Berkshire Hathaway Profits Drop on Insurance Weakness
Warren Buffett's Berkshire Hathaway has reported a drop in quarterly profits, driven by weakness in its insurance operations. The conglomerate also took a significant writedown on its stake in Occidental Petroleum, reflecting broader volatility facing the insurance and energy sectors.
The conglomerate's operating earnings for the fourth quarter of 2025 fell by over 29% to $10.2 billion compared to the same period in the previous year. This decline was largely driven by a significant 54% drop in insurance underwriting profits, which fell to $1.56 billion. A major factor in the reported drop in overall earnings was a $4.5 billion impairment charge on Berkshire's investments in Occidental Petroleum and Kraft Heinz. Despite the writedown on Occidental, the company has stated it does not intend to sell its shares. This earnings report marks the final quarter with Warren Buffett as CEO, with Greg Abel taking the helm at the beginning of 2026. Buffett will remain as chairman. Abel, in his first letter to shareholders, pledged to maintain the company's established culture of financial discipline. For the full year of 2025, Berkshire's operating earnings saw a 6.2% decrease to $44.49 billion. Net income for the year also experienced a substantial 25% drop to $66.97 billion. While the insurance sector faced headwinds, other segments of the conglomerate showed more resilience. The railroad business, BNSF, and the energy division both outperformed the insurance operations in 2025. Berkshire Hathaway's massive cash hoard saw a slight dip but remained substantial at $373.3 billion at the end of 2025. The company notably abstained from share buybacks for the sixth consecutive quarter. The performance of Berkshire Hathaway's Class A shares in 2025 lagged behind the broader market, with a 10% increase compared to the S&P 500's 16.4% advance. This marks a period of underperformance as the leadership transition takes place.
