Berkshire Hathaway Profits Tumble
Warren Buffett's Berkshire Hathaway reported a significant drop in quarterly profit, reflecting broader market headwinds. The decline was driven primarily by weakness in its insurance operations and a writedown on its investment in Occidental Petroleum.
The reported drop in Berkshire Hathaway's operating earnings for the fourth quarter of 2025 was a significant 29%, falling to $10.2 billion from $14.56 billion in the same period of the prior year. For the full year, operating earnings saw a 6.2% decrease to $44.49 billion. Net income for 2025 also dropped by 25% to $66.97 billion. A major contributor to this decline was the insurance division, where underwriting profits plunged by 54% to $1.56 billion in the fourth quarter. For the full year of 2025, insurance underwriting profits were $7.26 billion, down from $9 billion in 2024. The property and casualty insurance sector is facing challenges from rising claim costs due to inflation and an increase in the frequency of natural disasters. The company also took a significant $4.5 billion impairment on its investments in both Occidental Petroleum and Kraft Heinz. The writedown of the Occidental stake was prompted by the oil company's declining stock price, which Berkshire no longer considered a temporary fluctuation. Occidental's stock has been impacted by falling crude oil prices and a high debt load. This earnings report marks a significant transition period for the company, as it was the final quarter with Warren Buffett as CEO. Greg Abel, a long-time Berkshire executive, officially took over as CEO at the beginning of 2026, with Buffett remaining as chairman of the board. Abel joined Berkshire Hathaway in 2000 after the acquisition of MidAmerican Energy, where he was president. He was later appointed Vice Chairman of Non-Insurance Business Operations in 2018, overseeing a wide range of Berkshire's subsidiaries. Despite the downturn in profits, Berkshire Hathaway's cash hoard remains substantial, ending 2025 at $373.3 billion. The company did not buy back any of its shares in the fourth quarter. Looking ahead, new CEO Greg Abel has indicated that Berkshire's insurance businesses may write less property and casualty business for a period due to increased competition and lower rates. In his first letter to shareholders, Abel affirmed his commitment to maintaining the company's culture of financial strength and disciplined capital allocation.
