Berkshire Hathaway Profits Drop
Warren Buffett’s Berkshire Hathaway reported a drop in quarterly profit, a key indicator for the broader U.S. economy. The conglomerate cited weakness in its insurance operations due to rising claims and a significant writedown on its Occidental Petroleum investment amid market volatility.
The drop in operating profit for the fourth quarter was significant, falling over 29% to $10.2 billion from $14.56 billion in the same period a year earlier. For the full year, operating earnings declined 6% to $44.49 billion, while net income fell a steeper 25% to $66.97 billion. The insurance division was a primary driver of the weakness, with underwriting profits plunging 54% to $1.56 billion. This was attributed to rising claims, competitive pricing that limited customer growth for units like GEICO, and a nearly 25% dip in income from insurance investments. The writedown on the Occidental Petroleum stake amounted to a substantial $4.5 billion. This followed another significant impairment charge earlier in the year, a $3.76 billion writedown of its investment in Kraft Heinz. Despite the charge, Berkshire stated it has no intention to sell its Occidental shares. These results were released during a major leadership transition. The quarter was Warren Buffett's last as CEO, with his successor Greg Abel officially taking the helm at the start of 2026. In his first annual letter, Abel pledged to maintain the company's culture and capital discipline. Not all segments underperformed. The BNSF railroad business proved to be a bright spot, with its profits rising 6% during the fourth quarter. However, profits from Berkshire Hathaway Energy fell by 5%. The company's massive cash hoard dipped slightly but remains near record levels at $373.3 billion, giving new CEO Greg Abel significant capital for potential acquisitions. This report also marked the sixth consecutive quarter where Berkshire Hathaway did not buy back any of its own shares.
