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2026 Berkshire Hathaway Annual Shareholders Meeting Transcript
Date: May 2, 2026 Location: CHI Health Center, Omaha, Nebraska
Becky Quick: Good morning everybody and welcome to CNBC's special coverage of the 2026 Berkshire Hathaway Shareholder meeting. I'm Becky Quick, joined along with Mike Santoli, and we are here live in Omaha, Nebraska, on the floor of the CHI Health Center exhibit hall. It is a new day here in Omaha. After 60 years, Warren Buffett will not be answering questions from shareholders. Instead, Greg Abel will be taking center stage in his first meeting as the Berkshire CEO.
He'll start this meeting with a one-hour business update, then move on to that first Q&A session, which also will include Vice Chair of Insurance Operations, Ajit Jain. It starts in about 15 minutes. Let's give you a look at the rest of the day's schedule. The first Q&A session will be a little more than an hour. After that, you can catch our halftime show with big names, including Occidental’s Vicki Hollub and Brooks Running CEO Dan Sheridan. The second session starts at 12:45, with BNSF CEO Katie Farmer and the new President of Berkshire's Consumer Products, Service and Retailing, and NetJets CEO Adam Johnson joining Abel on stage after another hour break. The official shareholder meeting will start at 3 p.m. Eastern time.
In fact, just a few yards from here inside the arena, shareholders are starting to take their seats. This has a little bit of a different feel this morning. Um, it's quieter.
Mike Santoli: Yes, it is. There are still a lot of people here. In fact, when I was walking in, the lines were kind of out around the corner to both ends of this arena. Right now, you see Tim Cook is on the floor, kind of getting ready to take his seat, sitting with some of the directors, but the shopping here on the floor has been a little muted. There are a lot of people here, but not as many as we've been used to seeing the last couple of years when you got 40,000 people who are crammed into this place at once.
Becky Quick: Definitely a lot of curiosity about how this is going to go and how Greg's going to handle it, but it does feel a bit lighter. Not much of a press. But this is an evolution in Berkshire Hathaway. Do have some news this morning, too.
Mike Santoli: No doubt about it. Berkshire Hathaway also just released first quarter results. Operating earnings total $11.35 billion. That's up 18% over last year. The big headline from the results is that Berkshire's cash pile jumped to a record of nearly $400 billion—about $397 billion. That's in new CEO Greg Abel's first quarter as Chief Executive. Of course, Berkshire, according to the filing, sold a big chunk of stock in the three months, just over $24 billion.
The company also bought $16 billion worth. That gives you a net sale number for the quarter of $8.1 billion out of the equity portfolio, which is over $300 billion in size. Berkshire's five main stock holdings remain the same in Q1: American Express, Apple, Bank of America, Coca-Cola, and Chevron. The company also bought back a total of $235 million in its own stock, the first buyback since the second quarter of 2024. Now, Greg Abel had told you that they were restarting stock buybacks.
Becky Quick: Yeah, he said that about a month ago when he was on Squawk Box with us, and they had bought 220 or something. So, there was a little bit of suspense among the investors I spoke to about whether in fact they were more aggressive in buying more over the balance of the quarter. Who knows what they've done in April, right? These are only numbers through March 31st. So, this was the beginning of things. But people are wondering what they're going to do with all that cash growing up to almost $400 billion. I remember when it crossed $100 billion and people thought, "Oh my gosh, what are they going to do with this hundred-billion-dollar cash hoard?" That was only 2017.
Mike Santoli: What they're going to do is quadruple it. That was the answer. And continue to grow it. Although we have talked to some of the directors here, and the things that they'll point out is that that cash hoard, along with the $300 billion stock portfolio, makes up a much smaller portion of the business than it used to because the operating earnings are just so strong coming from these companies. I mean, the market cap is over a trillion.
Becky Quick: Yeah.
Mike Santoli: The book value rose to like $725 billion. So the operating business accounts for a lot more than it used to, though it still remains a question. Because if they're not buying back their own stock when they say it's below their estimate of intrinsic value, are they waiting for something in particular? By the way, it occurred to me that Greg Abel himself said he bought $15 million worth of shares. So that rounds it to a nice quarter-billion between the company and him that they picked up in the three months, right? Taking his salary, as he told us about a month ago, and he's going to be plowing it back in, buying shares on the open market, and basically on an after-tax basis, putting it all back into future shares so that he's aligned with shareholders as he sees this, too.
Now there are some highlights about who's out in the audience. You just saw Tim Cook. He's here along with the new CEO of Apple, John Ternus—saw him last night out and about. I know that Bryson DeChambeau is here; he's a friend of Greg Abel's and he's in the audience as well. But we've got a long-term Berkshire shareholder with us that you'll probably recognize as well. Bill Murray is here on set with us today. Obviously, you know him from Caddyshack, Groundhog Day, Lost in Translation, and a million other films. You probably know that he's a Berkshire shareholder just from our coverage here in past years. But Bill, I didn't even realize you bought in in the 1970s. That's way back.
Bill Murray: Well, I didn't do it. Good morning. I was led to a man named Sandy Gottesman in New York, who I much later found out was a close friend of Warren and did a lot of work with Warren. He had an account for me, and many years later, I met Warren. I thought he's such a nice fellow, I'd like to help him out. Maybe I'll buy some of his stock. And then I found out that I'd owned his stock for a couple of decades already. So, wow. Since then, I've just emptied all the mattresses, and I'm all in on this thing here.
Becky Quick: You've been coming for about four or five years, maybe, to the Berkshire annual meeting here. What brings you here? Why do you keep coming back?
Bill Murray: Well, the first time I came was after I met Warren, and I got a kick out of it. I mean, a real kick out of him—he really makes me laugh, and like, big body laughs. So, I get a kick out of them, and I thought, "Well, I'll go out there and see what the Warren and Charlie show was like," and it lived up to everything. It was really good, and I enjoyed sitting there in the dark with all the people who were so excited to sort of be in the club, you know? I didn't even know I was in the club. And so I was like, "God, I could have been here in the club all this time, walking around buying marshmallows and things and candy".
Becky Quick: Kind of a little pressure on the new guy. Greg Abel's going to have to make you laugh now.
Bill Murray: Well, you know, I think he's much friendlier. I saw him yesterday, and he was really friendly. Certainly friendly. I think he's probably done a little research on it. Like, I know there's a challenge to be as funny as those two characters were. That was big-time humor. That was very funny stuff.
Mike Santoli: Bill, I don't mean to put you on the spot, but as a shareholder, you probably look at this and think, "Okay, this is a changing of the guard". What do you want to hear? What makes you feel comfortable with still being a Berkshire shareholder?
Bill Murray: Well, you had Sue Decker on your show the other day, and she spoke of what was going to happen to the company—that it was no longer going to be the way that Warren had it, where you just sort of let your companies go, let them do their own thing, you don't bother, you don't interfere. That actually, Berkshire was going to provide some guidance and suggestions, set goals for them, and sort of streamline operations and just tighten things up. When she said that, I thought, "Oh, you mean like everybody else?" You know, maybe that should work. That should work. So it was told to me by... I mean, my head is still ringing from the pinballs of numbers that you guys were talking about there a second ago. So it'll take me a second to get my thought... how many billion? What's that again? Yeah. So, it's a pretty good cushion to operate with. I feel comfortable knowing that, you know, it's sort of like sitting next to a guy at a poker table. They have $400 billion. You figure like, "Well, when he's broke, I'm going to be broke".
Mike Santoli: Um, the feel is a little different, and it's an evolution. And as somebody who is a careful observer of cultural phenomenons, what would you have to say? Because I've talked to you in the past when you've sat and listened to Warren and Charlie. And by the way, folks, if you take a look at the stage, there's Warren Buffett walking in to the floor of the Berkshire Hathaway meeting. That's his daughter, Susie Buffett, another director of the company, sitting next to him. But the first time in 60 years that he's going to be sitting on the floor listening to this Q&A instead of actually taking questions from the shareholders.
Bill Murray: Well, that'll be a great experience. I was in a show once and, for some reason, I came late, and my understudy went on in the show, and I got to sit and watch our show. I was the only one of us that ever got to see our show, and it was fantastic. I thought, "God dang, this is really good". I was really happy to see that. So, I think he's going to have that same experience of what it's like to be there as a shareholder and to see how the story goes down, how Greg tells the story.
Mike Santoli: And you know, he's going to have his own kind of wisdom reflected back onto himself because, I mean, the one thing Abel's going to do is talk a lot about continuity of the culture and the discipline and everything else.
Bill Murray: Yeah.
Mike Santoli: What was the show?
Bill Murray: It was the National Lampoon Show off-Broadway, and I was in it with my brother Brian and Joe Flaherty, Harold Ramis, Gilda Radner, John Belushi, and Paul Jacobs on the piano. It was an outrageous show at the time. It was a great, great show. It was worth being late for. I only did it once, but I'm so glad I did. I was lucky. I didn't get in trouble because it was just those guys, right?
Becky Quick: Well, Bill, I know you've got to make your way out to the floor.
Bill Murray: I get lost going through the curtains. I do. Nice to see you.
Becky Quick: So, we are going to head out to the meeting, which is taking place in just a moment. We got to get ready to start taking these questions from the shareholders. Again, we are just minutes away. You can see that room starting to fill up. If you've been watching all of this, a lot of news that's happening today for sure. Berkshire shares are down nearly 6% since the start of the year.
Mike Santoli: So, the big question now is, could Abel's comments today be enough to spark some enthusiasm for the stock? We're going to talk about that in just a moment with John Rogers of Ariel Investments. I would point out a couple of things about the stock investment over the last year, which is it was at a historic peak one year ago on this very day and also a historic premium to its valuation. Since then, actually, other insurance stocks have actually been somewhat weak along the way; that's dragged down the perception of GEICO's value, and obviously the valuation is moderated now. So it's about 1.4 times book value; it had been up around 1.8 times. The other thing I guess I'd say is defensive and quality stocks have not necessarily been in favor. The S&P 500 has been very difficult to keep up with. And by the way, also, I was going to mention on a 5-year basis, the S&P 500 has just caught up to Berkshire Hathaway's performance. It's basically been outperforming for that entire period. Almost every rolling five-year period you can go back to, Berkshire has outperformed. John Rogers of Ariel is right here in the house. He's a longtime shareholder and, of course, friend of Berkshire. John, good to see you.
John Rogers: Great to be here.
Mike Santoli: Just talk about your general thoughts as you observe this transition from Warren as CEO to Greg Abel and, I guess, what you might want articulated or clarified today.
John Rogers: Well, I think that sometimes in basketball, people think about whether Michael Jordan's the greatest of all time or LeBron James. There's no doubt that Warren Buffett's the greatest investor of all time and the greatest communicator of his investment ideas of all time. So, it's huge shoes for Greg to fill. What I'd like to find out today is whether he's optimistic about the markets or not. It's been a difficult market; it's been really complicated by the war and everything else, and I'm wondering if his confidence is still there.
Mike Santoli: Do you think his approach to the job... it's interesting to me that Warren Buffett, of course, created all of this value at least initially principally as a stock picker. He was a market junkie from a young age, and that was sort of his window on this, and then he bought whole businesses and he's become a massive insurance operator and all the rest of it. Whereas Greg has come from industry; he's owned whole businesses, been a CEO, made acquisitions in that way. So, I wonder if he's still going to think about the public equity portfolio as a principal driver of value going ahead, or if he's going to look for ways to maybe do things with the operating side.
John Rogers: I would think he will continue Warren's playbook and Charlie's playbook. It's worked so extraordinarily well; it's created so much wealth, and the board really believes in Warren's beliefs, and of course, Warren is still there. So I think Greg will follow the pattern that has built all this opportunity to create real massive generational wealth.
Mike Santoli: There's a line of thinking that Berkshire Hathaway, at a time when everybody is focusing on the types of businesses or even just financial balance sheets that can't be dislocated by AI or anything else, that Berkshire Hathaway should come toward the top of the list just given its asset mix and all the rest. I mean, is that something that you think about in terms of the enduring value of the company?
John Rogers: Well, I do. I think there's a huge moat around Berkshire. You walk around the center today and you see all these marvelous businesses invested in that you would think they're so unique and so special. They really can't be replicated. So, I think there's so much value here in the portfolio, and I think it's going to perform very, very well coming out of this sort of downturn over the last year.
Mike Santoli: Does it... you know, there's one line of thought that with almost $400 billion in cash now on the balance sheet, perhaps investors more broadly may not have as much confidence in allowing Greg to sit on that much cash because who knows how he's going to allocate it, whereas people had some comfort level with Warren.
John Rogers: But I think again, Warren's still there, the board's still there, Warren's such a presence. Greg has learned so much from Warren. So, I know he'll be very careful with making those investment choices and how he uses the cash.
Mike Santoli: And in general, I mean, your thoughts on the market. We have this other sort of tech-concentrated S&P 500 run to new records, but the rest of the market, I guess, has also found some pockets of strength.
John Rogers: There are. I've been looking at, of course, the leisure-oriented stocks that I think are really cheap—companies like Norwegian Cruise Line and, of course, my favorite, Madison Square Garden Entertainment, that owns the Garden and is going to benefit from the Knicks' run to the world championship.
Mike Santoli: No doubt about it. So, a Chicago guy, you're okay betting on the Knicks that way?
John Rogers: I really am. It's a wonderful team. It's really remarkable how sports team values are now getting reflected. There's a couple of public market plays—the Atlanta Braves and all the rest of it—all of a sudden, and the group that comes to this meeting seems interested in those types of idiosyncratic companies.
Mike Santoli: They really do.
John Rogers: You know, Mellody Hobson, my co-CEO, has started Project Level to invest in women's sports-related franchises and teams. It's a wonderful thing. And I look at the NBA; it's going to be a worldwide phenomenon. You're going to have NBA leagues someday in Africa, you're going to have them in Europe, you're going to have them in Asia. All those eyeballs will be watching NBA talent, and you can see world championships—it'll be truly a world championship. So, still a lot of value in professional sports.
Mike Santoli: John Rogers of Ariel, thanks so much for getting us kicked off today. Really appreciate it. Enjoy the meeting. Right now, we take you to this year's annual Berkshire Hathaway shareholder meeting.
[Song: "Back in Time" by Huey Lewis & The News plays]
Greg Abel: Good morning and welcome to Omaha. I want to welcome all our owners, our long-term owners, and those that have recently become a shareholder. Again, thank you for joining us in Omaha for the meeting. Obviously, very excited by this. And I want to also touch on... we have many people here just experiencing it, so just great to be together. The first thing I just want to touch on... we had the video, incredible 60 years. The one thing I did note that we've traditionally had was a movie which included the credits, and we'll have a few other videos that I'll touch on later, but we did have an exceptional producer and executive producer, and I want to thank her because she wasn't acknowledged: Susie Buffett. Thank you.
And then the director who's always done the movies, again, did this video and will do our company videos that I'll touch on shortly: Brad Underwood. Thank you, Brad. Now, we have a great day planned, and it's really all around our owners. It's our culture, but most importantly, this is our owners' day, our owners' weekend. We have an exceptional group of owners, and we're just passionate to be here. We'll communicate a variety of things around Berkshire and our insurance and operating subsidiaries, and Berkshire as a whole. But what we really treasure is the engagement with our owners, our shareholders, and the questions that come. So thank you. Really appreciate it.
Now to touch on this morning, we have three sessions that we'll cover over the morning and early afternoon. The first session, there'll be some pleasantries here, and then we'll move into a business update. As we move into the second session, I'll have Ajit Jain join us here on stage. We'll obviously take any questions, so it'll be a question-and-answer period. We'll do the traditional rotating between our shareholders and Becky. Becky, thank you for being here. And we'll do the traditional Q&A and then that session will wrap, and then we'll move to a third session that will have Katie Farmer. Katie has been the CEO of BNSF Railway for the past five years. And then we'll also be joined by Adam Johnson, who is a 10-year CEO of NetJets, but also took on an incremental role recently, and we announced that in December. Adam took on the Consumer Products group, Services, and Retailing group. So we'll have them join us for the third session. Again, the traditional question-and-answer period.
The only thing that I would say... this is also a little bit incremental or different from past meetings. Throughout this morning, we'll have three different videos associated with operating companies. The first one will be from GEICO. Nancy Pierce, who's the CEO of GEICO, a long-term veteran with a wealth of experience with GEICO, she's over in the manager section. She'll narrate a video on GEICO. And then we'll also have a video on NetJets narrated by Adam, and a video narrated by Katie on BNSF. So that'll be incremental. Now, the fundamental purpose of both having some incremental managers join us on the stage and the videos... we have an exceptional team at Berkshire. The depth of management is very deep. Obviously, we have a number of subsidiaries, but the depth of our team is great. And this is an opportunity, through the videos or having incremental leaders on stage, for you as our owners to both learn more about those businesses but also about the leaders that lead them. That will be a format that as we go forward, we'll build on—i.e., we can introduce you to other leaders either on stage or through the videos.
So let's move to the formalities. Now I'm going to introduce our directors. I'm going to do it alphabetically. So, if they could just acknowledge with a wave or however they would like to acknowledge our shareholders, our owners. Start with Howard Buffett, Susie Buffett, our Chairman Warren Buffett. Warren, we have a little surprise there for you. If you look up to the right, you'll see a jersey and a number. We are retiring number 60, for 60 years as our CEO of Berkshire. Equally, it's being placed beside Charlie's jersey, number 45. Charlie was with Berkshire for 45 years, obviously our Vice Chairman and a treasured partner of Warren, and it's just reflective of a great partnership. Thank you, Warren. I'm happy to report both those jerseys will remain in the rafters for the years to come. So, great.
Now we'll continue with our directors: Steve Burke, Ken Chenault, Chris Davis our lead director—and I'll just add a point here because it's Sue's 20th year as a director of Berkshire. Thank you for being our lead director and all you do, Sue Decker. Charlotte Guyman, Ajit Jain. I would just add, for Ajit, obviously he's been our Vice Chairman of Insurance for nine years. I had many years to be his co-chairman. But one thing I just want to touch on: Ajit joined Berkshire in 1986. So not only is he a director, he's just been really the architect of our insurance business. So again, thank you, Ajit. Tom Murphy Jr., Wally Weitz, Meryl Witmer.
Now I can start to... I think my eyes have adjusted a bit to the lights and everyone out there. And I have to tell a little bit of a story here because when Warren announced the transition last year and I was sitting here, I couldn't have been more proud, but I don't mind sharing... the first thing that flashed through my mind was, "Geez, we've already booked this arena, and I know the directors would be here, and I knew I would have some family here, but it's wonderful that I'll have you here". So, thank you. Now, back to a great tradition. I'm going to throw the mic over to Warren. Warren, thank you.
Warren Buffett: Yeah. This is not my show today, but there are two anniversaries that we're kind of celebrating today. One is the fact that the board has had what I will generously call a refreshment, which they voted on, and you couldn't have made a better decision. They did it unanimously. It surprised all the board when I announced it last year except for Susie, and that's been 100% successful. Greg is doing everything I did and then some, and he's doing it better in all cases, and he's the right person. So that decision we score 100% on. Thank you, Warren.
But there's another anniversary today that I'd like to spend just a minute telling you about because about 10 years ago, we made a commitment to essentially move 10% of the resources of Berkshire Hathaway. We turned it over to another person who was not that well-known at the time. And we did that by spending roughly $35 billion buying stock in Apple Corp. And we were going to have that under the management... we're turning that money over to the management essentially of Apple to make Berkshire look good and without any work by us, which is our preferred way of operating. And I would like to report that 10 years later, several things are happening. One is the 35 billion, counting dividends, realized appreciation, unrealized appreciation, has turned into 185 billion pre-tax. And I didn't have to do a damn thing. I mean, we're very big around here on having other people do the work and us collecting the money, but that has been a success, and we do look at marketable securities as being businesses. That doesn't mean we hold all of them forever, but still our largest holding is Apple.
And Apple has a very interesting history that some of you may be familiar with. But one item is they're observing an anniversary themselves—I think just within the last week or so, they celebrated their 50th anniversary. You know, 50 years seems like a long time, but Apple seems like a very new company. And when Tim Cook went into the top position at Apple, he succeeded, allegedly, Steve Jobs. Everybody in America knew Steve Jobs' name, and not many people knew Tim's name. Apple had had this roller-coaster experience where the two Steves had started in the garage or something 50 years earlier. And then, I'm not sure how many of you know, but Steve was thrown out for a while and then he came back in. He did these marvelous things in terms of developing products, and then he had an untimely death. Everybody said, "Who's going to manage Apple when Steve Jobs isn't around?" and probably just a very few percentage points of American investors had even heard of Tim Cook. In effect, Tim took over about 14 years ago when Steve died, but when we made our investment and turned over 10% of the resources of Berkshire, we were turning it over to Tim. As I say, he has turned that into 185 billion or something pre-tax, which we won't bother to compare to our record with. But Tim has announced that he's retiring as well; that's an announcement that's just been made in the last couple of years. And so I think it's appropriate if Tim would take a bow and our shareholders would say thanks to him. Tim is right by me.
How would you like to step into the shoes of Steve Jobs and come through with his record? I mean, it's one of the miracles of American business management. And so anyway, thank you, Tim. And I'm going to turn things back to Greg and we'll go on with the meeting.
Greg Abel: Tim, on behalf of our shareholders and owners here, we echo everything Warren said, and I would add one thing: you've truly been a global ambassador around the world for American business. Thank you. And Warren, thank you for taking the mic there. I am reminded... I have a Cherry Coke here in your honor, Peanut Brittle in Charlie's honor, and that seat remains open. Thank you, Warren.
Now, we'll move to a few more formalities and get into the business update. It really started with the letter to our owners and shareholders at the end of February. And I touched on it in the letter... I highlighted that as we transitioned, I wrote a letter to our 400,000 employees touching on culture and values. And the purpose of that letter was to highlight that was not going to change. It had never changed in Berkshire under Warren—60 years aspects evolved, but our culture and values did not change, and as we did the transition, that was not going to change either. It's the bedrock of Berkshire, that culture and values. Now, one of the values we've often touched on here is integrity. There's no better example than Warren's remarkable demonstration of that when he testified before Congress in 1991 as the Chairman and CEO of Salomon Brothers. I like to call it Berkshire's Anthem, but I wanted to make sure we had that opportunity to see the video today. Berkshire's Anthem.
[Video Clip: Warren Buffett's 1991 Salomon Brothers Testimony]
Greg Abel: Berkshire's Anthem, that's embedded in Berkshire. We send a reminder to our CEOs and employees—our 400,000 employees—and we do remind them of that, including I ask our CEOs each year... just sent out a letter again in the first quarter asking them, as they run their business, as they make those daily decisions, apply that simple test that Warren highlighted: the newspaper test.
Now moving to the more formal update on our numbers. In fine tradition, we always start with our exhibit hall sales from yesterday. And the interesting thing is... last year was a record, as you may guess, but fortunately, this year sales were very consistent with 2024. We're basically at $1.5 million in sales. But the point is, we'd always love to get to $2 million, and we're not there yet, so we've got something to work on. But importantly, what the exhibit hall represents is our businesses showing their products and services, and you get to see this great commitment of our leadership team and their passion for Berkshire and their passion for the owners. I was fortunate to spend some time going through the exhibit hall yesterday, and that's a wonderful experience because we're getting the opportunity to engage with all of you as owners. So, love the exhibit hall and what a great experience. And I'll just add: it's open till 4:00 today, so feel free to spend a little money.
Truly moving to the more formal aspects of the business update. We issued our 10-Q this morning and had the related press release. You can see the results and I'll touch on those. I'll start with Berkshire as a whole. Obviously, we have our insurance as our heart of Berkshire—it was our foundation. But as we move to the non-insurance businesses, we're really fortunate to have a number of businesses in there, but in their aggregate, they're fundamental and really central to American businesses and American industry and to the American consumer. And when I combine those, it's really the unique opportunity we have to excel across those businesses. And that will continue. It's been our focus, and it'll very much continue to be our focus.
If I start by looking at these results, I'll start with total insurance. And I'm starting there because there's a couple of really important points to make. You can see in 2026, the first quarter, we're actually up quarter on quarter. And yet, in the letter that I sent out in February, I highlighted the fact that we were unlikely to see stronger results in 2026. But there are some important points here. In 2025, we had an $860 million after-tax charge associated with California wildfires that we insured. The adjustment's not so important; it's just a highlight that the 2026 results and what we're feeling in the insurance industry right now, there's two things. One, our 2026 results do not reflect any catastrophic events; it was a pretty benign period. There were some storms in the northeast part of the United States, but relative to 2025 and past years, very benign. And that highlights again that our insurance businesses, but the industry as a whole... the pricing we've talked about—that hardening—i.e., can you get the proper premium for risk? It's becoming a more challenging market. What's driving that, when you see a benign environment, you start to see competition coming into the industry. They bring a variety of products and forms, but it's really they're bringing capital into the industry. So just wanted to really highlight: we still see that as a softening market, and I'll expand on that.
Now, when we discuss insurance, we have two core objectives at Berkshire: we want to underwrite at a profit, so create a profit for our shareholders. Truly underwrite at a combined ratio—I'll come back to it because there's a lot of insurance jargon here and a lot of numbers. And then the second core objective is to increase our float. Now, the insurance jargon and the numbers on here... go to the combined ratio on the left and go way over to the right .The 10-year average 93%.
Greg Abel: I'll give you a little bit of color here. If we have a $100 premium that comes in associated with a policy, the 93% represents the costs incurred associated with that premium. It can be the cost of writing the premium, the commissions, or the loss reserve we set up. The 7%—i.e., $7 on $100—is our profit, our operating profit on that premium. And then if I go back to the $93, just roughly $23 of that would be the expenses, the administration of running the business. And that's just an average; it varies across our businesses and it varies across the industry. The other $70—and this is very important—that's actually what goes down into float.
So when you see our float growing, we take that $70, it goes into our float, and we'll incur losses against it over the years to come. And when the loss shows up, we pay out against that 70. But if you take a simple small commercial business or personal insurance, that $70 effectively gets paid out likely over a three to four-year period. That premium sits there as float; we earn on it, and Warren's referenced it many times—it's a valued part of Berkshire and it's really the opportunity to continue to create value for you as our owners and shareholders. You can see on the float, we've gone back to 2015—it's effectively doubled through 2025. There's a small increase in the current quarter, but I wanted you to all see it, but the fact it increased... it could have decreased because it's just subject to the payment cycle we're in. The really core and important objective is that we grow it over the long run, and we'll continue to provide those types of updates to you as our owners.
Now, if I go back up to the underwriting results and you see the combined ratio again, but we'll focus on 2026. Primary and reinsurance, they're both 87.0% and 89.6%. The amazing thing there is that there's an eight in that number. Again, our 10-year average is in the 93% range, so we're actually realizing more operating insurance profit there. Again, what's driving that? A very benign environment when you think of the catastrophic environment we insure into. The last time there was a hurricane that hit landfall in the US was 19 months ago. So our quarterly results and our results last year do not reflect those types of outcomes. Again, that means we have more capital coming into that industry. Yes, we like those results, but the reality is as that business—as our insurance business—softens and we cannot realize the value we should for the related risk, Ajit and our insurance team across the businesses will start writing less premium. We still want to write it at an underwriting profit because there's still opportunities there and there's a number of risks we'll insure, but we'll be much more cautious specifically across the primary and reinsurance businesses.
Now, let's move to GEICO. As I highlighted, we have a new CEO; we're fortunate to have Nancy leading that team. They even have a better combined ratio: 87.3%. That means associated with that business, 12% plus operating income is coming off of each dollar of premium we write there. Exceptional result. What's driven that is that four or five years ago, the GEICO team stepped back and said that they felt they weren't, relative to the risk, getting the proper premium—the proper price for risk. And over the last four years, the GEICO team worked hard to get the proper balance across that. That meant our premiums went up for our customers across certain classes of drivers; they worked hard to segment that customer. And by the way, that happened across the auto industry generally speaking; you saw an increase in the overall premium as they managed that underlying risk. Again, what's that mean to the industry? What's that mean to GEICO? Well, one, there's a lot of folks out there pursuing those customers. Anytime you increase a customer's insurance premium, and especially over a period of time—and I'm talking about both GEICO and our competitors—listen, people start evaluating and shopping, and we've seen unprecedented shopping activity across the auto space, and you see the advertising that's out there. They're pursuing customers, and they're pursuing the GEICO customers.
So yes, there's an important balance I want to highlight to all of you, and this is what our GEICO team's working on. Yes, we have to get the price to risk right, but there's two other important things we really need to balance. The second piece is we really do want to retain our customers. There's no more valued customer than our GEICO customers. Many of you as shareholders and owners of Berkshire are GEICO customers; we want to retain all of you, we want to retain every GEICO customer. So, as we found that right price to risk, the next challenge is making sure we retain our customers, and Nancy and her team have that as a clear objective and they're working hard on that. And then the third piece of that balance is to grow GEICO. How do we measure growth in that industry? It's policies in force. And if I touch on what we've experienced as growth in GEICO, if we go back to last quarter 2025 versus this quarter ending March of this year, our policies in force grew by 2%. Now, compare that to the number one competitor in our industry, Progressive; they just announced their first quarter results—they grew by 11%. And our team at GEICO fully acknowledges, as I said, that balance that they have to find across those three metrics, including growth. It's not going to be easy to just restart the growth engine; we acknowledge that. But they understand the objective, and as we go through 2026 and into 2027, two important objectives they have are: okay, let's retain our customers and let's start growing GEICO.
Again, the last thing I'll just touch on the insurance business, and it's Tokyo Marine. I'm not going to expand a lot other than we announced the transaction in the fourth week of March—a great transaction by Ajit and his team, and it's a strategic transaction in that. I'm highlighting that because yes, there's a financial aspect of it and we're thrilled with that, but it is a long-term strategic partnership, and when Ajit's on stage I'll have him expand on that. So well done, Ajit; thank you to you and your team—a great, great transaction for Berkshire.
