Warren Buffett’s final act as CEO of Berkshire Hathaway came with an awkward bow. Operating earnings cratered 29% in Q4, hitting just $10.2 billion compared to $14.56 billion a year ago. It’s the kind of number that would normally trigger panic across Wall Street, but here’s the thing about Berkshire: the company’s so massive and its track record so legendary that even a rough quarter feels like a blip on an otherwise perfect radar.
Still, you have to wonder what’s really happening inside the Omaha machine.
The culprit? Insurance. That’s where the real damage is happening. Insurance underwriting profits got absolutely hammered, dropping 54% to $1.56 billion from $3.41 billion. Insurance investment income also took a gut punch, sliding nearly 25%. When you strip away the investment gains and losses, Berkshire’s core operating business is telling a different story than the one investors have gotten used to hearing.
The Insurance Squeeze Getting Tighter
This isn’t some random hiccup. The insurance business has been Berkshire’s bread and butter for decades. It’s the engine that generates the cash flow that lets Buffett play venture capitalist with the stock market. When that engine starts sputtering, it matters.
For all of 2025, insurance underwriting came in at $7.26 billion, down from $9 billion in 2024. Over the full year, insurance investment income eased to $12.5 billion from $13.6 billion. These aren’t massive declines, but they’re declines nonetheless. The question nobody’s asking loudly enough is whether this is cyclical weakness or something more structural.
The insurance industry has been under serious pressure. Rising claims, increased competition, and the evolving nature of risk in a warming world all play a role. Berkshire’s so big that it absorbs shocks other insurers couldn’t survive, but absorbing doesn’t mean thriving.
When Investment Gains Matter (And Don’t)
Here’s where things get interesting. Overall earnings for Q4 landed at $19.2 billion compared to $19.7 billion the year before. That’s basically flat, right? Except there’s a $4.5 billion impairment buried in there from Kraft Heinz and Occidental Petroleum investments. Without that drag, things would’ve looked better on the surface.
But Berkshire itself tells investors not to pay attention to short-term investment performance. The company straight up said in its earnings release that quarterly investment gains are “usually meaningless.” When a company’s actively trying to lower expectations around its investment returns, that’s telling you something about where it thinks things are headed.
Full-year overall earnings dropped to $66.97 billion from $89 billion in 2024. That’s a bigger decline than the operating earnings number suggests, and it underscores how much Berkshire’s investment portfolio has done the heavy lifting in recent years.
The Succession Question Nobody’s Asking
Greg Abel is now at the helm. He’s a competent operator, and Buffett’s still hanging around as chairman. But here’s what keeps investors up at night: Buffett was the ultimate stock picker. He had an intuition about value that was almost supernatural. Abel’s tasked with maintaining that same discipline while running a company with half a trillion dollars in cash.
Speaking of cash, Berkshire ended Q4 with $373.3 billion sitting around. That’s down from $381.6 billion in Q3. Notably, Buffett didn’t do any share buybacks despite the stock basically treading water in Q4. That’s either a sign of caution or just a reflection that he doesn’t see value at current prices. Either way, it’s worth paying attention to.
The Long Game Still Wins
Look, here’s the thing that matters more than any single quarter. Since 1965, Berkshire has delivered 19.7% in compounded annual gains. That’s nearly double what the S&P 500 has done over the same period. We’re talking about overall gains exceeding 6,000,000% versus the market’s 46,061%.
That’s not luck. That’s not even just talent. That’s decades of discipline, capital allocation that actually made sense, and a willingness to be contrarian when everyone else was losing their minds.
Class A shares rose 10% in 2025, lagging the broader market’s 16.4% surge. Maybe that’s a warning sign that Berkshire’s best days are behind it. Or maybe it’s just a reminder that owning the best companies at any price can make you feel poor while you’re actually getting rich.
The real question isn’t whether Berkshire had a rough quarter. The real question is whether the insurance business headwinds are temporary or the new normal, and whether a company this size can still move the needle at all.
