⚠ The Unprecedented YearModerate threat

Berkshire Hathaway (BRK.B) — threat to the moat

The loss bigger than the models is the business's defining risk — and climate keeps raising the odds.

The whole catastrophe business rests on pricing risk from history and probability, and both are imperfect guides to a future that may not resemble the past. A warming climate appears to be making the largest hurricanes, floods, and wildfires more frequent and more severe than the historical record predicts, which means prices set from yesterday's experience can prove badly inadequate for tomorrow's weather. The mega-catastrophes Berkshire insures are exactly the events for which the past is the least reliable guide.

Pre-tax underwriting, first half ($M)$3,994MGEICO H1 25$2,410MGEICO H1 26$343MReins. H1 25$1,286MReins. H1 26Berkshire Form 10-Q, June 2026
A quiet catastrophe half lifted reinsurance while auto margins fell.

The sharper hazard is correlation. Berkshire's insurers are diversified across many kinds of risk, but a truly systemic event — a great earthquake striking a major city, a pandemic triggering claims across several lines at once, or a record run of hurricanes in a single season — could hit many exposures simultaneously in a way diversification does not cushion. The point of the business is the willingness to absorb a very bad year; an unprecedented year could be worse than even a conservative underwriter imagined.

This is a real risk to earnings in any given period rather than a threat to the institution, which is built precisely to survive such a year with room to spare. Berkshire treats a large annual catastrophe loss as a normal cost of doing business, not a surprise. But this is the one place where the company deliberately courts a spectacular single-year loss, and climate change is quietly raising the stakes on a bet that has, so far, paid well — the reinsurance group lost money on underwriting every year from 2017 to 2021 before earning $1.9 billion pre-tax in 2025.1234

References
  1. ReportedBut this is the one place where the company deliberately courts a spectacular single-year loss, and climate change is quietly raising the stakes on a bet that has, so far, paid well — the reinsurance group lost money on underwriting every year from 2017 to 2021 before earning $1.9 billion pre-tax in 2025.
    Berkshire Hathaway Form 10-K, FY2018 - float $123 billion (2018) and $114 billion (2017); pre-tax underwriting by unit 2016-2018 (Reinsurance Group -$3,648M in 2017, total -$3,239M); insurance and other cash about $109 billion — FY2016-FY2018 · publ. February 2019 · source ↗
  2. ReportedBut this is the one place where the company deliberately courts a spectacular single-year loss, and climate change is quietly raising the stakes on a bet that has, so far, paid well — the reinsurance group lost money on underwriting every year from 2017 to 2021 before earning $1.9 billion pre-tax in 2025.
    Berkshire Hathaway Form 10-K, FY2020 - after-tax earnings by line 2018-2020 (railroad $5,481M/$5,161M, manufacturing, service and retailing $9,372M/$8,300M, insurance investment income $5,530M/$5,039M in 2019/2020); float $138 billion; Reinsurance Group underwriting -$1,109M/-$1,472M/-$2,700M; impairments $3.0 billion (2018) and $11.0 billion (2020); $24.7 billion of share repurchases in 2020; insurance and other cash $135.0 billion; about 360,000 employees; acquisitions of businesses net of cash $3,279M/$1,683M/$2,532M — FY2018-FY2020 · publ. February 2021 · source ↗
  3. ReportedBut this is the one place where the company deliberately courts a spectacular single-year loss, and climate change is quietly raising the stakes on a bet that has, so far, paid well — the reinsurance group lost money on underwriting every year from 2017 to 2021 before earning $1.9 billion pre-tax in 2025.
    Berkshire Hathaway Form 10-K, FY2022 - float $164 billion (2022) and $147 billion (2021); after-tax earnings by line 2020-2022 (insurance investment income $6,484M in 2022); pre-tax underwriting -$98M in 2022; Reinsurance Group -$930M (2021) and +$1,389M (2022); $7.9 billion of share repurchases in 2022; insurance and other cash $125.0 billion; about 383,000 employees; Alleghany acquired for about $11.5 billion; acquisitions of businesses net of cash $456M (2021) and $10,594M (2022) — FY2020-FY2022 · publ. February 2023 · source ↗
  4. ReportedBut this is the one place where the company deliberately courts a spectacular single-year loss, and climate change is quietly raising the stakes on a bet that has, so far, paid well — the reinsurance group lost money on underwriting every year from 2017 to 2021 before earning $1.9 billion pre-tax in 2025.
    Berkshire Hathaway Form 10-K, FY2025 - float $176 billion; after-tax earnings 2023-2025 (underwriting $7,258M, insurance investment income $12,513M, BNSF $5,476M, BHE $3,979M, manufacturing, service and retailing $13,647M in 2025; net earnings $66,968M incl. $30,737M investment gains and an $8,255M Kraft Heinz/Occidental impairment); revenues $371,444M; segment revenues (insurance $104,212M incl. premiums earned $88,902M and investment income $15,310M, BNSF $23,533M, BHE $26,297M, manufacturing $78,487M, service and retailing $42,647M, McLane $50,998M, Pilot $42,198M); pre-tax underwriting GEICO $6,824M, Primary $785M, Reinsurance $1,851M; GEICO combined ratio 84.7% (81.5%, 90.7%) and loss ratio 72.3%; capex $20,927M and D&A by segment; identifiable assets and goodwill by segment; 65% of equity fair value in five companies; equity securities $297.8B ($271.6B); BNSF volumes by business group; no share repurchases in 2025; no cash dividend since 1967; about 387,800 employees — FY2023-FY2025 · publ. March 2026 · source ↗
Sources
Generated September 23, 2026