In a significant shift for one of the world’s most iconic investment firms, Berkshire Hathaway reported a notable decline in operating earnings for the fourth quarter of 2025, primarily attributed to underperformance in its insurance sector. The company’s earnings from operations reached $10.2 billion, reflecting a staggering 29% drop compared to $14.56 billion for the same quarter of the previous year. This marked the final quarter under the leadership of Warren Buffett, who announced his intention to step down as CEO during the annual shareholders meeting in May.
Taking the helm as of January 2026, Greg Abel expressed his commitment to sustaining the strong financial ethos and discipline instilled by Buffett in an accompanying letter to shareholders. While Buffett remains at the forefront as chairman, the transition signifies a new chapter for the conglomerate.
The downturn in operating earnings was largely driven by a 54% decrease in insurance underwriting profits, which fell to $1.56 billion from $3.41 billion a year prior. Additionally, insurance investment income saw a nearly 25% decline, plummeting from $4.088 billion to $3.1 billion. For the entirety of 2025, total operating earnings amounted to $44.49 billion, down from $47.44 billion in 2024. Insurance profits for the year diminished as well, from $9 billion in 2024 to $7.26 billion in 2025, while annual insurance investment income also decreased from $13.6 billion to $12.5 billion.
Overall earnings for the company in the fourth quarter experienced a slight reduction as well, falling to $19.2 billion from $19.7 billion a year earlier. This decline was impacted by a $4.5 billion impairment related to investments in both Kraft Heinz and Occidental Petroleum. Despite these challenges, investment gains amounted to $13.5 billion.
For the full year, overall earnings suffered a notable drop to $66.97 billion compared to $89 billion in the previous year. In response to the potentially volatile nature of investment earnings, the company reminded investors to regard short-term performance with caution. “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,” the company stated in its earnings release.
Berkshire Hathaway’s strategy regarding stock buybacks remained unchanged, as Buffett chose not to repurchase shares even amid a stable closing for Q4. The company’s cash reserves decreased slightly, ending the quarter at $373.3 billion compared to a record high of $381.6 billion in the third quarter. The Class A shares of Berkshire Hathaway experienced a 10% rise over 2025, trailing behind the S&P 500’s impressive 16.4% advance.
Despite the current challenges, Berkshire Hathaway’s enduring legacy under Buffett is marked by remarkable wealth creation over the decades. Since 1965, the company has achieved compounded annual gains of 19.7%, significantly outpacing the S&P 500’s rate during the same period. Abel emphasized this extraordinary track record in his inaugural letter to shareholders as CEO, highlighting that Berkshire’s total gains have exceeded 6,000,000%, compared to just 46,061% for the S&P 500, including dividends.
