Berkshire Hathaway Profits Fall on Insurance Weakness
Warren Buffett's Berkshire Hathaway reported a drop in quarterly profits, dragged down by its insurance operations and a writedown of its investment in Occidental Petroleum. The results highlight growing pressures in the insurance and energy sectors from inflation and asset volatility.
The recent profit decline reflects a significant downturn in Berkshire Hathaway's insurance underwriting earnings, which plummeted 54% to $1.56 billion in the fourth quarter. The company's insurance investment income also saw a substantial drop of nearly 25% to $3.1 billion. For the full year, insurance underwriting profits fell to $7.26 billion from $9 billion in the previous year. This report marks the first earnings release since Greg Abel took over as CEO in January 2026, with Warren Buffett remaining as chairman. In his first annual letter to shareholders, Abel acknowledged the headwinds in the insurance sector and indicated the company would likely write less property and casualty business for a period. This follows a trend where increased competition and lower rates have led to volume reductions in property reinsurance. A $4.5 billion impairment charge on Berkshire's investments in Occidental Petroleum and Kraft Heinz also impacted the quarterly results. Despite the writedown on Occidental, Berkshire has stated it does not intend to sell its shares in the oil company. This is the second writedown in 2025, with a previous one on its Kraft Heinz investment. The conglomerate's massive cash pile decreased slightly to $373.3 billion from a record $381.6 billion in the third quarter. For the sixth consecutive quarter, Berkshire did not repurchase any of its own shares. The company has also been a net seller of stocks for thirteen straight quarters. While the insurance and investment segments faced challenges, other parts of the sprawling conglomerate showed resilience. The railroad business, BNSF, saw its operating earnings rise approximately 5% to $1.3 billion. The manufacturing, service, and retailing sectors also posted a 3% growth in earnings, generating $3.4 billion. For the full year of 2025, Berkshire's operating earnings fell 6.2% to $44.49 billion. Overall net earnings, which include the fluctuation of its stock investments, saw a more significant drop of 25% to $66.97 billion for the year. Buffett has consistently advised investors to focus on operating earnings rather than the swings in net earnings caused by accounting rules.
