Berkshire Hathaway Profits Tumble
Berkshire Hathaway reported a significant drop in quarterly profit, hit by weakness in its core insurance operations and a writedown on its investment in Occidental Petroleum. The conglomerate's insurance arm, typically a cash cow, faced higher claim costs and lower underwriting income, raising questions about the sector's resilience.
The fourth-quarter operating earnings saw a steep 29% decline to $10.2 billion from $14.56 billion a year earlier. This was the final quarter with Warren Buffett as CEO; his successor, Greg Abel, took the helm at the beginning of 2026 and has pledged to maintain the company's core financial discipline. For the full year, operating profit fell 6% to $44.49 billion. A significant driver of the decline was a 54% plunge in insurance underwriting profits, which fell to $1.56 billion. The property and casualty sector is grappling with broad inflationary pressures, including the surging costs of auto parts, building materials, and labor for repairs. Increased litigation expenses and "social inflation" are also contributing to higher claims costs across the industry. The company booked a $4.5 billion writedown on its investment in Occidental Petroleum, reflecting a view that the oil giant's recent stock price decline was not temporary. Berkshire first invested $10 billion in 2019 to help Occidental finance its acquisition of Anadarko Petroleum, in what was seen as a long-term bet on oil prices and the Permian Basin. Berkshire has stated it does not intend to sell its Occidental shares. It wasn't all bad news across the conglomerate's vast holdings. The BNSF railroad division saw its profits rise by approximately 5% to $1.3 billion. However, profits from Berkshire Hathaway Energy fell over the same period. The diverse manufacturing, service, and retailing segment reported a 3% increase in earnings to $3.4 billion for the quarter. This modest growth came despite what the company described as "sluggish" consumer demand impacting well-known brands like Duracell and Fruit of the Loom. In his first letter to shareholders, new CEO Greg Abel emphasized continuity with the culture built by Buffett. He also confirmed that initiating a dividend is not under consideration and that he will not rush to deploy Berkshire's massive cash reserves, which stood at $373.3 billion at the end of the year. The company has now been a net seller of stocks for 13 consecutive quarters.
