Why did Berkshire's net earnings drop so sharply in Q1 2025?

The decline was driven mainly by investment losses. Under GAAP, changes in unrealized gains and losses on equity holdings flow through earnings, and Berkshire recorded about $7.4 billion of such losses in the quarter. Realized after-tax gains of $2.4 billion only partly offset this. Operating earnings, which exclude investment results, also fell but by a smaller amount, from $11.2 billion to $9.6 billion.

Is the decline in operating earnings a concern for investors?

It reflects several factors. Insurance underwriting earnings roughly halved to $1.3 billion, and the Other category fell due to a $713 million foreign currency loss on yen-type non-dollar debt, compared with a gain a year earlier. Partly offsetting this, Berkshire Hathaway Energy and insurance investment income improved. Because the currency and investment-income items can be volatile, investors may want to watch underwriting trends in coming quarters.

How much insurance float does Berkshire have, and why does it matter?

Insurance float, the net liabilities Berkshire assumes under insurance contracts, was about $173 billion at March 31, 2025, up $2 billion from year-end 2024. Float is valuable because Berkshire can invest these funds until claims are paid, which supports its investment income. Growing float at low cost is a key indicator of the insurance business's health.

Did shareholders approve any of the shareholder proposals at the annual meeting?

No. All eight shareholder proposals were defeated. Each received fewer than 16,000 votes in favor against roughly 430,000 to 445,000 opposed, reflecting strong support for management and the board's existing approach on environmental reporting, pay ratio disclosure, civil rights, DEI oversight, clean energy financing and AI risk governance.

Should investors rely on the quarterly EPS figure?

Management explicitly warns against it. The filing states that investment gains and losses in any given quarter are usually meaningless and can produce misleading per-share figures. Investors are urged to read the 10-Q and to focus on operating earnings and the performance of the individual business segments for a clearer picture of underlying results.

BRK-B 8-K: Earnings & Results & Shareholder Matters

01—Abstract

Summary

Summary of the 8-K filed May 6, 2025. Cited figures are marked; the original filing is the authoritative source.

Berkshire Hathaway's first quarter 2025 results were dominated by investment losses, while the underlying operating businesses held up reasonably well.

Net earnings attributable to Berkshire shareholders fell to $4.6 billion^a from $12.7 billion a year earlier, or $2.13 per Class B share versus $5.88. Operating earnings, which exclude investment gains and losses, declined to $9.6 billion from $11.2 billion. The gap is explained by investment losses of $5.0 billion after tax, which include roughly $7.4 billion of unrealized losses on equity holdings partly offset by $2.4 billion of realized after-tax gains.

Management explicitly cautions that quarterly investment gains and losses are usually meaningless for assessing performance and can mislead investors on per-share figures. Within operating earnings, insurance underwriting fell sharply to $1.3 billion^b from $2.6 billion, while insurance investment income rose to $2.9 billion from $2.6 billion, aided by $869 million of income on U.S. Treasury bills and other investments not directly owned by insurance subsidiaries. Berkshire Hathaway Energy grew to $1.1 billion from $717 million, and BNSF rose modestly to $1.2 billion.

Manufacturing, service and retailing earnings were roughly flat at $3.1 billion^c. The 'Other' category dropped to $41 million from $1.1 billion, primarily because of a $713 million foreign currency loss on non-U.S. dollar debt, compared with a $597 million gain a year earlier. Insurance float reached about $173 billion, up $2 billion from year-end 2024.

The filing also reports the May 3, 2025 annual shareholder meeting. All thirteen director nominees were re-elected, including Warren Buffett, Greg Abel and Ajit Jain, with withheld votes generally in the 16,000 to 60,000 range. All eight shareholder proposals failed by wide margins, with each receiving fewer than 16,000 votes in favor against roughly 430,000 or more opposed.

02—Key points

Key Highlights

Net earnings attributable to Berkshire shareholders fell to $4.603 billion in Q1 2025 from $12.702 billion in Q1 2024, driven mainly by investment losses.
Investment losses of $5.038 billion after tax, including about $7.4 billion of unrealized losses on equity holdings, versus investment gains of $1.480 billion a year earlier.
Operating earnings declined 14% to $9.641 billion from $11.222 billion, with insurance underwriting earnings down roughly 49% to $1.336 billion.
Berkshire Hathaway Energy earnings rose about 53% to $1.097 billion, and BNSF increased 6% to $1.214 billion.
'Other' operating earnings fell to $41 million from $1.078 billion, largely due to a $713 million foreign currency loss on non-U.S. dollar debt.
Insurance float grew about $2 billion from year-end 2024 to roughly $173 billion.
At the May 3, 2025 annual meeting, all 13 director nominees were re-elected and all eight shareholder proposals were defeated by wide margins.

03—Questions

Frequently Asked Questions

Why did Berkshire's net earnings drop so sharply in Q1 2025?
The decline was driven mainly by investment losses. Under GAAP, changes in unrealized gains and losses on equity holdings flow through earnings, and Berkshire recorded about $7.4 billion of such losses in the quarter. Realized after-tax gains of $2.4 billion only partly offset this. Operating earnings, which exclude investment results, also fell but by a smaller amount, from $11.2 billion to $9.6 billion.
Is the decline in operating earnings a concern for investors?
It reflects several factors. Insurance underwriting earnings roughly halved to $1.3 billion, and the Other category fell due to a $713 million foreign currency loss on yen-type non-dollar debt, compared with a gain a year earlier. Partly offsetting this, Berkshire Hathaway Energy and insurance investment income improved. Because the currency and investment-income items can be volatile, investors may want to watch underwriting trends in coming quarters.
How much insurance float does Berkshire have, and why does it matter?
Insurance float, the net liabilities Berkshire assumes under insurance contracts, was about $173 billion at March 31, 2025, up $2 billion from year-end 2024. Float is valuable because Berkshire can invest these funds until claims are paid, which supports its investment income. Growing float at low cost is a key indicator of the insurance business's health.
Did shareholders approve any of the shareholder proposals at the annual meeting?
No. All eight shareholder proposals were defeated. Each received fewer than 16,000 votes in favor against roughly 430,000 to 445,000 opposed, reflecting strong support for management and the board's existing approach on environmental reporting, pay ratio disclosure, civil rights, DEI oversight, clean energy financing and AI risk governance.
Should investors rely on the quarterly EPS figure?
Management explicitly warns against it. The filing states that investment gains and losses in any given quarter are usually meaningless and can produce misleading per-share figures. Investors are urged to read the 10-Q and to focus on operating earnings and the performance of the individual business segments for a clearer picture of underlying results.

04—Continue

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