Berkshire Hathaway’s (BRK.A) fourth-quarter 2025 earnings report revealed a significant decline in operating profits, largely driven by challenges within its insurance businesses. The results, released Saturday, mark the final quarter with Warren Buffett at the helm as CEO, a role he transitioned to Greg Abel at the start of 2026. While the transition is underway, the conglomerate’s long-term financial strength remains a central focus, as Abel affirmed in his accompanying letter to shareholders.
Operating earnings for the quarter totaled $10.2 billion, a more than 29% decrease from the $14.56 billion reported in the same period last year. This downturn reflects broader trends in the insurance sector, with underwriting profits falling 54% to $1.56 billion, compared to $3.41 billion in the prior year. Insurance investment income likewise experienced a decline, dropping nearly 25% to $3.1 billion from $4.088 billion. The results come as investors closely watch how Abel will navigate the company’s future, building on Buffett’s decades of success in value investing and strategic acquisitions.
For the full year 2025, Berkshire Hathaway reported operating earnings of $44.49 billion, down from $47.44 billion in 2024. Insurance underwriting profits for the year came in at $7.26 billion, a decrease from $9 billion in 2024, while insurance investment income eased to $12.5 billion from $13.6 billion. These figures underscore the impact of a challenging environment for insurers, with factors like rising claims costs and competitive pricing pressures weighing on performance.
Impact of Investment Impairments
Overall earnings, which include gains or losses from Berkshire’s stock market investments, saw a slight dip in the fourth quarter, falling to $19.2 billion from $19.7 billion a year prior. However, these numbers were significantly affected by a $4.5 billion impairment related to Berkshire’s investments in Kraft Heinz and Occidental Petroleum. Despite this, investment gains still contributed $13.5 billion to the overall earnings. Full-year overall earnings fell more substantially, to $66.97 billion from $89 billion in 2024. Berkshire Hathaway consistently advises investors to focus on long-term performance rather than short-term fluctuations in investment gains, noting that quarterly results can be “misleading” for those unfamiliar with accounting rules.
Cash Position and Share Buybacks
Despite the earnings decline, Berkshire Hathaway maintained a substantial cash position. The company refrained from repurchasing shares in the fourth quarter, even as earnings came in flat. However, its cash hoard did decrease slightly, to $373.3 billion from a record $381.6 billion in the third quarter. This substantial cash reserve provides Berkshire with flexibility for future acquisitions or investments, a hallmark of Buffett’s and now Abel’s strategy.
Stock Performance and Long-Term Gains
Berkshire Hathaway Class A shares rose 10% in 2025, trailing the S&. P 500’s 16.4% advance. Despite this relative underperformance, the company’s long-term track record remains exceptional. Since 1965, Berkshire Hathaway has achieved compounded annual gains of 19.7%, nearly double the S&P 500’s compounded increases over the same period. Abel highlighted this success in his letter, noting that overall gains for Berkshire exceed 6,000,000% over that period, compared to 46,061% for the S&P 500, including dividends.
A Modern Era Under Greg Abel
Warren Buffett’s decision to step down as CEO, announced at the annual shareholders meeting last May, marked a pivotal moment for Berkshire Hathaway. Buffett’s retirement, though not a complete departure as he remains chairman, signals a new era under Greg Abel’s leadership. Abel, who took the reins at the start of 2026, has pledged to uphold the culture of financial strength and capital discipline that Buffett established. His first annual letter to shareholders reinforces this commitment, emphasizing a continued focus on long-term value creation.
The transition also comes as Berkshire Hathaway navigates a changing economic landscape. The company’s diverse portfolio, spanning insurance, railroads, energy, and consumer products, positions it to weather various economic conditions. However, challenges such as rising interest rates, inflation, and geopolitical uncertainty could impact future performance. Investors will be closely watching Abel’s strategic decisions as he steers Berkshire Hathaway through these complexities.
Looking ahead, Berkshire Hathaway’s next major investor update will come with the release of its first-quarter 2026 earnings report. This will provide further insight into Abel’s leadership and the company’s performance under his direction. Shareholders and analysts alike will be keen to assess how Berkshire Hathaway adapts to the evolving market environment and continues to deliver long-term value.
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