Berkshire Hathaway accelerates stock buybacks, operating profit falls

Berkshire Hathaway reported a lower third-quarter operating profit on Saturday, driven primarily by declines in its insurance underwriting results. Despite the drop in earnings, the Omaha, Nebraska-based conglomerate significantly accelerated its share repurchases under the leadership of new Chief Executive Officer Greg Abel, signaling a fresh willingness to deploy capital compared to his predecessor.

According to Euronext Markets, the company's quarterly operating profit fell 6% to $12.71 billion, or about $8,954 per Class A share, down from $13.49 billion during the same period a year earlier. SRN News and TradingView noted similar 6% declines, while Yahoo Finance reported the drop at 5.8% to $12.7 billion. Net income fell 28% to $22.11 billion, a figure that includes unrealized gains and losses on stocks the firm still owns. Berkshire consistently urges investors to look past the volatility created by changes in the values of stocks it does not sell.

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The July-September quarter marked the third full reporting period since Abel became chief executive, succeeding Warren Buffett after a legendary six-decade tenure at the helm. SRN News noted that Buffett, 96, remains chairman emeritus after stepping down as CEO at the end of 2025. Business Insider Africa added that Buffett also stepped down as chairman in September.

Under Abel, Berkshire noticeably stepped up its capital return program. The conglomerate bought back $9.6 billion of stock in the third quarter, adding to the $4.8 billion repurchased earlier in the year and roughly $2 billion more in the opening weeks of October, according to SRN News. TradingView highlighted that the $9.6 billion crushed Visible Alpha estimates of $1.6 billion, more than doubling the $4.5 billion repurchased in the second quarter and towering over the $234 million bought back in the first quarter.

David Kass, a finance professor at the University of Maryland and a longtime Berkshire analyst, told Business Insider Africa via email that the surge in buybacks was a pleasant surprise. Kass stated that Abel's choice to ramp up repurchases while acting as a net seller of stocks indicates caution regarding current market valuations outside of Berkshire's own shares.

Insurance operations weighed heavily on the company's bottom line. SRN News reported that total insurance profit fell 26%, with underwriting profit dropping 43%. Geico suffered a 45% pretax profit decline due to rising accident losses and higher advertising spending. Yahoo Finance noted that Geico faced an 8.5% increase in claims losses alongside a 17% surge in underwriting expenses as replacement costs and claim severity eroded margins. TradingView added that Geico's underwriting expenses rose ~17% YoY to $1.7B while losses and LAE jumped ~9% YoY to $8.7B, while insurance-investment income dropped 14% due to lower interest rates.

Other segments of the massive conglomerate performed much better. Profit at railroad operator BNSF rose 19% to $1.73 billion, bolstered by fuel surcharges and heavier shipping volumes of consumer, agricultural, and energy goods. Berkshire Hathaway Energy generated $1.61 billion, an 8% increase driven by utilities and natural gas pipelines. Industrial businesses like Precision Castparts also posted strong numbers, lifting pretax profit by 30% on aerospace and gas turbine sales.

Revenue across the enterprise climbed 11% to $105.65 billion, marking the second straight quarter of double-digit percentage growth, according to SRN News and TradingView, beating Visible Alpha estimates of $102 billion. Consumer products displayed mixed results as shoppers resisted higher prices, though brands like Brooks running shoes and Duracell batteries saw sales growth.

Financial reports offered differing figures regarding the exact size of Berkshire's legendary cash pile at the close of the period. SRN News reported the company ended September with $356.9 billion in cash and equivalents, down from $380.2 billion at the end of March. Business Insider Africa stated the cash pile shrank to $357 billion after subtracting Treasury payables. Conversely, Yahoo Finance cited a climbing record total of $377.4 billion in cash, cash equivalents, and short-term U.S. Treasury bills, up from $365.5 billion at the end of June.

Market watchers continue to monitor broader corporate moves. Berkshire maintained that considerable uncertainty remains regarding economic and geopolitical events, including ongoing wars and potential tariffs. Meanwhile, shareholders await upcoming portfolio filings to see how the firm's equity holdings shift next.

What to Watch Next

• The upcoming release of Berkshire Hathaway's third-quarter portfolio disclosure, detailing stock purchases and sales.
• Further disclosures from CEO Greg Abel regarding capital allocation and potential large-scale acquisitions.
• Geico's ongoing underwriting adjustments aimed at regaining lost customers while stabilizing loss ratios.