Berkshire Hathaway Profits Decline
Berkshire Hathaway reported a drop in quarterly profit, driven by weakness in its insurance operations. The results were also hit by a writedown of its stake in Occidental Petroleum, reflecting broader challenges in the insurance sector.
The conglomerate's operating profit for the fourth quarter plummeted by 30% to $10.2 billion, down 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. A significant contributor to the decline was a $4.5 billion writedown on Berkshire's investment in Occidental Petroleum. The company indicated this was due to the belief that the oil company's recent stock price decline was not "temporary." This follows another major impairment charge of $3.76 billion on its Kraft Heinz investment earlier in 2025. The core insurance businesses faced considerable headwinds, with quarterly underwriting profits plunging 54% and investment income from insurance dropping nearly 25%. Operations like GEICO have been contending with rising claims and increased advertising expenses, while pricing pressures have limited customer growth. These results mark the final quarter with Warren Buffett as CEO. His successor, Greg Abel, officially took over the role at the start of 2026, with Buffett remaining as chairman. Abel, who previously headed Berkshire's non-insurance operations, inherits a massive cash hoard of $373.3 billion. In his first annual letter to shareholders, Abel paid tribute to his predecessor and pledged to maintain the company's foundational strategies. Despite the profit dip, Berkshire has refrained from share buybacks for six consecutive quarters and has been a net seller of stocks for thirteen straight quarters. While the insurance and investment segments struggled, other parts of the sprawling conglomerate showed resilience. The BNSF railroad, for example, saw its profits increase by 6% in the fourth quarter. However, manufacturing, retail, and service businesses reported only modest gains amid "sluggish" consumer demand.
