Published
# Berkshire Hathaway Inc. (BRK-B) — Business, Risks and Management's Discussion Source filings: the FY2025 Annual Report on Form 10-K (accession 0001193125-26-083899, filed March 2, 2026) and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (accession 0001193125-26-341032, filed August 10, 2026). --- ## Business *From the FY2025 10-K, accession 0001193125-26-083899.* Berkshire Hathaway is a Delaware-domiciled holding company headquartered in Omaha, Nebraska, owning subsidiaries engaged in numerous diverse business activities. The most important are insurance businesses conducted on both a primary and a reinsurance basis, a freight rail transportation business, and a group of utility and energy generation and distribution businesses. It also owns a large collection of manufacturing, service and retailing businesses. Operating subsidiaries are managed on an unusually decentralized basis, with few centralized or integrated business functions. The Chief Executive Officer — Gregory E. Abel, who succeeded Warren E. Buffett in that role effective January 1, 2026 — is ultimately responsible for significant capital allocation decisions, investment activities, and evaluating the operating performance of the businesses. Berkshire and its subsidiaries employed approximately 387,800 people worldwide at the end of 2025, approximately 80% in the United States, with roughly 19% represented by unions. ### Insurance Berkshire's insurance subsidiaries write property and casualty risks as well as life and health risks worldwide, and employed approximately 42,600 people at the end of 2025. Underwriting is organized into three groups: - **GEICO** — headquartered in Maryland, principally sells private passenger automobile insurance to individuals in all 50 states and the District of Columbia, mainly by direct response methods (internet and telephone) and to a lesser extent through agencies. It also writes motorcycle, ATV, recreational vehicle, boat and commercial vehicle coverage and operates an agency placing third-party homeowners, renters, life and identity-protection policies. Per A.M. Best data for 2024 published in 2025, the five largest private passenger auto insurers held about 63.6% of the market on written premiums, with GEICO third largest at approximately 11.6%. Principal competitors named are State Farm, Progressive, Allstate and USAA. - **Berkshire Hathaway Primary Group (BH Primary)** — a collection of independently managed commercial insurers: NICO Primary (commercial auto and general liability), Berkshire Hathaway Homestate (workers' compensation, commercial auto, commercial property), Berkshire Hathaway Specialty Insurance (commercial property/casualty, executive and professional lines, with offices across Asia, Europe, Australia, New Zealand and Canada), RSUI and CapSpecialty (specialty property, umbrella/excess, professional and D&O liability), MedPro and MLMIC (healthcare liability), USLI (five specialty insurers), and BH Direct and GUARD (small and medium business, the former through the biBERK.com and Threeinsurance.com platforms). Nearly 90% of BH Primary net premiums written in 2025 were in the U.S., of which approximately 40% was written on a non-admitted basis. - **Berkshire Hathaway Reinsurance Group (BHRG)** — global reinsurance conducted in 23 countries through the NICO Group, the General Re Group and the TransRe Group, on both quota-share and excess-of-loss terms, treaty and facultative. A significant portion of the NICO Group's annual reinsurance premium derives from a 20% quota-share agreement with Insurance Australia Group that expires December 31, 2029. The General Re Group also writes a global life and health book; Berkshire Hathaway Life Insurance Company of Nebraska (BHLN) writes traditional life reinsurance and reinsured closed blocks of variable annuity guarantees now in run-off. Two long-tail books are written with the deliberate expectation of underwriting losses in exchange for investable funds: **retroactive reinsurance**, which indemnifies ceding companies for adverse development on loss events that already occurred (and carries substantial asbestos, environmental and latent-injury exposure), and **periodic payment annuities** issued by BHLN, typically settling personal injury or workers' compensation claims. No new contracts of significance have been written in either book in recent years; BHLN has written no new periodic payment annuity policies since 2022. The combined statutory surplus of Berkshire's U.S.-based insurers was approximately $333 billion at December 31, 2025, and the major insurance subsidiaries are rated AA+ by Standard & Poor's and A++ by A.M. Best. Berkshire's aggregate deductible under the federal terrorism reinsurance program (TRIA, extended through December 31, 2027) is expected to be approximately $2.5 billion in 2026. **Float.** Invested assets derive from shareholder capital plus net policyholder funds held for investment, or "float" — principally unpaid losses and loss adjustment expenses, life, annuity and health benefit liabilities and unearned premiums, reduced by premium and reinsurance receivables, deferred acquisition costs and deferred charges on retroactive reinsurance. Float grew from approximately $138 billion at the end of 2020 to approximately $176 billion at the end of 2025. Investment portfolios have historically held a much greater proportion of equity securities than is customary in the industry, unusually concentrated in relatively few companies, with no target allocations by investment type and no attempt to match asset and liability durations. ### Burlington Northern Santa Fe (BNSF) BNSF, based in Fort Worth, operates one of the largest freight rail systems in North America — over 32,500 route miles in 28 states plus three Canadian provinces — serving the Midwest, Pacific Northwest, Western, Southwestern and Southeastern U.S. and certain ports. BNSF Railway had approximately 35,000 employees at the end of 2025, of whom roughly 30,000 were union members. Freight revenue is classified as consumer products, industrial products, agricultural and energy products, and coal. The railroad works with approximately 200 shortline railroads. Operations are regulated by the Surface Transportation Board, the Federal Railroad Administration, OSHA and the EPA, and BNSF is required as a common carrier to transport hazardous materials. Its primary rail competitor in the Western U.S. is Union Pacific; deregulated motor carriers, barges, ships and pipelines also compete on price and service. Management has committed to a 30% reduction in BNSF Railway greenhouse gas emissions by 2030 from a 2018 baseline, in which locomotive diesel consumption accounted for roughly 80% of emissions. ### Berkshire Hathaway Energy (BHE) BHE is an Iowa-headquartered holding company employing approximately 24,000 people. Its domestic regulated interests comprise four regulated U.S. utilities — PacifiCorp (Utah, Oregon, Wyoming, Washington, Idaho, California), MidAmerican Energy (Iowa, Illinois, South Dakota, Nebraska), and NV Energy's Nevada Power and Sierra Pacific — serving approximately 5.4 million retail customers, together owning approximately 32,400 net megawatts of generation in operation and under construction. Five U.S. interstate natural gas pipeline companies (BHE GT&S, Northern Natural and Kern River) operate approximately 20,900 miles of pipeline with design capacity of roughly 21.6 billion cubic feet per day, and BHE holds a 75% interest in a liquefied natural gas export, import and storage facility. Other businesses include electricity distribution in Great Britain (Northern Powergrid), transmission in Alberta, a portfolio of mostly renewable independent power projects, and HomeServices of America, a residential real estate brokerage and brokerage franchisor. Rates charged by the regulated businesses are based largely on costs including income taxes and a return on capital, and are subject to regulatory approval; costs not allowed in approved rates depress results. ### Manufacturing - **Industrial products** — Precision Castparts (investment castings, forgings, fasteners and aerostructures for aerospace and power, with Boeing, Airbus, GE Aerospace, Rolls Royce and Pratt & Whitney among significant customers); Lubrizol (lubricant additives and advanced materials, competing with Infineum, Chevron Oronite and Afton); IMC, one of the three largest makers of consumable carbide metal-cutting tools (ISCAR, TaeguTec, Ingersoll, Tungaloy, NTK), with much of its manufacturing in Israel; Marmon, comprising eleven business groups at year-end 2025 (twelve as described in the second-quarter 2026 report) and more than 120 autonomous businesses across roughly 630 facilities — including Union Tank Car, which with Canadian affiliate Procor owns a fleet of approximately 118,000 railcars, and EXSIF, a lessor of approximately 76,000 intermodal tank containers. Also CTB (agricultural systems), LiquidPower Specialty Products (pipeline drag-reduction agents), W&W|AFCO Steel (19 fabrication plants), and Bell Laboratories (rodent control), acquired July 31, 2025. - **OxyChem** — acquired from Occidental Petroleum on January 2, 2026 under an agreement dated October 1, 2025, with Occidental retaining OxyChem's legacy environmental liabilities. A top three North American producer of PVC, chlor-alkali products and chlorinated organics, with 21 U.S. plants across ten states plus sites in Canada and Chile and approximately 4,000 employees and contractors. - **Building products** — Clayton Homes (shipped approximately 49,400 off-site built homes in 2025, over 83% to the Department of Energy's Zero Energy Ready Home standard, plus roughly 10,000 site-built homes; its Clayton Properties Group spans nine builders in 17 states with approximately 300 subdivisions, roughly 67,300 owned or controlled homesites and a $1.2 billion order backlog at year-end); Shaw Industries (carpet, carpet tile and hard surface flooring, over 3,800 styles, sold to more than 42,000 retailers and distributors); Johns Manville (insulation, roofing, reinforcement fiberglass and nonwovens, over 40 plants); Benjamin Moore (premium coatings sold through more than 8,000 independent retailers including approximately 4,000 Ace Hardware stores); MiTek (engineered connectors, software and machinery for the truss component market); and Acme Brick. - **Consumer products** — Forest River (recreational vehicles, cargo trailers, buses and boats; approximately 36% market share at December 2025 versus roughly 39% for the largest competitor); Fruit of the Loom, Garan, Fechheimer, BH Shoe Holdings and Brooks Sports; Duracell (estimated 32% share of the global alkaline battery market in 2025); Jazwares (Squishmallows, plus licensed Pokémon, Hello Kitty, Star Wars and Disney lines); Richline (jewelry) and Larson-Juhl (custom framing). ### Service and retailing Service businesses include NetJets (shared private aircraft ownership, headquartered in Columbus with European operations in Lisbon) and FlightSafety (aviation training and full flight simulator manufacturing); TTI, a global specialty distributor of electronic components operating from more than 180 locations, with its Mouser subsidiary serving lower-volume customers online; International Dairy Queen (approximately 7,800 franchised restaurants); XTRA (transportation equipment leasing, approximately 90,000 units); CORT (furniture rental); Charter Brokerage (third-party logistics); Business Wire; IPS (pharmaceutical, biotech, data center and life sciences design and construction management); and WPLG in Miami. Excluding McLane, service businesses employed approximately 31,200 people at the end of 2025. **McLane** provides wholesale distribution in all 50 states through retail, restaurant and beverage units, serving approximately 43,100 retail locations and approximately 35,300 restaurants; its beverage unit, Empire Distributors, serves approximately 30,800 locations. Major customers in 2025 were Walmart (approximately 17.2% of revenues), 7-Eleven (approximately 13.3%) and Yum! Brands (approximately 13.3%). McLane had approximately 24,900 employees at the end of 2025. **Retailing** centers on Berkshire Hathaway Automotive, one of the largest U.S. auto retailers, operating 108 new vehicle franchises through 83 dealerships plus 31 collision centers, with approximately 75% of dealership-related revenues from Arizona and Texas and roughly 90% of dealership revenue from the Toyota/Lexus, General Motors, Ford/Lincoln, Nissan/Infiniti and Honda/Acura brands. Also included are four home furnishings retailers (Nebraska Furniture Mart, R.C. Willey, Star and Jordan's), three jewelers (Borsheims, Helzberg with 161 stores, and Ben Bridge), See's Candies (approximately 250 stores, with roughly half of annual revenue earned in the fourth quarter), Pampered Chef, Oriental Trading and Detlev Louis Motorrad in Europe. Excluding Pilot, retailing employed approximately 25,400 people at the end of 2025. **Pilot Travel Centers**, wholly owned since January 2024, operates 675 travel centers and 82 fuel-only locations across the U.S. and five Canadian provinces, plus 94 locations in unconsolidated joint ventures, and runs wholesale fuel and fuel marketing businesses. Pilot sold approximately 10.9 billion gallons of fuel in 2025 and had approximately 29,300 employees at year-end. Its top 10 diesel customers accounted for approximately 10% of diesel gallons sold, and its top 10 fuel suppliers for approximately 45% of gallons purchased. --- ## Risk factors *From the FY2025 10-K, accession 0001193125-26-083899.* ### General business risks - **Terrorism.** A nuclear, biological or chemical attack or armed terrorist incursion could produce significant losses across worldwide operations. - **Cybersecurity.** Certain information systems have already been subject to cyber threats, and attacks have become more sophisticated and frequent. A significant disruption or intrusion at one or more significant operations could affect results, financial condition and liquidity; a failure to acquire, develop or protect rights around new technology could create competitive disadvantage. - **Geopolitical events.** Management states the risk of adverse effects from geopolitical events is rising. Government policies and other governments' responses may reduce sales, raise operating costs, trigger sanctions, restrict supply chains, damage properties and depress the value of securities owned. International trade policies, including tariffs and other barriers, could negatively affect operating results. - **Dependence on a few key people.** Gregory E. Abel was appointed in May 2025 to succeed Warren E. Buffett as Chief Executive Officer effective January 1, 2026, and major capital allocation and investment decisions are his responsibility. Ajit Jain is Vice Chairman of insurance operations and Adam Johnson is President of consumer products, service and retailing; both report directly to Mr. Abel. Loss of key personnel could have a material adverse effect. - **Need for qualified personnel.** The decentralized model requires competent management at each subsidiary; labor disruptions or strikes at subsidiaries, customers or within supply chains could reduce sales and increase costs. - **Equity concentration.** A high percentage of the insurance subsidiaries' equity investments sits in a relatively small number of issuers. A significant decline in the fair values of the larger holdings would produce a material decline in consolidated shareholders' equity and earnings, and — because most equities are held at the insurers — in statutory surplus, whose size is treated as a competitive advantage supporting claims-paying ratings and the capacity to write new business. - **Competition and technology.** Technological change, disruptive innovation and difficulty enforcing intellectual property may erode competitive advantages across the operating businesses. - **Economic conditions and capital market access.** Significant deterioration in economic conditions, including sustained high inflation, could materially affect one or more significant operations. The utilities, energy and railroad businesses regularly use debt and depend on access to borrowed funds at reasonable rates. - **Epidemics and pandemics.** Future outbreaks could disrupt supply chains and workforces, reduce demand, create credit losses and drive equity market volatility. - **Regulatory change.** Initiatives addressing financial institutions, products and services, environmental and climate matters and income tax policy raise compliance costs. Data privacy and artificial intelligence laws are enacted or under development in multiple jurisdictions; failure to comply could bring reputational damage and significant economic penalties. - **Climate change and greenhouse gas regulation.** More frequent or intense extreme weather raises physical risk to non-insurance operating assets and produces losses in the insurance operations. Additional GHG and climate policy could raise compliance costs, particularly at BNSF and BHE, which combined represent the vast majority of Berkshire's direct emissions. ### Risks specific to the regulated businesses - **Underwriting risk tolerance.** When properly paid for the risk, Berkshire has been and will continue to be willing to assume more risk from a single event than any other insurer has knowingly assumed, and could incur a significant loss from a single natural or man-made catastrophe. Underwriting practices attempt to avoid writing groups of policies from which pre-tax losses from a single catastrophe event might aggregate in excess of $15 billion, but losses could manifest in unanticipated ways and policy limitations or exclusions may not prove enforceable as intended. - **Claims estimation.** Premiums are received today against losses paid over decades, and estimating claim costs is inherently imprecise. Evolving legal, social and environmental conditions — new or expanded theories of liability, third-party litigation funding and increasingly large jury verdicts — may extend coverage beyond underwriting intent. Estimated unpaid losses on property and casualty risks were $151.8 billion at December 31, 2025, and a small percentage increase can materially reduce reported earnings. - **Insurance regulation.** Regulation governs the business that can be written, rates, capital levels, permitted investments and the timing and amount of dividends to Berkshire. Internationally active insurance group regimes covering group capital, liquidity, governance and risk management continue to develop. - **Railroad regulation and exposure.** BNSF is subject to extensive rate, tax, operating, safety, labor and environmental regulation, and can face significant litigation costs. Policies limiting or displacing coal, or other commodities BNSF hauls, could reduce revenues and earnings; as a common carrier it must transport toxic inhalation hazard chemicals and other hazardous materials. Because U.S. freight infrastructure is integrated, disruption at ports, passenger railroads or interchanging carriers — including from consolidation or mergers among major rail carriers — can hurt BNSF's results. - **Utility regulation and wildfire exposure.** BHE's businesses are highly regulated across virtually every aspect of operations, including asset acquisition and retirement, rate setting, capital structure and dividends. The regulated energy subsidiaries are exposed to losses arising from wildfires and related litigation and judicial outcomes, and costs not recoverable through approved rates can materially hurt results. - **Capital intensity.** BNSF and BHE require significant ongoing capital investment whose operational or financial failure may not be recoverable through customer rates, and a significant portion of that spending may be debt funded. --- ## Management's discussion — fiscal year 2025 *From the FY2025 10-K, accession 0001193125-26-083899.* Total revenues were $371.4 billion in 2025, essentially unchanged from $371.4 billion in 2024 and up from $364.5 billion in 2023. Net earnings attributable to Berkshire shareholders were $67.0 billion, down from $89.0 billion in 2024 and $96.2 billion in 2023, with the swing driven by investment gains rather than operations. The after-tax composition (in millions): | | 2025 | 2024 | 2023 | |---|---|---|---| | Insurance – underwriting | 7,258 | 9,020 | 5,428 | | Insurance – investment income | 12,513 | 13,670 | 9,567 | | BNSF | 5,476 | 5,031 | 5,087 | | Berkshire Hathaway Energy | 3,979 | 3,730 | 2,331 | | Manufacturing, service and retailing | 13,647 | 13,072 | 13,362 | | Investment gains (losses) | 30,737 | 41,558 | 58,873 | | Impairment of Kraft Heinz and Occidental | (8,255) | — | — | | Other | 1,613 | 2,914 | 1,575 | | **Net earnings attributable to shareholders** | **66,968** | **88,995** | **96,223** | **Insurance underwriting.** Pre-tax underwriting earnings were $9.46 billion, down from $11.41 billion, with all three groups lower: GEICO $6,824 million (from $7,813 million), BH Primary $785 million (from $855 million) and BHRG $1,851 million (from $2,737 million). Management described the three-year run of results as exceptional relative to longer periods and warned earnings may decline from industry competition and rising claim cost trends. After-tax losses from significant catastrophe events were approximately $850 million, chiefly the Southern California wildfires, versus $1.2 billion in 2024 and $725 million in 2023. At GEICO, premiums written rose $2.3 billion (5.3%) on higher policies-in-force. The loss ratio rose to 72.3% from 71.8% on higher average claim severities — bodily injury severity up twelve to fourteen percent — partly offset by higher average earned premium per policy, lower catastrophe losses and greater favorable prior-year development ($957 million versus $550 million). Underwriting expenses rose 34.2% and the expense ratio rose 2.7 points to 12.4% on higher advertising and policy acquisition costs. BH Primary premiums written were slightly lower, with gains at MedPro, BHHC, NICO Primary, BH Direct and USLI offset by declines at GUARD (down 32.6% as it exited unprofitable lines) and RSUI (down 8.7% on reduced property volumes); prior-year loss estimates increased approximately $190 million versus a $52 million reduction in 2024, with claim costs for liability coverages pressured by social inflation. BHRG property and casualty premiums written fell $1.7 billion on lower property volumes amid increased competition and lower rates, though prior-year reserves released $1.1 billion, mostly from lower-than-expected property losses. The long-tail run-off books continued to cost earnings: retroactive reinsurance produced pre-tax underwriting losses of $950 million before currency effects, and periodic payment annuities $603 million, mainly from accretion of discounted liabilities. Retroactive reinsurance unpaid losses were $31.0 billion with $8.1 billion of deferred charge assets at year-end; management expects deferred charges to decline approximately $800 million in 2026, a corresponding pre-tax charge. Aggregate remaining losses payable under retroactive contracts are currently expected not to exceed $46 billion, and estimated asbestos and environmental liabilities were approximately $11.1 billion. For BHRG's casualty book, management considers a five percent increase in claim liabilities reasonably possible over time, which would raise casualty liabilities by roughly $1.8 billion. **Insurance investment income.** Pre-tax investment income fell 8.9% and after-tax income fell $1.2 billion (8.5%) on lower short-term interest rates and reduced dividend income, and was also affected by large capital distributions from the insurers to the parent at the end of 2024. Float was approximately $176 billion at year-end, up from $171 billion, and the average cost of float was negative in each of the three years. **BNSF.** Railroad operating revenues were $23.35 billion, essentially flat, with average revenue per car/unit down 0.5% on lower fuel surcharges and unfavorable mix. Operating expenses fell $591 million (3.7%) and the operating ratio improved 2.5 points to 65.5%, helped by productivity, lower litigation accruals and the non-recurrence of a $290 million December 2024 charge for the SMART-TD labor agreement. Pre-tax earnings rose 7.9% to $7.18 billion and net earnings 8.8% to $5.48 billion. By group, consumer products revenue fell 2.8% to $8.2 billion (volumes up 1.2%), industrial products fell 1.5% to $5.0 billion (volumes down 4.6%), agricultural and energy rose 3.2% to $6.6 billion, and coal rose 2.5% to $3.0 billion on higher natural gas prices. Total volumes were 9.62 million cars/units, up 0.3%. **BHE.** Net earnings attributable to Berkshire rose $249 million (6.7%) to $3,979 million. By business, U.S. utilities earned $2,097 million (up 6.9%), natural gas pipelines $1,151 million (down 6.6%), other energy businesses $1,175 million (down 11.9%), real estate brokerage $24 million (versus a $107 million loss), against corporate interest and other costs of $465 million. Pre-tax wildfire loss accruals at PacifiCorp were $100 million versus $346 million in 2024. U.S. utilities' electric margin rose $651 million (8.4%) to $8.4 billion on higher retail rates, retail volumes up 2.2% and higher wholesale prices. Northern Powergrid earnings fell on lower tariffs from inflation adjustments beginning in the second quarter of 2025. Management flagged the One Big Beautiful Bill Act, enacted July 4, 2025, which accelerates the phase-out of clean electricity production and investment tax credits and adds sourcing requirements for facilities starting construction after December 31, 2025; it did not materially affect 2025 results but may affect future renewable, storage and technology-neutral project economics. **Manufacturing, service and retailing.** Revenues were $214.3 billion (down 0.7%) with pre-tax earnings of $17.48 billion (up 3.8%) and a pre-tax margin of 8.2%. - Manufacturing revenues of $78.5 billion produced $12.57 billion of pre-tax earnings. *Industrial products* revenue rose 4.1% to $37.3 billion and earnings 13.1% to $6.81 billion, an 18.3% margin: PCC revenue $10.8 billion (aerospace up 7.5%) with earnings up 34.2% including insurance recoveries from a first-quarter fire at a fasteners plant; Marmon revenue $12.8 billion (up 4.7%) with earnings up 8.5%; IMC revenue approximately $4.1 billion with earnings essentially flat; Lubrizol revenue $6.2 billion (down 3.0%) with earnings down 20.6%. *Building products* revenue rose 0.9% to $26.8 billion while earnings fell 3.9% to $3.97 billion; Clayton Homes revenue rose 4.3% to $12.9 billion with pre-tax earnings about $1.9 billion, unchanged, as financial services gains offset weaker home building, and loan balances reached approximately $29.5 billion (up 8.6%). *Consumer products* revenue fell 3.0% to $14.4 billion while pre-tax earnings rose 2.8% to $1.79 billion — but only because Duracell recorded refundable advanced manufacturing production credits for 2023 through 2025 in 2025, which GAAP places in pre-tax earnings; before those credits, group earnings declined significantly. - Service and retailing revenues were $135.8 billion with $4.91 billion of pre-tax earnings. Service revenue rose 11.0% to $23.0 billion and earnings 17.2% to $2.70 billion on aviation services (up 9.9%, with shared-ownership aircraft up 6.9% and in-flight hours up 11.3%), IPS (up 24.2%) and TTI (up 12.3%). McLane revenue fell 1.8% to $51.0 billion, partly on one fewer week, while earnings rose 6.6% to $676 million. Retailing revenue rose 2.5% to $19.7 billion while earnings fell 4.2% to $1.34 billion. Pilot was the weak point: revenue fell 10.0% to $42.2 billion on lower bulk fuel and trading volumes and lower fuel prices, and pre-tax earnings fell 69.1% to $190 million on weaker wholesale fuel and in-store margins, higher operating costs and charges from adjustments to certain fuel-related balance sheet accounts. **Investments and other.** Pre-tax investment gains were $39.1 billion, including $40.0 billion of unrealized gains on equities held at year-end. Management repeats that such gains and losses are "generally meaningless" for understanding periodic results. Other-than-temporary impairments of $8.255 billion were recorded on the equity-method holdings — $3.76 billion on Kraft Heinz and $4.50 billion on Occidental. Other after-tax earnings fell $1.3 billion, reflecting $642 million of currency losses on non-dollar debt (versus $1.15 billion of gains in 2024), lower equity-method earnings and goodwill impairment losses of $1,555 million (versus $399 million), relating to certain building products, consumer products and retailing businesses. **Financial condition.** Shareholders' equity was $717.4 billion at December 31, 2025, up $68.1 billion. Insurance and other businesses held cash, cash equivalents and U.S. Treasury Bills of $369.0 billion, with equity and fixed maturity securities (excluding equity-method holdings) of $315.6 billion. During 2025 Berkshire paid $16.9 billion to acquire equity securities and received $30.7 billion from sales. No shares were repurchased in 2025; the program permits repurchases below intrinsic value as conservatively determined by the CEO after consultation with the Chairman, and prohibits repurchases that would reduce consolidated cash, cash equivalents and Treasury Bills below $30 billion. Berkshire has not declared a cash dividend since 1967. Operating cash flow was $46.0 billion and capital expenditures $20.9 billion, of which $14.4 billion was BNSF and BHE; those two forecast approximately $15 billion of capital spending in 2026. Borrowings excluding BNSF and BHE were $45.8 billion (Berkshire $22.7 billion, BHFC $18.3 billion); BNSF debt was $24.1 billion and BHE $59.3 billion. Berkshire does not guarantee BNSF or BHE borrowings. Property and casualty claim liabilities were approximately $152 billion, with payments on pre-2026 occurrences expected to exceed $30 billion in 2026. At year-end, goodwill was $83.1 billion and indefinite-lived intangibles $18.9 billion. In the fourth-quarter impairment review, four reporting units did not exceed carrying value by at least 20%; the largest was Pilot, with estimated fair value of approximately $20.2 billion against carrying value of $18.7 billion including $6.5 billion of goodwill. Approximately 65% of the aggregate fair value of equity securities was concentrated in five companies at December 31, 2025; a hypothetical 30% decline in prices was estimated to reduce net earnings by $68.6 billion. --- ## Current quarter — second quarter and first six months of 2026 *From the Q2 2026 10-Q, accession 0001193125-26-341032.* After-tax earnings attributable to Berkshire shareholders by component (in millions): | | Q2 2026 | Q2 2025 | 1H 2026 | 1H 2025 | |---|---|---|---|---| | Insurance – underwriting | 1,731 | 1,992 | 3,448 | 3,328 | | Insurance – investment income | 3,059 | 3,367 | 5,738 | 6,260 | | BNSF | 1,558 | 1,466 | 2,935 | 2,680 | | Berkshire Hathaway Energy | 891 | 702 | 2,005 | 1,799 | | Manufacturing, service and retailing | 4,470 | 3,601 | 7,669 | 6,661 | | Other | 1,274 | 32 | 2,534 | 73 | | **Operating earnings excluding investment gains and impairments** | **12,983** | **11,160** | **24,329** | **20,801** | | Investment gains (losses) | 12,684 | 4,970 | 11,444 | (68) | | Impairment of Kraft Heinz | — | (3,760) | — | (3,760) | | **Net earnings attributable to shareholders** | **25,667** | **12,370** | **35,773** | **16,973** | Total revenues were $101.8 billion in the quarter and $195.5 billion for the half, versus $92.5 billion and $182.2 billion. Net earnings attributable to shareholders were $25.7 billion in the quarter and $35.8 billion for the half, against $12.4 billion and $17.0 billion; operating earnings excluding investment gains and impairments were $13.0 billion in the quarter and $24.3 billion for the half, against $11.2 billion and $20.8 billion. The after-tax gain from remeasuring Berkshire's and BHFC's non-U.S. dollar denominated senior notes into dollars was $326 million in the quarter against an $877 million loss a year earlier, a swing of roughly $1.20 billion that lifts the "Other" line from $32 million to $1,274 million and accounts for most of the $1.8 billion increase in operating earnings excluding investment gains and impairments. **Insurance.** Underwriting earnings fell 13.1% in the quarter but rose 3.6% for the half. There were no significant catastrophe events in the first six months of 2026, against $850 million of after-tax losses in the same period of 2025. The offset was GEICO, where the loss ratio rose to 76.6% in the quarter and 75.3% for the half — increases of 4.8 and 4.9 percentage points — on higher claim frequencies (bodily injury up five to seven percent, property damage and collision up three to five percent) and higher severities (bodily injury up ten to twelve percent). Underwriting expenses rose 27.3% in the quarter on commissions and advertising, lifting the half-year expense ratio 2.7 points to 14.0%. Premiums written rose only 1.1% in the quarter, with growth in commercial auto partly offset by lower average premiums per private passenger auto policy. BH Primary premiums written fell 4.1% in the quarter, with year-to-date declines at RSUI (13.2%), GUARD (7.5%), BHHC (5.7%) and BHSI (2.6%) as several primary insurers cut U.S. property volumes; the loss ratio improved 9.2 points for the half, helped by $444 million of prior-year reserve releases versus $401 million of increases a year earlier. In BHRG property/casualty, premiums written rose 4.1% in the quarter entirely because of a new whole account reinsurance agreement with wholly-owned insurance subsidiaries of Tokio Marine Holdings that commenced April 1, 2026, under which NICO assumes on a quota-share basis a portion of Tokio Marine's non-life premiums and related losses on risks attaching over a ten-year term; it contributed $483 million of premiums written. Excluding it, premiums written fell 5.6% in the quarter and 3.8% for the half on lower property volumes. Prior-year reserve releases were $869 million for the half versus $506 million. Float was approximately $177.5 billion at June 30, 2026, up roughly $1.1 billion since year-end, and the average cost of float remained negative. Retroactive reinsurance unpaid losses declined $1.1 billion to $30.0 billion, with deferred charge assets of $7.7 billion. Insurance investment income fell 7.9% pre-tax in the quarter on lower short-term rates. **BNSF.** Railroad operating revenues rose 14.6% in the quarter and 9.8% for the half, with volumes up 6.5% and 4.3% and average revenue per car/unit up 7.6% and 5.3%, mainly on higher fuel surcharge revenue and higher yield. Consumer products revenue rose 20.5% in the quarter to $2.4 billion on intermodal from higher west coast imports, market share gains and tightening truck capacity; agricultural and energy rose 17.9% to $1.9 billion on grain exports, petroleum fuels and oilseeds; industrial products rose 9.1% to $1.4 billion on steel, aggregates and cement; coal revenue was up slightly at $722 million despite volume declines from plant retirements and lower natural gas prices. Operating expenses rose 15.6% in the quarter, driven by a 68.1% ($475 million) increase in fuel expense on higher average prices and volume; compensation and benefits rose only 1.9%. Pre-tax earnings rose 13.9% in the quarter and 13.7% for the half. **BHE.** Earnings rose 26.9% in the quarter and 11.5% for the half. U.S. utilities net earnings rose $163 million (37.6%) in the quarter, with electric utility margin of $2.3 billion in the quarter and $4.3 billion for the half (up 8.1% and 5.4%) and retail volumes up 3.1% for the half (MEC up 6.0%, NV Energy up 4.3%, PacifiCorp up 0.8%). Natural gas pipelines added $177 million for the half on a general rate case and higher variable LNG revenues from colder first-quarter weather. Other energy businesses fell $104 million for the half on lower Northern Powergrid distribution revenue and higher interest expense; real estate brokerage fell on charges from a second-quarter settlement in the real estate industry litigation. **Manufacturing, service and retailing.** After-tax earnings rose 24.1% in the quarter and 15.1% for the half, led by industrial products manufacturing and the services businesses. - *Industrial products* revenue rose 27.3% in the quarter to $12.2 billion and 25.5% for the half to $23.3 billion, largely on acquisitions; pre-tax earnings rose 41.0% and 32.2%, with a 19.3% half-year margin. OxyChem contributed revenue of $1.4 billion in the quarter and $2.6 billion for the half, with pre-tax earnings of $149 million and $121 million after incremental acquisition-accounting depreciation and amortization and transition costs. IMC revenue rose 26.5% in the quarter and earnings 71.0%, though management expects second-half earnings to be hurt by rising raw materials costs and noted customers had been accelerating purchases. PCC revenue rose 14.4% on aerospace and industrial gas turbine demand with earnings up 34.2%. Lubrizol revenue rose 11.1% with earnings up 23.4%, with price increases necessitated by sharply higher raw materials, energy and supply chain costs from late in the first quarter. Marmon revenue rose 4.9%, mostly from the transfer of Acme Brick into Marmon effective January 1, 2026, with earnings up 10.3% helped by gains on business divestitures and real estate disposals. - *Building products* revenue rose 0.9% in the quarter and fell 0.9% for the half amid low home construction activity. Clayton Homes revenue rose 2.8% in the quarter but pre-tax earnings fell 3.5% in the quarter and 5.9% for the half on lower home building volume and gross margins; loan balances reached approximately $30.4 billion, up 7.8% year over year. Other building products earnings rose 16.6% in the quarter, but only because of refunds received on trade tariffs paid primarily in 2025 and lower restructuring and legal costs — before those items earnings fell 8.8% in the quarter and 8.9% for the half. - *Consumer products* revenue fell 2.0% in the quarter on lower volumes at Fruit of the Loom and Forest River, while pre-tax earnings rose 12.2% in the quarter and 19.1% for the half on Brooks Sports, Duracell (advanced manufacturing production tax credits) and Jazwares, partly aided by the same tariff refunds. - *Service* revenue rose 21.1% in the quarter and 19.1% for the half, with half-year gains at TTI (26.5%), aviation services (15.5%) and IPS (22.5%); pre-tax earnings rose 20.6% and 20.8%. Management noted part of TTI's demand increase reflected customers responding to potential further price increases and supply chain concerns including extended lead times, and warned inventory cost and supply chain uncertainty could hurt TTI's gross margins in future. - *McLane* revenue fell 3.8% in the quarter, with retail sales down 8.9% year to date on net customer losses, partly offset by restaurant sales up 7.4%; pre-tax earnings fell 11.2% for the half. *Retailing* was roughly flat, with BHA about 70% of group revenue and its earnings up 5.1% in the quarter on service contract operations. *Pilot* revenue rose 47.7% in the quarter on higher fuel prices with pre-tax earnings up 143.7%, but half-year earnings fell 16.4% against 2025 asset disposition gains. **Financial condition.** Shareholders' equity was $747.9 billion at June 30, 2026, up $30.5 billion since year-end. Berkshire resumed share repurchases in 2026 after buying back no stock in 2025, acquiring $4.8 billion of treasury stock in the first six months, most of it in the second quarter. Insurance and other businesses held cash, cash equivalents and U.S. Treasury Bills of $359.2 billion, with equity and fixed maturity securities excluding equity-method holdings of $340.8 billion. The equity portfolio itself was $323.8 billion at fair value against a $106.5 billion cost basis; the five largest holdings — Alphabet, American Express, Apple, Bank of America and Coca-Cola — were 66% of it, up from 65% at year-end. Berkshire owned 151.6 million American Express shares, 22.5% of that company, and continues to carry the stake at fair value rather than under the equity method given voting and passivity commitments. Equity-method holdings were 27.5% of Kraft Heinz and 26.7% of Occidental, plus Occidental preferred with an aggregate liquidation value of approximately $8.5 billion accruing an 8% dividend and warrants on 83.9 million Occidental shares at $59.59. Operating cash flow was $21.7 billion for the half and capital expenditures $10.6 billion, of which $6.7 billion was BNSF and BHE; those two forecast approximately $8.6 billion more over the remainder of 2026. Borrowings excluding BNSF and BHE were $43.3 billion, with Berkshire's own debt down $2.3 billion to $20.4 billion; BNSF debt was $23.5 billion and BHE $61.8 billion, with BHE subsidiaries issuing $4.6 billion of term debt at a 5.8% weighted average rate. Property and casualty unpaid losses and loss adjustment expenses were $152.9 billion. Goodwill was $83.1 billion and indefinite-lived intangibles $19.0 billion, with no impairment concluded as of June 30, 2026. **Litigation and commitments.** PacifiCorp had recorded cumulative estimated probable wildfire losses of approximately $2.85 billion through June 30, 2026 and paid approximately $2.3 billion of settlements to date, including $589 million in the first six months of 2026; estimated unpaid wildfire liabilities were $572 million, down from approximately $1.2 billion at year-end, and no further insurance recoveries are expected. In the *James* class action arising from the 2020 Oregon wildfires, the Oregon Court of Appeals in April 2026 reversed the Phase I liability verdict on an erroneous jury instruction and awarded costs to PacifiCorp; the plaintiffs petitioned the Oregon Supreme Court, which on June 25, 2026 allowed review and scheduled oral argument for November 3, 2026. Phase II jury verdicts to date have awarded net damages of approximately $1.25 billion to 201 plaintiffs, and PacifiCorp has posted bonds totaling $719 million; most remaining Phase II trials are stayed, with one trial scheduled to begin in September 2027. Management states it is reasonably possible PacifiCorp will incur material additional losses beyond amounts accrued and cannot reasonably estimate a range. HomeServices' $250 million nationwide class settlement of the *Burnett* real estate commission antitrust case is payable over four years, with $130 million paid into escrow; appeals of all defendants' settlements were argued before the Eighth Circuit on January 14, 2026 and a ruling is pending. Separately, National Indemnity's September 2024 agreement to pay $535 million to a bankruptcy estate concerning certain non-insurance affiliates remains subject to court approval, and a related environmental consent decree was filed with the court on April 3, 2026. On February 15, 2026, PacifiCorp agreed to sell certain assets and liabilities associated with its Washington operations to Portland General Electric Company and an affiliate for a base sales price of $1.9 billion in cash; the transaction is subject to regulatory approvals and is expected to close in the first half of 2027. --- ## Subsequent events *From the Q2 2026 10-Q, accession 0001193125-26-341032 (period ended June 30, 2026).* - **Acquisition of Taylor Morrison Home Corporation.** Berkshire entered into an Agreement and Plan of Merger with Taylor Morrison Home Corporation on May 31, 2026 to acquire all outstanding shares of Taylor Morrison common stock for **$72.50 per share in cash, or approximately $6.8 billion in the aggregate**. A majority of Taylor Morrison shareholders voted to adopt the agreement on July 22, 2026, and with all necessary regulatory approvals received, the acquisition was **completed on July 24, 2026**. Taylor Morrison is a national community developer and homebuilder that also provides financial services to its customers, including mortgage, title and escrow, and homeowners' insurance. It will be reported within the building products group from the acquisition date. Because the closing was so close to the issuance of the quarterly financial statements, it was impracticable to provide an initial estimate of the values of identifiable assets acquired, liabilities assumed and residual goodwill; those disclosures are expected in the interim financial statements for the period ending September 30, 2026. - **Scheduled wildfire litigation dates.** Damages discovery related to previously scheduled *James* Phase II trials was set to resume on August 10, 2026, ahead of the Oregon Supreme Court oral argument scheduled for later in the year. For reference, the acquisition of Occidental's chemicals business, OxyChem, closed earlier in the period on January 2, 2026 for cash consideration of approximately $9.4 billion including certain post-closing adjustments, with Occidental retaining OxyChem's legacy environmental liabilities; preliminary acquisition-date asset values were $10.7 billion (including approximately $7.0 billion of property, plant and equipment) against $1.3 billion of liabilities.