Berkshire Hathaway Profits Tumble
Berkshire Hathaway's post-Buffett era is hitting turbulence, with the conglomerate reporting a significant drop in quarterly profits. The decline is being blamed on weakness in its insurance operations and a costly writedown of its investment in Occidental Petroleum, reflecting broader market volatility and energy sector risks.
The fourth-quarter operating profit saw a steep 30% fall to $10.2 billion, a significant drop from the $14.53 billion reported in the same quarter of the previous year. For the entire year, operating profit experienced a 6% decline, settling at $44.49 billion. A major factor in the profit decline was a $4.5 billion writedown on Berkshire's investment in Occidental Petroleum. The company indicated this was because the oil company's recent stock price decline was not considered "temporary." This follows another significant writedown earlier in 2025 on its Kraft Heinz investment. The company's core insurance operations faced considerable headwinds, with quarterly profits from the sector falling by 38%. Insurance underwriting profits specifically plummeted 54% in the fourth quarter. This was attributed to falling interest rates and pricing pressures that limited customer growth at GEICO and its reinsurance businesses. This earnings report is the first under the new leadership of CEO Greg Abel, who took over from Warren Buffett at the start of 2026. In his first annual letter to shareholders, Abel paid tribute to his predecessor and pledged to maintain the company's disciplined investment approach. Despite the downturn in profits, Berkshire Hathaway ended 2025 with a massive cash pile of $373.3 billion. This provides new CEO Greg Abel with substantial capital for potential major acquisitions. For the thirteenth consecutive quarter, Berkshire was a net seller of stocks and did not repurchase any of its own shares for the sixth straight quarter. The company's Class A shares also underperformed the S&P 500 in 2025, rising 10% compared to the index's 16.4% gain.
