Berkshire Hathaway Reports Significant Drop in Operating Earnings in Warren Buffett’s Final Quarter as CEO, Insurance Sector Leads Decline

Berkshire Hathaway, the sprawling conglomerate steered for decades by Warren Buffett, has reported a substantial decrease in its operating earnings for the fourth quarter of 2025. The conglomerate’s insurance business, a cornerstone of its operations, experienced significant weakness, contributing heavily to the overall decline. Operating earnings for the fourth quarter totaled $10.2 billion, marking a notable decrease of more than 29% compared to the $14.56 billion recorded in the corresponding period of the previous year.

This quarter signifies a pivotal moment in Berkshire Hathaway’s history, as it represents Warren Buffett’s final term as Chief Executive Officer. Buffett announced his intention to step down at the company’s annual shareholders meeting in May 2025. The leadership baton has now been passed to Greg Abel, who assumed the CEO role at the commencement of 2026. In Berkshire’s annual letter, released concurrently with the financial results, Abel articulated his commitment to preserving the core tenets of Buffett’s legacy: financial strength and disciplined capital allocation. Warren Buffett continues to serve as Chairman of the Board.

The insurance sector, a critical component of Berkshire Hathaway’s profitability, saw a sharp decline in underwriting profits. These profits fell by 54%, dropping from $3.41 billion in the fourth quarter of 2024 to $1.56 billion in the most recent quarter. Furthermore, income generated from the insurance segment’s investments also experienced a downturn, sliding nearly 25% to $3.1 billion from $4.088 billion in the prior year’s fourth quarter.

For the entirety of the fiscal year 2025, Berkshire Hathaway’s operating earnings amounted to $44.49 billion, a decrease from the $47.44 billion earned in 2024. Delving deeper into the insurance operations for the full year, underwriting profits reached $7.26 billion, down from $9 billion in 2024. Insurance investment income for the year also saw a moderation, easing to $12.5 billion from $13.6 billion a year earlier.

When considering overall earnings, which encompass both operating results and fluctuations in the value of the conglomerate’s extensive stock market investments, the picture for the fourth quarter shows a slight dip. Overall earnings fell to $19.2 billion from $19.7 billion in the fourth quarter of 2024. It is important to note that these reported figures were influenced by a $4.5 billion impairment charge related to Berkshire’s investments in Kraft Heinz and Occidental Petroleum. The conglomerate reported investment gains of $13.5 billion for the quarter.

Looking at the full-year financial performance, overall earnings experienced a more significant decline, dropping to $66.97 billion from $89 billion in the previous year. Berkshire Hathaway consistently advises its investors to exercise caution when interpreting investment performance over shorter time horizons. The company’s earnings release explicitly 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 statement underscores the volatile nature of investment valuations and the focus on the more stable operating earnings.

No Share Buybacks, Cash Reserves See Slight Decrease

Despite ending the fourth quarter with a substantial cash reserve, Warren Buffett once again opted against initiating share buybacks for Berkshire Hathaway. This decision, made even as the company’s cash hoard saw a modest reduction, is a notable aspect of its financial strategy. The conglomerate’s cash and cash equivalents stood at $373.3 billion at the close of the fourth quarter, a slight decrease from the record high of $381.6 billion reported in the third quarter of 2025.

While Berkshire Hathaway Class A shares experienced a gain of 10% throughout 2025, this performance trailed the broader S&P 500 index, which advanced by 16.4% during the same period. Nevertheless, the enduring legacy of Warren Buffett’s leadership is undeniably etched in the unparalleled wealth creation he has delivered to Berkshire Hathaway shareholders over his tenure.

Since 1965, Berkshire Hathaway has achieved a compounded annual gain of an impressive 19.7%. This performance has nearly doubled the compounded increases of the S&P 500 over the same extensive timeframe. Greg Abel, in his inaugural annual letter to shareholders as CEO, highlighted that the overall gains for Berkshire Hathaway since 1965 have exceeded an astonishing 6,000,000%. In stark contrast, the S&P 500, including reinvested dividends, has seen gains of approximately 46,061% during that period. This historical data vividly illustrates the remarkable long-term value creation orchestrated under Buffett’s guidance.