Insurance companies have played a large role in the business and performance of Berkshire Hathaway (NYSE: BRK), the conglomerate founded by Warren Buffett and run by the businessman for 60 years.
He has turned over the reins to Greg Abel, who wrote his first letter to the shareholders of the well-known company, an annual tradition started by Buffett, who is known as the “Oracle of Omaha.”
Abel, the new CEO, is reinforcing Berkshire Hathaway’s long-held investment thesis of purchasing companies that generate steady revenue streams with a focus on insurance companies. He does not plan to change the culture of the behemoth, capital discipline, or its decentralized business model.
“Berkshire is a unique conglomerate, intentionally designed to allocate capital rationally and efficiently,” he wrote. “Insurance is our core, and we also hold substantial investments in businesses across many other sectors.”
Berkshire’s operating profits declined by 30% in the fourth quarter, while its insurance underwriting income fell by over 50% after two years of underwriting profits increasing.
For 2025, net earnings dropped to $66.97 billion from $88.99 billion in 2024, as a result of lower income from its insurance businesses, a decline in investment gains, and new impairment charges on its equity holdings.
Berkshire’s operating earnings declined to $44.49 billion from $47.44 billion a year earlier. Its largest acquisition occurred in January 2025 when it spent $9.5 billion for Occidental Petroleum’s chemicals business.
But Berkshire’s cash level reached a record $373 billion. Berkshire’s Class A shares fell by 5.8% during the past year, while its Class B shares declined at a similar rate of 5.6%.
Profit from insurance underwriting dropped to $7.26 billion for 2025, down from $9.02 billion in 2024. Insurance investment income also dipped to $12.51 billion from $13.67 billion.
Berkshire owns several insurance companies, including GEICO, General Re (Gen Re), National Indemnity Company (NICO), and the Berkshire Hathaway Primary Group.
As of Dec. 31, 2025, the insurance float reached $176 billion, an increase of $5 billion from 2024.
But the company indicated no change in its capital allocation or timing on the potential of buybacks of its stock. Giving shareholders a dividend also does not appear to be part of Abel’s strategy.
Improvements sought at BNSF, equity holdings
Similar to Buffett, Abel has adopted a straightforward, matter-of-fact attitude and mentioned that BNSF, its railroad business, needed to make improvements on its operating margins.
In 2025, BNSF’s operating margin improved to 34.5% from 32.0% in 2024, but is only “modestly above its five-year average” and requires more improvements in efficiency and service, he said in the letter.
“These gains matter, but they are not enough; more progress is needed to translate operational improvements into stronger financial results,” Abel said. “We view operating margin (the inverse of the industry’s operating ratio) as the best measure of performance. Each one-percentage-point improvement in operating margin generates approximately $230 million of incremental operating cash flow for our owners.”
Berkshire is also not satisfied with its investment in Kraft Heinz (NASDAQ: KHC) whose stock has fallen by 23% during the last year.
“Our investment in Kraft Heinz has been disappointing,” Abel wrote. “Even after considering the preferred equity component in our original Heinz investment, our return has been well short of adequate. At Berkshire, equity investments are fundamental to our capital allocation activities; responsibility ultimately resides with me as CEO.”
In January, the conglomerate registered all of its 27.5% stake in the food company in a SEC filing. As the largest shareholder of the company that manufactures food staples such as ketchup, macaroni and cheese and hot dogs, Berkshire could exit its investment, the one misstep made by Buffett’s otherwise renowned record.
The registration statement gives the company the ability to lower its position, according to investment bank Stifel.
“The registration provides Berkshire Hathaway the ability to reduce its ownership stake; we believe transaction notifications are not required outside of quarterly 13F filings,” Stifel analysts wrote. “The next update is likely to be in mid-May, when Berkshire reports its first fiscal quarter activity.”
Kraft Heinz announced in 2025 that it would separate into two companies, but changed its mind earlier this year and put the plans on hold. The $46 billion merger in 2015 was meant to generate cost savings for both companies and expand sales to other countries.
Abel has not made any other changes and said that Berkshire’s investment manager Ted Weschler would continue to manage about 6% of its investments, including a portion of the portfolio that had been overseen by former Geico CEO Todd Combs, who also served as an investment manager. Combs resigned and is serving as head of JPMorgan Chase’s new Security and Resiliency Initiative to make equity investments in the aerospace, defense, energy, and health care industries.
“Ted’s impact extends beyond these investments, as he continues to play a broader role in assessing significant opportunities, providing valuable input on our businesses, and supporting Berkshire in various other ways,” Abel wrote.
Buffett has been a longtime believer that earnings from a company should be allocated for acquisitions or internal growth. Abel has stood by this policy, stating that share repurchases would occur only “when they trade below our estimate of intrinsic value, conservatively determined, ensuring that repurchases enhance per-share value for continuing owners.”
Abel said he is not changing Buffett’s policy of skipping quarterly earnings calls since the company and Buffett have always been advocates of holding onto investments for longer periods of time. Giving investors updates each quarter would not be consistent with Berkshire’s “long-term horizon,” he said.
Berkshire’s next era under the helm of Abel appears to follow the conglomerate’s history and tenet of investing in high-quality companies that generate consistent cash flow and keeping those investments over a longer time period.
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