Berkshire Hathaway reported a more than 28% decline in its third-quarter profit, with weaker performance at its insurance businesses and changes in the value of its investments weighing down the results.The conglomerate posted a profit of $22.1 billion, or $15,502 per Class A share, compared with $30.8 billion, or $21,413 per Class A share, in the same quarter last year.The decline was not limited to fluctuations in its investment portfolio.Berkshire’s operating earnings, which exclude changes in the value of investments, also fell nearly 6% to $12.7 billion, or $8,907 per Class A share. This was lower than the $13.485 billion, or $9,376.15 per Class A share, reported a year earlier.The four analysts surveyed by FactSet Research had expected operating earnings of $8,821.84 per Class A share.Berkshire has long recommended that investors to focus on operating earnings to understand how its businesses are performing, as changes in investment values can cause significant fluctuations in its overall profit.
Geico accounts for most of the decline
A major pressure point during the quarter was Berkshire’s insurance business. Underwriting profit across its insurers fell to $1.35 billion from $2.37 billion in the corresponding period last year, with Geico accounting for most of the decline.Geico’s underwriting profit dropped to $982 million from $1.77 billion a year ago. CFRA Research analyst Cathy Seifert said the insurer was facing a difficult situation as insurance premiums declined while the average cost of claims increased.The company has also been investing more in advertising to attract customers. Investor Chris Ballard, managing director at Check Capital, said he was not disappointed with Geico’s numbers, as the spending reflected the company’s efforts to bring in more customers. He added that writing new policies more aggressively generally puts pressure on an auto insurer’s bottom line.“It should be looking better. Progressive is doing better, but they were doing so well for so long. They had cut their advertising for quite a while there,” said Ballard, whose firm invested in Berkshire. “So we’ve been kind of expecting this on our end.”
Noninsurance businesses perform better
The performance of Berkshire’s noninsurance operations appeared stronger than that of its insurance business, Seifert said. These businesses have been overseen by Greg Abel for years and include manufacturers such as Precision Castparts, utilities and BNSF railroad.She said these operations appeared to be doing better even though there were no major hurricanes or other catastrophes this year.“I think we’re seeing the businesses that play to Greg’s strengths do well. But the question is what about the rest of the franchise,” Seifert said.
Berkshire buys back $9.6 billion in shares
Alongside the earnings decline, Berkshire repurchased $9.6 billion worth of its own shares during the third quarter. However, the buybacks likely halted recently after its Class A stock price surged past $878,000, exceeding the level it had reached before Warren Buffett announced his retirement plans at the annual meeting in May 2025.Buffett gave up the chairman’s title in September after handing over the chief executive’s role to Abel in January.The conglomerate’s cash reserves also increased to $377.4 billion at the end of the third quarter, compared with $365.5 billion at the end of June.Berkshire owns several major insurers, including Geico, alongside a collection of large utilities, BNSF railroad and a range of manufacturing and retail businesses, including Precision Castparts and See’s Candy.
