Berkshire Hathaway Profits Fall
Berkshire Hathaway reported a drop in quarterly profit, driven by weakness in its insurance operations. The conglomerate also wrote down its stake in Occidental Petroleum, reflecting recent volatility in energy markets.
A nearly 30% drop in fourth-quarter operating earnings was driven by a 54% plunge in insurance underwriting profits, which fell to $1.56 billion from $3.41 billion a year earlier. Insurance investment income also slid by almost 25% to $3.1 billion. For the full year, insurance underwriting profits dropped to $7.26 billion from $9 billion in 2024. The reported weakness in the insurance division stems from pricing pressures and increased competition. Auto insurer GEICO, a key Berkshire subsidiary, has been facing rising claims costs and has increased rates, which has impacted customer retention. In his first letter to shareholders, new CEO Greg Abel noted these trends and stated that the company will likely write less property and casualty business for a period of time. Berkshire recorded a $4.5 billion writedown on its investment in Occidental Petroleum in the fourth quarter. The company attributed the impairment to a decline in the oil company's stock price that was not considered "temporary." This followed a separate $3.76 billion writedown of its Kraft Heinz investment earlier in 2025. The energy sector faced headwinds in the latter half of 2025, with realized oil prices for companies like Occidental falling to around $59 per barrel in the fourth quarter, down from nearly $70 a year prior. Despite the writedown, Berkshire has stated it does not intend to sell its Occidental shares. Not all of Berkshire's diverse holdings underperformed. The BNSF railroad business saw its operating income rise about 5% year-over-year to $1.3 billion in the fourth quarter. The manufacturing, service, and retailing segment also posted a 3% gain in operating income, reaching $3.4 billion. This earnings report marks a significant transition, being the first since Greg Abel took over as CEO from Warren Buffett, who remains chairman. In his inaugural shareholder letter, Abel paid tribute to his predecessor and affirmed his commitment to maintaining Berkshire's long-standing culture of financial discipline. The conglomerate's massive cash hoard dipped slightly to $373.3 billion from a record $381.6 billion in the third quarter. The company did not repurchase any of its shares for the sixth consecutive quarter. For the full year of 2025, Berkshire Hathaway's operating earnings totaled $44.49 billion, a decrease from $47.44 billion in the prior year. Overall net earnings for 2025 fell to $66.97 billion from $89 billion in 2024, a figure that includes the fluctuation of its massive stock market investments.
