In his first annual shareholder letter, published Feb. 28, 2026, Greg Abel eased the nerves of Berkshire Hathaway (BRK.A) (BRK.B) investors by recommitting to the values that the company held under legendary investor Warren Buffett. Buffett has always been remarkably upfront about his mistakes and open with his investors, a trait that has defined the company’s culture for 60 years. By emphasizing these principles in his first annual message, Abel is making shareholders feel confident that this transparency will continue even as the guard changes.

One of the most important lessons Abel is carrying forward is Buffett’s warning from 2024: “Once you start fooling your shareholders, you will soon believe your own baloney.” Buffett dealt in total transparency and treated shareholders as true partners, and Abel’s first letter makes it clear he intends to follow that same blueprint. While Abel acknowledged that simple arithmetic means he won’t be the CEO for the next 60 years, he explicitly stated his intention that two decades from now, the company will be even stronger for the next generation of owners.

The Numbers

When discussing the hard numbers for the fourth quarter and the full year of 2025, Abel stuck to the traditional Berkshire preference for “operating earnings” over GAAP net earnings, which can be distorted by market swings. 

Berkshire delivered operating earnings of $44.5 billion in 2025. While this was down from the $47.4 billion reported in 2024, it remained healthy and above the five-year average of $37.5 billion. Abel noted that the company produced $46 billion in net cash flows from operating activities, further underscoring the durability of the underlying businesses.

The heart of Berkshire remains its insurance operations, which saw an exceptional combined ratio of 87.1% in 2025. This was significantly better than the company’s ten-year average of 93.0%. GEICO was a major contributor to this success, having restored its margins through rate increases, although Abel cautioned that this came at the cost of lower customer retention. Looking toward 2026, Abel warned of potential headwinds as more capital enters the insurance market, likely leading the company to write less property and casualty business to maintain underwriting discipline.

In the non-insurance sectors, BNSF and Berkshire Hathaway Energy (BHE) showed steady cash generation but also areas for improvement. BNSF’s operating margin improved to 34.5%, yet Abel was candid in stating that the gap between BNSF and the industry’s best remains too wide. On the energy side, BHE produced $8.4 billion in operating cash flows while navigating the rising demands of AI computing and the increasing risks of wildfires in the Western U.S. Abel emphasized that BHE will only invest capital where the “regulatory compact” remains intact, allowing for a reasonable return on invested capital.

Abel also highlighted Berkshire’s staggering financial strength, noting that cash and U.S. Treasury holdings have now exceeded $370 billion. This massive “dry powder” ensures that the company remains a “fortress” and is ready to act decisively when others are fearful. Whether it is managing concentrated equity stakes in giants like Apple (AAPL) and American Express (AXP) or overseeing its 51 non-insurance businesses, Abel’s message was consistent: the operating framework and the commitment to shareholder partnership remain unchanged.

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