Greg Abel has taken up the pen that for decades belonged to Warren Buffett, publishing his first annual letter to shareholders as Berkshire Hathaway’s chief executive and outlining a company that is both resilient and in transition. The numbers portray that duality: GAAP net income fell year‑on‑year, operating earnings slipped from 2024’s levels, yet underlying cash generation and balance‑sheet strength remain formidable.
For the year to December 31, 2025 Berkshire reported net income attributable to shareholders of $66.97 billion, down from $88.99 billion the prior year, and fourth‑quarter net profit of $19.20 billion, a 2.5% decline. Managers and analysts instead point to operating earnings — the metric Berkshire prizes because it strips out volatile investment and derivatives results — which declined to $44.5 billion for the year from $47.4 billion in 2024; fourth‑quarter operating earnings dropped roughly 30% versus the same period a year earlier.
The principal drag was insurance. Full‑year underwriting profit fell to $7.26 billion from $9.02 billion, with a particularly sharp fourth‑quarter decline. Investment returns tied to the insurance operations also softened. Berkshire’s non‑insurance businesses, notably BNSF and Berkshire Hathaway Energy, continued to produce steady cash flows, helping to offset the hit from underwriting and investment volatility.
Management also flagged a $4.5 billion writedown on holdings in Kraft Heinz and Occidental, a reminder that even Berkshire’s portfolio is not immune to the bond‑market‑and‑consumer shocks of recent years. Despite the setbacks, the company closed the year with a cash hoard of about $373.3 billion and generated roughly $46 billion of operating cash flow in 2025 — data points Abel used to underline financial flexibility and the capacity to invest or acquire when opportunities arise.
Abel’s tone in the letter is careful and deliberately reassuring. He emphasised continuity: Warren Buffett, now 95, has relinquished the CEO title but remains chairman and — he wrote — is at the office five days a week. Abel reiterated the group’s long‑standing cultural pillars: decentralised management, capital discipline, integrity and a shareholder‑as‑partner mentality. On capital allocation he pledged a measured approach, saying Berkshire seeks to hold interests in sustainably profitable businesses rather than simply parking funds in government bonds.
For markets and shareholders the immediate questions are pragmatic. Can underwriting margins recover and will investment returns rebound enough to lift GAAP profits? Will Berkshire deploy any portion of its extraordinary cash balance on acquisitions or buybacks, or continue to sit on liquidity until valuations, financing or regulatory conditions become more attractive? Abel’s letter signals steady stewardship rather than an activist pivot — comforting to investors who fear disorderly succession, but also limiting in an era when some expect blockbuster dealmaking from Berkshire’s vault of capital.