Berkshire Hathaway profit drops 28% as share buybacks reach $9.6 billion

Berkshire Hathaway reported a 28% decline in third-quarter profits on Saturday, a drop driven by changes in the value of its investments. The company posted a net profit of $22.1 billion, or $15,502 per Class A share, down from $30.8 billion, or $21,413 per share, in the same period a year ago.

The conglomerate repurchased $9.6 billion worth of its own stock during the quarter. However, that buying activity likely paused recently. Berkshire Class A shares recently surpassed the $878,000 mark, a level higher than where the stock traded before Warren Buffett announced his retirement plans at the company's May 2025 annual meeting. Buffett stepped down as chairman in September after transferring the chief executive role to Greg Abel in January.

Operating earnings, which exclude volatile investment gains and losses, also declined. Berkshire's operating profit fell nearly 6% to $12.7 billion, or $8,907 per Class A share. That figure compares to $13.485 billion, or $9,376.15 per share, in the prior year's third quarter. FactSet Research data showed that four analysts had projected operating earnings of $8,821.84 per Class A share for the quarter.

The insurance division faced particular pressure. Underwriting profit across all of Berkshire's insurers dropped to $1.35 billion from $2.37 billion the previous year. Geico, the company's largest auto insurer, contributed $982 million to that total, a decrease from $1.77 billion a year earlier.

Cathy Seifert, a CFRA Research analyst, noted that Geico faces a difficult market environment. Insurance premiums are decreasing while the average cost of claims is rising. Seifert observed that Berkshire's noninsurance operations, which Abel has managed for years, appear to be outperforming the insurance unit. This includes manufacturers like Precision Castparts, utility providers, and the BNSF railroad. She noted that these businesses performed well even without the boost from major hurricanes or other natural disasters 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.

Chris Ballard, a managing director at Check Capital, offered a different perspective on the Geico results. His firm holds an investment in Berkshire. Ballard stated that the numbers were not disappointing because they reflect the company's decision to invest again in its marketing, specifically its iconic spokeslizard campaign, to attract new customers. He explained that increasing the pace of writing new auto insurance policies typically puts pressure on a company'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," Ballard said. "So we've been kind of expecting this on our end."

Berkshire's liquidity position strengthened during the quarter. The company's cash pile increased to $377.4 billion at the end of September, up from $365.5 billion at the end of June. The conglomerate holds diverse assets, including Geico, major utilities, the BNSF railroad, and various manufacturing and retail entities such as Precision Castparts and See's Candy.

The company has historically advised investors to focus on operating earnings rather than net profits because the latter can fluctuate widely based on investment portfolio performance. The third-quarter results will be followed by the company's fourth-quarter report in January.