In his first annual shareholder letter, published on February 28, 2026, Greg Abel eased the nerves of Berkshire Hathaway (BRK.A) (BRK.B) investors by reaffirming the company’s values held by legendary investor Warren Buffett. Buffett’s willingness to admit his mistakes and be honest with investors has defined the company’s culture for 60 years. By emphasizing these principles in his first annual message, Abel gave shareholders confidence that this transparency will continue even amid a changing of the guard.
One of the most important lessons Abel inherited was Buffett’s warning from 2024: “Once you start fooling shareholders, you’ll soon believe your own nonsense.” Buffett insists on complete transparency and treating shareholders as true partners, and Abel’s first letter made it clear that he intends to follow the same blueprint. While Abel admitted that simple arithmetic means he won’t be CEO for the next 60 years, he made clear his intention is that 20 years from now the company will be even stronger for the next generation of owners.
When discussing hard numbers for the fourth quarter and full-year 2025, Abel stuck to Berkshire Hathaway’s traditional preference for “operating earnings” rather than GAAP net income, which can be distorted by market swings.
Berkshire Hathaway’s operating profit in 2025 will be $44.5 billion. While down from the $47.4 billion reported in 2024, it remains healthy and above the five-year average of $37.5 billion. Abel noted that the company generated $46 billion in net cash flow from operating activities, further underscoring the durability of the underlying business.
Berkshire Hathaway’s core remains its insurance business, which will have a combined ratio of 87.1% by 2025, significantly better than the company’s ten-year average of 93.0%. GEICO was a major contributor to that success, restoring profits by raising rates, although Abel warned that this came at the cost of lower customer retention. Looking ahead to 2026, Abell warned of potential headwinds as more capital enters the insurance market, which could lead the company to reduce underwriting in its property and casualty business to maintain underwriting discipline.
In the non-insurance space, BNSF and Berkshire Hathaway Energy (BHE) have shown solid cash generation, but there are areas for improvement. BNSF’s operating profit margin improved to 34.5%, but Abel admitted that the gap between BNSF and the best companies in the industry is still too large. On the energy side, BHE generated $8.4 billion in operating cash flow while responding to growing demand for artificial intelligence computing and increasing wildfire risks in the Western United States. Abel stressed that BHE would only make capital investments where the “regulatory covenants” were intact, resulting in a reasonable return on invested capital.
Abell also highlighted Berkshire’s impressive financial strength, noting that its cash and U.S. Treasury holdings now exceed $370 billion. This huge amount of “dry powder” ensures that the company remains a “fortress” and is ready to take decisive action when others get scared. Whether managing concentrated ownership stakes in giants like Apple (AAPL) and American Express (AXP) or overseeing its 51 non-insurance businesses, Abel’s message has been consistent: The operating framework and commitment to shareholder partnerships remain unchanged.
On the date of publication, Oscar Cierpial did not hold (either directly or indirectly) any securities mentioned in this article. All information and data in this article are for reference only. This article was originally published on Barchart.com