Berkshire Hathaway Profits Drop
Warren Buffett's Berkshire Hathaway reported a drop in quarterly profit, dragged down by its insurance operations. The company also took a writedown on its stake in Occidental Petroleum. The results reflect broader pressures on the insurance industry from higher catastrophe losses and increased competition.
The drop in operating earnings for the fourth quarter was significant, falling over 29% to $10.2 billion. This report is the first under new CEO Greg Abel, who took the reins from Warren Buffett in January 2026, with Buffett remaining as chairman. The decline in the insurance business was stark, with underwriting profits plummeting 54% to $1.56 billion. Abel noted in his first shareholder letter that increased competition and capital in the reinsurance market are leading to price declines, which will likely result in Berkshire writing less property and casualty business for a period. The writedown on Occidental Petroleum was part of a larger $4.5 billion pre-tax impairment that also included an investment in Kraft Heinz. Berkshire began accumulating its stake in Occidental in 2019, helping to finance the oil company's purchase of Anadarko Petroleum, and now owns more than 26% of the company. While insurance operations faltered, other segments of the conglomerate showed resilience. For the full year, the BNSF railroad business saw operating earnings grow by approximately 9%, and the manufacturing, retail, and service businesses posted modest gains. Despite the profit dip, Berkshire's massive cash hoard remained largely intact, ending the year at $373.3 billion. The company did not repurchase any of its shares during the final quarter of 2025. For the full year of 2025, Berkshire Hathaway's Class A shares saw a 10% increase. This performance lagged the broader market, as the S&P 500 index advanced 16.4% during the same period.
