Berkshire Hathaway (BRK-A) profits fell by more than expected during the first quarter.

The conglomerate run by billionaire investor Warren Buffett reported operating earnings fell 12% year-over-year to $3.737 billion. That comes out to about $2,274 per class A share, which was a bit lighter than the $2,761 expected by analysts surveyed by Bloomberg. (These figures were in line with Berkshire's preliminary Q1 figures, which were released on April 30.)

To be clear, Buffett does not lose sleep over these quarterly moves, as long as they are not indicative of major long-term or permanent changes in business. He'd also rather not have investors obsess over the short-term.

“We make investment decisions solely on the basis of what we think the best investment decision is, not on the basis of how it'll affect earnings in any quarter or in any year," Buffett said during Berkshire Hathaway's annual meeting.

Having said that, let's take a closer look at what's going on at Berkshire Hathaway.

View photos Berkshire Hathaway's Q1 operating earnings. More

For the most part, the $360 billion company is considered an insurance conglomerate offering reinsurance and property and casualty insurance. But its portfolio of equity investments and wholly owned subsidiaries include a broad array of companies BNSF Railroad, Duracell, Fruit of the Loom, Lubrizol, Precision Castparts, and Clayton Homes.

What Buffett said about insurance

Warren Buffett spent some time during Berkshire Hathaway's annual shareholder meeting to discuss some the results, including the particularly weak insurance and rail businesses.

“The basic underwriting at GEICO is actually improving,” Buffett said. “But we had some hail storms in Texas toward the end of the quarter. We've actually had some since the end of the quarter, too. So there were more catastrophe losses in the first quarter than last year.”

Buffett highlighted discussed the ongoing challenges in the insurance business being caused by persistently low interest rates.

“I think the business of the reinsurance companies generally is less attractive for the next ten years than it has been for the last ten years,” Buffett said during the meeting. “In part, that's because what's happened to interest rates. A significant portion of what you earn in insurance comes from investment of the float.”

What Buffett said about railroads

Berkshire's big industrial companies had a tough quarter, pressured by an array of factors including lackluster manufacturing activity, weak export growth, and falling demand for coal.

“Railroad earnings are down significantly and railroad car loadings throughout the industry," Buffett said. "All of the major railroads were down significantly in the first quarter and probably will continue to be down — almost certainly will continue to be down — the balance of the year.”

"We still have a lot of headwinds, specifically as the commodity supercycle is really coming to a close,” BNSF Rail’s Matt Rose said to Yahoo Finance. “The strong dollar is a headwind. Certainly the coal business is a headwind.” It isn’t all bad though. “The rest of the economy on the consumer side actually feels pretty good,” Rose added. “So we'll rely on our old standards. A lot of growth in domestic intermodal and agriculture should be pretty good for us. So that's the great part about us having a balanced portfolio."