Berkshire Hathaway CEO Insights: GEICO, Underwriting, and Market Trends
In his initial letter to shareholders, Berkshire Hathaway CEO Greg Abel signaled a potential reduction in the property and casualty insurance business volume in the near term. He emphasized the company's diverse insurance operations, focusing on long-term objectives. Abel noted a slowdown or reversal in industry trends, following several years of pricing and policy adjustments, beginning in the latter months of 2025.
Greg Abel, who became CEO in January 2026, shared these insights alongside the company's 2025 financial results. In discussing auto insurance, Abel highlighted GEICO's improved cost structure, enhanced underwriting discipline, and advances in customer segmentation and risk-based pricing. From late 2022 to 2024, rate increases positively influenced 2025 performance, with a stable pricing environment expected.
Abel stated that GEICO, with its nuanced pricing strategy, managed to retain its customer base while investing in technology to boost efficiency and service delivery. According to Reinsurance News, Berkshire's property and casualty combined ratio worsened slightly in 2025 to 84.5% from 82.9% in 2024, due to a higher loss ratio and a slightly reduced expense ratio. GEICO was the main contributor to underwriting profit that year.
GEICO generated $6.8 billion in pre-tax underwriting earnings in 2025, down from $7.8 billion in 2024. Premiums written increased over 5% to $45.2 billion, driven by higher policies in force, while premiums earned grew over 5% to $44.5 billion. Losses and loss adjustment expenses rose 6% year-on-year to $32.1 billion, with underwriting expenses up 34.2% to $5.5 billion, resulting in a 2025 combined ratio of 84.7%, higher than the prior year's 81.5%.
According to CNBC, Berkshire's cash holdings decreased by 2.2% in the fourth quarter, totaling $373.3 billion at year-end. Operating earnings dropped 29.8% to $10.2 billion compared to the previous year. However, insurance underwriting declined by 54%, and insurance investment income fell by 25%.
Additionally, an analyst monitoring Berkshire Hathaway predicts the company's stock could rise by 10% to 12% annually over the next decade. Concurrently, GEICO announced further reductions in auto insurance rates for Florida drivers. This decision is attributed to ongoing market stabilization following 2023 legal reforms. Amanda White, GEICO’s head of insurance product management, stated that positive regulatory changes have stabilized the market, enabling the insurer to offer competitively priced products.