OMAHA, Neb. — Berkshire Hathaway Inc. disclosed a significant downturn in its operating earnings for the fourth quarter of 2025, marking the final financial report under the stewardship of longtime CEO Warren Buffett. The conglomerate, known for its diverse portfolio spanning insurance, railroads, energy, and consumer goods, announced operating earnings of $10.2 billion for the period ending December 31, 2025, a decline of more than 29 percent from the $14.56 billion recorded in the same quarter a year earlier. This drop was largely attributed to challenges in the company's insurance operations, a cornerstone of its business model.
The earnings release, issued on Saturday, comes at a pivotal moment for Berkshire. Buffett, the 95-year-old investment icon who transformed the company from a struggling textile manufacturer into a global powerhouse since taking the helm in 1965, announced his intention to step down as CEO last May during the annual shareholders meeting in Omaha. Effective January 1, 2026, Greg Abel, Berkshire's vice chairman in charge of non-insurance operations, assumed the role of CEO. Buffett, however, retains his position as chairman, ensuring continuity in the company's governance.
Abel, in his inaugural annual letter to shareholders accompanying the earnings report, emphasized preserving the principles that defined Buffett's tenure. "We will continue the culture Buffett built of financial strength and capital discipline," Abel wrote, underscoring a commitment to prudent management amid economic uncertainties. The letter also highlighted Berkshire's enduring success, noting compounded annual gains of 19.7 percent since 1965 — nearly double the S&P 500's performance over the same period. Overall, Berkshire shares have delivered gains exceeding 6,000,000 percent, compared to 46,061 percent for the S&P 500 including dividends.
Delving into the specifics, Berkshire's insurance underwriting profits plummeted 54 percent to $1.56 billion in the fourth quarter, down from $3.41 billion in the prior year. This segment, which includes subsidiaries like GEICO and Berkshire Hathaway Reinsurance Group, faced headwinds from increased claims and competitive pressures in the property and casualty markets. Insurance investment income also weakened, sliding nearly 25 percent to $3.1 billion from $4.088 billion, reflecting lower yields on fixed-income securities amid a stabilizing interest rate environment.
For the full year 2025, operating earnings totaled $44.49 billion, a decrease from $47.44 billion in 2024. Annual insurance underwriting profits came in at $7.26 billion, compared to $9 billion the previous year, while investment income eased to $12.5 billion from $13.6 billion. These figures underscore a broader softening in Berkshire's insurance division, which has historically provided a steady float for investments but proved vulnerable to macroeconomic shifts, including inflation's impact on claims costs and reinsurance pricing dynamics.
Beyond operating results, Berkshire's overall net earnings for the fourth quarter dipped slightly to $19.2 billion from $19.7 billion a year ago. However, these headline numbers were influenced by volatility in the company's equity portfolio. The report detailed a $4.5 billion impairment charge related to investments in Kraft Heinz Co. and Occidental Petroleum Corp., offsetting investment gains of $13.5 billion for the quarter. Full-year net earnings fell more sharply to $66.97 billion from $89 billion in 2024.
Berkshire has long cautioned investors against fixating on these investment-driven swings. In its earnings release, the company stated, "The amount of investment gains (losses) in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules." This philosophy, a Buffett hallmark, prioritizes long-term value creation over quarterly fluctuations, encouraging focus on the underlying business performance.
Despite the earnings dip, Berkshire ended the quarter with a substantial cash position of $373.3 billion, down from a record $381.6 billion at the end of the third quarter. Notably, the company refrained from repurchasing its own shares, even as Class A shares traded near flatline levels during the period. Buffett has historically used buybacks to signal confidence when shares appear undervalued, but the decision to hold steady reflects a cautious approach in a market where valuations remain elevated.
Berkshire's stock performance in 2025 reflected these mixed signals. Class A shares rose 10 percent over the year, underperforming the S&P 500's 16.4 percent advance. The conglomerate's market capitalization, hovering around $1 trillion, positions it as one of the world's largest companies, yet its diversified holdings — from Apple Inc. to BNSF Railway — have occasionally lagged broader indices during tech-driven rallies.
The transition to Abel arrives as Berkshire navigates a complex landscape. The insurance sector, which accounts for a significant portion of earnings, has grappled with catastrophes like wildfires and hurricanes, alongside rising litigation costs. Meanwhile, non-insurance units, including utilities and manufacturing, provided some offset, though global supply chain disruptions lingered from prior years.
Analysts and investors have closely watched Abel's early moves. A 62-year-old Canadian executive with deep roots in Berkshire's energy operations, Abel was groomed as successor for over a decade. His letter reiterated Buffett's aversion to speculative bets, favoring instead "wonderful businesses at fair prices." This approach has shielded Berkshire from the dot-com bust and the 2008 financial crisis, amassing a fortress balance sheet that peers envy.
Looking back, Buffett's era at Berkshire is synonymous with disciplined investing and folksy wisdom dispensed at annual meetings, often dubbed "Woodstock for Capitalists." His decision to step aside, announced amid health speculations though never confirmed, ensures an orderly handover. Buffett's net worth, largely tied to Berkshire, exceeds $130 billion, but he has pledged to donate the bulk to philanthropy, primarily through the Bill & Melinda Gates Foundation.
The earnings report also sheds light on Berkshire's strategic positioning. With cash reserves rivaling some nations' GDPs, the company is poised for opportunistic acquisitions, though Buffett has lamented the scarcity of "elephant-sized" deals in recent years. Smaller tuck-in purchases, like the 2024 acquisition of a specialty insurer, continue to bolster the portfolio.
As Abel steers the ship, questions persist about maintaining Berkshire's contrarian edge in an era dominated by passive investing and AI hype. Yet, the company's track record suggests resilience. Investors, many of whom have held shares for decades, view the leadership change not as an end but a continuation of a legacy built on patience and prudence.
In the broader market context, Berkshire's results contrast with tech giants' robust gains, highlighting its value-oriented DNA. As 2026 unfolds, all eyes will be on Abel's first full-year performance, with the next earnings report slated for late April. For now, the conglomerate's faithful remain anchored by its history of outpacing benchmarks over the long haul.