Greg Abel Signals Insurance Strain and Quiet Investment Shift in First Shareholder Letter
In his first letter opening Berkshire Hathaway’s annual report, greg abel said the conglomerate’s insurance and reinsurance operations remained profitable but showed weaker 2025 underwriting and investment income, a shift that matters because GEICO and other property/casualty units drove a combined pretax underwriting profit decline of $1. 9 billion.
Greg Abel flags insurance squeeze and slowing growth
Abel wrote that pretax underwriting profits across Berkshire’s P/C operations fell 16. 5% to just over $9. 7 billion in 2025, with GEICO accounting for more than 50% of the $1. 9 billion year-over-year drop. He warned that GEICO’s broad rate increases had "restored margins but come at the cost of lower retention, " and added that competitors’ rate reductions "may extend that pressure into 2026. " The annual report’s Management Discussion and Analysis also attributes a 5. 3% increase in GEICO’s written and earned premium to higher policies in force, though it did not disclose the magnitude of PIF growth.
GEICO and property/casualty units show slipping underwriting profits
Abel noted that, after two years of rising underwriting profits, underwriting income shrank across personal lines, commercial lines and reinsurance in 2025. For commercial primary insurance, he said "demand entering 2025 was solid, and pricing in most commercial insurance business segments was adequate or improving, " but that lower pricing or slowing rate hikes appeared as the year progressed and more capital entered the market. "We have always prioritized underwriting discipline over volume, " he wrote, and added that primary insurance businesses are expected to face continued headwinds in 2026.
Investment moves, omissions and executive pay
On investments, Abel emphasized a "concentrated approach" for holdings the company intends to hold for decades, naming Apple, American Express, Coca-Cola and Moody’s as forever stocks while omitting Bank of America Corp. and Chevron Corp. from that list despite their status as top-five holdings by market value in Berkshire’s fourth-quarter 13F filing. The 13F filing showed a 9% reduction in the Bank of America stake in the final quarter of 2025 and a 7% increase in the Chevron position in the same period. Abel described the Kraft Heinz investment as "disappointing, " saying returns have been "well short of adequate, " and the letter noted a rise in his base pay to $25 million and cash holdings that now exceed $370 billion.
Abel also described reinsurance dynamics: significant increases in available capital from traditional and alternative markets, a more benign reinsured catastrophe loss burden in 2025 that contributed to property reinsurance price drops, and continued claims inflation in many casualty reinsurance segments that outpaced pricing.
The letter opened Berkshire’s annual report on Saturday and sets a clear near-term focus: restoring retention at GEICO while maintaining underwriting discipline and navigating what the company expects will be continued headwinds into 2026.
