Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) reported that its fourth-quarter net income grew about 15% compared with the year-ago period, helped by gains on its investments and derivatives portfolio. However, operating earnings, the metric Warren Buffett has long explained is the most important for understanding the company's true earnings power, declined about 6% to $4.4 billion, from $4.7 billion in the fourth quarter last year.

Here's a look at some of that units that move the needle in Berkshire's quarterly reports.

Insurance hauls it in

Berkshire's insurance units were especially profitable in the fourth quarter, generating a pre-tax underwriting profit of $864 million. Berkshire Hathaway Reinsurance, the unit led by Ajit Jain, had a monstrous fourth quarter. It earned $736 million in pre-tax underwriting profits in the fourth quarter alone.

Of course, insurance has its ups and downs, especially when the results are tallied on a quarterly basis. Geico, a company that Buffett lavishes with praise in this year's annual letter to shareholders, earned $462 million in pre-tax underwriting profits for the full year but posted an underwriting loss of $90 million in the fourth quarter.

Buffett explained in his letter to shareholders that Geico was operating differently from its peers in a poor year for car insurance. He wrote: "[L]oss costs throughout the auto-insurance industry had been increasing at an unexpected pace and some competitors lost their enthusiasm for taking on new customers. Geico's reaction to the profit squeeze, however, was to accelerate its new-business efforts."

As a group, Berkshire's insurance units generated after-tax underwriting profits of $548 million, with $889 million of luscious investment income on top, in the fourth quarter.

Glass jar filled with coins and currency.

Image source: Getty Images.

Rail volumes pinch railway earnings

In the press release, Berkshire Hathaway combines BNSF with its utilities and energy businesses into one segment. These units generated $1.4 billion of operating earnings on a combined basis in the fourth quarter, down from $1.5 billion last year.

Buffett's annual letter serves up more detail. Revenue at BNSF has now declined for three years in a row, because of declining prices for energy commodities and lower fuel surcharges it passes on to customers. For the full year, BNSF operating earnings before interest and taxes declined about 14% in 2016.

Buffett hasn't turned on his beloved railroad. He explained that while pricing is difficult to compare from railroad to railroad, BNSF customers paid about $0.03 per ton-mile compared with the customers of its competitors, who paid an average of $0.04 to $0.05 per ton-mile. One gets the sense Buffett thinks he owns the low-cost supplier in a commoditized industry, a recurring theme in Berkshire's biggest operating businesses. 

Investments chip in nearly $2 billion

Berkshire's vast securities portfolio adds a little intrigue to its earnings every quarter, as stock-price moves measured in mere percentage points result in billions of dollars in gains or losses. In the fourth quarter, Berkshire's profit from investment gains tallied to $1.2 billion, and its derivatives positions added another $704 million on top. For the full year, investments and derivatives added roughly $6.5 billion to Berkshire's bottom line.

Of course, Buffett argues that attention is better spent elsewhere. He repeatedly cautions that the securities portfolio will simply ebb and flow with stock prices in the short term and that performance should be measured over several years or even decades, rather than over quarterly accounting periods.

In his letter to shareholders, Buffett made an interesting remark for shareholders to ponder. He clarified that while Berkshire owns some stocks that he has no intention of selling, Berkshire isn't making any commitment to hold any of its marketable securities forever. He leaves it up to the reader to decide which investments might have led to this new disclosure. Is it the new stake in Apple and airlines? Or is Buffett firing a warning shot to the handful of underperformers in the portfolio? We'll probably never know for certain -- unless he actually sells.