Berkshire Hathaway Profits Dip on Insurance Weakness

The conglomerate's operating earnings, a key metric watched by investors, fell by approximately 30% to $10.2 billion in the fourth quarter compared to the same period last year. For the full year, operating profit saw a 6% decline to $44.49 billion. A significant driver of this decline was the insurance underwriting business, where profits plunged 54% to $1.56 billion in the fourth quarter. This was attributed to rising claims, increased advertising spending at Geico, and competitive pricing pressures that limited growth. The writedown on Occidental Petroleum amounted to a $4.5 billion impairment charge. Berkshire indicated this move reflects the view that the oil company's stock price decline was not a temporary issue, though it does not intend to sell its stake. This comes in addition to another significant writedown on its Kraft Heinz investment earlier in 2025. This earnings report marks the final quarter with Warren Buffett as CEO, with Greg Abel taking the helm at the start of 2026. In his first annual letter, Abel pledged to uphold the company's long-standing culture of financial discipline and capital strength. Despite the profit dip, Berkshire Hathaway's cash hoard remains substantial, ending the year at $373.3 billion. This provides the new leadership with significant capital for potential acquisitions. For the thirteenth consecutive quarter, the company was a net seller of stocks and did not repurchase any of its own shares. While the insurance sector faced headwinds, other parts of the conglomerate showed mixed results. The BNSF railroad business saw a modest rise in earnings, as did the manufacturing, service, and retailing businesses, despite what the company described as "sluggish" consumer demand.