As at 6 March 2026

Executive Summary

Key highlights

In this report, we review the latest FY25 results for the year ended 31 December 2025.

Financial results at a glance:

• Berkshire’s operating earnings were 6% lower to $44.5 billion in FY25 versus $47.4 billion in FY24, modestly lower YoY but comfortably ahead of the five-year average of $37.5 billion, underscoring the resilience and breadth of the group’s operating businesses.

• Net earnings attributable to Berkshire shareholders declined by 25% from $89.0 billion in FY24 to $67.0 billion in FY25, primarily reflecting lower investment gains and an $8.3 billion after-tax impairment on equity-method investments, rather than a deterioration in underlying operating performance.

• Insurance operations delivered strong profitability, with a property and casualty combined ratio of 87.1 versus a five-year average of 90.7, supported by disciplined underwriting at GEICO, Primary and Reinsurance, benign US catastrophe activity and continued emphasis on risk-adequate pricing.

• Net cash flow from operating activities, rose approximately 50% YoY to $46.0 billion, above the five-year average of $40 billion, driven by stronger insurance cash generation, favourable working capital movements and the addback of a non-cash equity method investment impairment in FY25.

• The balance sheet remains exceptionally strong, with cash and US Treasury holdings exceeding $370 billion at year-end 2025, enabling Berkshire to meet extreme stress obligations, act as a source of strength to the financial system and retain substantial dry powder for future investment opportunities.

• Insurance float increased by 3% to $176 billion for FY25, up from $171 billion in FY24, continuing the long-term structural growth in low-cost funding that underpins Berkshire’s investment engine.

Analyst thesis

Our recommendation is based on:

• Diversified conglomerate with permanent capital advantage: Berkshire’s insurance operations generate a substantial float, providing a large, low-cost funding base that supports acquisitions and long-term investments. Its wholly owned subsidiaries span insurance, railroads, energy, manufacturing, and retail, contributing to diversified earnings and cash flows across economic cycles.

• Record cash reserves support strategic optionality: Berkshire held a record cash and US Treasury Bills at 4Q25, reflecting disciplined capital allocation and a fortress balance sheet. This substantial liquidity, combined with strong operating cash flow, provides capacity for large-scale acquisitions and opportunistic deployment.

• Leadership transition introduces near term valuation risk: Warren Buffett’s exit creates the risk of removing a longstanding ‘Buffett premium’ from Berkshire’s valuation, reflecting his exceptional capital allocation track record. Any missteps by successor Greg Abel could lead to the shares trading at or below fair value rather than at a premium, as investors reassess management quality and execution risk.

• Valuation supported by quality and balance sheet strength: While Berkshire trades at a premium to its long-term average book value multiple, its diversified earnings base, conservative leverage and strong balance sheet provide support for steady intrinsic value growth. Relative to its quality, track record and financial resilience, we see scope for continued long-term outperformance versus the broader market.