Berkshire Hathaway Profits Drop
Warren Buffett's Berkshire Hathaway reported a drop in quarterly profits, driven by ongoing weakness in its core insurance operations. The results were also hit by a significant writedown related to its investment in Occidental Petroleum, raising questions about the conglomerate's direction under designated successor Greg Abel.
The recent drop in Berkshire Hathaway's operating profit was significant, falling 30% to $10.2 billion in the fourth quarter from $14.53 billion a year earlier. For the full year, operating profit saw a 6% decline to $44.49 billion. This occurred during Warren Buffett's final quarter as CEO before Greg Abel took the helm in January 2026, with Buffett remaining as chairman. A major factor in the profit decline was a $4.5 billion writedown on the company's investment in Occidental Petroleum. Berkshire indicated this was due to a belief that the recent drop in the oil company's stock price was not "temporary." This follows another significant writedown earlier in 2025 related to its investment in Kraft Heinz. The core insurance businesses faced considerable headwinds, with quarterly insurance profit falling 38% to $4.63 billion. Insurance underwriting profits for the fourth quarter plummeted by 54%. The company cited pricing pressures and falling interest rates as limiting factors for its GEICO and reinsurance businesses. This leadership transition to Greg Abel, former vice chairman of non-insurance operations, comes as Berkshire sits on a massive cash pile of $373.3 billion. However, the company has not engaged in share buybacks for six consecutive quarters and was a net seller of stocks for the 13th straight quarter. In his first annual letter to shareholders, Abel paid tribute to Buffett, calling him "arguably the greatest investor of all time," and pledged to maintain the company's investment discipline. Abel, who has been with Berkshire since 2000, previously led Berkshire Hathaway Energy, transforming it into a major producer of wind energy. While seen as more hands-on than Buffett, Abel is not expected to initiate major shake-ups, adhering to Berkshire's decentralized business model. He has emphasized his commitment to strengthening the legacy built by Buffett and his late partner Charlie Munger. The conglomerate's performance has recently trailed the broader market. Since Buffett announced he was stepping down as CEO, Berkshire shares have underperformed the S&P 500.
