year was negative.

A summary of cash and investments held in our insurance businesses as of
December 31, 2022 and 2021 follows (in millions).

                                                    December 31,
                                                 2022          2021
Cash, cash equivalents and U.S. Treasury Bills $  86,816     $  90,688
Equity securities                                298,934       334,907
Fixed maturity securities                         24,998        16,386
Other                                              3,417         4,296
                                               $ 414,165     $ 446,277




Fixed maturity investments as of December 31, 2022 were as follows (in
millions).


                                                Amortized        Unrealized        Carrying
                                                  cost          gains/losses         value
U.S. Treasury, U.S. government corporations
and agencies                                   $    10,029     $         (237 )   $     9,792
Foreign governments                                 10,375               (127 )        10,248
Corporate bonds                                      1,938                251           2,189
Other                                                2,701                 68           2,769
                                               $    25,043     $          (45 )   $    24,998




U.S. government obligations are rated AA+ or Aaa by the major rating agencies.
Approximately 93% of all foreign government obligations were rated AA or higher
by at least one of the major rating agencies. Foreign government securities
include obligations issued or unconditionally guaranteed by national or
provincial government entities.

                                      K-41
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Railroad

Burlington Northern Santa Fe, LLC ("BNSF") operates one of the largest railroad
systems in North America, with over 32,500 route miles of track in 28 states.
BNSF also operates in three Canadian provinces. BNSF classifies its major
business groups by type of product shipped including consumer products,
industrial products, agricultural products and coal. A summary of BNSF's
earnings follows (dollars in millions).


                                                                            

Percentage change

                                         2022        2021        2020       2022 vs 2021      2021 vs 2020
Railroad operating revenues            $  25,203   $  22,513   $  20,181             11.9 %            11.6 %
Railroad operating expenses:
Compensation and benefits                  5,253       4,696       4,542             11.9               3.4
Fuel                                       4,581       2,766       1,789             65.6              54.6
Purchased services                         2,102       2,033       1,954              3.4               4.0
Depreciation and amortization              2,517       2,444       2,460              3.0              (0.7 )

Equipment rents, materials and other 2,147 1,763 1,684

          21.8               4.7
Total                                     16,600      13,702      12,429             21.2              10.2
Railroad operating earnings                8,603       8,811       7,752             (2.4 )            13.7
Other revenues (expenses):
Other revenues                               685         769         688            (10.9 )            11.8
Other expenses, net                         (555 )      (687 )      (611 )          (19.2 )            12.4
Interest expense                          (1,025 )    (1,032 )    (1,037 )           (0.7 )            (0.5 )
Pre-tax earnings                           7,708       7,861       6,792             (1.9 )            15.7
Income taxes                               1,762       1,871       1,631             (5.8 )            14.7
Net earnings                           $   5,946   $   5,990   $   5,161             (0.7 )            16.1

Effective income tax rate                   22.9 %      23.8 %      24.0 %




The following table summarizes BNSF's railroad freight volumes by business group
(cars/units in thousands).

                                 Cars/Units                    Percentage change
                         2022       2021      2020      2022 vs 2021       2021 vs 2020
Consumer products         5,202      5,673     5,266             (8.3 )%             7.7 %
Industrial products       1,618      1,709     1,622             (5.3 )              5.4
Agricultural products     1,200      1,224     1,189             (2.0 )              2.9
Coal                      1,529      1,529     1,404                -                8.9
                          9,549     10,135     9,481             (5.8 )              6.9




2022 versus 2021

Railroad operating revenues increased 11.9% in 2022 compared to 2021, reflecting
an 18.9% increase in average revenue per car/unit, including the impact from
higher fuel surcharge revenue driven by higher fuel prices, partially offset by
lower volumes of 5.8%. BNSF's pre-tax earnings decreased 1.9% in 2022 from 2021.
Pre-tax earnings in 2022 were impacted by lower volumes and higher fuel and
other operating costs, offset by higher yield and fuel surcharge revenue.

Operating revenues from consumer products increased 11.8% in 2022 to $9.2
billion compared to 2021, reflecting higher average revenue per car/unit,
partially offset by a volume decrease of 8.3%. The volume decrease was primarily
due to lower intermodal shipments, resulting from supply chain disruptions and
lower west coast imports during the second half of the year.

Operating revenues from industrial products were $5.6 billion in 2022, an
increase of 5.6% from 2021, reflecting higher average revenue per car/unit,
partially offset by a volume decrease of 5.3%. The volume decrease was primarily
due to a decrease in petroleum products related to lower demand for shipments of
crude by rail and lower building products, steel and taconite shipments,
partially offset by increased mineral shipments.

Operating revenues from agricultural products increased 12.6% to $5.7 billion in
2022 compared to 2021. The revenue increase reflected higher revenue per
car/unit partially offset by lower volumes of 2.0%. The decrease in volumes was
primarily due to lower grain exports and fertilizer shipments, partially offset
by higher volumes of domestic grains, renewable diesel and feedstocks.

Operating revenues from coal increased 21.7% to $3.9 billion in 2022 compared to
2021, attributable to higher average revenue per car/unit. Coal volumes were
unchanged compared to 2021.

                                      K-42
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Railroad (Continued)

Railroad operating expenses were $16.6 billion in 2022, an increase of $2.9
billion (21.2%) compared to 2021. Our ratio of railroad operating expenses to
railroad operating revenues increased 5.0 percentage points to 65.9% in 2022
versus 2021. The operating expense increase was primarily attributable to
significant increases in the cost of fuel, as well as higher compensation and
benefits expense. Compensation and benefits expenses increased $557 million
(11.9%) in 2022 compared to 2021, primarily due to wage inflation, including the
impact from the ratified union labor agreements, higher health and welfare costs
and lower productivity. Fuel expenses increased $1.8 billion (65.6%) in 2022
compared to 2021, primarily due to higher average fuel prices, partially offset
by lower volumes. Equipment rents, materials and other expenses increased $384
million (21.8%) in 2022 compared to 2021, due to general inflation, lower gains
from land and easement sales and higher casualty and litigation costs.

Approximately 31,000 of BNSF's employees are members of a labor union. The U.S.
Class I railroads and rail labor unions were engaged in multi-party national
negotiations from January 2020 through June 2022. Federal mediation was included
in that timeframe, followed by a release from the National Mediation Board and
subsequent appointment of a Presidential Emergency Board (PEB), in accordance
with the Railway Labor Act. The PEB issued its report and recommendations to
settle the bargaining disputes on August 16, 2022. Tentative agreements based on
these recommendations were reached with all labor unions in September 2022.
Thereafter, a majority of the unions ratified those agreements with the
remainder being imposed by Congress in December 2022. This concluded the
national round which is not subject to re-opening until late 2024.

2021 versus 2020

Railroad operating revenues increased 11.6% in 2021 compared to 2020, reflecting
higher volumes of 6.9%, as well as a 3.5% increase in average revenue per
car/unit resulting from business mix changes and higher fuel surcharge revenue
attributable to higher fuel prices. Pre-tax earnings were $7.9 billion in 2021,
an increase of 15.7% from 2020. The COVID-19 pandemic caused a significant
economic slowdown that adversely affected our volumes in 2020. Revenue changes
in 2021 were driven by continued improvements from the 2020 effects of the
COVID-19 pandemic, partially offset by disruptions in the global supply chain.

Operating revenues from consumer products increased 13.7% in 2021 to $8.3
billion compared to 2020, reflecting increased volumes of 7.7% and higher
average revenue per car/unit. The volume increase was primarily due to growth in
intermodal in both international and domestic shipments driven by increased
retail sales, inventory replenishments by retailers and increased e-commerce
activity. Operating revenues from industrial products were $5.3 billion in 2021,
an increase of 5.0% from 2020. Volumes increased 5.4% while average revenue per
car/unit was nearly unchanged from 2020. The volume increase was primarily due
to improvement in the U.S. industrial economy, driving higher volumes in the
construction and building sectors, partially offset by lower petroleum volumes
due to unfavorable market conditions in the energy sector.

Operating revenues from agricultural products increased 5.8% to $5.1 billion in
2021 compared to 2020. The revenue change reflected a volume increase of 2.9%
due to higher domestic grain shipments and higher volumes of ethanol and related
commodities, as well as higher revenue per car/unit. Operating revenues from
coal increased 21.5% to $3.2 billion in 2021 compared to 2020 attributable to
higher volumes of 8.9% in 2021, as well as higher average revenue per car/unit.
The volume increase in 2021 was attributable to increased electricity
generation, higher natural gas prices and improved export demand.

Railroad operating expenses were $13.7 billion in 2021, an increase of $1.3
billion (10.2%) compared to 2020. The ratio of railroad operating expenses to
railroad operating revenues decreased 0.7 percentage points to 60.9% in 2021
versus 2020. The increase in railroad operating expenses reflected higher
volumes and higher average fuel prices, partially offset by the favorable impact
of productivity improvements. Compensation and benefits expenses increased $154
million (3.4%) in 2021 compared to 2020, primarily due to increased volumes,
wage inflation and health and welfare costs, partially offset by productivity
improvements. Fuel expenses increased $977 million (54.6%) compared to 2020,
primarily due to higher average fuel prices. Purchased service expenses
increased $79 million (4.0%) compared to 2020, primarily due to higher volumes
and the effects of insurance recoveries in 2020 related to 2019 flooding,
partially offset by improved productivity. Equipment rents, materials and other
expenses increased $79 million (4.7%) compared to 2020, due to higher
volume-related costs.

                                      K-43
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Utilities and Energy

We currently own 92% of Berkshire Hathaway Energy Company ("BHE"), which
operates a global energy business. BHE's domestic regulated utility interests
include PacifiCorp, MidAmerican Energy Company ("MEC") and NV Energy. BHE's
natural gas pipelines consist of five domestic regulated interstate natural gas
pipeline systems and a 25% interest in a liquefied natural gas export, import
and storage facility ("LNG interest"), which BHE operates and consolidates for
financial reporting purposes. Three of the natural gas pipeline systems and the
LNG interest were acquired on November 1, 2020 from Dominion Energy, Inc. ("BHE
GT&S"). Other energy businesses include two regulated electricity distribution
businesses operated by BHE subsidiaries (referred to as Northern Powergrid) in
Great Britain, a regulated electricity transmission-only business in Alberta,
Canada ("AltaLink, L.P.") and a diversified portfolio of mostly renewable
independent power projects and investments. BHE also operates a residential real
estate brokerage business and a large network of real estate brokerage
franchises in the United States.

The rates our regulated businesses charge customers for energy and services are
based in large part on the costs of business operations, including income taxes
and a return on capital, and are subject to regulatory approval. To the extent
such costs are not allowed in the approved rates, operating results will be
adversely affected. A summary of BHE's net earnings follows (dollars in
millions).



                                                    2022            2021            2020
Revenues:
Energy operating revenue                         $   21,069      $   18,935      $   15,556
Real estate operating revenue                         5,268           6,215           5,396
Other income (loss)                                      56             (54 )           148
Total revenue                                        26,393          25,096          21,100
Costs and expense:
Energy cost of sales                                  6,757           5,504           4,187
Energy operating expense                              9,233           8,535           7,539
Real estate operating costs and expense               5,117           5,710           4,885
Interest expense                                      2,140           2,054           1,941
Total costs and expense                              23,247          21,803          18,552
Pre-tax earnings                                      3,146           3,293           2,548
Income tax expense (benefit)*                        (1,629 )        (1,153 )          (996 )
Net earnings after income taxes                       4,775           4,446 

3,544

Noncontrolling interests of BHE subsidiaries            423             399              71
Net earnings attributable to BHE                      4,352           4,047 

3,473

Noncontrolling interests and preferred stock
dividends                                               448             475             332
Net earnings attributable to Berkshire Hathaway
shareholders                                     $    3,904      $    3,572      $    3,141
Effective income tax rate                             (51.8 )%        (35.0 )%        (39.1 )%

* Includes significant production tax credits from wind-powered electricity
generation.

                                      K-44
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Utilities and Energy (Continued)

The discussion of BHE's operating results that follows is based on after-tax
earnings, reflecting how the energy businesses are managed and evaluated. A
summary of net earnings attributable to BHE follows (dollars in millions).

                                                                                Percentage change
                                        2022        2021        2020      2022 vs 2021      2021 vs 2020
U.S. utilities                         $ 2,295     $ 2,211     $ 1,969              3.8 %            12.3 %
Natural gas pipelines                    1,040         807         528             28.9              52.8
Other energy businesses                  1,338         979         953             36.7               2.7
Real estate brokerage                      100         387         375            (74.2 )             3.2
Corporate interest and other              (421 )      (337 )      (352 )           24.9              (4.3 )
                                       $ 4,352     $ 4,047     $ 3,473              7.5              16.5


2022 versus 2021

Our U.S. utilities operate in several states, including Utah, Oregon and Wyoming
(PacifiCorp), Iowa and Illinois (MEC) and Nevada (NV Energy). After-tax earnings
increased $84 million in 2022 compared to 2021. The earnings increase reflected
higher electric utility margin (operating revenue less cost of sales) and a $157
million increase in production tax credits recognized on new wind-powered
generating facilities placed in-service at PacifiCorp and MEC, partially offset
by higher operating expenses and state income taxes. Operating expenses
increased due to higher costs associated with certain regulatory mechanisms at
MEC and NV Energy, increases in general and plant maintenance costs, incremental
depreciation expense from additional assets placed in-service and higher
accruals at PacifiCorp associated with the 2020 wildfires.

The U.S. utilities' electric utility margin was $7.7 billion in 2022, an
increase of $586 million (8.3%) compared to 2021. The increase reflected higher
operating revenue from favorable retail and wholesale pricing and increases in
retail customer volumes, partially offset by increases in thermal generation and
purchased power costs. Retail customer volumes increased 2.4% (1.6% at
PacifiCorp, 4.3% at MEC and 2.2% at NV Energy) in 2022 compared to 2021,
primarily due to higher customer usage, an increase in the average number of
customers and the favorable impact of weather.

Natural gas pipelines' after-tax earnings increased $233 million in 2022
compared to 2021. Substantially all of the increase was derived from BHE GT&S,
primarily attributable to higher regulated storage and service revenues from a
general rate case settlement and higher revenues and margins from non-regulated
activities, as well as income tax adjustments.

Other energy businesses' after-tax earnings increased $359 million in 2022
compared to 2021. The increase was primarily due to increased wind tax equity
investment earnings of $200 million and the impact in 2021 on income tax expense
of $109 million at Northern Powergrid related to the enactment in June 2021 of
an increase in the United Kingdom corporate income tax rate from 19% to 25%,
effective April 1, 2023. The earnings increase also reflected higher operating
revenue from owned renewable energy projects and earnings from new gas
exploration and solar projects, partially offset by lower earnings from natural
gas generating facilities and unfavorable foreign currency translation effects
in 2022. The increase in wind tax equity investment earnings reflected the
impact of losses in 2021 on pre-existing tax equity investments due to the
February 2021 winter storms as well as increased income tax benefits from
projects reaching commercial operation over the past twelve months.

Real estate brokerage after-tax earnings decreased $287 million in 2022 compared
to 2021. The decrease reflected lower brokerage services revenues and margins,
primarily due to an 11% reduction in closed brokerage transaction volumes, as
well as lower mortgage services revenues and margins from a 40% decrease in
closed transaction volumes, attributable to lower homeowner refinancing activity
resulting from rising interest rates.

Corporate interest and other after-tax earnings decreased $84 million in 2022
compared to 2021. The decrease was primarily due to lower state income tax
benefits and higher interest expense from corporate debt issued in 2022.

                                      K-45
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Utilities and Energy (Continued)

2021 versus 2020

The U.S. utilities' after-tax earnings increased $242 million in 2021 compared
to 2020. The increase reflected higher electric utility margin and an increase
of $139 million in production tax credits recognized at PacifiCorp and MEC,
partially offset by higher operating expenses. Operating expenses increased due
to higher costs associated with certain regulatory mechanisms at MEC, increased
depreciation expense from additional assets placed in-service and by the impacts
of a depreciation study effective January 1, 2021 at PacifiCorp. The operating
expense increase was partially offset by the impact of accruals at PacifiCorp in
2020 associated with wildfires and changes to a settlement agreement in 2021
related to a hydroelectric facility, as well as lower costs associated with
certain regulatory mechanisms at NV Energy.

The U.S. utilities' electric utility margin was $7.1 billion in 2021, an
increase of $126 million (1.8%) compared to 2020. The increase reflected higher
operating revenue from increases in retail and wholesale customer volumes and
favorable wholesale pricing, partially offset by increases in thermal generation
and purchased power costs as well as lower base tariff general rates in 2021 and
a favorable regulatory decision in 2020 at NV Energy. Retail customer volumes
increased 3.8% in 2021 compared to 2020, primarily due to higher customer usage,
an increase in the average number of customers and the favorable impact of
weather.

Natural gas pipelines' after-tax earnings increased $279 million in 2021
compared to 2020. The earnings increase in 2021 was primarily due to incremental
earnings of $211 million from the BHE GT&S acquisition completed in November
2020. In addition, earnings in 2021 reflected the effects of higher margins on
natural gas sales and higher transportation revenue at Northern Natural Gas due
to increased demand from the February 2021 winter storms, partially offset by
lower transportation revenue primarily due to lower volumes for the remainder of
the year.

Other energy businesses' after-tax earnings increased $26 million in 2021
compared to 2020. The increase was primarily due to higher earnings at Northern
Powergrid ($46 million), partially offset by lower earnings from renewable
energy. The increase at Northern Powergrid was attributable to higher tariff
rates and units distributed, lower write-offs of gas exploration costs and
favorable foreign currency exchange rate movements, partially offset by an
increase in income tax expense of $74 million from increases in the United
Kingdom corporate income tax rates in both 2021 and 2020. The decline in
earnings from renewable energy reflected a reduction in wind tax equity
investment earnings of $56 million, which included increased losses from
pre-existing tax equity investments of $165 million, largely attributable to the
February 2021 winter storms, partially offset by increased income tax benefits
from projects reaching commercial operation over the past twelve months.

Real estate brokerage after-tax earnings increased $12 million in 2021 compared
to 2020. The increase was due to an increase in closed brokerage transaction
volumes in 2021, partially offset by lower mortgage volume due to a decrease in
refinance activity.

Corporate interest and other after-tax earnings increased $15 million in 2021
compared to 2020. The increase was primarily due to an increase in state income
tax benefits and higher earnings from non-regulated energy services, offset by
higher operating expenses and higher interest expense from corporate debt issued
in 2020.

                                      K-46
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing

A summary of revenues and earnings of our manufacturing, service and retailing
businesses follows (dollars in millions). Beginning January 31, 2023, this group
will include Pilot Travel Centers.


                                                                                      Percentage change
                                      2022          2021          2020        2022 vs 2021         2021 vs 2020
Revenues
Manufacturing                       $  75,781     $  68,730     $  59,079              10.3 %               16.3 %
Service and retailing                  91,512        84,282        75,018               8.6                 12.3
                                    $ 167,293     $ 153,012     $ 134,097               9.3                 14.1
Pre-tax earnings
Manufacturing                       $  11,177     $   9,841     $   8,010              13.6 %               22.9 %
Service and retailing                   5,042         4,711         2,879               7.0                 63.6
                                       16,219        14,552        10,889              11.5                 33.6
Income taxes and noncontrolling
interests                               3,707         3,432         2,589
Net earnings*                       $  12,512     $  11,120     $   8,300
Effective income tax rate                22.2 %        23.0 %        23.3 %
Pre-tax earnings as a percentage
of revenues                               9.7 %         9.5 %         8.1 %




* Excludes certain acquisition accounting expenses, which primarily related to
the amortization of identified intangible assets recorded in connection with our
business acquisitions. The after-tax acquisition accounting expenses excluded
from earnings above were $681 million in 2022, $690 million in 2021 and $783
million in 2020. In 2020, net earnings also excluded after-tax goodwill and
indefinite-lived intangible asset impairment charges of $10.4 billion. These
expenses are included in "Other" in the summary of earnings on page K-33 and in
the "Other" earnings table on page K-56.

Manufacturing

Our manufacturing group includes a variety of industrial, building and consumer
products businesses. A summary of revenues and pre-tax earnings of our
manufacturing operations follows (dollars in millions).

Percentage change

                                      2022         2021         2020        2022 vs 2021        2021 vs 2020
Revenues
Industrial products                 $ 30,824     $ 28,176     $ 25,667                9.4 %               9.8 %
Building products                     28,896       24,974       21,244               15.7                17.6
Consumer products                     16,061       15,580       12,168                3.1                28.0
                                    $ 75,781     $ 68,730     $ 59,079
Pre-tax earnings
Industrial products                 $  4,862     $  4,469     $  3,755                8.8 %              19.0 %
Building products                      4,789        3,390        2,858               41.3                18.6
Consumer products                      1,526        1,982        1,397              (23.0 )              41.9
                                    $ 11,177     $  9,841     $  8,010
Pre-tax earnings as a percentage
of revenues
Industrial products                     15.8 %       15.9 %       14.6 %
Building products                       16.6 %       13.6 %       13.5 %
Consumer products                        9.5 %       12.7 %       11.5 %




                                      K-47

--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Industrial products

The industrial products group includes metal products for aerospace, power and
general industrial markets (Precision Castparts Corp. ("PCC")), specialty
chemicals (The Lubrizol Corporation ("Lubrizol")), metal cutting tools/systems
(IMC International Metalworking Companies ("IMC")), and Marmon, which consists
of more than 100 autonomous manufacturing and service businesses, internally
aggregated into eleven groups, and includes equipment leasing for the rail,
intermodal tank container and mobile crane industries. The industrial products
group also includes equipment and systems for the livestock and agricultural
industries (CTB International) and a variety of industrial products for diverse
markets (Scott Fetzer and LiquidPower Specialty Products). Beginning October 19,
2022, this group includes the structural steel fabrication products business
conducted through W&W|AFCO Steel, acquired in connection with the Alleghany
acquisition Additionally, the Alleghany businesses included certain other
smaller manufacturers that primarily became part of Marmon.

2022 versus 2021

Revenues of the industrial products group in 2022 increased $2.6 billion (9.4%)
and pre-tax earnings increased $393 million (8.8%) compared to 2021. Pre-tax
earnings as a percentage of revenues in 2022 was 15.8%, a decrease of 0.1
percentage points compared 2021.

PCC's revenues were $7.5 billion in 2022, an increase of $1.1 billion (16.5%)
compared to 2021. PCC derives significant revenues and earnings from aerospace
products. The revenue increase in 2022 was primarily attributable to higher
demand for aerospace products. Commercial aircraft delivery rates by original
equipment manufacturers ("OEMs") of narrow-body aircraft have rebounded since
the onset of the pandemic. Deliveries of wide-body aircraft remain relatively
low, in part, attributable to the pause in the Boeing 787 program. However,
Boeing resumed deliveries in the third quarter of 2022. Long-term industry
forecasts continue to show growth and strong demand for air travel and aerospace
products.

PCC's pre-tax earnings in 2022 were $1.2 billion, an increase of 1.6% compared
to 2021. PCC's results in 2022 were negatively affected by increased costs for
labor and training, materials and utilities and supply chain disruptions, as
well as a $59 million reduction in pension plan income. PCC management has taken
and will continue to take actions to improve operations, maintain safety and
prepare for increased demand for its products. Growth in PCC's revenues and
earnings will be predicated on the ability to successfully increase production
levels to match the expected growth in aerospace demand, including managing
through the current supply chain and employment environments.

Lubrizol's revenues were $6.7 billion in 2022, an increase of 3.2% compared to
2021. The revenue increase reflected higher average selling prices, partially
offset by lower volumes and adverse foreign currency translation effects from
the stronger U.S. Dollar. Sales volumes throughout 2022 were restricted by
effects of supply constraints for certain raw materials and the effects of
unplanned plant maintenance activities, both of which limited Lubrizol's
production capabilities. The increase in average selling prices was driven by
escalating prices for raw materials, including oil feedstocks, as well as for
utilities, packaging, shipping and freight costs. We believe supply chain and
required maintenance constraints are easing and that we can increase production
rates and sales volumes in 2023.

Lubrizol's pre-tax earnings in 2022 increased 48.6% compared to 2021. Pre-tax
earnings in 2022 included insurance recoveries of $242 million related to a fire
in 2019 at the Rouen, France facility and a fire in 2021 at the Rockton,
Illinois, facility compared to insurance recoveries of $55 million in 2021.
Earnings in 2022 also included aggregate losses related to the Rockton, Illinois
fire of $36 million compared to aggregate losses and asset impairment charges in
2021 of $257 million related to the Rockton facility fire and an underperforming
business in the Advanced Materials product lines. Earnings in 2022 were also
negatively impacted by rising raw material costs, lower sales volumes, higher
unplanned maintenance expenses, and by unfavorable foreign currency translation
effects, partially offset by higher selling prices. Earnings in 2021 were
negatively impacted by severe winter storms, which caused industry-wide
temporary facilities closures, including at our Additives facilities, which
experienced lost sales and incremental manufacturing and other operating costs.

Marmon's revenues were $10.7 billion in 2022, an increase of $934 million (9.6%)
compared to 2021. Nearly all of Marmon's business groups generated higher
revenues in 2022, led by significant increases in the Transportation, Retail
Solutions, Metal Services and Crane groups, which contributed 82% of the
increase. These increases generally reflected higher volumes and prices in our
heavy-duty truck & trailer, shopping cart and store shelving businesses,
stronger demand in Canada for metal services and higher demand in the mining and
infrastructure markets. Revenues of most of Marmon's other groups, particularly
those serving the transit, oil & gas, utility and restaurant markets, also
increased in 2022, reflecting higher volumes. These increases were partially
offset by lower lease revenues in the Rail & Leasing group, reflecting lower
renewal rates and fewer third-party tank car sales.

                                      K-48
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Industrial products (Continued)

Marmon's pre-tax earnings in 2022 increased 11.3% compared to 2021. Earnings in
2022 reflected increases in the Transportation, Metal Services, Retail, Crane
and several other business groups due to higher volumes and pricing, which were
partially offset by lower earnings from the Rail & Leasing group, reflecting
lower renewal rates, higher repair costs and losses of approximately $90 million
related to the shutdown in the second quarter of its business in Russia.

IMC's revenues increased 4.5% to $3.7 billion in 2022 compared to 2021,
reflecting increased sales in most regions, partially offset by the foreign
currency translation effects of a stronger U.S. Dollar, lower sales in China
(attributable to the pandemic) and the effects the Russia-Ukraine conflict in
Europe. IMC's pre-tax earnings decreased 2.5% in 2022 compared to 2021,
primarily due to lower average gross sales margins, primarily attributable to
changes in product sales mix and higher raw material costs. Earnings were also
negatively affected by unfavorable foreign currency translation effects and the
Russian-Ukraine conflict.

2021 versus 2020

Revenues of the industrial products group in 2021 increased $2.5 billion (9.8%)
from 2020. Pre-tax earnings increased $714 million (19.0%) compared to 2020 and
pre-tax earnings as a percentage of revenues in 2021 was 15.9%, an increase of
1.3 percentage points compared to 2020.

PCC's revenues were $6.5 billion in 2021, a decrease of $853 million (11.6%)
compared to 2020. The COVID-19 pandemic contributed to material declines in
commercial air travel and OEM aircraft production in 2021 and 2020. PCC's
revenues were negatively impacted in both years by reduced aircraft production
levels, which reflected order delays and cancellations by airlines and inventory
reduction initiatives within the industry.

PCC's pre-tax earnings in 2021 were $1.2 billion, an increase of 78.8% compared
to 2020, which reflected significant restructuring costs and inefficiencies
associated with reduction in production. Asset impairment and restructuring
costs in 2020 were $295 million. The 2021 earnings increase also reflected the
actions taken by management in 2020 and 2021 to resize, restructure and improve
operations and to prepare for more normalized demand, as well as from a decline
in restructuring costs.

Lubrizol's revenues were $6.5 billion in 2021, an increase of 8.6% compared to
2020. The increase reflects higher average selling prices, driven by significant
increases in materials and other manufacturing costs, as well as slightly higher
volumes. Sales volumes in the Additives product lines in 2021 were negatively
affected by the impacts of the severe winter weather events in the first
quarter, raw materials supply constraints and unplanned maintenance in the
second half of the year.

Lubrizol's pre-tax earnings in 2021 decreased 50.8% compared to 2020. The
earnings decline in 2021 included previously mentioned losses of $257 million
related to the Rockton, Illinois facility fire and asset impairment charges, as
well as the adverse effects of rising raw material costs and the winter storms
in 2021.

Marmon's revenues were $9.8 billion in 2021, an increase of $2.1 billion (27.9%)
compared to 2020, which was negatively impacted by the initial effects of the
pandemic. Revenues in 2021 from the Electrical, Metal Services and Plumbing &
Refrigeration groups increased 54% over 2020, accounting for over half of the
aggregate increase in Marmon's revenues. These increases were attributable to
higher volumes and prices, including the impact of significantly higher average
copper and metal prices. Revenues of most of Marmon's other groups, particularly
those serving the construction, automotive, heavy-duty truck and restaurant
markets, also increased in 2021, reflecting higher volumes. These increases were
partially offset by the impact of divestitures and business closures in the
Water Technologies and Retail Solutions groups and lower lease revenues in the
Rail & Leasing group, reflecting fewer railcars on lease and changes in lease
mix.

                                      K-49
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Industrial products (Continued)

Marmon's pre-tax earnings increased 40.3% in 2021 compared to 2020. The increase
was primarily due to earnings increases in the Electrical, Metal Services and
Plumbing & Refrigeration groups due to higher volumes and average margins and
relatively low earnings in 2020 attributable to the pandemic. Earnings of
several other business groups also increased attributable to higher sales
volumes, sales mix changes and lower restructuring charges, which were partially
offset by lower earnings from the Rail & Leasing and Water Technologies groups.

IMC's revenues increased 19.5% in 2021 compared to 2020, reflecting improving
business conditions in most geographic regions and favorable foreign currency
translation effects. IMC's pre-tax earnings increased 47.7% in 2021 versus 2020,
primarily attributable to higher customer demand, improved manufacturing
efficiencies, operating cost management saving initiatives and favorable foreign
currency translation effects.

Building products

The building products group includes manufactured and site-built home
construction and related lending and financial services (Clayton Homes),
flooring (Shaw), insulation, roofing and engineered products (Johns Manville),
bricks and masonry products (Acme Building Brands), paint and coatings (Benjamin
Moore) and residential and commercial construction and engineering products and
systems (MiTek).

2022 versus 2021

Revenues of the building products group increased $3.9 billion (15.7%) in 2022
and pre-tax earnings increased $1.4 billion (41.3%) compared to 2021. Pre-tax
earnings as percentages of revenues were 16.6% in 2022 and 13.6% in 2021. During
2021 and much of 2022, our businesses experienced relatively strong customer
demand and higher sales volumes. Our building products businesses benefited in
recent years from the low interest rate environment. However, interest rates in
the U.S. increased significantly during 2022, which contributed to slowing
demand for new home construction in the fourth quarter. As such, comparative
revenues and earnings in the near term will likely decline from current levels.

Clayton Homes' revenues were approximately $12.7 billion in 2022, an increase of
$2.2 billion (21.1%) over 2021. Revenues from home sales for the year increased
$2.1 billion (25.1%) in 2022 to approximately $10.4 billion, primarily due to
higher average selling prices. New home unit sales increased 6.2% in 2022,
reflecting a 6.0% increase in factory-built manufactured home unit sales and a
7.1% increase in site-built home unit sales. However, unit sales in the fourth
quarter of 2022 declined 3.9% from 2021, and our net order backlog declined
significantly during 2022. We expect the comparative decline in unit sales to
accelerate in the near term. Financial services revenues, which include
mortgage, insurance and interest income from lending activities, increased 4.7%
in 2022 compared to 2021. Loan balances, net of allowances for credit losses,
were approximately $21.3 billion as of December 31, 2022, an increase of
approximately $2.5 billion from December 31, 2021. Actual and anticipated loan
foreclosures rose during the fourth quarter of 2022.

Pre-tax earnings of Clayton Homes were approximately $2.4 billion in 2022, an
increase of $685 million (40.7%) compared to 2021. Earnings in 2022 reflected
higher home sales, gross margin rates and net interest income. As previously
mentioned, we expect unit home sales to decline in the near term and we
anticipate earnings will also decline in 2023 compared to 2022.

Aggregate revenues of our other building products businesses were approximately
$16.2 billion in 2022, an increase of 11.8% versus 2021. The increase was
primarily due to higher average selling prices, and to a lesser extent, from
higher unit volumes in certain product lines and product mix changes.
Significant cost inflation in 2021, that continued through 2022, largely drove
the higher selling prices.

Pre-tax earnings of the other building products businesses were approximately
$2.4 billion in 2022, an increase of 41.9% over 2021. Pre-tax earnings as a
percentage of revenues was 15.0% in 2022, a 3.2 percentage point increase
compared to 2021. Earnings in 2022 benefitted from higher selling prices and
strong demand in certain product categories, as well as an increase in gains
from certain business divestitures and asset sales and reduced impairment and
restructuring charges. The increase in earnings in 2022 also reflected the
negative impact of severe winter storms in the first quarter of 2021, which
reduced sales and increased production and other operating costs in 2021.

                                      K-50
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Building products (Continued)

2021 versus 2020

Revenues of the building products group increased $3.7 billion (17.6%) in 2021
and pre-tax earnings increased $532 million (18.6%) compared to 2020. Pre-tax
earnings as percentages of revenues were 13.6% in 2021 and 13.5% in 2020. During
2021, our businesses experienced strong customer demand and higher sales
volumes. We also experienced various forms of supply chain disruptions that
contributed to considerable raw material and logistics cost inflation and supply
constraints.

Clayton Homes' revenues were approximately $10.5 billion in 2021, an increase of
$1.9 billion (22.2%) over 2020. Revenues from home sales increased $1.8 billion
(26.5%) in 2021 to approximately $8.3 billion, reflecting increased revenue per
home sold, changes in sales mix and a net increase in new units sold. Unit sales
of site-built homes increased 15.8% in 2021, while factory-built manufactured
home unit sales increased 1.5%. Site-built home unit sales were constrained by
longer construction periods arising from supply chain constraints and labor
shortages. Financial services revenues increased 7.8% in 2021 compared to 2020.
Loan balances, net of allowances for credit losses, were approximately $18.8
billion as of December 31, 2021, an increase of approximately $1.7 billion
compared to December 31, 2020.

Pre-tax earnings of Clayton Homes were approximately $1.7 billion in 2021, an
increase of $440 million (35.3%) compared to 2020. Earnings in 2021 reflected
higher earnings from home sales, mortgage originations, net interest income and
lower provisions for expected credit losses, partially offset by the impact of
rising manufacturing and supply chain costs. The provision for expected credit
losses in 2020 was unusually high and included provisions for the expected
impact of the COVID-19 pandemic.

Aggregate revenues of our other building products businesses were approximately
$14.5 billion in 2021, an increase of 14.4% versus 2020. The increase was
primarily due to higher average selling prices driven by significantly higher
input and supply chain costs, as well as higher unit volumes for paint and
coatings, flooring, insulation, roofing and other engineered products.

Pre-tax earnings of the other building products businesses were approximately
$1.7 billion in 2021, an increase of 5.7% over 2020. Pre-tax earnings as a
percentage of revenues were 11.8% in 2021, a 1.0 percentage point decrease
compared to 2020. While customer demand in 2021 was generally strong, reduced
availability of materials and other product inputs from supply chain disruptions
negatively affected operating results. In addition, higher restructuring and
impairment charges contributed to the reduction in our pre-tax margin rates.

Consumer products

The consumer products group includes leisure vehicles (Forest River), several
apparel and footwear operations (including Fruit of the Loom, Garan, H.H. Brown
Shoe Group and Brooks Sports) and a manufacturer of high-performance alkaline
batteries (Duracell). This group also includes custom picture framing products
(Larson-Juhl), jewelry products (Richline) and beginning October 19, 2022,
Jazwares, LLC ("Jazwares"), a global toy company acquired in connection with the
Alleghany acquisition.

2022 versus 2021

Consumer products group revenues increased $481 million (3.1%) in 2022 versus
2021, reflecting an 8.0% increase from Forest River and the impact of the
Jazwares acquisition, substantially offset by lower apparel and footwear and
Duracell revenues (4.7% in the aggregate). In the fourth quarter of 2022,
consumer products revenues before the impact of the Jazwares acquisition
declined 15.7%, driven by significant declines in recreational vehicle unit
sales. Revenues of Forest River increased 8.0% in 2022 compared to 2021, while
apparel and footwear and Duracell revenues decreased 4.5% and 5.2%,
respectively. The declines in apparel and footwear revenues were driven by lower
volumes, as major retailers reduced orders in response to rising inventories.
Duracell's revenue decline was primarily due to lower volumes and unfavorable
foreign currency translation effects of the stronger U.S. Dollar.

                                      K-51
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Consumer products (Continued)

Consumer products group pre-tax earnings declined $456 million (23.0%) in 2022
compared to 2021 and as a percentage of revenues in 2022 decreased 3.2
percentage points to 9.5%. The earnings decline reflected lower aggregate
earnings from the apparel and footwear businesses (68.0%) and Duracell (30.6%),
partially offset by higher earnings from Forest River (7.6%).

Our apparel businesses were negatively affected in 2022 by low sales volumes,
reduced manufacturing efficiencies and higher input costs, including raw
materials, freight, labor and other operating costs. The reductions in sales
volumes and supply chain issues in 2021 and 2022 have also elevated our current
inventories. We currently believe retailers will continue to constrain purchases
in the near term and that our sales volumes and earnings will continue to be
negatively affected. We are taking measures to right-size our operations for the
long-term and reduce product inventories to more appropriate levels. Duracell's
earnings in 2022 declined, primarily due to lower sales, cost inflation and
foreign currency translation effects.

Earnings from Forest River increased in 2022, primarily due to the increase in
unit sales in the first half of the year and higher average selling prices,
partly offset by higher materials costs. However, sales volumes, revenues and
earnings declined over the second half of the year compared to the elevated
levels in the first half of 2022 and in 2021. We currently expect demand for
recreational vehicles will continue to slow and Forest River's comparative
revenues and earnings to decline in 2023, particularly over the first half of
the year.

2021 versus 2020

Consumer products group revenues increased $3.4 billion (28.0%) in 2021 versus
2020. Revenues from Forest River increased 40.2% in 2021 compared to 2020,
driven by a 27.6% increase in recreational vehicle unit sales and higher average
selling prices, primarily due to significant increases in manufacturing costs.

Revenues of several of our other consumer products businesses were significantly
higher in 2021 as compared to 2020. The initial impacts of the pandemic in the
first half of 2020 from temporary retail store closures and reduced demand had a
severe impact on most of these businesses. Apparel and footwear revenues
increased 25.3% in 2021 compared to 2020, reflecting significant increases in
unit sales, partly attributable to inventory restocking by certain customers,
and from increased consumer demand. Revenues from Richline increased 39.9%,
while revenues from Duracell increased 2.4%.

Consumer products group pre-tax earnings increased $585 million (41.9%) in 2021
compared to 2020 and as a percentage of revenues in 2021 increased 1.2
percentage points to 12.7%. The increase reflected significant earnings
increases at many of our businesses. However, our consumer products businesses,
particularly the apparel and footwear businesses, also experienced significant
cost increases and supply chain disruptions, causing pre-tax margins in the
second half of 2021 to be 1.1 percentage points lower than in the first half of
the year.

Service and retailing

A summary of revenues and pre-tax earnings of our service and retailing
businesses follows (dollars in millions).

Percentage change

                                      2022         2021         2020       2022 vs 2021         2021 vs 2020
Revenues
Service                             $ 19,006     $ 15,872     $ 12,346              19.7 %               28.6 %
Retailing                             19,297       18,960       15,832               1.8                 19.8
McLane                                53,209       49,450       46,840               7.6                  5.6
                                    $ 91,512     $ 84,282     $ 75,018
Pre-tax earnings
Service                             $  3,047     $  2,672     $  1,600              14.0 %               67.0 %
Retailing                              1,724        1,809        1,028              (4.7 )               76.0
McLane                                   271          230          251              17.8                 (8.4 )
                                    $  5,042     $  4,711     $  2,879
Pre-tax earnings as a percentage
of revenues
Service                                 16.0 %       16.8 %       13.0 %
Retailing                                8.9 %        9.5 %        6.5 %
McLane                                   0.5 %        0.5 %        0.5 %




                                      K-52

--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Service

Our service group consists of several businesses. The largest of these
businesses are NetJets and FlightSafety (aviation services), which offer shared
ownership programs for general aviation aircraft and high technology training
products and services to operators of aircraft, and TTI, a distributor of
electronics components. Our other service businesses franchise and service a
network of quick service restaurants (Dairy Queen), lease transportation
equipment (XTRA) and furniture (CORT), provide third party logistics services
that primarily serve the petroleum and chemical industries (Charter Brokerage),
distribute electronic news, multimedia and regulatory filings (Business Wire)
and operate a television station in Miami, Florida (WPLG). Beginning, October
19, 2022, this group includes IPS Integrated Project Services, LLC (IPS), a
provider of various services in facilities construction management.

2022 versus 2021

Service group revenues increased $3.1 billion (19.7%) in 2022 compared to 2021,
primarily attributable to revenue increases from TTI and the aviation services
businesses, as well as the impact of the IPS acquisition. Revenues from TTI
increased 17.4% in 2022 versus 2021. However, in the third quarter, new orders
began to slow in certain regions and markets and the slowing of new orders was
observed across nearly all regions in the fourth quarter. The slowing of
electronic components demand is in part attributable to elevated inventory
levels within the supply chain. Revenues from aviation services increased 18.2%
in 2022 compared to 2021. The revenue increase reflected year-to-date increases
in training hours (11%), customer flight hours (9%), most of which occurred in
the first half of the year, and fuel surcharges to customers due to the increase
in customer flight hours and significant increases in fuel prices. These
increases were partially offset by changes in sales mix.

Pre-tax earnings of our service business group increased $375 million (14.0%) in
2022 to $3.0 billion. Pre-tax earnings of the group as a percentage of revenues
were 16.0% in 2022, a decrease of 0.8 percentage points compared to 2021. The
earnings increase in 2022 was attributable to TTI (19.4%) and aviation services
(3.4%), as well as increased earnings from several of our smaller services
businesses. The increase from TTI was primarily attributable to the increase in
sales and higher average gross margin rates, partially offset by unfavorable
foreign currency effects in 2022 and a favorable legal settlement in 2021. The
earnings increase from aviation services in 2022 compared to 2021 was primarily
attributable to improved product sales margins, increased training hours and
lower restructuring costs at FlightSafety. Earnings at our smaller services
companies increased $106 million (19.3%) over 2021, reflecting a combination of
higher revenues and operating cost leverage.

2021 versus 2020

Service group revenues increased $3.5 billion (28.6%) in 2021 compared to 2020,
primarily attributable to higher revenues from TTI and the aviation services
businesses. Revenues from TTI increased 37.4% in 2021 versus 2020, primarily
attributable to significantly higher volumes across all significant markets and
product categories, and to a lesser extent, higher average prices and changes in
sales mix. Customer demand accelerated throughout 2021, as customers attempted
to maintain adequate inventories in response to high demand for components in
end products and effects of supply chain disruptions. Revenues from aviation
services increased 27.5% in 2021 over low 2020 levels, primarily due to higher
training hours (24%) and customer flight hours (70%).

Pre-tax earnings of our service business group increased $1.1 billion (67.0%) to
$2.7 billion. Pre-tax earnings of the group as a percentage of revenues was
16.8% in 2021, an increase of 3.8 percentage points compared to 2020. Earnings
at nearly all service businesses increased in 2021 compared to 2020, with the
largest increases from TTI, the aviation services businesses and the XTRA
leasing business. TTI's earnings increase was primarily attributable to
increases in sales volumes, as well as from improved operating cost leverage,
changes in sales mix and a gain from a legal settlement. The increase in
earnings from aviation services was attributable to the favorable effects of
higher volume, changes in business mix, increased operating efficiencies, lower
impairment charges and the effects of past restructuring efforts, partly offset
by higher subcontractor costs attributable to the significant increase in flight
demand.

Retailing

Our largest retailing business is Berkshire Hathaway Automotive, Inc. ("BHA"),
which represented 65% of our combined retailing revenue in 2022. BHA consists of
over 80 auto dealerships that sell new and pre-owned automobiles and offer
repair services and related products. BHA also operates two insurance
businesses, two auto auctions and an automotive fluid maintenance products
distributor. Our retailing businesses also include four home furnishings
businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan's),
which sell furniture, appliances, flooring and electronics. The home furnishings
group represented 20% of the combined retailing revenues in 2022.

                                      K-53
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Retailing (Continued)

Other retailing businesses include three jewelry businesses (Borsheims, Helzberg
and Ben Bridge), See's Candies (confectionary products), Pampered Chef (high
quality kitchen tools), Oriental Trading Company (party supplies, school
supplies and toys and novelties) and Detlev Louis Motorrad ("Louis"), a retailer
of motorcycle accessories based in Germany.

2022 versus 2021

Retailing group revenues in 2022 increased $337 million (1.8%) compared to 2021,
reflecting an increase at BHA, partially offset by combined lower revenues from
our other retailers. BHA's revenues in 2022 increased 6.1% compared to 2021.
Revenues from new and used retail vehicle sales increased 5.9% compared to 2021,
attributable to higher average vehicle transaction prices, partly offset by a
4.5% decline in total retail units sold. New vehicle unit sales continue to be
constrained by relatively low new vehicle production, although production
gradually trended higher during 2022. Revenues from BHA's service and repair
business increased 11.1% versus 2021. Revenues of the home furnishings group
declined 2.6%, while revenues of all other retailers declined 8.9%, primarily
due to lower sales at Pampered Chef.

Pre-tax earnings in 2022 of the retailing group decreased $85 million (4.7%)
from 2021 and the pre-tax margin rate decreased 0.6 percentage points to 8.9%.
BHA's pre-tax earnings increased 18.4%, primarily due to increases in vehicle
gross profit margins. BHA's comparative vehicle gross profit margin rates began
to accelerate during the second half of 2021, attributable to low available
inventory. BHA's vehicle gross margin rates peaked in the first half of 2022 and
have since declined. Aggregate pre-tax earnings for the remainder of our
retailing group decreased $233 million (23.2%) in 2022 compared to 2021,
primarily due to reduced earnings from the home furnishings group, See's Candies
and Pampered Chef.

2021 versus 2020

Retailing group revenues in 2021 increased $3.1 billion (19.8%) compared to
2020. BHA's revenues increased 19.0%, with vehicle sales, service and repair,
and finance and service contract revenues each increasing versus 2020. Revenues
from vehicle sales increased $1.7 billion (20.7%), primarily due to higher
average selling prices, as well as a 2.7% increase in units sold. However, new
vehicle unit sales in the second half of 2021 declined 18% compared to the
second half of 2020, reflecting significant new vehicle supply shortages at
manufacturers attributable to the global computer chip shortages and other
supply chain disruptions. Home furnishings group revenues increased 22.0%,
attributable to higher consumer demand and higher average selling prices, driven
by higher inventory and freight costs.

Pre-tax earnings of the retailing group increased $781 million (76.0%) in 2021
from 2020 and the pre-tax margin rate increased 3.0 percentage points to 9.5%.
BHA's pre-tax earnings increased 47.5%, primarily due to increased vehicle sales
margins and higher earnings from finance and service contract activities. In
addition, earnings in 2021 benefitted from lower floorplan interest expense,
attributable to significant declines in inventory levels, and from ongoing
operating cost control efforts.

Home furnishings group pre-tax earnings increased 67.6% in 2021 versus 2020,
reflecting generally higher average gross margin rates and sales mix changes and
cost control efforts, partly offset by higher personnel costs. Aggregate pre-tax
earnings for the remainder of our retailing group increased $321 million in 2021
compared to 2020. The initial effects of the pandemic in 2020 were severe for
most of our other retailers due to the restricted operations at many of those
businesses. Results in 2021 also benefitted from relatively strong consumer
demand and the effects of restructuring efforts in 2020.

                                      K-54
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Manufacturing, Service and Retailing (Continued)

Retailing (Continued)

McLane

McLane Company, Inc. ("McLane") operates a wholesale distribution business that
provides grocery and non-food consumer products to retailers and convenience
stores ("grocery") and to restaurants ("foodservice"). McLane also operates
businesses that are wholesale distributors of distilled spirits, wine and beer
("beverage"). The grocery and foodservice businesses generate high sales and
very low profit margins. These businesses have several significant customers,
including Walmart, 7-Eleven, Yum! Brands and others. Grocery sales comprised
about 62% of McLane's consolidated sales in 2022 with food service comprising
most of the remainder. A curtailment of purchasing by any of its significant
customers could have an adverse impact on periodic revenues and earnings.

2022 versus 2021

Revenues of $53.2 billion in 2022 increased $3.8 billion (7.6%) compared to
2021. Revenues from the grocery business increased 4.4%, while revenues from the
foodservice and beverage businesses increased 14.1% and 6.0%, respectively.

Pre-tax earnings increased $41 million (17.8%) in 2022 as compared to 2021. The
increase reflected slightly higher gross margin rates in the grocery and
foodservice businesses, partly offset by higher personnel costs, fuel expense
and insurance costs. McLane's grocery and food service operating results
continue to be adversely affected by supply chain constraints, including the
effects of labor and truck driver shortages, high fuel costs and high inventory
costs.

2021 versus 2020

Revenues increased $2.6 billion (5.6%) in 2021 compared to 2020. Revenues from
the grocery business increased 1.5%, while revenues from the foodservice and
beverage businesses increased 13.1% and 17.8%, respectively. The foodservice
business was significantly impacted by pandemic-related restaurant closures in
2020.

Pre-tax earnings decreased $21 million (8.4%) in 2021 as compared to 2020. The
decrease reflected significant increases in personnel, contract transportation
and fuel costs, which more than offset the favorable impact of higher sales and
slightly higher gross sales margins. McLane's grocery and food service
operations were significantly affected in 2021 by upstream supply chain
constraints, including the effects of labor and truck driver shortages, which
contributed to higher inventory costs, and disruptions in inventory
availability. These upstream supply chain effects, together with the truck
driver and warehouse personnel shortages that we experienced, adversely affected
our customer service levels and reduced our operating efficiencies. In response,
hiring and wage and benefits costs increased significantly in 2021. The increase
in fuel costs was primarily attributable to significant increases in petroleum
prices.

Investment and Derivative Contract Gains (Losses)

A summary of investment and derivative contract gains (losses) follows (dollars
in millions).


                                                   2022           2021           2020
Investment gains (losses)                       $  (67,623 )   $   77,576     $   40,905
Derivative contract gains (losses)                    (276 )          966           (159 )
Gains (losses) before income taxes and
noncontrolling interests                           (67,899 )       78,542   

40,746

Income taxes and noncontrolling interests (14,287 ) 16,202

       9,155
Net earnings (loss)                             $  (53,612 )   $   62,340     $   31,591
Effective income tax rate                             20.9 %         20.4 %         21.7 %




                                      K-55

--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Investment and Derivative Contract Gains (Losses) (Continued)

Investment gains (losses)

Unrealized gains and losses arising from changes in market prices of our
investments in equity securities are included in our reported earnings, which
significantly increases the volatility of our periodic net earnings due to the
magnitude of our equity securities portfolio and the inherent volatility of
equity securities prices. Unrealized gains and losses also include the effects
of changes in foreign currency exchange rates on investments in non-U.S. issuers
that are held by our U.S.-based subsidiaries. Pre-tax investment gains and
losses included net unrealized losses of approximately $63.1 billion in 2022 and
gains of approximately $76.4 billion in 2021 and $55.0 billion in 2020
attributable to changes in market prices of equity securities we held at the end
of each year. In each year, we also recorded pre-tax gains and losses from
market value changes during each year on equity securities sold during such
year, including losses of $3.9 billion in 2022, gains of $1.0 billion in 2021
and losses of $14.0 billion in 2020. Taxable investment gains on equity
securities sold, which is generally the difference between sales proceeds and
the original cost basis of the securities sold, were $769 million in 2022, $3.6
billion in 2021 and $6.2 billion in 2020.

We believe that investment gains and losses, whether realized from sales or
unrealized from changes in market prices, are often meaningless in terms of
understanding our reported consolidated earnings or evaluating our periodic
economic performance. We continue to believe the investment gains and losses
recorded in earnings in any given period has little analytical or predictive
value.

Derivative contract gains (losses)

Derivative contract gains and losses include the changes in fair value of our
few remaining equity index put option contract liabilities. The periodic changes
in the fair values of these liabilities are recorded in earnings. Substantially
all of our contracts have expired and our exposure to loss in the future is
insignificant.

Other

A summary of after-tax other earnings follows (in millions).

                                                   2022           2021           2020
Equity method earnings                          $    1,528     $      804     $      615
Acquisition accounting expenses                       (681 )         (690 )         (783 )
Goodwill and intangible asset impairments                -              -        (10,381 )
Corporate interest expense, before foreign
currency effects                                      (269 )         (305 )         (334 )
Foreign currency exchange rate gains (losses)
on Berkshire
  and BHFC non-U.S. Dollar senior notes              1,263            955           (764 )
Other earnings                                         196            474            279
                                                $    2,037     $    1,238     $  (11,368 )




After-tax equity method earnings include our proportionate share of earnings
attributable to our investments in Kraft Heinz, Pilot, Occidental Petroleum and
Berkadia. Equity method earnings increased $724 million in 2022 versus 2021,
primarily due to higher earnings from Kraft Heinz and Pilot and from the
inclusion of Occidental Petroleum, beginning in the fourth quarter of 2022. See
Note 5 to the Consolidated Financial Statements.

Our after-tax earnings from Kraft Heinz were $550 million in 2022, $317 million
in 2021 and $170 million in 2020, which included our after-tax share of goodwill
and other intangible asset impairment charges recorded by Kraft Heinz of $157
million in 2022, $259 million in 2021 and $611 million in 2020. Our after-tax
earnings from Occidental in 2022 were $258 million and our after-tax earnings
from Pilot increased $267 million in 2022 compared to 2021. As a result of the
increase in our ownership in Pilot to 80% on January 31, 2023, we discontinued
the use of the equity method on that date. See Note 26 to the Consolidated
financial Statements.

After-tax acquisition accounting expenses include charges arising from the
application of the acquisition method in connection with certain of Berkshire's
past business acquisitions. Such charges arise primarily from the amortization
or impairment of intangible assets recorded in connection with those business
acquisitions. Goodwill and intangible asset impairments in 2020 included
after-tax charges of $9.8 billion attributable to impairments of goodwill and
certain identifiable intangible assets that were recorded in connection with our
acquisition of PCC in 2016. See Other Critical Accounting Policies on page K-62
for additional details.

                                      K-56
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Other (Continued)

Foreign currency exchange rate gains and losses pertain to the Berkshire and
BHFC Euro, Great Britain Pound and Japanese Yen denominated debt. Changes in
foreign currency exchange rates produce unrealized gains and losses from the
periodic revaluation of these liabilities into U.S. Dollars. In 2022, we
recorded foreign currency exchange rate gains on these debt issues, due to
strengthening of the U.S. Dollar, which reduced the U.S Dollar carrying value of
the debt. The gains and losses recorded in any given period can be significant
due to the magnitude of the borrowings and the inherent volatility in foreign
currency exchange rates. Other earnings consist primarily of Berkshire parent
company investment income and corporate expenses, other intercompany interest
income where the interest expense is included in earnings of the operating
businesses and other unallocated income and income taxes.

Financial Condition

Our consolidated balance sheet continues to reflect significant liquidity and a
very strong capital base. Consolidated shareholders' equity at December 31, 2022
was $472.4 billion, a decrease of $33.8 billion since December 31, 2021. Net
loss attributable to Berkshire shareholders was $22.8 billion and included
after-tax losses on our investments of approximately $53.4 billion. Over each of
the last three years, investment gains and losses from changes in the market
prices of our investments in equity securities produced significant volatility
in our earnings.

Berkshire's common stock repurchase program, as amended, permits Berkshire to
repurchase its Class A and Class B shares at prices below Berkshire's intrinsic
value, as conservatively determined by Warren Buffett, Berkshire's Chairman of
the Board and Chief Executive Officer, and Charlie Munger, Vice Chairman of the
Board. The program does not specify a maximum number of shares to be repurchased
and does not require any specified repurchase amount. The program is expected to
continue indefinitely. We will not repurchase our stock if it reduces the total
amount of Berkshire's consolidated cash, cash equivalents and U.S. Treasury Bill
holdings below $30 billion. Financial strength and redundant liquidity will
always be of paramount importance at Berkshire. Berkshire paid $7.9 billion
during 2022 to repurchase shares of its Class A and Class B common stock.

At December 31, 2022, our insurance and other businesses held cash, cash
equivalents and U.S. Treasury Bills of $125.0 billion, which included $94.7
billion in U.S. Treasury Bills. Investments in equity and fixed maturity
securities (excluding our investments in Kraft Heinz and Occidental common
stock) were $333.9 billion. During 2022, we paid cash of $67.9 billion to
acquire equity securities and we received proceeds of $33.7 billion from sales
of equity securities. On October 19, 2022, we acquired Alleghany Corporation for
$11.5 billion, which held cash and investments of $19.7 billion as of the
acquisition date. On January 31, 2023, we acquired an additional 41.4% interest
in Pilot for approximately $8.2 billion, which was based on Pilot's unaudited
earnings in 2022 and its net debt as of December 31, 2022 and is subject to
post-closing adjustments following the completion of the audit of Pilot's 2022
consolidated financial statements.

Our consolidated borrowings at December 31, 2022 were $122.7 billion, of which
approximately 94% were by the Berkshire parent company, BHFC, BNSF and BHE and
its subsidiaries. During 2022, Berkshire and certain of its subsidiaries issued
term debt of approximately $12.7 billion in the aggregate and paid approximately
$3.9 billion of maturing senior debt. Expected principal and interest payments
related to our consolidated borrowings in each of the next five years are (in
billions): $17.4 in 2023; $10.4 in 2024; $11.0 in 2025; $8.7 in 2026; and $8.1
in 2027.

Berkshire parent company debt outstanding at December 31, 2022 was $21.4
billion, substantially unchanged from December 31, 2021. In 2022, Berkshire
issued an aggregate ¥243.5 billion (approximately $1.94 billion) of senior notes
with maturity dates ranging from 2025 to 2052 and a weighted average interest
rate of 0.8%. Berkshire's borrowings decreased $1.4 billion during 2022 from
changes in foreign currency exchange rates on its non-U.S. Dollar denominated
debt.

Berkshire's insurance and other subsidiary outstanding borrowings were
approximately $25.1 billion at December 31, 2022, an increase of $7.3 billion
since December 31, 2021. Senior note borrowings of BHFC, a wholly-owned
financing subsidiary, were approximately $17.9 billion at December 31, 2022, an
increase of $4.8 billion since December 31, 2021, reflecting the issuance of
debt, repayments of maturing debt ($775 million) and reductions in the carrying
value of non-U.S. denominated debt due to foreign currency exchange rate changes
($300 million). In 2022, BHFC issued $4.5 billion of senior notes maturing in
2027, 2032 and 2052 with a weighted average interest rate of 3.4% and €1.25
billion (approximately $1.4 billion) of senior notes maturing in 2030 and 2034
with a weighted average interest rate of 1.8%. BHFC's borrowings are used to
fund a portion of loans originated and acquired by Clayton Homes and equipment
held for lease by our railcar leasing business. Berkshire guarantees BHFC's
senior notes for the full and timely payment of principal and interest.
Subsidiary borrowings as of December 31, 2022 included approximately $2.3
billion attributable to Alleghany and its subsidiaries.

                                      K-57
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Financial Condition (Continued)

BNSF's outstanding debt was $23.5 billion as of December 31, 2022, an increase
of $233 million from December 31, 2021. In 2022, BNSF issued $1.0 billion of
4.45% debentures due in 2053 and repaid approximately $900 million of term debt.
Outstanding borrowings of BHE and its subsidiaries were $52.8 billion at
December 31, 2022, an increase of $1.0 billion since December 31, 2021. In 2022,
BHE issued $1.0 billion of 4.6% senior notes due in 2053. During 2022, BHE
subsidiaries issued approximately $3.0 billion of term debt with a weighted
average interest rate of 5.2% at December 31, 2022 and maturity dates ranging
from 2024 to 2053. Berkshire does not guarantee the repayment of debt issued by
BNSF, BHE or any of their subsidiaries.

In each of the past three years, our diverse group of businesses generated net
operating cash flows between $37 billion and $40 billion. Our consolidated
capital expenditures for property, plant and equipment and equipment held for
lease were $15.5 billion in 2022, which included capital expenditures by our
railroad, utilities and energy businesses (BNSF and BHE) of $11.0 billion. BNSF
and BHE maintain very large investments in capital assets (property, plant and
equipment) and will regularly make significant capital expenditures in the
normal course of business. We forecast capital expenditures of these two
operations will approximate $13.7 billion in 2023.

On August 16, 2022, the Inflation Reduction Act of 2022 ("the 2022 act") was
signed into law. The 2022 act contains numerous provisions, including a 15%
corporate alternative minimum income tax on "adjusted financial statement
income", expanded tax credits for clean energy incentives and a 1% excise tax on
corporate stock repurchases. The provisions of the 2022 act become effective for
tax years beginning after December 31, 2022. On December 27, 2022, the IRS and
Department of Treasury issued initial guidance for taxpayers subject to the
corporate alternative minimum tax. The guidance addresses several, but not all,
issues that needed clarification. The IRS and Department of Treasury intend to
release additional guidance in the future. We will continue to evaluate the
impact of the Act as more guidance becomes available. We currently do not expect
a material impact on our consolidated financial statements.

Contractual Obligations

We are party to other contracts associated with ongoing business activities,
which will result in cash payments to counterparties in future periods. Certain
obligations are included in our Consolidated Balance Sheets, such as operating
lease liabilities and shared aircraft repurchase liabilities of NetJets.
Estimated payments of these liabilities in each of the next five years are (in
billions): $1.8 in 2023; $1.6 in 2024; $1.4 in 2025; $1.3 in 2026; and $1.5 in
2027.

We are also obligated to pay claims arising from our property and casualty
insurance companies. Such liabilities, including amounts from retroactive
reinsurance, were approximately $143 billion at December 31, 2022. We currently
forecast claim payments in 2023 of approximately $35 billion with respect to
claims occurring prior to 2023. Additionally, we estimate net payments of
approximately $2 billion in 2023 for life, health and annuity benefits under
contracts. However, the timing and amount of the payments under insurance and
reinsurance contracts are contingent upon the outcome of future events. Actual
payments will likely vary, perhaps materially, from the forecasted payments, as
well as from the liabilities currently recorded in our Consolidated Balance
Sheet. We anticipate that these payments will be funded by operating cash flows.

Other obligations pertaining to the acquisition of goods or services in the
future, such as certain purchase obligations, are not currently reflected in the
Consolidated Financial Statements and will be recognized in future periods as
the goods are delivered or services are provided. As of December 31, 2022, the
largest categories of our long-term contractual obligations primarily related to
fuel, capacity, transmission and maintenance contracts and capital expenditure
commitments of BHE and BNSF, aircraft purchase commitments of NetJets and
certain raw materials purchase commitments. We estimate future payments
associated with these contracts over the next five years of approximately $24
billion, including $12 billion in 2023.

Critical Accounting Policies

Certain accounting policies require us to make estimates and judgments in
determining the amounts reflected in our Consolidated Financial Statements. Such
estimates and judgments necessarily involve varying and possibly significant
degrees of uncertainty. Accordingly, certain amounts currently recorded in our
Consolidated Financial Statements will likely be adjusted in the future based on
new available information and changes in other facts and circumstances. A
discussion of our principal accounting policies that required the application of
significant judgments as of December 31, 2022 follows.

                                      K-58
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Property and casualty insurance unpaid losses

We record liabilities for unpaid losses and loss adjustment expenses (also
referred to as "gross unpaid losses" or "claim liabilities") based upon
estimates of the ultimate amounts payable for loss events occurring on or before
the balance sheet date. The timing and amount of ultimate loss payments are
contingent upon, among other things, the timing of claim reporting from insureds
and ceding companies and the final determination of the loss amount through the
loss adjustment and settlement process. We use a variety of techniques in
establishing claim liabilities, which may require significant judgments and
assumptions.

As of the balance sheet date, recorded claim liabilities include estimates for
reported claims and for incurred-but-not-reported ("IBNR") claims. The period
between the loss occurrence date and loss settlement date is the "claim-tail."
Property claims usually have relatively short claim-tails, absent litigation.
Casualty claims usually have longer claim-tails, occasionally extending for
decades. Casualty claims may be more susceptible to litigation and the impact of
changing contract interpretations. The legal environment and judicial process
further contribute to extending claim-tails.

Our consolidated claim liabilities, including liabilities from retroactive
reinsurance contracts, as of December 31, 2022 were approximately $143 billion,
of which 78% related to GEICO and the Berkshire Hathaway Reinsurance Group.
Additional information regarding significant uncertainties inherent in the
processes and techniques for estimating unpaid losses of these businesses
follows.

GEICO

GEICO predominantly writes private passenger automobile insurance. As of
December 31, 2022, GEICO's gross unpaid losses were $24.8 billion and claim
liabilities, net of reinsurance recoverable, were $23.8 billion. GEICO's claim
reserving methodologies produce liability estimates based upon the individual
claims. The key assumptions affecting our liability estimates include
projections of ultimate claim counts ("frequency") and average loss per claim
("severity"). We utilize a combination of several actuarial estimation methods,
including Bornhuetter-Ferguson and chain-ladder methodologies.

Claim liability estimates for automobile liability coverages (such as bodily
injury ("BI"), uninsured motorists, and personal injury protection) are more
uncertain due to the longer claim-tails, so we establish additional case
development estimates. As of December 31, 2022, case development liabilities
averaged approximately 38% of the case reserves. We select case development
factors through analysis of the overall adequacy of historical case liabilities.

IBNR claim liabilities are based on projections of the ultimate number of claims
expected (reported and unreported) for each significant coverage. We use
historical claim count data to develop age-to-age projections of the ultimate
counts by quarterly accident period, from which we deduct reported claims to
produce the number of unreported claims. We estimate the average costs per
unreported claim and apply such estimates to the unreported claim counts,
producing an IBNR liability estimate. We may record additional IBNR estimates
when actuarial techniques are difficult to apply.

We test the adequacy of the aggregate claim liabilities using one or more
actuarial projections based on claim closure models and paid and incurred loss
triangles. Each type of projection analyzes loss occurrence data for claims
occurring in a given period and projects the ultimate cost.

Our claim liability estimates recorded at the end of 2021 were reduced by $653
million during 2022, which produced a corresponding increase to pre-tax
earnings. The assumptions used to estimate liabilities at December 31, 2022
reflect the most recent frequency and severity estimates. Future development of
recorded liabilities will depend on whether actual frequency and severity of
claims are more or less than anticipated.

With respect to liabilities for BI claims, we believe it is reasonably possible
that average claims severities will change by at least one percentage point from
the projected severities used in establishing the recorded liabilities at
December 31, 2022. We estimate that a one percentage point increase or decrease
in BI severities would produce a $245 million increase or decrease in recorded
liabilities, with a corresponding decrease or increase in pre-tax earnings. Many
of the economic forces that would likely cause BI severity to differ from
expectations would likely also cause severities for other injury coverages to
differ in the same direction.

                                      K-59
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Property and casualty insurance unpaid losses (Continued)

Berkshire Hathaway Reinsurance Group

BHRG's liabilities for unpaid losses and loss adjustment expenses derive
primarily from reinsurance contracts issued through the NICO, General Re and
TransRe Groups. A summary of BHRG's property and casualty unpaid losses and loss
adjustment expenses, other than retroactive reinsurance losses and loss
adjustment expenses, as of December 31, 2022 follows (in millions).


                                                 Property      Casualty       Total
Reported case liabilities                        $   8,314     $  12,136     $ 20,450
IBNR liabilities                                     9,084        21,041       30,125

Gross unpaid losses and loss adjustment expenses 17,398 33,177

50,575

Reinsurance recoverable                                787         1,439    

2,226

Net unpaid losses and loss adjustment expenses $ 16,611 $ 31,738

 $ 48,349




Gross unpaid losses and loss adjustment expenses consist primarily of
traditional property and casualty coverages written primarily under
excess-of-loss and quota-share treaties. Under certain contracts, coverage can
apply to multiple lines of business written and the ceding company may not
report loss data by such lines consistently, if at all. In those instances, we
judgmentally allocate losses to property and casualty coverages based on
internal estimates.

In connection with reinsurance contracts, the nature, extent, timing and
perceived reliability of loss information received from ceding companies varies
widely depending on the type of coverage and the contractual reporting terms.
Reinsurance contract terms, conditions and coverages also tend to lack
standardization and may evolve more rapidly than primary insurance policies.

The nature and extent of loss information provided under many facultative
(individual risk) or per occurrence excess contracts may be comparable to the
information received under a primary insurance contract. However, loss
information with respect to aggregate excess-of-loss and quota-share contracts
is often in a summary format rather than on an individual claim basis. Loss data
includes currently recoverable paid losses, as well as case loss estimates.
Ceding companies infrequently provide reliable IBNR loss estimates.

Loss reporting to reinsurers is typically slower than primary insurers. In the
U.S., client reporting is generally required at quarterly intervals ranging from
30 to 90 days after the end of the quarterly period, while outside of the U.S.,
reinsurance reporting practices may vary further. In certain countries, clients
report annually from 90 to 180 days after the end of the annual period. To the
extent that reinsurers assume and cede underlying risks from other reinsurers,
further delays in claims reporting may occur. The relative impact of reporting
delays on the reinsurer may vary depending on the type of coverage, contractual
reporting terms, the magnitude of the claim relative to the attachment point of
the reinsurance coverage and other reasons.

As reinsurers, the premium and loss data we receive is at least one level
removed from the underlying claimant, so there is a risk that the loss data
reported is incomplete, inaccurate or the claim is outside the coverage terms.
We maintain certain internal procedures to determine that the information is
complete and in compliance with the contract terms. Generally, our reinsurance
contracts permit us to access the ceding company's records with respect to the
subject business, thus providing the ability to audit the reported information.
In the normal course of business, disputes occasionally arise concerning whether
claims are covered by our reinsurance policies. We resolve most coverage
disputes through negotiation with the client. If disputes cannot be resolved,
our contracts generally provide arbitration or alternative dispute resolution
processes. We believe there are no coverage disputes at this time for which an
adverse resolution would likely have a material impact on our consolidated
results of operations or financial condition.

Establishing claim liability estimates for reinsurance assumed requires
evaluation of loss information received from our clients. We generally rely on
the ceding companies' reported case loss estimates. We independently evaluate
certain reported case losses and if appropriate, we use our own case liability
estimate. For instance, as of December 31, 2022, our case loss estimates
exceeded ceding company estimates by approximately $650 million for certain
legacy workers' compensation claims occurring over 10 years ago. We also
periodically conduct detailed reviews of individual client claims, which may
cause us to adjust our case estimates.

                                      K-60
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Property and casualty insurance unpaid losses (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Although liabilities for losses are initially determined based on pricing and
underwriting analysis, we use a variety of actuarial methodologies that place
reliance on the extrapolation of historical data, loss development patterns,
industry data and other benchmarks. The estimate of the IBNR liabilities also
requires judgment by actuaries and management to reflect the impact of
additional factors like change in business mix, volume, claim reporting and
handling practices, inflation, social and legal environment and the terms and
conditions of the contracts. The methodologies generally fall into or are
hybrids of one or more of the following categories:

Paid and incurred loss development methods - These methods consider expected
case loss emergence and development patterns, together with expected loss ratios
by year. Factors affecting our loss development analysis include, but are not
limited to, changes in the following: client claims reporting and settlement
practices, the frequency of client company claim reviews, policy terms and
coverage (such as loss retention levels and occurrence and aggregate policy
limits), loss trends and legal trends that result in unanticipated losses.
Collectively, these factors influence our selections of expected case loss
emergence patterns.

Incurred and paid loss Bornhuetter-Ferguson methods - These methods consider
actual paid and incurred losses and expected patterns of paid and incurred
losses, taking the initial expected ultimate losses into account to determine an
estimate of the expected unpaid or unreported losses.

Frequency and severity methods - These methods commonly focus on a review of the
number of anticipated claims and the anticipated claims severity and may also
rely on development patterns to derive such estimates. However, our processes
and techniques for estimating liabilities in such analyses generally rely more
on a per-policy assessment of the ultimate cost associated with the individual
loss rather than with an analysis of historical development patterns of past
losses.

Additional analysis - In some cases we have established reinsurance claim
liabilities on a contract-by-contract basis, determined from case loss estimates
reported by the ceding company and IBNR liabilities that are primarily a
function of an anticipated loss ratio for the contract and the reported case
loss estimate. Liabilities are adjusted upward or downward over time to reflect
case losses reported versus expected case losses, which we use to form revised
judgment on the adequacy of the expected loss ratio and the level of IBNR
liabilities required for unreported claims. Anticipated loss ratios are also
revised to include estimates of known major catastrophe events.

Our claim liability estimation process for short-tail lines, primarily property
exposures, utilizes a combination of the paid and incurred loss development
methods and the incurred and paid loss Bornhuetter-Ferguson methods. Certain
catastrophe, individual risk and aviation excess-of-loss contracts tend to
generate low frequency/high severity losses. Our processes and techniques for
estimating liabilities under such contracts generally rely more on a per
contract assessment of the ultimate cost associated with the individual loss
event rather than with an analysis of the historical development patterns of
past losses.

For our long-tail lines, primarily casualty exposures, we may rely on different
methods depending on the maturity of the business, with estimates for the most
recent years being based on priced loss expectations and more mature years
reflecting the paid or incurred development pattern indications.

In 2022, certain workers' compensation claims reported losses were less than
expected. As a result, we reduced estimated ultimate losses for prior years'
loss events by $114 million. We estimate that increases of ten percent in the
tail of the expected loss emergence pattern and in the expected loss ratios
would produce a net increase of approximately $1.1 billion in IBNR liabilities,
producing a corresponding decrease in pre-tax earnings. We believe it is
reasonably possible for these assumptions to increase at these rates.

For other casualty losses, other than asbestos, environmental and other latent
injury claims, we reduced estimated ultimate liabilities for prior years' events
by approximately $650 million in 2022. For certain significant casualty and
general liability portfolios, we estimate that increases of five percent in the
claim-tails of the expected loss emergence patterns and in the expected loss
ratios would produce a net increase in our nominal IBNR liabilities and a
corresponding reduction in pre-tax earnings of approximately $980 million,
although outcomes of greater than or less than $980 million are possible given
the diversification in worldwide business.

The change in estimated ultimate liabilities for asbestos, environmental and
other latent injury claims, excluding amounts assumed under retroactive
reinsurance contracts was not significant in 2022. Net liabilities for such
claims were approximately $2.1 billion at December 31, 2022. Loss estimations
for these exposures are difficult to determine due to the changing legal
environment and increases may be required in the future if new exposures or
claimants are identified, new claims are reported or new theories of liability
emerge.

                                      K-61
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Property and casualty insurance unpaid losses (Continued)

Retroactive reinsurance

Our retroactive reinsurance contracts cover loss events occurring before the
contract inception dates. Claim liabilities associated with our retroactive
reinsurance contracts predominately pertain to casualty or liability exposures.
We expect the claim-tails to be very long. At December 31, 2022, gross unpaid
losses were $35.4 billion and deferred charges were $9.9 billion.

Our contracts are generally subject to maximum limits of indemnifications and,
as such, we currently expect that maximum remaining gross losses payable under
our retroactive policies will not exceed $52 billion. Absent significant
judicial or legislative changes affecting asbestos, environmental or latent
injury exposures, we also currently believe it unlikely that losses will develop
upward to the maximum losses payable or downward by more than 15% of our
estimated gross liability.

We establish liability estimates by individual contract, considering exposure
and development trends. In establishing our liability estimates, we often
analyze historical aggregate loss payment patterns and project expected ultimate
losses under various scenarios. We assign judgmental probability factors to
these scenarios and an expected outcome is determined. We then monitor
subsequent loss payment activity and review ceding company reports and other
available information concerning the underlying losses. We re-estimate the
expected ultimate losses when significant events or significant deviations from
expectations are revealed.

Certain of our retroactive reinsurance contracts include asbestos, environmental
and other latent injury claims. Our estimated liabilities for such claims were
approximately $12.1 billion at December 31, 2022. We do not consistently receive
reliable detailed data regarding asbestos, environmental and latent injury
claims from all ceding companies, particularly with respect to multi-line or
aggregate excess-of-loss policies. When possible, we conduct a detailed analysis
of the underlying loss data to make an estimate of ultimate reinsured losses.
When detailed loss information is unavailable, we develop estimates by applying
recent industry trends and projections to aggregate client data. Judgments in
these areas necessarily consider the stability of the legal and regulatory
environment under which we expect claims will be adjudicated. Legal reform and
legislation could also have a significant impact on our ultimate liabilities.

We increased estimated ultimate liabilities for prior years' retroactive
reinsurance contracts by $86 million in 2022. In 2022, we paid losses and loss
adjustment expenses of $2.4 billion with respect to our retroactive reinsurance
contracts.

In connection with our retroactive reinsurance contracts, we also record
deferred charges, which at contract inception represents the excess, if any, of
the estimated ultimate liability for unpaid losses over premiums received. We
amortize deferred charges, which produces charges to pre-tax earnings in future
periods based on the expected timing and amount of loss payments. We adjust
deferred charge balances due to changes in the expected timing and ultimate
amount of claim payments and the effects of the adjustments are included in
pre-tax earnings. Significant changes in such estimates may have a significant
effect on unamortized deferred charge balances. Based on the contracts in effect
as of December 31, 2022, we estimate that amortization expense in 2023 will
approximate $860 million.

Other Critical Accounting Policies

Our Consolidated Balance Sheet at December 31, 2022 includes goodwill of
acquired businesses of $78.1 billion and other indefinite-lived intangible
assets of $18.3 billion. We evaluate these assets for impairment annually in the
fourth quarter and on an interim basis if the facts and circumstances lead us to
believe that more likely than not there has been an impairment.

Goodwill and indefinite-lived intangible asset impairment reviews include
determining the estimated fair values of our reporting units and
indefinite-lived intangible assets. The key assumptions and inputs used in such
determinations may include forecasting revenues and expenses, cash flows and
capital expenditures, as well as an appropriate discount rate and other inputs.
Significant judgment by management is required in estimating the fair value of a
reporting unit and in performing impairment reviews. Due to the inherent
subjectivity and uncertainty in forecasting future cash flows and earnings over
long periods of time, actual results may differ materially from the forecasts.
If the carrying value of the indefinite-lived intangible asset exceeds fair
value, the excess is charged to earnings as an impairment loss. If the carrying
value of a reporting unit exceeds the estimated fair value of the reporting
unit, then the excess, limited to the carrying amount of goodwill, will be
charged to earnings as an impairment loss.

                                      K-62
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Other Critical Accounting Policies (Continued)

As of December 31, 2022, we concluded it was more likely than not that goodwill
recorded in our Consolidated Balance Sheet was not impaired. The fair value
estimates of reporting units are and will likely be significantly affected by
assumptions on the long-term effects of the COVID-19 pandemic on the reporting
units businesses, as well as other assumptions concerning the long-term economic
performance of the reporting units, which we cannot reliably predict.
Consequently, any fair value estimates can be subject to wide variations.

We primarily use discounted projected future earnings or cash flow methods in
determining fair values. The key assumptions and inputs used in such methods may
include forecasting revenues and expenses, cash flows and capital expenditures,
as well as an appropriate discount rate and other inputs. A significant amount
of judgment is required in estimating the fair value of a reporting unit and in
performing goodwill impairment tests.

In connection with the annual goodwill impairment review conducted in the fourth
quarter of 2022, the estimated fair values of six reporting units did not exceed
our carrying values by at least 20%. The most significant of these reporting
units was Precision Castparts Corp. ("PCC"). Our estimated fair value of PCC was
approximately $31.5 billion, exceeding our carrying value of approximately $30.3
billion by 4.0%. Our carrying value of PCC included goodwill of approximately
$7.5 billion. For the five other reporting units, our aggregate estimated fair
value was approximately $4.5 billion, which exceeded our aggregate carrying
value of approximately $4.1 billion by 9.9%. Our carrying value of these units
included goodwill of approximately $1.4 billion.

In the second quarter of 2020, we quantitively reevaluated goodwill for
impairment for certain reporting units, and most significantly for PCC. As a
result of our reviews, we recorded pre-tax goodwill impairment charges of $10
billion and indefinite-lived intangible asset impairment charges of $638
million, of which approximately $10 billion related to PCC. Prior to the
reevaluation, the carrying value of PCC-related goodwill was approximately $17
billion. Additionally, the carrying value of PCC-related indefinite-lived
intangible assets was approximately $14 billion. Substantially all of these
amounts were recorded in connection with Berkshire's acquisition of PCC in 2016.
The initial effects of the COVID-19 pandemic on commercial airlines and aircraft
manufacturers were particularly severe. At that time, we considered several
factors in our reevaluation, including but not limited to the announcements by
airlines concerning potential future demand, employment levels and aircraft
orders, announcements by manufacturers of reduced aircraft production and the
actions we were taking to restructure operations. Consequently, we deemed it
prudent under the prevailing circumstances to increase discount rates and reduce
prior long-term forecasts of future cash flows for purposes of reviewing for
impairments.

Market Risk Disclosures

Our Consolidated Balance Sheets include substantial amounts of assets and
liabilities whose fair values are subject to market risks. Our significant
market risks are primarily associated with equity prices, interest rates,
foreign currency exchange rates and commodity prices. The fair values of our
investment portfolios remain subject to considerable volatility. The following
sections address the significant market risks associated with our business
activities.

Equity Price Risk

Equity securities represent the most significant portion of our consolidated
investment portfolio. Strategically, we strive to invest in businesses that
possess excellent economics and able and honest management, and we prefer to
invest a meaningful amount in each company. Historically, equity investments
have been concentrated in relatively few issuers. At December 31, 2022,
approximately 75% of the total fair value of equity securities was concentrated
in five companies.

We often hold our equity securities for long periods and short-term price
volatility has occurred in the past and will occur in the future. We also strive
to maintain significant levels of shareholder capital and ample liquidity to
provide a margin of safety against short-term price volatility.

                                      K-63
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Equity Price Risk (Continued)

For the past several years, we were also subject to equity price risk with
respect to our equity index put option contracts. However, substantially all of
the contracts written to date have expired.

The following table summarizes our significant assets and liabilities as of
December 31, 2022 and 2021 and the estimated effects of a hypothetical 30%
increase and a 30% decrease in market prices as of those dates. The selected 30%
hypothetical increase and decrease does not reflect the best or worst case
scenario. Indeed, results from declines could be far worse due both to the
nature of equity markets and the aforementioned concentrations existing in our
equity investment portfolio. Dollar amounts are in millions.


                                                                                                       Estimated
                                                                                   Estimated           Increase
                                                                               Fair Value After       (Decrease)
                                                                Hypothetical     Hypothetical           in Net
                                                Fair Value      Price Change   Change in Prices      Earnings (1)
December 31, 2022
Investments in equity securities               $    308,793     30% 

increase $ 399,087 $ 71,344

                                                                30% decrease             218,688           (71,195 )
December 31, 2021
Investments in equity securities               $    350,719     30% 

increase $ 452,936 $ 81,136

                                                                30% decrease             248,606           (81,053 )
Equity index put option contract liabilities             99     30% increase                   5                74
                                                                30% decrease               1,088              (781 )




(1)

The estimated increase (decrease) is after income taxes.

Interest Rate Risk

We may also invest in bonds, loans or other interest rate sensitive instruments.
Our strategy is to acquire or originate such instruments at prices considered
appropriate relative to the perceived credit risk. We also issue debt in the
ordinary course of business to fund business operations, business acquisitions
and for other general purposes. We attempt to maintain high credit ratings in
order to minimize the cost of our debt. We infrequently utilize derivative
products, such as interest rate swaps, to manage interest rate risks and we do
not attempt to match maturities of assets and liabilities.

The fair values of our fixed maturity investments, loans and finance receivables
and notes payable and other borrowings will fluctuate in response to changes in
market interest rates. Increases and decreases in interest rates generally
translate into decreases and increases in fair values of these instruments.
Additionally, fair values of interest rate sensitive instruments may be affected
by the creditworthiness of the issuer, prepayment options, relative values of
alternative investments, the liquidity of the instrument and other general
market conditions.

                                      K-64
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Interest Rate Risk (Continued)

The following table summarizes the estimated effects of hypothetical changes in
interest rates on our significant assets and liabilities that are subject to
significant interest rate risk at December 31, 2022 and 2021. We assumed that
the interest rate changes occur immediately and uniformly to each category of
instrument and that there were no significant changes to other factors used to
determine the value of the instrument. The hypothetical changes in interest
rates do not reflect the best or worst case scenarios. Actual results may differ
from those reflected in the table. Dollars are in millions.


                                                               Estimated 

Fair Value After Hypothetical Change in

Interest Rates (bp=basis points)

                                             Fair          100 bp             100 bp             200 bp         300 bp
                                            Value         decrease           increase           increase       increase
December 31, 2022
Assets:
Investments in fixed maturity securities   $ 25,128     $     25,619       $     24,659       $     24,215     $  23,794
Investments in equity securities*             9,964           10,434              9,523              9,109         8,719
Loans and finance receivables                23,428           24,249             22,633             21,907        21,228

Liabilities:

Notes payable and other borrowings:
Insurance and other                          41,961           45,535             38,941             36,367        34,157
Railroad, utilities and energy               67,651           74,698             61,725             56,710        52,430

December 31, 2021
Assets:
Investments in fixed maturity securities   $ 16,434     $     16,624       $     16,231       $     16,036     $  15,847
Investments in equity securities*            10,864           11,457             10,313              9,798         9,319
Loans and finance receivables                22,174           22,982             21,417             20,714        20,054

Liabilities:

Notes payable and other borrowings:
Insurance and other                          42,339           46,559             38,724             35,683        33,104
Railroad, utilities and energy               87,065           97,474             78,472             71,289        65,246

* Includes Cumulative Perpetual Preferred Stocks

Foreign Currency Risk

Certain of our subsidiaries operate in foreign jurisdictions and we transact
business in foreign currencies. In addition, we hold investments in common
stocks of major multinational companies, who have significant foreign business
and foreign currency risk of their own. We generally do not attempt to match
assets and liabilities by currency and do not use derivative contracts to manage
foreign currency risks in a meaningful way.

                                      K-65
--------------------------------------------------------------------------------

Management's Discussion and Analysis (Continued)

Foreign Currency Risk (Continued)

Our net assets subject to financial statement translation into U.S. Dollars are
primarily in our insurance, utilities and energy and certain manufacturing and
service subsidiaries. A portion of our financial statement translation-related
impact from changes in foreign currency rates is recorded in other comprehensive
income. In addition, we include gains or losses from changes in foreign currency
exchange rates in net earnings related to non-U.S. Dollar denominated assets and
liabilities of Berkshire and its U.S.-based subsidiaries. A summary of these
gains (losses), after-tax, for each of the years ending December 31, 2022 and
2021 follows (in millions).


                                                            2022             2021

Non-U.S. denominated debt included in net earnings $ 1,263 $

955

Net liabilities under certain reinsurance contracts
included in net earnings

                                         263        

58

Foreign currency translation included in other
comprehensive income                                          (2,045 )         (1,021 )


Commodity Price Risk

Our subsidiaries use commodities in various ways in manufacturing and providing
services. As such, we are subject to price risks related to various commodities.
In most instances, we attempt to manage these risks through the pricing of our
products and services to customers. To the extent that we are unable to sustain
price increases in response to commodity price increases, our operating results
will likely be adversely affected. We generally do not utilize derivative
contracts to manage commodity price risks to any significant degree.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

See "Market Risk Disclosures" contained in Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Management's Report on Internal Control Over Financial Reporting

Management of Berkshire Hathaway Inc. is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is
defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the Company's internal control over financial
reporting as of December 31, 2022, as required by the Securities Exchange Act of
1934 Rule 13a-15(c). In making this assessment, we used the criteria set forth
in the framework in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on our
evaluation under the framework in Internal Control-Integrated Framework (2013),
our management concluded that our internal control over financial reporting was
effective as of December 31, 2022.

The effectiveness of our internal control over financial reporting as of
December 31, 2022 has been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their report which appears on
page K-67.

Berkshire Hathaway Inc.
February 25, 2023

                                      K-66

--------------------------------------------------------------------------------