Berkshire Hathaway Profit Falls
Warren Buffett’s Berkshire Hathaway reported a drop in quarterly profit, driven by weakness in its insurance operations and a writedown on its Occidental Petroleum investment. The results from the economic bellwether highlight the impact of inflation and geopolitical risk on even diversified conglomerates.
Fourth-quarter operating profit plunged by 30% to $10.2 billion, a significant drop from $14.53 billion in the same period a year earlier. For the full year, operating profit saw a 6% decrease to $44.49 billion. The insurance division, a core part of Berkshire's operations, faced considerable headwinds. Quarterly insurance profit fell by 38%, hampered by the impact of falling interest rates on the company's extensive cash reserves and increased pricing pressure on its GEICO and reinsurance businesses. Insurance underwriting profits specifically dropped a staggering 54% to $1.56 billion. A significant factor in the profit decline was a $4.5 billion writedown on Berkshire's investment in Occidental Petroleum. The company indicated this was due to concerns that the oil company's falling stock price was not a temporary issue. This follows another substantial writedown of its Kraft Heinz investment earlier in 2025. This earnings report marks a transitional period for the conglomerate, being the last under Warren Buffett's tenure as CEO. His successor, Greg Abel, has taken the helm and, in his first annual letter, pledged to uphold Buffett's investment discipline. Despite the profit dip, Berkshire Hathaway ended 2025 with a massive cash hoard of $373.3 billion, providing new CEO Greg Abel with significant capital for potential acquisitions. The company has now gone 13 consecutive quarters selling more stocks than it has bought and has not engaged in share buybacks for six straight quarters. Net income, which includes the fluctuating value of Berkshire's massive stock portfolio, saw a smaller dip of 3% for the quarter to $19.2 billion. However, for the full year, net income fell more sharply by 25% to $66.97 billion. Looking ahead, new CEO Greg Abel has acknowledged the need for improved operating performance in some of Berkshire's businesses. In his letter, he paid tribute to Buffett as a "remarkable CEO" and "arguably the greatest investor of all time."
