Berkshire Hathaway Profit Falls
Berkshire Hathaway reported a drop in quarterly profit, dragged down by weakness in its insurance operations and a writedown on its Occidental Petroleum investment. The conglomerate's results reflect wider market headwinds, as its insurance units faced higher claims costs. The Occidental writedown also highlights the company's exposure to volatility in the energy sector.
The drop in operating earnings for the fourth quarter was significant, falling by more than 29% to $10.2 billion from $14.56 billion in the same period a year earlier. For the full year, operating earnings declined to $44.49 billion from $47.44 billion in the prior year. The insurance division's underwriting profits experienced a steep 54% decline in the fourth quarter, falling to $1.56 billion. Adding to the pressure, income from the company's vast insurance investments also slid by nearly 25% to $3.1 billion. This earnings report marks the final quarter under the leadership of Warren Buffett as CEO. His successor, Greg Abel, took the helm at the start of 2026, vowing to maintain the financial discipline and culture built by Buffett, who remains as chairman. The quarter's results were also impacted by a significant impairment charge of $4.5 billion related to Berkshire's investments in Kraft Heinz and Occidental Petroleum. Despite the writedown on its Occidental stake, Berkshire has indicated it does not intend to sell the shares. Not all of the conglomerate's diverse businesses faced headwinds. The BNSF railroad division saw its operating earnings grow by approximately 9% in 2025, while the energy segment's earnings increased by about 7%. Looking ahead, new CEO Greg Abel noted in his first annual letter that after several years of favorable pricing, the insurance industry saw a deceleration of these trends in late 2025. He indicated that this likely means Berkshire will write less property and casualty business for a period of time. Despite the profit dip and a lack of share buybacks in the fourth quarter, Berkshire's cash hoard remains immense. The company ended the year with $373.3 billion in cash and equivalents, providing substantial capital for future investments and acquisitions under its new leadership.
