Berkshire Hathaway is cutting premiums for its property and casualty (P&C) reinsurance business in 2025 due to increased competition and falling rates, with new chief executive Greg Abel warning the company will continue to reduce reinsurance premiums “as long as these phases of the cycle persist.”
Abel, who succeeded Warren Buffett as Berkshire Hathaway CEO in January 2026, has submitted his first letter to shareholders along with the company’s fiscal 2025 results.
In the letter, Abell highlighted Berkshire’s “extraordinary insurance business group,” but noted that “after several years of necessary adjustments to pricing and policy terms,” those trends are beginning to reverse in 2025, which “may mean we will be reducing our property and casualty business for some time.”
The CEO went on to say that Berkshire expects its primary insurance business to “face continued headwinds in 2026 and beyond,” and warned of similar dynamics in reinsurance.
“The reinsurance industry has attracted significant increases in available capital in both traditional and alternative markets, which, coupled with more modest reinsurance catastrophe loss burdens in 2025 in most major regions, has resulted in significant declines in property reinsurance prices. Across most casualty reinsurance segments, claims inflation continues to outpace pricing. As long as these phases of the cycle persist, we expect lower reinsurance premiums,” he said.
Still, 2025 was another strong year for Berkshire Hathaway’s re/insurance business, with pre-tax underwriting earnings totaling $9.5 billion, compared with $11.4 billion in 2024; net underwriting earnings of $7.3 billion, down nearly 20% from $9 billion in 2024. Compared with the same period last year, pre-tax underwriting income from reinsurance business, primary insurance business and GEICO all declined, but the performance remained strong.
Berkshire Hathaway Re’s pre-tax underwriting earnings fell more than 32% year over year to $1.9 billion as property and casualty insurance declined to $3.2 billion from $3.8 billion in 2024, partially offset by an increase in life and health (L&H) reinsurance earnings to $374 million (from $223 million in 2024).
At the same time, pre-tax underwriting losses from retroactive reinsurance losses increased to more than $1 billion, pre-tax losses on regular payment annuity contracts increased to $711 million, and variable annuity guaranteed reinsurance contracts generated $88 million in pre-tax earnings for the company in 2025.
In property and casualty reinsurance, written premiums fell by $1.7 billion to $20.2 billion in 2025, and net premiums fell by $1.8 billion to $20.4 billion. Berkshire attributed the decline to fewer real estate transactions driven by “increased competition and lower interest rates.”
As Abel noted in his letter to shareholders, despite the size of January’s California wildfires, 2025 was overall a milder year for reinsurance natural catastrophe losses, in part because severe convective storms and other so-called secondary peril losses dominated, and the primary market retained more of these losses last year.
Losses and loss adjustment expenses (LAE) fell 4.5% year over year to $11.7 billion, with losses from major catastrophic events of approximately $765 million, down from $800 million in 2024. Losses and LAE are also reduced by $1.1 billion in 2025 due to lower-than-expected property losses and a $1.1 billion reduction in estimated ultimate claims liability for claims from previous accident years.
Meanwhile, reinsurance underwriting expenses also fell 9.9% to $615 million, primarily due to the impact of lower premiums earned.
The property and casualty insurance combined ratio will decline slightly to 84.5% in 2025 from 82.9% in 2024 due to a higher loss ratio (57.2%) and a slightly lower expense ratio (27.3%).
As for the L&H Reinsurance segment, written premiums increased by approximately $300 million to $5.3 billion, while earned premiums increased by $271 million to $5.3 billion, primarily due to growth in non-U.S. markets.
Berkshire Hathaway attributed the strong year-over-year underwriting performance to higher earnings in its international and U.S. life and health businesses, lower losses in its U.S. long-term care business and higher foreign exchange gains.
At Berkshire Hathaway Primary Group, Berkshire Hathaway’s main insurance arm, pre-tax underwriting earnings fell to $785 million in 2025 from $855 million in 2024, and written premiums fell slightly to $18.7 billion from $18.8 billion. Premiums earned were flat at $18.7 billion.
Losses and LAE fell by more than 1% year over year to $12.5 billion in 2025, while final loss estimates for previous accident years increased by approximately $190 million in 2025 and fell by $52 million in 2024.
Underwriting expenses will increase from $5.2 billion in 2024 to $5.4 billion in 2025, with the expense ratio as high as 28.9% due to changes in the business structure.
Berkshire Hathaway’s main group’s combined ratio increased from 95.4% in 2024 to 95.8% in 2025 due to higher expense ratios, partially offset by a lower loss ratio (66.9%).
GEICO’s business, which writes property and casualty insurance, primarily private passenger auto insurance, in all 50 states and the District of Columbia, is typically the primary driver of the company’s insurance underwriting profits, and that will be the case again in 2025.
GEICO’s pre-tax underwriting income in 2025 will be $6.8 billion, compared with $7.8 billion in 2024, as written premiums increased more than 5% to $45.2 billion and premiums earned increased more than 5% to $44.5 billion, driven by an increase in policies in force over the past year.
GEICO’s losses and LAE increased 6% year-on-year to US$32.1 billion, and underwriting expenses increased 34.2% to US$5.5 billion. A high loss ratio of 72.3% and a higher expense ratio of 12.4% result in GEICO’s combined ratio of 84.7% in 2025, up from 81.5% in 2024.
In terms of insurance investment income, pre-tax investment income fell 8.9% to $15.3 billion in 2025, reflecting a decline in interest and other investment income, mainly due to lower short-term interest rates and lower dividend income.
Finally, Berkshire Hathaway’s outstanding stock has increased from approximately $171 billion at the end of 2024 to approximately $176 billion at the end of 2025.
“The future environment will reward insurers whose focus remains on sustainably growing underwriting profits rather than volume; customer trust and loyalty rather than temporary surges in market share; and long-term resilience rather than short-lived opportunism,” Abell said in a letter to shareholders.
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