Berkshire Hathaway’s operating earnings rose roughly 17% year over year, lifting results to about $11.8 billion as the conglomerate moves toward a scheduled leadership change in January. The gain followed a year in which the company reported operating earnings of $10.09 billion, or $7,023.01 per Class A share, and reflects two familiar drivers of Berkshire’s performance: lower-than-expected catastrophe losses in its insurance units and an uptick in paper investment gains across its large securities portfolio.

The improvement comes as Warren Buffett, Berkshire’s chairman and long-time chief executive, prepares to relinquish the CEO title next month at age 95. The announcement of his pending step-down has intensified investor focus on the company’s next steward and on how Berkshire’s unique mix of insurance operations, industrial businesses and a multibillion-dollar investment portfolio will be managed without its iconic leader. While the operating-profit bump suggests near-term resilience, analysts caution that much of the gain is tied to volatile elements that can reverse in a single season or quarter.

A relatively mild U.S. hurricane season reduced catastrophe payouts for Berkshire’s insurance subsidiaries, lessening pressure on underwriting results. At the same time, stronger “paper” investment gains—unrealized mark-to-market increases in its equity stakes and other securities—provided an accounting lift to earnings. Because Berkshire separates operating earnings from investment gains, the headline improvement reflects both business fundamentals and market-driven valuation moves.

For investors, the composition of the gain matters. Operating profits generated by Berkshire’s railroad, utilities, manufacturing and retail units tend to be steadier, while insurance underwriting and the investment book can be lumpy. Paper investment gains can buoy earnings and book value but are inherently reversible if markets retreat. That volatility amplifies the importance of succession clarity and the incoming CEO’s approach to capital allocation—whether it emphasizes continued opportunistic deployment into equities and acquisitions or a more conservative posture.

The broader implications touch on risk and policy as well. A mild hurricane season is a temporary respite in an era of rising catastrophe risk tied to climate change. Insurers and reinsurers globally are adjusting pricing, capital and catastrophe models to account for more frequent severe events; any uptick in storm activity would quickly move through the numbers of large insurers such as Berkshire. Regulators and investors will be watching capital buffers and reinsurance arrangements as climate-related tail risks become a larger component of underwriting models.

Berkshire’s 17% improvement highlights both the strengths and vulnerabilities of Buffett’s conglomerate: diversified cash-generating businesses and a powerful investment engine, but exposure to episodic insurance losses and market-driven swings in valuation. With the company transitioning leadership, the market’s assessment of how those risks will be managed without Buffett at the helm will shape Berkshire’s valuation and strategy in the years ahead.