Reinsurance capital build-up means Berkshire Hathaway expects to write less premium: Abel

Berkshire Hathaway anticipates underwriting less in reinsurance premiums while the market cycle remains in a more competitive phase, according to CEO Gregory Abel in his first letter to shareholders, while the company pulled back on property writings given the headwinds faced.

Berkshire Hathaway reported its full-year 20225 results on Saturday, which you can read much more detail about over on Reinsurance News.

With Warren Buffett now having stepped back from his position as the leader explaining the annual results to Berkshire Hathaway shareholders this was a first chance to hear from new CEO Gregory Abel.

As you might expect, given how the reinsurance market developed through 2025, the selective approach of Berkshire Hathaway comes to the fore and the company now anticipates a period of reduced volumes.

In the primary insurance group competitive dynamics are a headwind, Abel explained.

“Across our other primary property and casualty businesses, demand entering 2025 was solid, and pricing in most commercial insurance business segments was adequate or improving. As the year progressed, additional capital entered the market, resulting in lower pricing or decelerating rate increases in several important lines. We have always prioritized underwriting discipline over volume, and as pricing became less attractive, our premium growth plateaued. We expect these primary insurance businesses to face continued headwinds in 2026, and potentially beyond,” he wrote in the letter to shareholders.

On the Berkshire Hathaway reinsurance group he went into more detail on the dynamics that now encourage greater selectivity within its underwriting.

Abel stated, “Our reinsurance operations face similar dynamics. The reinsurance sector has attracted significant increases in available capital from both the traditional and alternative markets, which together with a more benign reinsured catastrophe loss burden in 2025 in most major regions has led to significant price declines in property reinsurance. In most casualty reinsurance segments, claims inflation continued to outpace pricing. As long as these phases of the cycle endure, we expect to write less reinsurance premium.”

Abel highlighted Berkshire Hathaway’s patient approach, significant capacity to capture the right opportunities, the fact managers are note targeted on quarterly earnings or growth, focus on underwriting discipline and long-term approach.

“The environment ahead will reward insurers whose focus remains on growing underwriting profit sustainably, not volume; customer trust and loyalty, not temporary spikes in market share; and long-term resilience, not short-lived opportunism,” he explained.

Within the Berkshire Hathaway reinsurance group, property and casualty pre-tax earnings fell to $3.17 billion for 2025, down from $3.8 billion in the prior year.

Premium volumes declined by $1.7 billion and premiums earned fell $1.8 billion compared to 2024, as the company pulled-back in certain areas.

Chief among these was seemingly property reinsurance, where the competition from capital build-up is likely seen as most significant.

Berkshire Hathaway reported that the decline in premiums was, “Primarily attributable to volume reductions in property business, adding that, “The volume decline was attributable to increased competition and lower rates.”

Demonstrating how the Berkshire Hathaway business model works to its advantage, all-important premium float continued to build over the last year.

CEO Abel said, “At year-end, our insurance float – the capital we hold to pay future losses and, in the meantime, invest for Berkshire’s benefit – stood at $176 billion. That amount increased from $171 billion at the end of 2024 and from $88 billion at the end of 2015.”

It’s clear Berkshire Hathaway feels rate adequacy no longer meets its needs across the entire property reinsurance market, driving the pull-back on premiums and intention to continue writing less premium as dynamics remain as they are.

Depending on how long the soft market lasts it will be interesting to see if the company persists with this strategy.

Read more on Berkshire Hathaway’s annual results over at our sister publication Reinsurance News.