Berkshire Hathaway’s CEO Greg Abel reported a decline in underwriting and investment income for the company’s insurance and reinsurance operations in his first annual report to investors. The results reflect a shift from two years of rising underwriting profits, with all sectors—personal lines, commercial lines, and reinsurance—showing shrinking underwriting income and higher combined ratios. Abel’s letter to shareholders highlighted the challenges facing the conglomerate’s property/casualty units, which remained profitable but faced ongoing pressures. GEICO, the largest insurer within the group, accounted for over 50% of the $1.9 billion year-over-year drop in pretax underwriting profits. Across all property/casualty operations, pretax underwriting profits fell 16.5% to $9.7 billion. Abel warned that slowing growth is likely to persist into 2026, citing the impact of GEICO’s broad rate increases, which restored margins but reduced customer retention. Competitors’ rate reductions could further strain the sector. Abel emphasized the need for the GEICO team to balance pricing risks for existing and new customers while maintaining underwriting discipline. In commercial insurance, demand remained strong in 2025, but pricing pressures emerged as more capital entered the market. Abel noted that while the company prioritized underwriting discipline over volume, premium growth plateaued as pricing became less attractive. He warned that primary insurance businesses would face continued headwinds in 2026 and beyond. Reinsurance operations also faced challenges, with significant capital inflows from traditional and alternative markets driving price drops. While reinsured catastrophe losses were less severe in 2025, claims inflation outpaced pricing in casualty reinsurance segments, leading to reduced premium writing.#berkshire_hathaway #state_farm #geico #greg_abel #progressive
