Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGIST****ERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

Berkshire Hathaway Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Berkshire Hathaway Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

K-64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Unpaid Losses and Loss Adjustment Expenses — Refer to Notes 1 and 16 to the financial statements

Critical Audit Matter Description

The Company’s unpaid losses and loss adjustment expenses (“claim liabilities”) include short duration property and casualty insurance and reinsurance contracts. Key assumptions affecting certain of these claim liabilities include anticipated claims and their severity, expected loss ratios, and expected patterns of paid and incurred losses.

Given the subjectivity of estimating these key assumptions, performing audit procedures to evaluate whether certain of these claim liabilities were appropriately recorded as of December 31, 2025 required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the key assumptions affecting certain of these claim liabilities included the following, among others:

We tested the operating effectiveness of controls over claim liabilities, including those over the key assumptions.

We tested the underlying data that served as the basis for the actuarial analysis to evaluate that the inputs to the actuarial estimate were accurate and complete.

With the assistance of our actuarial specialists:

We developed independent estimates of the claim liabilities, including loss data and industry claim development factors as needed, and compared our estimates to management’s estimates.

We compared prior year estimates of expected incurred losses to actual experience during the most recent year to identify potential bias in management’s determination of the claim liabilities.

Unpaid Losses and Loss Adjustment Expenses — Retroactive Reinsurance Contracts — Refer to Notes 1 and 17 to the financial statements

Critical Audit Matter Description

The Company’s unpaid losses and loss adjustment expenses under retroactive reinsurance contracts (“retroactive claim liabilities”) include property and casualty retroactive reinsurance contracts. Key assumptions affecting certain of these retroactive claim liabilities include anticipated claims and their severity, expected loss ratios, and expected patterns of paid and incurred losses.

Given the subjectivity of estimating these key assumptions, performing audit procedures to evaluate whether certain of these claim liabilities were appropriately recorded as of December 31, 2025, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the key assumptions affecting claim liabilities included the following, among others:

We tested the operating effectiveness of controls over claim liabilities, including those over the key assumptions.

We tested the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were accurate and complete.

With the assistance of our actuarial specialists:

We developed independent claim liability estimates for certain retroactive reinsurance contracts and compared our estimates to management’s estimates. For other retroactive reinsurance contracts, we evaluated the process used by management to develop the estimated claim liabilities.

We compared prior year estimates of expected incurred losses to actual experience during the most recent year to identify potential bias in management’s determination of the claim liabilities.

/s/ Deloitte & Touche LLP

Omaha, Nebraska

February 28, 2026

We have served as the Company’s auditor since 1985.

K-65

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED B****ALANCE SHEETS

(dollars in millions)

	December 31,
	2025				2024
Assets:
Insurance and Other:
Cash and cash equivalents*	$	47,719			$	44,333
Short-term investments in U.S. Treasury Bills**		321,434				286,472
Investments in fixed maturity securities		17,816				15,364
Investments in equity securities		297,778				271,588
Equity method investments		19,978				31,134
Loans and finance receivables		29,836				27,798
Other receivables		44,331				43,887
Inventories		24,424				24,008
Property, plant and equipment		31,885				30,071
Equipment held for lease		18,535				17,828
Goodwill		55,945				56,860
Other intangible assets		33,802				34,638
Deferred charges - retroactive reinsurance		8,104				8,797
Other		24,413				24,994
		976,000				917,772
Railroad, Utilities and Energy:
Cash and cash equivalents*		4,158				3,396
Receivables		4,387				4,503
Property, plant and equipment		184,740				175,030
Goodwill		27,129				27,020
Regulatory assets		4,821				5,349
Other		20,941				20,811
		246,176				236,109
Total assets	$	1,222,176			$	1,153,881

——————

*** Includes U.S. Treasury Bills *with maturities of three months or less when purchased of $*17.6 *billion at December 31, 2025 and $*14.4 billion at December 31, 2024.

**** *Includes unsettled purchases of U.S. Treasury Bills of $*167 *million and $*12.8 billion at December 31, 2025 and 2024, respectively. Such amounts were also included in liabilities and were paid shortly after the respective balance sheet date.

See accompanying Notes to Consolidated Financial Statements

K-66

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(dollars in millions)

	December 31,
	2025				2024
Liabilities:
Insurance and Other:
Unpaid losses and loss adjustment expenses	$	120,713			$	115,151
Unpaid losses and loss adjustment expenses - retroactive reinsurance		31,048				32,443
Unearned insurance premiums		31,339				30,808
Life, annuity and health insurance benefits		17,890				17,616
Other insurance policyholder liabilities		10,312				10,703
Accounts payable, accruals and other liabilities		38,019				37,489
Payable for purchase of U.S. Treasury Bills		167				12,769
Aircraft repurchase liabilities and unearned lease revenues		10,686				9,356
Notes payable and other borrowings		45,763				44,885
		305,937				311,220
Railroad, Utilities and Energy:
Accounts payable, accruals and other liabilities		19,250				18,226
Regulatory liabilities		7,013				7,033
Notes payable and other borrowings		83,318				79,877
		109,581				105,136
Income taxes, principally deferred		86,955				85,870
Total liabilities		502,473				502,226
Shareholders’ equity:
Common stock at par value		8				8
Capital in excess of par value		35,612				35,665
Accumulated other comprehensive income		(2,448	)			(3,584	)
Retained earnings		763,186				696,218
Treasury stock, at cost		(78,939	)			(78,939	)
Berkshire shareholders’ equity		717,419				649,368
Noncontrolling interests		2,284				2,287
Total shareholders’ equity		719,703				651,655
Total liabilities and shareholders’ equity	$	1,222,176			$	1,153,881

See accompanying Notes to Consolidated Financial Statements

K-67

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATE****MENTS OF EARNINGS

(dollars in millions except per share amounts)

	Year Ended December 31,
	2025				2024				2023
Revenues:
Insurance and Other:
Insurance premiums earned	$	88,902			$	88,257			$	83,403
Sales and service revenues		199,524				202,334				207,148
Leasing revenues		10,034				9,227				8,416
Interest, dividend and other investment income		23,261				21,825				15,764
		321,721				321,643				314,731
Railroad, Utilities and Energy:
Railroad transportation revenues		23,330				23,355				23,791
Utility and energy operating revenues		21,856				21,518				21,232
Service revenues and other income		4,537				4,917				4,728
		49,723				49,790				49,751
Total revenues		371,444				371,433				364,482
Investment gains (losses)		39,078				52,799				74,855
Costs and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses		57,307				56,186				57,187
Life, annuity and health insurance benefits		4,379				3,858				4,029
Insurance underwriting expenses		17,756				16,808				15,270
Cost of sales and services		160,062				163,642				169,281
Cost of leasing		7,685				7,069				6,037
Selling, general and administrative expenses		29,735				25,642				25,458
Interest expense		1,329				1,594				1,671
		278,253				274,799				278,933
Railroad, Utilities and Energy:
Freight rail transportation expenses		15,366				15,965				16,464
Utilities and energy cost of sales and other expenses		16,959				16,984				18,399
Other expenses		4,155				4,343				4,016
Interest expense		3,740				3,606				3,332
		40,220				40,898				42,211
Total costs and expenses		318,473				315,697				321,144
Earnings before income taxes and equity method earnings		92,049				108,535				118,193
Equity method earnings (losses)		(9,590	)			1,841				1,973
Earnings before income taxes		82,459				110,376				120,166
Income tax expense		15,199				20,815				23,019
Net earnings		67,260				89,561				97,147
Earnings attributable to noncontrolling interests		292				566				924
Net earnings attributable to Berkshire shareholders	$	66,968			$	88,995			$	96,223
Net earnings per average equivalent Class A share	$	46,563			$	61,900			$	66,412
Net earnings per average equivalent Class B share*	$	31.04			$	41.27			$	44.27
Average equivalent Class A shares outstanding		1,438,223				1,437,720				1,448,880
Average equivalent Class B shares outstanding		2,157,335,139				2,156,580,296				2,173,319,709

——————

*** Net earnings per average equivalent Class B share outstanding is equal to one-fifteen-hundredth of the equivalent Class A amount. See Note 22.

See accompanying Notes to Consolidated Financial Statements

K-68

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in millions)

		Year Ended December 31,
		2025				2024				2023
Net earnings		$	67,260			$	89,561			$	97,147
Other comprehensive income:
Unrealized gains (losses) on investments			141				(82	)			477
Applicable income taxes			(23	)			9				(100	)
Foreign currency translation			1,479				(1,500	)			782
Applicable income taxes			32				(36	)			(7	)
Long-duration insurance contract discount rate changes			210				807				(237	)
Applicable income taxes			(46	)			(144	)			49
Defined benefit pension plans			(800	)			1,628				578
Applicable income taxes			174				(350	)			(123	)
Other, net			(21	)			(162	)			(101	)
Other comprehensive income, net			1,146				170				1,318
Comprehensive income			68,406				89,731				98,465
Comprehensive income attributable to noncontrolling interests			302				557				953
Comprehensive income attributable to Berkshire shareholders		$	68,104			$	89,174			$	97,512

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CH****ANGES IN SHAREHOLDERS’ EQUITY

(dollars in millions)

		Berkshire shareholders’ equity
		Common stock and capital in excess of par value			Accumulated other comprehensive income			Retained earnings			Treasury stock			Non- controlling interests			Total
Balance at December 31, 2022		$	35,175		$	(5,052	)	$	511,127		$	(67,826	)	$	8,257		$	481,681
Net earnings			—			—			96,223			—			924			97,147
Other comprehensive income, net			—			1,289			—			—			29			1,318
Acquisitions of common stock			—			—			—			(8,976	)		—			(8,976	)
Transactions with noncontrolling interests			(687	)		—			—			—			(2,974	)		(3,661	)
Balance at December 31, 2023			34,488			(3,763	)		607,350			(76,802	)		6,236			567,509
Net earnings			—			—			88,995			—			566			89,561
Adoption of ASU 2023-02			—			—			(127	)		—			—			(127	)
Other comprehensive income, net			—			179			—			—			(9	)		170
Acquisitions of common stock			—			—			—			(2,918	)		—			(2,918	)
Transactions with noncontrolling interests			1,185			—			—			781			(4,506	)		(2,540	)
Balance at December 31, 2024			35,673			(3,584	)		696,218			(78,939	)		2,287			651,655
Net earnings			—			—			66,968			—			292			67,260
Other comprehensive income, net			—			1,136			—			—			10			1,146
Transactions with noncontrolling interests			(53	)		—			—			—			(305	)		(358	)
Balance at December 31, 2025		$	35,620		$	(2,448	)	$	763,186		$	(78,939	)	$	2,284		$	719,703

See accompanying Notes to Consolidated Financial Statements

K-69

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEM****ENTS OF CASH FLOWS

(dollars in millions)

		Year Ended December 31,
		2025				2024				2023
Cash flows from operating activities:
Net earnings		$	67,260			$	89,561			$	97,147
Adjustments to reconcile net earnings to operating cash flows:
Investment (gains) losses			(39,078	)			(52,799	)			(74,855	)
Depreciation and amortization			13,476				12,855				12,486
Discount accretion on investments, principally U.S. Treasury Bills			(11,964	)			(11,349	)			(5,510	)
Equity method investment impairment losses			10,681				—				—
Other			3,239				(892	)			(513	)
Changes in operating assets and liabilities:
Unpaid losses and loss adjustment expenses			3,088				2,173				2,628
Deferred charges - retroactive reinsurance			693				698				375
Unearned insurance premiums			432				376				1,854
Receivables and originated loans			(2,426	)			626				(1,949	)
Other assets			(861	)			(206	)			98
Other liabilities			429				(2,288	)			2,570
Income taxes			1,000				(8,163	)			14,865
Net cash flows from operating activities			45,969				30,592				49,196
Cash flows from investing activities:
Purchases of equity securities			(16,923	)			(9,237	)			(16,462	)
Sales of equity securities			30,686				143,359				40,631
Purchases of U.S. Treasury Bills and fixed maturity securities			(586,129	)			(526,842	)			(235,007	)
Sales of U.S. Treasury Bills and fixed maturity securities			44,769				48,462				52,302
Redemptions and maturities of U.S. Treasury Bills and fixed maturity securities			503,954				353,538				153,201
Acquisitions of businesses, net of cash acquired			(1,074	)			(396	)			(8,604	)
Purchases of property, plant and equipment and equipment held for lease			(20,927	)			(18,976	)			(19,409	)
Other			1,157				(195	)			685
Net cash flows from investing activities			(44,487	)			(10,287	)			(32,663	)
Cash flows from financing activities:
Proceeds from borrowings of insurance and other businesses			3,071				5,528				2,133
Repayments of borrowings of insurance and other businesses			(3,050	)			(7,796	)			(6,027	)
Proceeds from borrowings of railroad, utilities and energy businesses			6,101				7,658				5,684
Repayments of borrowings of railroad, utilities and energy businesses			(3,974	)			(4,151	)			(5,284	)
Changes in short-term borrowings, net			878				(3,059	)			2,407
Acquisitions of treasury stock			—				(2,918	)			(9,171	)
Other, principally transactions with noncontrolling interests			(793	)			(5,622	)			(4,147	)
Net cash flows from financing activities			2,233				(10,360	)			(14,405	)
Effects of foreign currency exchange rate changes			478				(212	)			116
Increase in cash and cash equivalents and restricted cash			4,193				9,733				2,244
Cash and cash equivalents and restricted cash at the beginning of the year			48,376				38,643				36,399
Cash and cash equivalents and restricted cash at the end of the year*		$	52,569			$	48,376			$	38,643
** Cash and cash equivalents and restricted cash at the end of the year:*
Insurance and Other		$	47,719			$	44,333			$	34,268
Railroad, Utilities and Energy			4,158				3,396				3,754
Restricted cash included in other assets			692				647				621
		$	52,569			$	48,376			$	38,643

See accompanying Notes to Consolidated Financial Statements

K-70

BERKSHIRE HATHAWAY INC.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

(1)

Significant accounting policies and practices

(a)

Nature of operations and basis of consolidation

Berkshire Hathaway Inc. (“Berkshire”) is a holding company owning subsidiaries engaged in numerous diverse business activities, including insurance and reinsurance, freight rail transportation, utilities and energy, manufacturing, service and retailing. In these notes the terms “us,” “we,” or “our” refer to Berkshire and its consolidated subsidiaries. Further information regarding Berkshire’s reportable business segments is contained in Note 26. Information concerning significant business acquisitions completed over the past three years appears in Note 2.

The accompanying Consolidated Financial Statements include the accounts of Berkshire consolidated with the accounts of all subsidiaries and affiliates in which we hold a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. We consolidate variable interest entities (“VIE”) when we possess both the power to direct the activities of the VIE that most significantly affect its economic performance, and we (a) are obligated to absorb the losses that could be significant to the VIE or (b) hold the right to receive benefits from the VIE that could be significant to the VIE. Intercompany accounts and transactions have been eliminated.

We continue to believe that reporting the railroad, utilities and energy subsidiaries separately in our Consolidated Balance Sheets and Consolidated Statements of Earnings is appropriate, given the relative significance of property, plant and equipment, capital expenditures and debt. Further, these subsidiaries are not supported by Berkshire debt guarantees or other financial commitments.

(b)

Use of estimates in preparation of financial statements

We prepare our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (“GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities at the balance sheet date and the reported amounts of certain revenues and expenses during the period. Our estimates of unpaid losses and loss adjustment expenses for property and casualty insurance claims are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim costs. In addition, estimates and assumptions associated with determinations of deferred charges on retroactive reinsurance contracts, fair values of certain financial instruments and evaluations of goodwill and indefinite-lived intangible assets for impairment require considerable judgment. Additionally, significant estimates may be required in the evaluation of certain other long-lived assets for impairments and the recognition of expected credit losses on amounts owed to us. Estimates may be subject to significant adjustments in future periods due to ongoing macroeconomic and geopolitical events, as well as changes in industry or company-specific factors or events. Actual results may differ from the estimates used in preparing our Consolidated Financial Statements.

(c)

Cash and cash equivalents and short-term investments in U.S. Treasury Bills

Cash equivalents consist of demand deposit and money market accounts and investments with maturities of three months or less when purchased. Short-term investments in U.S. Treasury Bills have maturities exceeding three months and less than one year at the time of purchase.

(d)

Investments in fixed maturity securities

We classify investments in fixed maturity securities on the acquisition date and at each balance sheet date. Securities classified as held-to-maturity are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity. Securities classified as trading are carried at fair value with changes in fair value reported in earnings. All other securities are classified as available-for-sale and are carried at fair value with the unrealized gain or loss recorded in accumulated other comprehensive income. We amortize the difference between the original cost and maturity value of a fixed maturity security to earnings using the interest method.

K-71

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(d)

Investments in fixed maturity securities

We record investment gains and losses on available-for-sale fixed maturity securities in earnings when the securities are sold. For available-for-sale securities in an unrealized loss position, we recognize a loss in earnings for the excess of amortized cost over fair value if we intend to sell the security before the price recovers. We record an allowance for credit losses, limited to the excess of amortized cost over fair value, with a corresponding charge to earnings if the present value of estimated expected cash flows is less than the present value of contractual cash flows. The allowance may be subsequently increased or decreased based on the prevailing facts and circumstances. The portion of the unrealized loss that is not related to a credit loss is recognized in accumulated other comprehensive income.

(e)

Investments in equity securities

We carry investments in equity securities at fair value and record the changes in fair values in the Consolidated Statements of Earnings as a component of investment gains and losses. Equity securities include certain common stock investments, in which we have elected the fair value option.

(f)

Investments under the equity method

We utilize the equity method to account for investments when we possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted or if the fair value option is elected.

We apply the equity method to investments in common stock and other investments when such investments possess substantially identical subordinated interests to common stock, and do not apply the equity method to investments that are not in-substance common stock as defined by GAAP. In applying the equity method, we increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive income of the investee. We record additional investments at cost and equity distributions received as reductions in the carrying value of the investment. If net losses reduce our carrying amount to zero, additional net losses may be recorded if other investments in the investee are at-risk, even if we have not committed to provide additional financial support to the investee. We include gains or losses on the disposition of equity method investments in earnings as a component of investment gains or losses.

(g)

Loans and finance receivables

Loans and finance receivables are primarily manufactured home loans, and to a lesser extent, commercial loans and site-built home loans. We carry substantially all loans and finance receivables at amortized cost, net of allowances for expected credit losses, based on our ability and intent to hold such loans to maturity. Acquisition costs and loan origination and commitment costs paid and fees received, as well as acquisition premiums or discounts, are capitalized and accrued to investment income as yield adjustments over the lives of the loans.

Measurements of expected credit losses include provisions for non-collection, whether the risk is probable or remote. Expected credit losses on manufactured home loans are based on the net present value of future principal payments less estimated expenses related to the charge-off and foreclosure of expected uncollectible loans and include provisions for loans that are not in foreclosure. Our principal credit quality indicator is whether the loans are performing. Expected credit loss estimates consider historical default rates, collateral recovery rates, historical runoff rates, interest rates, reductions of future cash flows for modified loans and the historical time elapsed from last payment until foreclosure, among other factors. In addition, our estimates consider current conditions and reasonable and supportable forecasts.

Loans are considered delinquent when payments are more than 30 days past due. We place loans over 90 days past due on nonaccrual status and accrued but uncollected interest is reversed. Subsequent collections on the loans are first applied to the principal and interest due for the most delinquent amount. We resume interest income accrual once a loan is less than 90 days delinquent.

K-72

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(g)

Loans and finance receivables

Loans are considered non-performing when the foreclosure process has started. Once a loan is in the process of foreclosure, interest income is not recognized until the foreclosure is cured or the loan is modified. Once a modification is complete, interest income is recognized based on the terms of the new loan. Foreclosed loans are charged off when the collateral is sold. Loans not in foreclosure are evaluated for charge-off based on individual circumstances concerning the future collectability of the loan and the condition of the collateral securing the loan.

(h)

Other receivables

Other receivables include balances due from customers, insurance premiums receivable and reinsurance losses recoverable, as well as other receivables. Trade receivables, insurance premiums receivables and other receivables are primarily short-term in nature with stated collection terms of less than one year from the date of origination. Reinsurance recoverables are comprised of amounts ceded under reinsurance contracts or pursuant to mandatory government-sponsored insurance programs and arise from unpaid losses and loss adjustment expenses on property and casualty claims and benefits under life and health contracts. Receivables are stated net of estimated allowances for expected credit losses.

We measure expected credit losses primarily utilizing credit loss history. In addition, our credit loss estimates consider current conditions and reasonable and supportable forecasts. In evaluating expected credit losses of reinsurance recoverables on unpaid losses, we review the credit quality of the counterparty and consider right-of-offset provisions within reinsurance contracts and other forms of credit enhancement including collateral, guarantees and other available information. We charge off receivables against the allowances after reasonable collection efforts are exhausted.

(i)

Fair value measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants in the principal market or in the most advantageous market when no principal market exists. Adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets when estimating fair value. In such circumstances, alternative valuation techniques may be appropriate to determine the value that would be received to sell an asset or paid to transfer a liability in an orderly transaction. Market participants are assumed to be independent, knowledgeable, and able and willing to transact an exchange and not acting under duress. Our nonperformance or credit risk is considered in determining the fair value of liabilities. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange.

(j)

Inventories

Inventories consist of manufactured products, goods or products acquired for resale, materials and supplies and homes constructed for sale. Manufactured inventory costs include materials, direct and indirect labor and factory overhead. At December 31, 2025, we used the last-in-first-out (“LIFO”) method to value 30% of inventory balances, with the remainder primarily determined under first-in-first-out and average cost methods. Non-LIFO inventories are stated at the lower of cost or net realizable value. The excess of current or replacement costs over costs determined under LIFO was approximately $2.5 billion as of December 31, 2025 and $2.3 billion as of December 31, 2024.

(k)

Property, plant and equipment and equipment held for lease

We use property, plant and equipment in our operations. We also own equipment that we lease to others under lease contracts. We record additions, improvements and betterments to such properties at cost. With respect to constructed assets, all materials, direct labor and contract services as well as certain indirect costs, including interest over the construction period, are capitalized. With respect to constructed assets that are subject to authoritative guidance for regulated operations, capitalized costs also include an allowance for funds used during construction, which represents the cost of equity funds used to finance the construction of the regulated facilities. Normal repairs and maintenance and other costs that do not improve the property, extend its useful life or otherwise do not meet capitalization criteria are charged to expense as incurred.

K-73

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(k)

Property, plant and equipment and equipment held for lease

Depreciation expense of our regulated utilities and railroad is generally determined using group depreciation methods where rates are based on periodic depreciation studies approved by the applicable regulator. Under group depreciation, a composite rate is applied to the gross investment in a particular class of property, despite differences in the service life or salvage value of individual property units within the same class. When such assets are retired or sold, no gain or loss is recognized. Gains or losses on disposals of all other assets are recorded through earnings. Ranges of estimated useful lives of depreciable assets unique to our railroad business are as follows: track structure and other roadway – 10 to 100 years and locomotives, freight cars and other equipment – 6 to 45 years. Ranges of estimated useful lives of assets unique to our utilities and energy businesses are as follows: utility generation, transmission and distribution systems – 5 to 80 years, interstate natural gas pipeline assets – 3 to 80 years and independent power plants and other assets – 2 to 50 years.

We depreciate property, plant and equipment used in operations by our other businesses to the estimated salvage value primarily using the straight-line method over estimated service lives. Ranges of estimated service lives of depreciable assets used in our other businesses are as follows: buildings and improvements – 5 to 50 years, machinery and equipment – 3 to 30 years and furniture, fixtures and other – 4 to 15 years. We depreciate the equipment held for lease to estimated salvage value primarily using the straight-line method over estimated useful lives ranging from 3 to 35 years. We use declining balance depreciation methods for assets when the revenue-earning power of the asset is greater during the earlier years of its life.

We evaluate property, plant and equipment and equipment held for lease for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable or when the assets are held for sale. Upon the occurrence of a triggering event, we assess whether the estimated undiscounted cash flows expected from the use of the asset and the residual value from the ultimate disposal of the asset exceeds the carrying value. If the carrying value exceeds the estimated recoverable amounts, we reduce the carrying value to fair value and record an impairment loss in earnings, except with respect to impairment of assets of our regulated utility and energy subsidiaries where the impacts of regulation are considered in evaluating the carrying value.

(l)

Leases

We are party to contracts where we lease property from others. When we lease assets from others, we record right-of-use assets and lease liabilities. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. In this regard, lease payments include fixed payments and variable payments that depend on an index or rate. The lease term is considered the non-cancellable lease period. Certain lease contracts contain renewal options or other terms that provide variable payments based on performance or usage. Options are not included in determining right-of-use assets or lease liabilities unless it is reasonably certain that options will be exercised. Generally, incremental borrowing rates are used in measuring lease liabilities. Right-of-use assets are subject to review for impairment. As permitted under GAAP, for some leases we do not separate lease components from non-lease components by class of asset. Additionally, we do not record assets or liabilities for leases with terms of one year or less.

(m)

Goodwill and other intangible assets

Goodwill represents the excess of the acquisition price of a business over the acquisition date values of identified net assets of that business. We evaluate goodwill for impairment at least annually. When evaluating goodwill for impairment, we estimate the fair value of the reporting unit. Several methods may be used to estimate a reporting unit’s fair value, including market quotations, asset and liability fair values and other valuation techniques, including, but not limited to, discounted projected future net earnings or net cash flows and multiples of earnings. When the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, the excess up to the balance of goodwill is charged to earnings as an impairment loss.

K-74

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(m)

Goodwill and other intangible assets

Other intangible assets with indefinite lives are also tested for impairment at least annually and when events or changes in circumstances indicate that, more likely-than-not, the asset is impaired. When the asset carrying value exceeds fair value, the excess is charged to earnings as an impairment loss. Significant judgment is required in estimating fair values and evaluating goodwill and indefinite-lived intangible assets for impairment. We amortize intangible assets with finite lives in a pattern that reflects the expected consumption of related economic benefits or on a straight-line basis over the estimated economic useful lives. Intangible assets with finite lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.

(n)

Revenue recognition

We earn insurance premiums on prospective property/casualty insurance and reinsurance contracts over the loss exposure or coverage period in proportion to the level of protection provided. We earn such premiums, in most cases ratably, over the term of the contract with unearned insurance premiums computed on a monthly or daily pro-rata basis. Premiums on retroactive property/casualty reinsurance contracts are normally received in full and are fully earned at the inception of the contracts, as the underlying loss events covered by the policies occurred prior to contract inception. Premiums for life reinsurance contracts are earned when due. Premiums for periodic payment annuity contracts are received in full and fully earned at the inception of the contracts. Premiums earned are stated net of amounts ceded to reinsurers. Premiums earned on contracts with experience-rating provisions reflect estimated loss experience under such contracts.

Sales and service revenues are recognized when goods or services are transferred to a customer. A good or service is transferred when (or as) the customer obtains control of that good or service. Revenues are based on the consideration we expect to receive in connection with our promises to deliver goods and services to our customers.

Our sales contracts provide customers with products directly or through wholesale and retail channels in exchange for consideration specified under the contracts. Contracts generally represent customer orders for individual products at stated prices. Sales contracts may contain either single or multiple performance obligations. In instances where contracts contain multiple performance obligations, we allocate the revenue to each obligation based on the relative stand-alone selling prices of each product or service.

Sales revenues reflect reductions for returns, allowances, late delivery penalties, volume discounts and other incentives, some of which may be contingent on future events. In certain customer contracts, sales revenues include certain state and local excise taxes billed to customers on specified products when those taxes are levied directly upon us by the taxing authorities. Sales revenues exclude sales taxes and value-added taxes collected on behalf of taxing authorities. Sales revenues include consideration for shipping and other fulfillment activities performed prior to the customer obtaining control of the goods. We also elect to treat consideration for such services that are performed after control has passed to the customer as sales revenue.

Product sales revenues are generally recognized at a point in time when control of the product transfers to the customer, which coincides with customer pickup or product delivery or acceptance, depending on terms of the arrangement. We recognize sales revenues and related costs over time with respect to certain contracts, including certain bridge and structural steel, castings, forgings and aerostructures contracts. Control of the product units under these contracts transfers continuously to the customer as the product is manufactured. These products generally have no alternative use and the contract requires the customer to provide reasonable compensation if terminated for reasons other than breach of contract.

K-75

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(n)

Revenue recognition

The principal performance obligation under our freight rail transportation service contracts is to move freight from a point of origin to a point of destination. The performance obligations are represented by bills of lading which create a series of distinct services that have a similar pattern of transfer to the customer. The revenues for each performance obligation are based on various factors including the product being shipped, the origin and destination pair and contract incentives, which are outlined in various private rate agreements, common carrier public tariffs, interline foreign road agreements and pricing quotes. The transaction price is generally a per car/unit amount to transport railcars from a specified origin to a specified destination. Freight revenues are recognized over time as the service is performed because the customer simultaneously receives and consumes the benefits of the service. Revenues recognized represent the portion of the service completed as of the balance sheet date. Invoices for freight transportation services are generally issued to customers and paid within 30 days or less. Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as reductions to revenue on a pro-rata basis based on actual or projected future customer shipments.

Utilities and energy revenues derive primarily from regulated electricity and natural gas sales. Regulated electricity and natural gas revenues are primarily tariff-based sales arrangements approved by various regulatory commissions. These tariff-based revenues are mainly comprised of energy, transmission, distribution and natural gas and have performance obligations to deliver energy products and services to customers which are satisfied over time as energy is delivered or services are provided. Such revenues are equivalent to the amounts we have the right to invoice and correspond directly with the value to the customer of the performance to date and include billed and unbilled amounts. Payments from customers are generally due within 30 days of billing. Rates charged for regulated energy products and services are established by regulators or contractual arrangements that establish the transaction price, as well as the allocation of price among the separate performance obligations. When preliminary regulated rates are permitted to be billed prior to final approval by the applicable regulator, certain revenue collected may be subject to refund and a liability for estimated refunds is accrued.

Other service revenues derive from contracts with customers in which performance obligations are satisfied over time, where customers receive and consume benefits as we perform the services or at a point in time when the services are completed. Other service revenues primarily derive from real estate brokerage, construction management and consulting, automotive repair, aircraft management, aviation training, franchising activities and news distribution.

Leasing revenue is generally recognized ratably over the term of the lease or based on usage, if applicable under the terms of the contract. A substantial portion of our lessor contracts are classified as operating leases.

(o)

Losses and loss adjustment expenses (“losses and LAE”)

We record liabilities for unpaid insurance losses and LAE under property and casualty insurance and reinsurance contracts for loss events that have occurred on or before the balance sheet date. Such liabilities represent the undiscounted estimated ultimate payment amounts.

We base liability estimates on (1) loss reports from policyholders and cedents, (2) individual case estimates and (3) estimates of incurred but not reported losses. Losses and LAE in the Consolidated Statements of Earnings include paid claims and claim settlement costs and changes in estimated unpaid claim and settlement cost liabilities. Losses and LAE in the Consolidated Statements of Earnings are stated net of amounts recovered and estimates of amounts recoverable ceded under reinsurance contracts. Reinsurance contracts do not relieve the ceding company of its obligations to indemnify policyholders with respect to the underlying insurance and reinsurance contracts.

(p)

Retroactive reinsurance

We record liabilities for unpaid losses and LAE under short-duration retroactive reinsurance contracts consistent with property and casualty contracts described in Note 1(o). With respect to retroactive reinsurance contracts, we also record deferred charge assets at the inception of the contracts, representing the excess, if any, of the estimated ultimate claim liabilities over the premiums earned. We subsequently adjust deferred charge assets as of the balance sheet date based on changes in the estimated timing and amount of ultimate loss payments, with retrospective application to the inception of the contract using the interest method. The resulting changes in deferred charge assets are included as a component of insurance losses and LAE in the Consolidated Statements of Earnings.

K-76

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(q)

Insurance policy acquisition costs

Deferred policy acquisition costs are included in other assets and were approximately $4.8 billion at December 31, 2025 and $4.6 billion in 2024. We capitalize the direct incremental costs that relate to the successful sale of insurance contracts, such as commissions and brokerage costs, subject to ultimate recoverability. We expense other underwriting costs as incurred. For short-duration property and casualty insurance contracts, deferred policy acquisition costs are reflected in expenses over the contract term as the related premiums are earned. For long-duration life contracts, we expense deferred policy acquisition costs at a constant level based on the expected amount of insurance in-force and the expected term of the contract using the assumptions consistent with those used in determining related insurance liabilities.

(r)

Life, annuity and health insurance benefits

Liabilities for life, annuity and health insurance benefits under long-duration insurance contracts represent the present value of expected future cash outflows from future benefit payments and certain non-acquisition costs, less the present value of expected future “net premiums,” which is the portion of gross premiums required to provide for all expected future benefits and variable expenses. Periodic payment and annuity reinsurance contracts are regarded as limited payment contracts. Such liabilities include the present value of expected future payments based on the discount rates used to measure benefit liabilities and deferred profit liabilities, which are based on the excess of gross premiums received over the net premiums established at the inception of the contract.

In estimating future cash flows, we consider the timing and amount of future claims, premiums and expenses, which require estimates of expected mortality, morbidity and lapse rates. Cash flow assumptions are reviewed at least annually, with the effects of assumption changes recorded in earnings. The discount rate assumptions used to measure benefit liabilities are revised each reporting period based on the prevailing upper-medium-grade corporate bond yields (generally single-A rated credit ratings) that reflect the duration and currency attributes of the liabilities. In measuring benefit liabilities, we generally group contracts by contract issue year. The effects of changes in discount rates are recorded in accumulated other comprehensive income.

(s)

Regulated utilities and energy businesses

Certain regulated utility and energy subsidiaries prepare their financial statements in accordance with authoritative guidance for regulated operations, reflecting the economic effects of regulation from the ability to recover certain costs from customers and the requirement to return revenues to customers in the future through the regulated rate-setting process. Accordingly, certain costs are deferred as regulatory assets and certain income is accrued as regulatory liabilities.

Regulatory assets and liabilities are subsequently recognized in operating expenses and revenues over various future periods. Regulatory assets and liabilities are continually assessed for probable future inclusion in regulatory rates by considering factors such as applicable regulatory or legislative changes and recent rate orders received by other regulated entities. If future inclusion in regulatory rates ceases to be probable, the amount no longer probable of inclusion in regulatory rates is charged or credited to earnings (or other comprehensive income, if applicable) or returned to customers.

(t)

Foreign currency

The accounts of certain subsidiaries are measured using functional currencies other than the U.S. Dollar. Revenues and expenses in the financial statements of these subsidiaries are translated into U.S. Dollars at the average exchange rate for the period and assets and liabilities are translated at the exchange rate as of the end of the reporting period. The net effects of translating the financial statements of these subsidiaries are included in accumulated other comprehensive income. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity, including gains and losses from the remeasurement of assets and liabilities due to changes in currency exchange rates, are included in earnings.

K-77

Notes to Consolidated Financial Statements

(1)

Significant accounting policies and practices

(u)

Income taxes

Berkshire files a consolidated federal income tax return in the U.S. with eligible subsidiaries. In addition, we file income tax returns in U.S. state and local and foreign jurisdictions. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions.

Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred income tax assets when realization is deemed to be unlikely.

Liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense.

(v)

Accounting pronouncements adopted in 2025

We adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”) in 2025 utilizing the retrospective application as permitted in the standard. ASU 2023-09 provides for enhanced income tax rate reconciliation and income taxes paid disclosures. See Note 20.

(w)

Accounting pronouncements to be adopted subsequent to December 31, 2025

In November 2024, the FASB issued Accounting Standards Update 2024-03, “Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of specific categories underlying certain expense captions on the income statement. ASU 2024-03 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

(2)

Significant business acquisitions

Our long-held strategy is to acquire businesses that we believe possess consistent earning power, good returns on equity and able and honest management. Financial results attributable to business acquisitions are included in our Consolidated Financial Statements beginning on their respective acquisition dates.

On January 2, 2026, Berkshire completed its acquisition of Occidental Petroleum Corporation’s (“Occidental”) chemicals business (“OxyChem”) pursuant to a definitive agreement as of October 1, 2025. Consideration paid to Occidental on January 2 was approximately $9.5 billion, which is subject to adjustment pursuant to the terms of the agreement. Also pursuant to the agreement, Occidental retained OxyChem’s legacy environmental liabilities. OxyChem is a global manufacturer of basic chemicals, with applications in water treatment, pharmaceuticals, healthcare, construction and other industries.

Final determinations of the values of certain assets and liabilities of OxyChem are not completed due to the proximity of the acquisition date to the date of these Consolidated Financial Statements and the certain complexities inherent with the transaction. We preliminarily estimate the values of OxyChem assets and liabilities will approximate $10.8 billion and $1.3 billion, respectively, and that assets will primarily consist of property, plant and equipment, trade receivables, inventories, equity method investments and intangible assets. Goodwill is not expected to be material. We do not believe this acquisition will have a material impact on our Consolidated Financial Statements.

K-78

Notes to Consolidated Financial Statements

(2)

Significant business acquisitions

On January 31, 2023, we acquired a 41.4% interest in Pilot Travel Centers LLC (“Pilot”) for approximately $8.2 billion, increasing our ownership interest to 80%. Accordingly, we began consolidating Pilot’s financial statements in our Consolidated Financial Statements. Prior to that time, we accounted for our 38.6% interest in Pilot under the equity method of accounting. In applying the acquisition method of accounting, we remeasured our previously held 38.6% investment in Pilot to fair value as of the acquisition date. We recognized a pre-tax non-cash remeasurement gain of approximately $3.0 billion in 2023 as investment gains, representing the excess of the fair value of that interest over the carrying value under the equity method.

(3)

Investments in fixed maturity securities

Investments in fixed maturity securities are summarized by type below (in millions).

	Amortized Cost				Unrealized Gains				Unrealized Losses				Fair Value
December 31, 2025
U.S. Treasury, U.S. government corporations and agencies	$	3,835			$	14			$	—			$	3,849
Foreign governments		12,493				58				(9	)			12,542
Corporate and other		1,197				232				(4	)			1,425
	$	17,525			$	304			$	(13	)		$	17,816
December 31, 2024
U.S. Treasury, U.S. government corporations and agencies	$	4,447			$	16			$	(4	)		$	4,459
Foreign governments		9,443				16				(97	)			9,362
Corporate and other		1,324				225				(6	)			1,543
	$	15,214			$	257			$	(107	)		$	15,364

Investments in fixed maturity securities are generally classified as available-for-sale. As of December 31, 2025, approximately 95% of our foreign government holdings were rated AA or higher by at least one of the major rating agencies. The amortized cost and estimated fair value of fixed maturity securities at December 31, 2025 are summarized below by contractual maturity dates (in millions). Actual maturities may differ from contractual maturities due to prepayment rights held by issuers.

	Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years				Mortgage-backed securities				Total
Amortized cost	$	12,875			$	4,040			$	406			$	100			$	104			$	17,525
Fair value		12,949				4,083				558				110				116				17,816

(4)

Investments in equity securities

Investments in equity securities are summarized as follows (in millions).

		Cost Basis				Net Unrealized Gains				Fair Value
December 31, 2025
Banks, insurance and finance		$	15,454			$	88,675			$	104,129
Consumer products			11,899				83,055				94,954
Commercial, industrial and other			58,036				40,659				98,695
		$	85,389			$	212,389			$	297,778
December 31, 2024
Banks, insurance and finance		$	15,707			$	75,936			$	91,643
Consumer products			12,658				92,091				104,749
Commercial, industrial and other			47,141				28,055				75,196
		$	75,506			$	196,082			$	271,588

K-79

Notes to Consolidated Financial Statements

(4)

Investments in equity securities

Our investments in equity securities over the years have been concentrated in relatively few companies. The fair value of our five largest holdings at December 31, 2025 and 2024 represented 65% and 71%, respectively, of the aggregate fair value of our equity securities shown in the preceding tables. The five largest holdings at each date were American Express Company, Apple Inc., Bank of America Corporation, The Coca-Cola Company and Chevron Corporation.

Additionally, we own shares of Occidental common stock, which we account for under the equity method. See Note 5. Since 2019, we have also owned non-voting Cumulative Perpetual Preferred Stock of Occidental and Occidental common stock warrants. Our investments in the Occidental preferred stock and Occidental common stock warrants are recorded at fair value and included as equity securities in our Consolidated Balance Sheets, as such investments are not in-substance common stock under GAAP and are not eligible for the equity method.

The Occidental preferred stock accrues dividends at 8% per annum and is redeemable at the option of Occidental commencing in 2029 at a redemption price equal to 105% of the liquidation value. As of December 31, 2025, our investment in Occidental preferred stock had an aggregate liquidation value of approximately $8.5 billion. To date, Occidental has redeemed approximately $1.5 billion of the aggregate liquidation value due to excess distributions, as defined under the terms of the Occidental preferred stock certificate of designations, to its common stockholders.

The Occidental common stock warrants allow us to purchase up to 83.9 million shares of Occidental common stock at an exercise price of $59.59 per share. The warrants are exercisable in whole or in part until one year after the date the preferred stock is fully redeemed.

As of December 31, 2025, we owned 151.6 million shares of American Express Company (“American Express”) common stock representing 22.1% of the outstanding common stock of American Express. Since 1995, we have been party to an agreement with American Express whereby we agreed to vote a significant portion of our shares in accordance with the recommendations of the American Express Board of Directors. We have also agreed to passivity commitments as requested by the Board of Governors of the Federal Reserve System, which collectively, in our judgment, restrict our ability to exercise significant influence over the operating and financial policies of American Express. Accordingly, we do not use the equity method with respect to our investment in American Express common stock and we continue to record our investment at fair value.

(5)

Equity method investments

Berkshire and its subsidiaries hold investments that are accounted for pursuant to the equity method. The most significant of these are our investments in the common stock of The Kraft Heinz Company (“Kraft Heinz”) and Occidental. As of December 31, 2025, we owned 27.5% of the outstanding Kraft Heinz common stock and 26.9% of the outstanding Occidental common stock, which excludes the potential effect of the exercise of Occidental’s outstanding common stock warrants. Kraft Heinz manufactures and markets food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Occidental is an energy company, whose activities include oil and natural gas exploration, development and production.

We also own a 50% interest in Berkadia Commercial Mortgage LLC (“Berkadia”). Jefferies Financial Group Inc. (“Jefferies”) owns the other 50% interest. Berkadia engages in mortgage banking, investment sales and servicing commercial/multi-family real estate loans. Berkadia’s commercial paper borrowing capacity (limited to $1.5 billion) is supported by a surety policy issued by a Berkshire insurance subsidiary. Jefferies is obligated to indemnify us for one-half of any losses incurred under the policy.

Our investments in Kraft Heinz, Occidental and Berkadia are summarized as follows (in millions). Kraft Heinz and Occidental common stocks are publicly-traded and the fair values are based on quoted market prices as of our balance sheet dates.

	Carrying Value								Fair Value
	December 31,								December 31,
	2025				2024				2025				2024
Kraft Heinz	$	8,634			$	13,395			$	7,897			$	9,994
Occidental		10,894				17,287				10,894				13,053
Berkadia		450				452
	$	19,978			$	31,134

K-80

Notes to Consolidated Financial Statements

(5)

Equity method investments

Our equity in earnings and distributions received from equity method investments for each of the three years ending December 31, 2025 are summarized as follows (in millions).

	Equity in Earnings												Distributions Received
	Year ended December 31,												Year ended December 31,
	2025				2024				2023				2025				2024				2023
Kraft Heinz*	$	(4,393	)		$	745			$	758			$	521			$	521			$	521
Occidental*		(5,302	)			1,005				1,077				247				207				142
Other		105				91				138				107				65				58
	$	(9,590	)		$	1,841			$	1,973			$	875			$	793			$	721

——————

*** We report our equity in Occidental’s earnings on a one-quarter lag and, in the second quarter of 2025, we began reporting our equity in Kraft Heinz’s earnings on a one-quarter lag.

In the second quarter of 2025, we recorded a pre-tax impairment loss of approximately $5.0 billion on our investment in Kraft Heinz common stock as a component of our equity in the earnings of Kraft Heinz, which reduced the carrying value of our investment to fair value based on the quoted market price. As a result, Berkshire’s share of Kraft Heinz shareholders’ equity exceeded Berkshire’s equity method carrying value by approximately $5.0 billion at that time. This basis difference was attributed to Kraft Heinz’s indefinite-lived intangible assets and goodwill. In evaluating our investment in Kraft Heinz for other-than-temporary impairment in the second quarter of 2025, we considered our ability and intent to hold the investment until the fair value exceeds carrying value, the magnitude and duration of the decline in fair value, and the operating results and financial condition of the company, as well as prevailing economic risks and uncertainties. Given these factors, we concluded that, in our judgment, the unrealized loss was other than temporary.

On May 19, 2025, Berkshire’s representatives on the Kraft Heinz Board of Directors resigned. Since the timing and extent of financial information we receive from Kraft Heinz became limited to the information Kraft Heinz makes publicly available, we concluded our receipt of such information was no longer sufficiently timely for concurrent inclusion in our Consolidated Financial Statements. Thus, we began recognizing the equity method effects attributable to our investment in Kraft Heinz on a one-quarter lag beginning with our second quarter of 2025.

Our equity in earnings from Kraft Heinz in 2025 included the $5.0 billion impairment loss we recorded in our second quarter. Earnings in 2025 also included our proportionate share of Kraft Heinz’s net earnings reported through its first nine months of 2025 before our share ($2.4 billion) of the after-tax indefinite-lived intangible asset and goodwill impairment losses reported by Kraft Heinz (approximately $8.7 billion) in its first nine months of 2025, which we applied to the basis difference that resulted from the impairment loss we recorded in our second quarter.

Summarized financial information of Kraft Heinz follows (in millions).

	September 27, 2025				December 28, 2024
Assets	$	81,695			$	88,287
Liabilities		40,116				38,962

	Nine Months Ended September 27, 2025				Year Ended December 28, 2024				Year Ended December 30, 2023
Net sales	$	18,588			$	25,846			$	26,640
Net income/(loss) attributable to common shareholders		(6,497	)			2,744				2,855

K-81

Notes to Consolidated Financial Statements

(5)

Equity method investments

We also recorded a pre-tax impairment loss of approximately $5.7 billion on our investment in Occidental common stock in the fourth quarter of 2025 as a component of our equity in the earnings of Occidental, which reduced the carrying value of our investment to fair value based on the quoted market price at that time. In recognizing the impairment loss in earnings, we considered the magnitude and duration of the unrealized loss, as well as the operating results and financial condition of the company, and prevailing macroeconomic risks and uncertainties. While we currently have no intention of disposing of any Occidental common stock, in our judgment, the unrealized loss was other than temporary. The carrying value of our investment in Occidental common stock as of December 31, 2025 exceeded our share of Occidental common shareholders’ equity as of September 30, 2025 by approximately $3.4 billion.

Summarized financial information of Occidental follows (in millions).

	September 30, 2025				September 30, 2024
Assets	$	83,472			$	85,803
Liabilities		46,706				50,869

	Twelve months ending September 30,
	2025				2024				2023
Total revenues and other income	$	26,853			$	27,572			$	29,715
Net earnings attributable to common shareholders		1,418				3,703				4,471

(6)

Investment gains (losses)

Investment gains (losses) for each of the three years ending December 31, 2025 are summarized as follows (in millions).

		2025				2024				2023
Equity securities:
Change in unrealized investment gains (losses) during the year on securities held at the end of the year		$	39,981			$	49,297			$	69,144
Investment gains (losses) during the year on securities sold			(18	)			3,523				2,698
			39,963				52,820				71,842
Fixed maturity securities:
Gross realized gains			53				28				139
Gross realized losses			(83	)			(71	)			(86	)
Other			(855	)			22				2,960
		$	39,078			$	52,799			$	74,855

Equity securities gains and losses include unrealized gains and losses from changes in fair values during the year on equity securities we still own, as well as gains and losses on securities we sold during the year. In the preceding table, investment gains and losses on equity securities sold during the year represent the difference between the sales proceeds and the fair value of the equity securities sold at the beginning of the applicable year or, if later, the purchase date.

Proceeds from sales of equity securities were approximately $30.7 billion in 2025, $143.4 billion in 2024 and $40.6 billion in 2023. Taxable gains and losses on equity securities sold are generally the difference between the proceeds from sales and cost at the acquisition date and were gains of $23.7 billion in 2025, $101.1 billion in 2024 and $5.0 billion in 2023. Other investment gains included approximately $3.0 billion in 2023 from the remeasurement of our pre-existing 38.6% interest in Pilot through the application of acquisition accounting under GAAP.

K-82

Notes to Consolidated Financial Statements

(7)

Loans and finance receivables

Loans and finance receivables are principally manufactured home loans, and to a lesser extent, commercial loans and site-built home loans and are summarized as follows (in millions).

	December 31,
	2025				2024
Loans and finance receivables, before allowances and discounts	$	31,997			$	29,700
Allowances for credit losses		(1,347	)			(1,134	)
Unamortized acquisition discounts and points		(814	)			(768	)
	$	29,836			$	27,798

Reconciliations of the allowance for credit losses on loans and finance receivables for each of the three years ending December 31, 2025 follow (in millions).

	2025				2024				2023
Balance at the beginning of the year	$	1,134			$	950			$	856
Provision for credit losses		385				298				169
Charge-offs, net of recoveries		(172	)			(114	)			(75	)
Balance at December 31	$	1,347			$	1,134			$	950

At December 31, 2025, substantially all manufactured and site-built home loans were evaluated collectively for impairment, and we considered approximately 96% of these loans to be current as to payment status. A summary of performing and non-performing home loans, before allowances and discounts, by year of loan origination as of December 31, 2025 follows (in millions).

	Origination Year
	2025				2024				2023				2022				2021				Prior				Total
Performing	$	5,861			$	5,404			$	4,492			$	3,344			$	2,780			$	9,298			$	31,179
Non-performing		6				24				29				19				17				64				159
	$	5,867			$	5,428			$	4,521			$	3,363			$	2,797			$	9,362			$	31,338

(8)

Other receivables

Other receivables are summarized as follows (in millions).

	December 31,
	2025				2024
Insurance and other:
Insurance premiums receivable	$	18,656			$	18,548
Reinsurance recoverables		4,975				5,177
Trade receivables		16,126				15,638
Other		5,279				5,199
Allowances for credit losses		(705	)			(675	)
	$	44,331			$	43,887
Railroad, utilities and energy:
Trade receivables	$	3,782			$	3,764
Other		698				862
Allowances for credit losses		(93	)			(123	)
	$	4,387			$	4,503

Provisions for credit losses with respect to other receivables were $530 million in 2025, $469 million in 2024 and $513 million in 2023. Charge-offs, net of recoveries, were $539 million in 2025, $498 million in 2024 and $474 million in 2023.

K-83

Notes to Consolidated Financial Statements

(9)

Inventories

Inventories of our insurance and other businesses are comprised of the following (in millions).

		December 31,
		2025				2024
Raw materials and supplies		$	5,020			$	5,421
Work in process and other			3,625				3,150
Finished manufactured goods			5,698				4,898
Goods acquired for resale			10,081				10,539
		$	24,424			$	24,008

Inventories, materials and supplies of our railroad, utilities and energy businesses are included in other assets and were approximately $3.2 billion at December 31, 2025 and $3.0 billion at December 31, 2024.

(10)

Property, plant and equipment

A summary of property, plant and equipment of our insurance and other businesses follows (in millions).

		December 31,
		2025				2024
Land, buildings and improvements		$	22,034			$	20,735
Machinery and equipment			34,733				32,475
Furniture, fixtures and other			6,212				5,501
			62,979				58,711
Accumulated depreciation			(31,094	)			(28,640	)
		$	31,885			$	30,071

A summary of property, plant and equipment of our railroad, utilities and energy businesses follows (in millions). The utility generation, transmission and distribution systems and interstate natural gas pipeline assets are owned by regulated public utility and natural gas pipeline subsidiaries.

		December 31,
		2025				2024
Railroad:
Land, track structure and other roadway		$	76,764			$	74,093
Locomotives, freight cars and other equipment			15,772				15,766
Construction in progress			2,163				1,813
			94,699				91,672
Accumulated depreciation			(22,327	)			(20,411	)
			72,372				71,261
Utilities and energy:
Utility generation, transmission and distribution systems		$	109,815			$	103,015
Interstate natural gas pipeline assets			21,334				20,237
Independent power plants and other			15,630				14,840
Construction in progress			10,591				8,793
			157,370				146,885
Accumulated depreciation			(45,002	)			(43,116	)
			112,368				103,769
		$	184,740			$	175,030

Property, plant and equipment depreciation expense for each of the three years ending December 31, 2025 is summarized below (in millions).

		2025				2024				2023
Insurance and other		$	3,245			$	3,117			$	2,898
Railroad, utilities and energy			6,901				6,514				6,494
		$	10,146			$	9,631			$	9,392

K-84

Notes to Consolidated Financial Statements

(11)

Equipment held for lease

Equipment held for lease includes railcars, aircraft, and other equipment, including over-the-road trailers, intermodal tank containers, cranes, storage units and furniture. Equipment held for lease is summarized below (in millions).

		December 31,
		2025				2024
Railcars		$	10,355			$	10,137
Aircraft			15,877				14,201
Other			5,660				5,686
			31,892				30,024
Accumulated depreciation			(13,357	)			(12,196	)
		$	18,535			$	17,828

Equipment held for lease depreciation expense was $1,585 million in 2025, $1,429 million in 2024 and $1,266 million in 2023. Fixed and variable operating lease revenues for each of the three years ending December 31, 2025 are summarized below (in millions).

		2025				2024				2023
Fixed		$	6,911			$	6,456			$	5,902
Variable			3,123				2,771				2,514
		$	10,034			$	9,227			$	8,416

A summary of future operating lease receipts as of December 31, 2025 follows (in millions).

2026				2027				2028				2029				2030				Thereafter				Total
$	4,703			$	3,713			$	2,802			$	1,816			$	904			$	230			$	14,168

(12)

Leases

We are party to contracts where we lease property from others under contracts classified as operating leases. We primarily lease buildings, offices, facilities and equipment. Operating lease right-of-use assets are included in other assets and operating lease liabilities are included in accounts payable, accruals and other liabilities. Information related to our operating leases follows (dollars in millions).

		Right-of-use assets				Lease liabilities				Weighted average remaining term in years				Weighted average discount rate used to measure liabilities
December 31, 2025		$	6,020			$	6,290				7.8				4.8	%
December 31, 2024			5,843				5,996				7.5				4.5	%

A summary of our remaining future operating lease payments reconciled to lease liabilities as of December 31, 2025 and December 31, 2024 follows (in millions).

	Year 1			Year 2			Year 3			Year 4			Year 5			Thereafter			Total lease payments			Amount representing interest			Lease liabilities
December 31:
2025	$	1,437		$	1,269		$	1,022		$	827		$	643		$	2,546		$	7,744		$	(1,454	)	$	6,290
2024		1,491			1,161			982			766			600			2,197			7,197			(1,201	)		5,996

Components of operating lease expense for each of the three years ending December 31, 2025 are summarized as follows (in millions).

		2025				2024				2023
Operating lease expense		$	1,647			$	1,652			$	1,535
Short-term lease expense			170				171				219
Variable lease expense			209				225				216
		$	2,026			$	2,048			$	1,970

K-85

Notes to Consolidated Financial Statements

(13)

Goodwill and other intangible assets

Reconciliations of the changes in the carrying value of goodwill during 2025 and 2024 follow (in millions).

		December 31,
		2025				2024
Balance at the beginning of the year*		$	83,880			$	84,626
Business acquisitions			459				87
Other, including impairments and foreign currency translation			(1,265	)			(833	)
Balance at the end of the year*		$	83,074			$	83,880

——————

*** *Net of accumulated goodwill impairments of $*13.0 *billion as of December 31, 2025, $*11.5 *billion as of December 31, 2024 and $*11.1 billion as of December 31, 2023.

Other intangible assets are summarized below (in millions).

	December 31, 2025										December 31, 2024
	Gross carrying amount			Accumulated amortization			Net carrying value				Gross carrying amount			Accumulated amortization			Net carrying value
Insurance and other:
Customer relationships	$	31,215		$	9,638		$	21,577			$	30,941		$	8,840		$	22,101
Trademarks and trade names		9,007			1,143			7,864				9,007			1,041			7,966
Patents and technology		5,237			4,196			1,041				5,375			4,359			1,016
Other		5,608			2,288			3,320				5,551			1,996			3,555
	$	51,067		$	17,265		$	33,802			$	50,874		$	16,236		$	34,638
Railroad, utilities and energy:*
Customer relationships and contracts	$	1,541		$	809		$	732			$	1,553		$	728		$	825
Other		442			134			308				437			126			311
	$	1,983		$	943		$	1,040			$	1,990		$	854		$	1,136

——————

*** Included in other assets.

Intangible assets with indefinite lives were $18.9 billion as of December 31, 2025 and December 31, 2024 and primarily related to certain customer relationships and trademarks and trade names. Intangible asset amortization expense was $1.7 billion in 2025 and $1.8 billion in 2024 and 2023. Estimated amortization expense over the next five years follows (in billions): 2026 – $1.7; 2027 – $1.6; 2028 – $1.4; 2029 – $1.4 and 2030 – $1.3.

(14)

Supplemental cash flow information

A summary of supplemental cash flow information follows (in millions).

		2025				2024				2023
Cash paid during the year for:
Income taxes		$	13,978			$	28,544			$	7,765
Interest:
Insurance and other			1,301				1,362				1,670
Railroad, utilities and energy			3,793				3,577				3,327
Non-cash investing and financing activities:
Liabilities assumed in connection with business acquisitions			28				22				10,938
Operating lease liabilities arising from obtaining right-of-use assets			1,640				2,007				1,645
Class B common stock issued in exchange for noncontrolling interests			—				1,045				—

(15)

Insurance subsidiary disclosures

Payments of dividends by our insurance subsidiaries are restricted by insurance statutes and regulations. Without prior regulatory approval, our principal insurance subsidiaries may declare up to approximately $33 billion as ordinary dividends during 2026. Investments in fixed maturity and equity securities and short-term investments on deposit with U.S. state insurance authorities in accordance with state insurance regulations were approximately $5.5 billion at December 31, 2025 and $5.6 billion at December 31, 2024.

K-86

Notes to Consolidated Financial Statements

(15)

Insurance subsidiary disclosures

Combined shareholders’ equity of U.S.-based insurance subsidiaries determined pursuant to statutory accounting rules (Surplus as Regards Policyholders) was approximately $333 billion at December 31, 2025 and $310 billion at December 31, 2024. Statutory surplus differs from the corresponding amount based on GAAP due to differences in accounting for certain assets and liabilities. For instance, the recognition of deferred charges on retroactive reinsurance, life, annuity and health insurance benefits liabilities, deferred policy acquisition costs, unrealized gains on certain investments and deferred income taxes under GAAP differs from recognition under U.S. statutory reporting. In addition, the carrying values of certain assets, such as goodwill and non-insurance entities owned by our insurance subsidiaries, are not fully recognized for statutory reporting purposes.

Property/casualty and life/health insurance premiums written and earned are summarized below (in millions).

	Property/Casualty										Life/Health
	2025			2024			2023				2025			2024			2023
Premiums written:
Direct	$	66,693		$	65,495		$	61,990			$	14		$	19		$	—
Assumed		19,255			20,422			20,751				5,319			5,016			5,126
Ceded		(1,874	)		(2,231	)		(2,402	)			(31	)		(28	)		(33	)
	$	84,074		$	83,686		$	80,339			$	5,302		$	5,007		$	5,093
Premiums earned:
Direct	$	66,351		$	64,880		$	60,437			$	14		$	18		$	—
Assumed		19,303			20,738			20,442				5,286			5,008			5,105
Ceded		(2,021	)		(2,359	)		(2,548	)			(31	)		(28	)		(33	)
	$	83,633		$	83,259		$	78,331			$	5,269		$	4,998		$	5,072

(16)

Unpaid losses and loss adjustment expenses

Reconciliations of the changes in unpaid losses and LAE liabilities (“claim liabilities”), excluding liabilities under retroactive reinsurance contracts (see Note 17), for each of the three years ended December 31, 2025 follow (in millions).

	2025				2024				2023
Balance at the beginning of the year:
Gross liabilities	$	115,151			$	111,082			$	107,472
Reinsurance recoverable on unpaid losses		(4,593	)			(4,893	)			(5,025	)
Net liabilities		110,558				106,189				102,447
Losses and LAE incurred:
Current accident year		58,207				57,563				59,244
Prior accident years		(1,854	)			(2,322	)			(3,541	)
Total		56,353				55,241				55,703
Losses and LAE paid:
Current accident year		(23,762	)			(24,139	)			(25,184	)
Prior accident years		(27,709	)			(26,436	)			(27,065	)
Total		(51,471	)			(50,575	)			(52,249	)
Foreign currency effect		817				(297	)			288
Balance at December 31:
Net liabilities		116,257				110,558				106,189
Reinsurance recoverable on unpaid losses		4,456				4,593				4,893
Gross liabilities	$	120,713			$	115,151			$	111,082

Our claim liabilities under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim events that have occurred as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. Losses and LAE incurred and paid in the preceding table relate to events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). Losses and LAE incurred and paid are net of reinsurance recoveries.

Current accident year incurred losses included estimates for significant catastrophe events (losses exceeding $150 million per event) of approximately $1.1 billion in 2025, $1.5 billion in 2024 and $925 million in 2023.

K-87

Notes to Consolidated Financial Statements

(16)

Unpaid losses and loss adjustment expenses

We recorded net reductions of estimated ultimate claim liabilities for prior accident years’ events of $1.9 billion in 2025, $2.3 billion in 2024 and $3.5 billion in 2023, which produced corresponding reductions in losses and LAE incurred in those periods. These reductions, as percentages of the net liabilities at the beginning of each year, were 1.7% in 2025, 2.2% in 2024 and 3.5% in 2023.

Our primary insurance businesses reduced prior accident years’ ultimate claims estimates by $767 million in 2025, $602 million in 2024 and $2.1 billion in 2023. Substantially all of the decline in 2025 was attributable to property coverages. The decline in 2024 reflected reductions in claims estimates for property, medical professional liability and workers’ compensation coverages, partly offset by increased estimates for other casualty coverages. The estimated liability reductions in 2023 were across property, medical professional liability and workers’ compensation and other casualty coverages.

Our reinsurance businesses reduced prior accident years’ ultimate claims estimates by $1.1 billion in 2025, $1.7 billion in 2024 and $1.4 billion in 2023. In each year, the reductions reflected lower-than-expected property losses. In 2025, our reinsurance businesses increased prior accident years ultimate casualty claims estimates compared to reductions in 2024 and 2023.

Estimated net claim liabilities for environmental and asbestos exposures, excluding liabilities under retroactive reinsurance contracts, were approximately $1.8 billion at December 31, 2025 and $1.9 billion at December 31, 2024. These liabilities are subject to change due to changes in the legal and regulatory environment, among other factors. We are unable to reliably estimate additional losses or a range of losses that are reasonably possible to arise from these factors.

Disaggregated information concerning our claim liabilities is provided below and in the pages that follow for GEICO, Berkshire Hathaway Primary Group (“BH Primary”) and Berkshire Hathaway Reinsurance Group (“BHRG”). In this discussion, “resolution period” refers to the period between the claim occurrence date and claim settlement or payment date. A reconciliation of the disaggregated net unpaid losses and allocated loss adjustment expenses (the latter referred to as “ALAE”) to our consolidated claim liabilities as of December 31, 2025 follows (in millions).

	GEICO							BH Primary							BHRG
	Physical Damage			Auto Liability				Medical Professional Liability			Workers’ Compensation/ Other Casualty				Property			Casualty				Total
Unpaid losses and ALAE, net	$	914		$	23,526			$	9,721		$	26,912			$	14,944		$	34,538			$	110,555
Reinsurance recoverable		3			899				38			1,401				688			1,323				4,352
Unallocated LAE																							2,396
Other losses and LAE																							3,410
Unpaid losses and LAE																						$	120,713

GEICO

GEICO’s claim liabilities predominantly relate to various types of private passenger auto liability and physical damage claims. For such claims, we establish and evaluate unpaid claim liabilities using standard actuarial loss development methods and techniques. The actuarial methods utilize historical claims data, adjusted when deemed appropriate to reflect perceived changes in loss patterns. Claim liabilities include case and IBNR estimates.

Case reserves are based on a combination of adjuster determined liabilities and statistical liabilities. The adjuster liabilities reflect claim adjusters estimates based on the facts and merits of each claim. The statistical liabilities estimates are based on key claim and policy characteristics and historical ultimate losses, adjusted for selected trends and applied to pending liability and physical damage claims.

For unreported claims, IBNR claim liabilities are estimated by projecting the ultimate number of claims expected (reported and unreported) for each significant coverage based on historical data, from which reported claims are deducted to produce the estimated number of unreported claims. The product of the average cost per unreported claim and the number of unreported claims produces the IBNR liability estimate. We may record supplemental IBNR liabilities in certain situations when actuarial techniques are difficult to apply.

K-88

Notes to Consolidated Financial Statements

(16)

Unpaid losses and loss adjustment expenses

GEICO’s net auto physical damage and liability losses and ALAE incurred and paid are summarized by accident year below. IBNR and case development liabilities are as of December 31, 2025 and are net of estimated salvage and subrogation recoveries. Anticipated salvage and subrogation recoveries are included in IBNR reserves and may result in negative IBNR reserves, primarily in physical damage. Claim counts are established when accidents that could result in a liability are reported and are based on policy coverage. Each claim event may generate claims under multiple coverages and may result in multiple counts. The “Cumulative Number of Reported Claims” includes the combined number of reported claims for all auto policy coverages. Dollars are in millions.

Physical Damage

		Losses and ALAE Incurred through December 31,													Cumulative Number of
Accident Year					2024*			2025			IBNR and Case Development Liabilities				Reported Claims (in 000's)
2024					$	11,095		$	10,833		$	88				6,496
2025									10,612			(275	)			5,828
		Losses and ALAE incurred						$	21,445
		Cumulative Losses and ALAE Paid through December 31,
Accident Year					2024*			2025
2024					$	10,495		$	10,728
2025									9,936
		Losses and ALAE paid							20,664
		Net unpaid losses and ALAE for 2024 – 2025 accident years							781
		Net unpaid losses and ALAE for accident years before 2024							133
		Net unpaid losses and ALAE						$	914

Auto Liability

		Losses and ALAE Incurred through December 31,																			Cumulative Number of
Accident Year		2021*			2022*			2023*			2024*			2025			IBNR and Case Development Liabilities				Reported Claims (in 000's)
2021		$	17,481		$	17,457		$	17,229		$	17,033		$	16,827		$	545				2,461
2022						19,645			18,903			18,818			18,275			1,056				2,397
2023									17,948			18,073			17,234			1,856				1,977
2024												17,081			18,208			3,361				1,842
2025															19,901			5,897				1,742
		Losses and ALAE incurred												$	90,445
		Cumulative Losses and ALAE Paid through December 31,
Accident Year		2021*			2022*			2023*			2024*			2025
2021		$	6,450		$	12,681		$	14,863		$	15,796		$	16,132
2022						7,614			13,838			16,031			16,853
2023									7,191			12,682			14,555
2024												7,084			12,764
2025															7,590
		Losses and ALAE paid													67,894
		Net unpaid losses and ALAE for 2021 – 2025 accident years													22,551
		Net unpaid losses and ALAE for accident years before 2021													975
		Net unpaid losses and ALAE												$	23,526

——————

*** Unaudited required supplemental information

K-89

Notes to Consolidated Financial Statements

(16)

Unpaid losses and loss adjustment expenses

BH Primary

BH Primary’s liabilities for unpaid losses and LAE primarily derive from medical professional liability and workers’ compensation and other casualty insurance, which includes commercial auto and general liability insurance. Net losses and ALAE incurred and paid are summarized by accident year in the following tables, disaggregated by medical professional liability and workers’ compensation and other casualty coverages. IBNR and case development liabilities are as of December 31, 2025. The cumulative number of reported claims reflects the number of individual claimants and includes claims that ultimately resulted in no liability or payment. Dollars are in millions.

Medical Professional Liability

Estimates of the ultimate expected losses and LAE incurred for medical professional claim liabilities are based on a variety of commonly accepted actuarial methodologies, such as the paid and incurred development method and Bornhuetter-Ferguson based methods, as well as other techniques that consider insured loss exposures and historical and expected loss trends, among other factors. These methodologies produce loss estimates from which we determine our best estimate. In addition, we study developments in older accident years and adjust initial loss estimates to reflect recent developments based upon claim age, coverage and litigation experience.

		Losses and ALAE Incurred through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025			IBNR and Case Development Liabilities			Cumulative Number of Reported Claims (in 000's)
2016		$	1,392		$	1,416		$	1,414		$	1,394		$	1,341		$	1,288		$	1,216		$	1,188		$	1,172		$	1,184		$	64			15
2017						1,466			1,499			1,495			1,474			1,382			1,349			1,315			1,310			1,321			86			21
2018									1,602			1,650			1,659			1,580			1,616			1,606			1,583			1,580			115			24
2019												1,670			1,691			1,663			1,614			1,534			1,579			1,608			129			22
2020															1,704			1,751			1,698			1,631			1,606			1,584			225			33
2021																		1,852			1,855			1,787			1,714			1,671			452			26
2022																					1,927			1,912			1,846			1,814			650			24
2023																								1,964			1,918			1,892			1,052			26
2024																											2,004			2,116			1,533			29
2025																														1,985			1,803			13
		Losses and ALAE incurred																											$	16,755
		Cumulative Losses and ALAE Paid through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025
2016		$	22		$	115		$	274		$	461		$	620		$	712		$	822		$	908		$	957		$	1,022
2017						27			128			300			457			582			739			877			977			1,051
2018									35			166			367			543			728			949			1,080			1,209
2019												39			160			314			536			757			963			1,154
2020															34			148			321			531			767			976
2021																		36			136			333			548			787
2022																					38			182			441			700
2023																								28			156			404
2024																											34			178
2025																														26
		Losses and ALAE paid																												7,507
		Net unpaid losses and ALAE for 2016 – 2025 accident years																												9,248
		Net unpaid losses and ALAE for accident years before 2016																												473
		Net unpaid losses and ALAE																											$	9,721

——————

** Unaudited required supplemental information*

K-90

Notes to Consolidated Financial Statements

(16)

Unpaid losses and loss adjustment expenses

Workers’ Compensation and Other Casualty

We establish case liabilities for reported casualty and workers’ compensation claims based upon the facts and circumstances of the claim. The excess of the ultimate projected losses, including the case development estimates over the case-basis liabilities, is included in IBNR liabilities. We evaluate ultimate loss and loss adjustment expense estimates for claims using a combination of commonly accepted actuarial methodologies, such as the Bornhuetter-Ferguson and chain-ladder approaches, incorporating combinations of paid and incurred loss data, claims frequency and severity data, expected loss ratios, as well as other data and assumptions. For workers’ compensation claims, paid and incurred loss data is also segregated and analyzed by state due to the different state regulatory frameworks that may impact the duration and amount of loss payments. We also separately study the various components of liabilities, such as employee lost wages, medical expenses and the costs of claims investigations and administration.

		Losses and ALAE Incurred through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025			IBNR and Case Development Liabilities			Cumulative Number of Reported Claims (in 000's)
2016		$	2,931		$	2,848		$	2,793		$	2,772		$	2,815		$	2,825		$	2,864		$	2,840		$	2,809		$	2,802		$	226			125
2017						3,473			3,337			3,299			3,310			3,322			3,320			3,321			3,357			3,385			338			143
2018									3,998			3,886			3,967			4,030			4,091			4,177			4,230			4,205			480			164
2019												4,584			4,623			4,692			4,763			4,847			4,919			4,935			599			185
2020															5,030			4,881			4,775			4,774			4,866			4,918			1,019			159
2021																		5,890			5,847			5,875			5,976			6,200			1,493			167
2022																					6,781			6,753			6,862			6,966			2,329			190
2023																								7,299			7,363			7,514			2,974			190
2024																											7,962			7,918			4,169			184
2025																														8,002			5,548			141
		Losses and ALAE incurred																											$	56,845
		Cumulative Losses and ALAE Paid through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025
2016		$	373		$	908		$	1,359		$	1,765		$	1,998		$	2,140		$	2,303		$	2,377		$	2,420		$	2,468
2017						480			1,133			1,645			2,050			2,279			2,492			2,673			2,784			2,871
2018									583			1,340			1,902			2,324			2,746			3,120			3,396			3,517
2019												725			1,598			2,214			2,898			3,430			3,812			4,015
2020															736			1,498			2,066			2,598			3,138			3,474
2021																		865			1,744			2,433			3,161			3,797
2022																					958			2,008			2,901			3,711
2023																								1,056			2,152			3,230
2024																											1,245			2,428
2025																														1,289
		Losses and ALAE paid																												30,800
		Net unpaid losses and ALAE for 2016 – 2025 accident years																												26,045
		Net unpaid losses and ALAE for accident years before 2016																												867
		Net unpaid losses and ALAE																											$	26,912

——————

*** Unaudited required supplemental information

BHRG

We use a variety of methodologies to establish BHRG’s estimates for property and casualty claim liabilities. These methodologies include paid and incurred loss development techniques, incurred and paid loss Bornhuetter-Ferguson techniques and frequency and severity techniques, as well as ground-up techniques when appropriate.

K-91

Notes to Consolidated Financial Statements

(16)

Unpaid losses and loss adjustment expenses

Our claim liabilities are principally a function of reported losses from ceding companies, case development and IBNR liability estimates. Case loss estimates are reported either individually or in bulk as provided under the terms of the contracts. We may independently evaluate case losses reported by the ceding company, and if deemed appropriate, establish additional case liabilities based on our estimates.

Estimated IBNR liabilities are affected by expected case loss emergence patterns and expected loss ratios, which are evaluated as groups of contracts with similar exposures or on a contract-by-contract basis. Estimated case and IBNR liabilities for major catastrophe events are generally based on a per-contract assessment of the ultimate cost associated with the individual loss event. Claim count data is not provided consistently by ceding companies under our contracts or is otherwise considered unreliable.

BHRG’s net losses and ALAE incurred and paid are disaggregated and summarized by accident year based on losses that are expected to have shorter resolution periods (property) and losses expected to have longer resolution periods (casualty). Under certain contracts, the coverage can apply to multiple lines of business written by the ceding company, whether property, casualty or combined, and the ceding company may not report loss data by such lines consistently, if at all. In those instances, we allocated losses to property and casualty coverages based on internal estimates. IBNR and case development liabilities are as of December 31, 2025. Dollars are in millions.

Property

		Losses and ALAE Incurred through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025			IBNR and Case Development Liabilities
2016		$	3,953		$	4,542		$	4,216		$	4,177		$	4,172		$	4,161		$	4,138		$	4,127		$	4,131		$	4,120		$	17
2017						6,420			6,117			5,938			5,810			5,731			5,649			5,630			5,616			5,613			42
2018									5,514			5,612			5,470			5,324			5,329			5,278			5,298			5,288			168
2019												5,002			5,134			4,906			4,601			4,545			4,508			4,520			128
2020															6,992			7,273			6,907			6,698			6,525			6,469			280
2021																		8,157			8,040			7,702			7,398			7,212			269
2022																					8,912			8,485			7,986			7,992			709
2023																								8,038			7,471			6,963			951
2024																											7,838			7,108			2,008
2025																														6,579			3,325
Losses and ALAE Incurred																													$	61,864
		Cumulative Losses and ALAE Paid through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025
2016		$	918		$	2,228		$	2,695		$	3,187		$	3,456		$	3,652		$	3,761		$	3,840		$	3,927		$	3,965
2017						1,350			3,517			4,597			4,951			5,187			5,380			5,470			5,494			5,529
2018									1,211			3,108			3,757			4,045			4,291			4,500			4,627			4,734
2019												1,014			2,855			3,577			3,907			4,066			4,136			4,223
2020															1,259			3,600			4,659			5,327			5,605			5,797
2021																		1,630			4,121			5,455			6,160			6,526
2022																					1,817			4,352			5,631			6,518
2023																								1,773			4,148			5,174
2024																											1,725			3,595
2025																														1,542
Losses and ALAE Paid																														47,603
Net unpaid losses and ALAE for 2016 – 2025 accident years																														14,261
Net unpaid losses and ALAE for accident years before 2016																														683
Net unpaid losses and ALAE																													$	14,944

——————

*** Unaudited required supplemental information

K-92

Notes to Consolidated Financial Statements

(16)

Unpaid losses and loss adjustment expenses

Casualty

		Losses and ALAE Incurred through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025			IBNR and Case Development Liabilities
2016		$	3,811		$	4,026		$	3,931		$	3,897		$	3,844		$	3,800		$	3,771		$	3,797		$	3,828		$	3,834		$	328
2017						4,063			4,507			4,382			4,274			4,206			4,195			4,252			4,253			4,307			406
2018									4,917			5,577			5,516			5,384			5,310			5,396			5,469			5,593			632
2019												5,606			6,090			5,961			5,789			5,748			5,822			5,918			866
2020															6,248			6,277			6,096			6,140			6,115			6,126			1,104
2021																		6,324			6,309			5,979			5,997			6,014			1,449
2022																					6,078			6,132			6,085			6,217			2,181
2023																								6,088			6,189			6,123			2,696
2024																											6,123			6,233			3,628
2025																														6,147			4,678
		Losses and ALAE incurred																											$	56,512
		Cumulative Losses and ALAE Paid through December 31,
Accident Year		2016*			2017*			2018*			2019*			2020*			2021*			2022*			2023*			2024*			2025
2016		$	656		$	1,366		$	1,809		$	2,174		$	2,450		$	2,654		$	2,828		$	3,007		$	3,144		$	3,235
2017						609			1,319			1,839			2,490			2,740			2,959			3,187			3,374			3,535
2018									697			1,750			2,803			3,273			3,654			3,973			4,251			4,484
2019												844			1,886			2,447			3,207			3,759			4,127			4,496
2020															871			1,909			2,723			3,388			3,986			4,427
2021																		778			1,790			2,674			3,242			3,840
2022																					623			1,343			1,977			2,853
2023																								694			1,590			2,380
2024																											682			1,647
2025																														704
		Losses and ALAE paid																												31,601
		Net unpaid losses and ALAE for 2016 – 2025 accident years																												24,911
		Net unpaid losses and ALAE for accident years before 2016																												9,627
		Net unpaid losses and ALAE																											$	34,538

——————

*** Unaudited required supplemental information

Required supplemental unaudited average historical claims duration information based on the net losses and ALAE incurred and paid accident year data in the preceding tables follows. The percentages show the average portions of net losses and ALAE paid by each succeeding year, with year 1 representing the current accident year.

Average Annual Percentage Payout of Losses Incurred by Age, Net of Reinsurance
In Year	1		2		3		4		5		6		7		8		9		10
GEICO Physical Damage	97%		3%
GEICO Auto Liability	41		32		13%		7%		3%
BH Primary Medical Professional Liability	2		7		12		13		13		12%		10%		8%		5%		5%
BH Primary Workers’ Compensation and Other Casualty	14		16		13		12		10		7		5		3		2		2
BHRG Property	23		34		16		9		5		3		2		1		1		1
BHRG Casualty	13		16		13		11		8		6		5		4		4		2

K-93

Notes to Consolidated Financial Statements

(17)

Retroactive reinsurance

Retroactive reinsurance policies provide indemnification of losses and LAE of short-duration insurance contracts with respect to underlying loss events that occurred prior to the contract inception date. Exposures may include significant asbestos, environmental and other mass tort claims. Retroactive reinsurance contracts generally stipulate aggregate policy limits, and our exposure to such claims under these contracts is likewise limited. Reconciliations of the changes in estimated liabilities for retroactive reinsurance unpaid losses and LAE for each of the three years ended December 31, 2025 follow (in millions).

	2025				2024				2023
Balance at the beginning of the year	$	32,443			$	34,647			$	35,415
Losses and LAE incurred		261				247				1,109
Losses and LAE paid		(1,776	)			(2,399	)			(1,934	)
Foreign currency effect		120				(52	)			57
Balance at December 31	$	31,048			$	32,443			$	34,647
Losses and LAE incurred	$	261			$	247			$	1,109
Deferred charge adjustments		693				698				375
Losses and LAE incurred, including deferred charge adjustments	$	954			$	945			$	1,484

We classify incurred and paid losses and LAE based on the inception dates of the contracts, which reflect when our exposure to losses began. We believe that analysis of losses incurred and paid by the accident year of the underlying event is of limited relevance given that our agreed exposure to losses commenced on the specified contract inception date. We also believe that the classification of reported claims and case development liabilities has little or no practical analytical value. Substantially all of the losses and LAE incurred and paid related to contracts with inception dates prior to 2020.

Losses and LAE incurred include changes in estimated ultimate liabilities and related adjustments to deferred charge assets arising from the changes in the estimated timing and amount of loss payments. In 2023, we increased estimated ultimate liabilities under certain contracts by $1.1 billion, primarily attributable to revised estimates for asbestos, environmental and other casualty claims. Including adjustments to deferred charge assets, the increase in ultimate liabilities produced an incremental net expense of approximately $650 million in 2023. Deferred charge assets on retroactive reinsurance contracts were $8.1 billion at December 31, 2025 and $8.8 billion at December 31, 2024.

In establishing retroactive reinsurance claim liabilities, we analyze historical aggregate loss payment patterns and project losses under various probability and severity weighted scenarios. We expect the resolution periods for many contracts to be very long, with some lasting several decades. We monitor claim payment activity and review ceding company reports and other information, including relevant information concerning the underlying losses. We revise the expected timing and amounts of ultimate losses periodically or when significant events occur.

Our estimates of ultimate liabilities for asbestos and environmental exposures under our contracts were approximately $11.1 billion at December 31, 2025 and $11.9 billion at December 31, 2024. We monitor evolving case law and its effect on asbestos, environmental and other mass tort claims. Changing laws or government regulations, as well as newly identified toxins and injury events, newly reported claims, new theories of liability, new contract interpretations and other factors could result in increases in these liabilities, which could be material to our results of operations. We are unable to reliably estimate the amount of additional net loss or the range of net loss that is reasonably possible.

(18)

Long-duration insurance contracts

A summary of our long-duration life, annuity and health insurance benefits liabilities disaggregated by our principal product categories follows (in millions).

	December 31,
	2025				2024
Periodic payment annuity (“Annuities”)	$	10,441			$	10,276
Life and health		4,540				4,490
Other		2,909				2,850
	$	17,890			$	17,616

K-94

Notes to Consolidated Financial Statements

(18)

Long-duration insurance contracts

Reconciliations of the liabilities for each of our principal product categories for each of the two years ended December 31, 2025 follow (in millions). This information reflects the changes in discounted present values of expected future policy benefits and expected future net premiums before reinsurance ceded. Net premiums represent the portion of expected gross premiums that are required to provide for future policy benefits and variable expenses.

	Annuities								Life and health
	2025				2024				2025				2024
Expected future policy benefits:
Balance at the beginning of the year	$	10,276			$	11,212			$	43,784			$	52,665
Balance at the beginning of the year - original discount rates		11,757				11,681				55,170				65,871
Effects of cash flow assumption changes		21				—				80				(348	)
Effects of actual versus expected experience		(14	)			3				1,161				(12,711	)
Change in benefits, net		(499	)			(478	)			2,138				1,991
Interest accrual		557				550				1,362				1,234
Foreign currency effect		108				1				1,336				(867	)
Balance at December 31 - original discount rates		11,930				11,757				61,247				55,170
Effects of changes in discount rate assumptions		(1,489	)			(1,481	)			(13,123	)			(11,386	)
Balance at December 31	$	10,441			$	10,276			$	48,124			$	43,784
Expected future net premiums:
Balance at the beginning of the year									$	39,294			$	46,916
Balance at the beginning of the year - original discount rates										49,500				58,731
Effects of cash flow assumption changes										156				(416	)
Effects of actual versus expected experience										1,112				(11,104	)
Change in premiums, net										2,135				1,984
Interest accrual										1,227				1,099
Foreign currency effect										1,229				(794	)
Balance at December 31 - original discount rates										55,359				49,500
Effects of changes in discount rate assumptions										(11,775	)			(10,206	)
Balance at December 31									$	43,584			$	39,294
Liability for future policy benefits:
Balance at December 31	$	10,441			$	10,276			$	4,540			$	4,490
Reinsurance recoverables		—				—				(49	)			(46	)
Balance at December 31, net of reinsurance recoverables	$	10,441			$	10,276			$	4,491			$	4,444

Expected future policy benefits and expected future net premiums declined in 2024, primarily attributable to life reinsurance contract commutations. The impacts of these contract commutations were included in the effects of actual versus expected experience.

Other information relating to our long-duration insurance liabilities as of December 31, 2025 and 2024 follows (dollars in millions).

	Annuities								Life and health
	2025				2024				2025				2024
Undiscounted expected future gross premiums	$	—			$	—			$	113,118			$	100,413
Discounted expected future gross premiums		—				—				68,808				58,881
Undiscounted expected future benefits		32,552				30,592				101,207				91,493
Weighted average discount rate		5.7	%			5.8	%			5.1	%			4.9	%
Weighted average accretion rate		4.8	%			4.8	%			2.6	%			2.7	%
Weighted average duration	15 years				16 years				14 years				13 years

K-95

Notes to Consolidated Financial Statements

(18)

Long-duration insurance contracts

Gross premiums earned and interest expense before reinsurance ceded for each of the two years ended December 31, 2025 follows (in millions).

	Gross Premiums								Interest Expense
	2025				2024				2025				2024
Annuities	$	—			$	—			$	557			$	550
Life and health		3,994				3,830				135				135

(19)

Notes payable and other borrowings

Notes payable and other borrowings of our insurance and other businesses are summarized below (dollars in millions). The weighted average interest rates and maturity date ranges are based on borrowings as of December 31, 2025.

		Weighted Average				December 31,
		Interest Rate				2025				2024
Insurance and other:
Berkshire Hathaway Inc. (“Berkshire”):
U.S. Dollar denominated due 2026-2047			3.5	%		$	3,547			$	3,749
Euro denominated due 2027-2041			1.4	%			4,201				4,733
Japanese Yen denominated due 2026-2060			1.2	%			14,914				12,609
Berkshire Hathaway Finance Corporation (“BHFC”):
U.S. Dollar denominated due 2027-2052			3.6	%			14,475				14,469
Great Britain Pound denominated due 2039-2059			2.5	%			2,323				2,156
Euro denominated due 2030-2034			1.8	%			1,464				1,290
Other subsidiary borrowings due 2026-2051			5.1	%			3,518				4,564
Short-term subsidiary borrowings			5.6	%			1,321				1,315
						$	45,763			$	44,885

Berkshire borrowings consist of senior unsecured debt. In 2025, Berkshire repaid approximately $1.9 billion of maturing debt. At various dates in 2025, Berkshire borrowed approximately ¥451.6 billion (approximately $3.0 billion) under senior note issuances and term loan agreements. The borrowings have interest rates ranging from 1.35% to 3.12% and maturity dates ranging from 2028 to 2055.

Borrowings of BHFC, a wholly-owned finance subsidiary of Berkshire, consist of senior unsecured notes used to fund manufactured housing loans originated or acquired and equipment held for lease of certain subsidiaries. BHFC borrowings are fully and unconditionally guaranteed by Berkshire. Berkshire also guarantees certain debt of other subsidiaries, aggregating approximately $1.7 billion at December 31, 2025. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional and irrevocable guarantee of the full and prompt payment when due of all payment obligations.

The carrying values of Berkshire and BHFC non-U.S. Dollar denominated senior notes (€4.85 billion, £1.75 billion and ¥2,343 billion par at December 31, 2025) reflect the applicable exchange rates as of each balance sheet date. The effects of changes in foreign currency exchange rates during the period on our borrowings are recorded in earnings as a component of selling, general and administrative expenses. Changes in the exchange rates produced pre-tax losses of $840 million in 2025 and pre-tax gains of $1.5 billion in 2024 and $217 million in 2023.

K-96

Notes to Consolidated Financial Statements

(19)

Notes payable and other borrowings

Notes payable and other borrowings of our railroad, utilities and energy businesses are summarized below (dollars in millions). The weighted average interest rates and maturity date ranges are based on borrowings as of December 31, 2025.

	Weighted Average				December 31,
	Interest Rate				2025			2024
Railroad, utilities and energy:
Berkshire Hathaway Energy Company (“BHE”) and subsidiaries:
BHE senior unsecured debt due 2028-2053		4.4	%		$	11,461		$	13,107
Subsidiary and other debt due 2026-2064		4.8	%			45,798			42,150
Short-term borrowings		4.9	%			1,997			1,123
Burlington Northern Santa Fe (“BNSF”) and subsidiaries due 2026-2097		4.8	%			24,062			23,497
					$	83,318		$	79,877

BHE subsidiary debt represents amounts issued pursuant to separate financing agreements. Substantially all of the assets of certain BHE subsidiaries are, or may be, pledged or encumbered to support or otherwise secure such debt. These borrowing arrangements generally contain various covenants, including covenants which pertain to leverage ratios, interest coverage ratios and/or debt service coverage ratios. BNSF’s borrowings are primarily senior unsecured debentures. As of December 31, 2025, BHE, BNSF and their subsidiaries were in compliance with all applicable debt covenants. Berkshire does not guarantee any borrowings of BHE, BNSF or their subsidiaries.

In 2025, BHE subsidiaries issued $4.3 billion of term debt with a weighted average interest rate of 6.2% and maturity dates ranging from 2035 to 2056. BHE and its subsidiaries repaid term debt of approximately $2.7 billion and increased short-term borrowings by approximately $875 million. In 2026, BHE subsidiaries issued $1.5 billion of term debt with a weighted average interest rate of 6.4% and maturity dates ranging from 2029 to 2056. In 2025, BNSF issued $1.85 billion of debentures due in 2056 with a weighted average interest rate of 5.65% and repaid term debt of approximately $1.3 billion.

Unused and available lines of credit and commercial paper capacity to support operations and provide additional liquidity for our subsidiaries were approximately $10.7 billion at December 31, 2025, of which approximately $9.3 billion related to BHE and its subsidiaries.

Debt principal repayments expected during each of the next five years are as follows (in millions). Amounts in 2026 include short-term borrowings.

		2026				2027				2028				2029				2030
Insurance and other		$	5,759			$	4,972			$	3,424			$	2,603			$	3,222
Railroad, utilities and energy			4,023				1,659				1,769				3,733				2,571
		$	9,782			$	6,631			$	5,193			$	6,336			$	5,793

(20)

Income taxes

Our liabilities for income taxes are summarized as follows (in millions).

		December 31,
		2025				2024
Currently payable		$	902			$	1,806
Deferred			85,597				83,563
Other			456				501
		$	86,955			$	85,870

K-97

Notes to Consolidated Financial Statements

(20)

Income taxes

Our deferred income tax assets and liabilities are summarized by type of temporary difference as follows (in millions).

		December 31,
		2025				2024
Deferred income tax liabilities:
Investments, including unrealized appreciation		$	48,411			$	47,158
Deferred charges - retroactive reinsurance			1,702				1,847
Property, plant and equipment and equipment held for lease			34,834				33,590
Goodwill and other intangible assets			7,399				7,498
Other			4,528				5,043
			96,874				95,136
Deferred income tax assets:
Unpaid insurance losses and loss adjustment expenses			1,270				1,226
Unearned insurance premiums			1,323				1,284
Accrued liabilities			2,535				2,713
Regulatory liabilities			1,388				1,364
Deferred revenue			2,916				2,539
Other			1,845				2,447
			11,277				11,573
Net deferred income tax liability		$	85,597			$	83,563

We have not established deferred income taxes on accumulated undistributed earnings of certain foreign subsidiaries, which are expected to be reinvested indefinitely. Repatriation of all accumulated earnings of foreign subsidiaries would be impracticable to the extent that such earnings represent capital to support ongoing business operations. Generally, no U.S. federal income taxes will be imposed on future distributions of foreign earnings under current law. However, distributions to U.S. or other foreign jurisdictions could be subject to withholding and other local taxes.

A summary of income tax expense (benefit) in each of the three years ending December 31, 2025 follows (in millions).

		2025				2024				2023
U.S. federal		$	13,044			$	18,481			$	20,764
U.S. state			973				767				763
Foreign			1,182				1,567				1,492
		$	15,199			$	20,815			$	23,019
Current		$	13,332			$	30,464			$	7,642
Deferred			1,867				(9,649	)			15,377
		$	15,199			$	20,815			$	23,019

K-98

Notes to Consolidated Financial Statements

(20)

Income taxes

A summary of income taxes paid in each of the three years ending December 31, 2025 follows (in millions). In each of the three years ending December 31, 2025, the U.S. was the only jurisdiction in which income taxes paid exceeded 5% of the total paid.

		2025				2024				2023
U.S. federal		$	11,753			$	26,482			$	5,639
U.S. state			825				891				883
Foreign			1,400				1,171				1,243
		$	13,978			$	28,544			$	7,765

Income tax expense (benefit) is reconciled to the U.S. federal statutory tax rate for each of the three years ending December 31, 2025 in the table below (dollars in millions).

		2025								2024								2023
		Amount				%				Amount				%				Amount				%
Earnings before income taxes:
Domestic		$	77,083							$	105,065							$	115,412
Foreign			5,376								5,311								4,754
		$	82,459							$	110,376							$	120,166
U.S. federal income tax at the statutory tax rate		$	17,316				21.0	%		$	23,179				21.0	%		$	25,235				21.0	%
State and local income taxes, net of U.S. federal effect (1)			769				0.9				606				0.5				603				0.5
U.S. federal income tax credits:
Energy production tax credits			(2,084	)			(2.5	)			(2,039	)			(1.8	)			(1,817	)			(1.5	)
Other			(597	)			(0.7	)			(536	)			(0.5	)			(369	)			(0.3	)
U.S. federal nontaxable or nondeductible items:
Dividends received deduction			(460	)			(0.6	)			(491	)			(0.4	)			(678	)			(0.6	)
Other			257				0.3				(38	)			—				(260	)			(0.2	)
Other differences, net			(2	)			—				134				0.1				305				0.3
		$	15,199				18.4	%		$	20,815				18.9	%		$	23,019				19.2	%

——————

(1) In each year, no fewer than five states, in the aggregate, represented the majority of state income taxes.

We file income tax returns in the U.S. and in state, local and foreign jurisdictions. We have settled income tax liabilities with the U.S. federal taxing authority (“IRS”) for tax years through 2013, and the IRS is currently auditing tax years 2014 through 2020. We are also under audit or subject to audit with respect to income taxes in various state and foreign jurisdictions. It is reasonably possible that certain audits will be settled in 2026.

At December 31, 2025 and 2024, net unrecognized tax benefits were $456 million and $501 million, respectively. The balance at December 31, 2025 included $421 million in tax positions that, if recognized, would impact the effective tax rate.

The Organization for Economic Co-operation and Development (“OECD”) issued Pillar Two model rules introducing a global minimum tax of 15%. While the U.S. has not adopted Pillar Two rules, various countries have enacted legislation to adopt the rules. In January 2026, the OECD issued additional guidance, including a safe harbor framework for certain U.S.-parented multinational groups. Most jurisdictions with Pillar Two regimes in force will need further legislative action to incorporate the guidance into local law. We do not currently have material operations in jurisdictions with tax rates lower than the Pillar Two minimum tax rate, and we do not currently expect these rules will materially increase our global tax costs. There remains uncertainty as to the final Pillar Two model rules.

K-99

Notes to Consolidated Financial Statements

(21)

Fair value measurements

Our significant financial assets and liabilities are summarized below, with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S. Treasury Bills, other receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of or otherwise approximate the fair values.

		Carrying Value				Fair Value				Level 1				Level 2				Level 3
December 31, 2025
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	3,849			$	3,849			$	3,815			$	34			$	—
Foreign governments			12,542				12,542				12,411				131				—
Corporate and other			1,425				1,425				—				983				442
Investments in equity securities			297,778				297,778				288,232				10				9,536
Investments in Kraft Heinz & Occidental common stock			19,528				18,791				18,791				—				—
Loans and finance receivables			29,836				30,532				—				294				30,238
Other assets			141				141				13				119				9
Other liabilities			188				188				13				119				56
Notes payable and other borrowings:
Insurance and other			45,763				40,924				—				40,892				32
Railroad, utilities and energy			83,318				76,803				—				76,803				—
December 31, 2024
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	4,459			$	4,459			$	4,425			$	34			$	—
Foreign governments			9,362				9,362				9,199				163				—
Corporate and other			1,543				1,543				—				1,041				502
Investments in equity securities			271,588				271,588				261,910				10				9,668
Investments in Kraft Heinz & Occidental common stock			30,682				23,047				23,047				—				—
Loans and finance receivables			27,798				27,579				—				810				26,769
Other assets			201				201				33				158				10
Other liabilities			234				234				15				143				76
Notes payable and other borrowings:
Insurance and other			44,885				40,181				—				40,158				23
Railroad, utilities and energy			79,877				72,506				—				72,506				—

K-100

Notes to Consolidated Financial Statements

(21)

Fair value measurements

The fair values of substantially all of our financial instruments were measured using market or income approaches. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.

Reconciliations of our significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for each of the three years ending December 31, 2025 follow (in millions).

		Balance at the beginning of the year				Gains (losses) included in earnings				Dispositions and settlements				Balance at the end of the year
Investments in equity securities:
2025		$	9,663			$	(134	)		$	—			$	9,529
2024			10,468				(805	)			—				9,663
2023			12,169				(40	)			(1,661	)			10,468

Quantitative information as of December 31, 2025 for the significant assets measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (dollars in millions).

		Fair Value				Principal Valuation Techniques		Unobservable Inputs		Weighted Average
Investments in equity securities:
Preferred stock		$	8,805			Discounted cash flow		Expected duration		4 years
								Discount for illiquidity and subordination		325 bps
Common stock warrants			724			Warrant pricing model		Expected duration		5 years
								Volatility		43%

Investments in equity securities in the preceding table include our investments in certain preferred and common stock warrants, which do not have readily determinable market values as defined by GAAP. These investments are private placements and are not traded in securities markets. We applied discounted cash flow techniques in valuing the preferred stock and we made assumptions regarding the expected duration of the investment and the effects of illiquidity and subordination in liquidation. In valuing the common stock warrants, we used a warrant valuation model. While most of the inputs to the warrant model are observable, we made assumptions regarding the expected duration and volatility.

K-101

Notes to Consolidated Financial Statements

(22)

Common stock

The changes in Berkshire’s common stock for each of the three years ending December 31, 2025 are shown in the table below. In addition, one million shares of preferred stock are authorized and none are issued.

	**Class A, $**5 **Par Value (**1.65 million shares authorized)										**Class B, $**0.0033 **Par Value (**3.225 billion shares authorized)
	Issued			Treasury			Outstanding				Issued			Treasury			Outstanding
Balance at December 31, 2022		651,450			(59,886	)		591,564				1,509,969,352			(207,715,276	)		1,302,254,076
Conversions of Class A to Class B common stock		(12,122	)		—			(12,122	)			18,183,000			—			18,183,000
Treasury stock acquired		—			(11,667	)		(11,667	)			—			(9,875,568	)		(9,875,568	)
Balance at December 31, 2023		639,328			(71,553	)		567,775				1,528,152,352			(217,590,844	)		1,310,561,508
Conversions of Class A to Class B common stock		(15,426	)		—			(15,426	)			23,139,000			—			23,139,000
Treasury stock acquired		—			(4,787	)		(4,787	)			—			—			—
Treasury stock issued		—			—			—				—			2,291,631			2,291,631
Balance at December 31, 2024		623,902			(76,340	)		547,562				1,551,291,352			(215,299,213	)		1,335,992,139
Conversions of Class A to Class B common stock		(31,727	)		—			(31,727	)			47,590,500			—			47,590,500
Balance at December 31, 2025		592,175			(76,340	)		515,835				1,598,881,852			(215,299,213	)		1,383,582,639

Each Class A common share is entitled to one vote per share. Class B common stock possesses dividend and distribution rights equal to one-fifteen-hundredth (1/1,500) of such rights of Class A common stock. Each Class B common share possesses voting rights equal to one-ten-thousandth (1/10,000) of the voting rights of a Class A share. Unless otherwise required under Delaware General Corporation Law, Class A and Class B common shares vote as a single class. Each share of Class A common stock is convertible, at the option of the holder, into 1,500 shares of Class B common stock. Class B common stock is not convertible into Class A common stock. On an equivalent Class A common stock basis, there were 1,438,223 shares outstanding as of December 31, 2025 and December 31, 2024.

We provide earnings per share data on the Consolidated Statements of Earnings for average equivalent Class A shares outstanding and average equivalent Class B shares outstanding. Average equivalent Class A shares outstanding represents average Class A shares outstanding plus one-fifteen-hundredth (1/1,500) of the average Class B shares outstanding. Average equivalent Class B shares outstanding represents average Class B shares outstanding plus 1,500 times average Class A shares outstanding.

Berkshire’s common stock repurchase program currently permits Berkshire to repurchase shares any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined. The program allows share repurchases in the open market or through privately negotiated transactions and does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce the total value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bill holdings below $30 billion. Under the program, Berkshire is not obligated to repurchase any specific dollar amount or number of Class A or Class B shares. There is no expiration date to the program.

(23)

Revenues from contracts with customers

The following table summarizes customer contract revenues disaggregated by reportable segment and the source of the revenue for each of the three years ended December 31, 2025 (in millions). Other revenues, which are not considered to be revenues from contracts with customers under GAAP, are primarily insurance premiums earned, interest, dividend and other investment income and leasing revenues.

K-102

Notes to Consolidated Financial Statements

(23)

Revenues from contracts with customers

2025		BNSF			BHE			Manufacturing			Service and Retailing			Pilot*			McLane			Insurance, Corporate and other			Total
Manufactured products:
Industrial and commercial		$	—		$	—		$	30,145		$	191		$	—		$	—		$	—		$	30,336
Building			—			—			19,609			—			—			—			—			19,609
Consumer			—			—			17,919			—			—			—			—			17,919
Grocery and convenience store distribution			—			—			—			—			—			30,697			—			30,697
Food and beverage distribution			—			—			—			—			—			18,585			—			18,585
Auto sales			—			—			—			11,283			—			—			—			11,283
Other retail and wholesale distribution			—			—			3,697			15,290			41,611			—			—			60,598
Service			23,256			4,013			1,460			6,987			266			897			—			36,879
Electricity and natural gas			—			21,338			—			—			—			—			—			21,338
Total			23,256			25,351			72,830			33,751			41,877			50,179			—			247,244
Other revenues			185			931			5,560			8,809			289			36			108,390			124,200
		$	23,441		$	26,282		$	78,390		$	42,560		$	42,166		$	50,215		$	108,390		$	371,444
2024
Manufactured products:
Industrial and commercial		$	—		$	—		$	28,907		$	210		$	—		$	—		$	—		$	29,117
Building			—			—			19,892			—			—			—			—			19,892
Consumer			—			—			18,204			—			—			—			—			18,204
Grocery and convenience store distribution			—			—			—			—			—			31,841			—			31,841
Food and beverage distribution			—			—			—			—			—			18,068			—			18,068
Auto sales			—			—			—			10,802			—			—			—			10,802
Other retail and wholesale distribution			—			—			3,390			15,035			46,433			—			—			64,858
Service			23,278			4,059			1,570			5,761			274			999			—			35,941
Electricity and natural gas			—			20,991			—			—			—			—			—			20,991
Total			23,278			25,050			71,963			31,808			46,707			50,908			—			249,714
Other revenues			212			1,250			5,185			7,975			149			178			106,770			121,719
		$	23,490		$	26,300		$	77,148		$	39,783		$	46,856		$	51,086		$	106,770		$	371,433
2023
Manufactured products:
Industrial and commercial		$	—		$	—		$	28,066		$	233		$	—		$	—		$	—		$	28,299
Building			—			—			20,119			—			—			—			—			20,119
Consumer			—			—			17,702			—			—			—			—			17,702
Grocery and convenience store distribution			—			—			—			—			—			31,524			—			31,524
Food and beverage distribution			—			—			—			—			—			19,040			—			19,040
Auto sales			—			—			—			10,747			—			—			—			10,747
Other retail and wholesale distribution			—			—			3,289			16,289			51,197			—			—			70,775
Service			23,724			4,055			1,457			5,474			264			1,079			—			36,053
Electricity and natural gas			—			20,647			—			—			—			—			—			20,647
Total			23,724			24,702			70,633			32,743			51,461			51,643			—			254,906
Other revenues			67			1,258			4,650			7,136			203			171			96,091			109,576
		$	23,791		$	25,960		$	75,283		$	39,879		$	51,664		$	51,814		$	96,091		$	364,482

——————

*** Revenues from Pilot are principally fuel sales. Revenues in 2023 are for the eleven months ending December 31.

A summary of transaction prices allocated to the significant unsatisfied remaining performance obligations related to contracts with expected durations exceeding one year as of December 31, 2025 and the timing of when the performance obligations are expected to be satisfied follows (in millions).

		Less than****12 months				Greater than 12 months				Total
Electricity and natural gas		$	3,261			$	18,107			$	21,368
Other sales and service contracts			3,833				9,754				13,587

K-103

Notes to Consolidated Financial Statements

(24)

Pension plans

Certain Berkshire subsidiaries sponsor defined benefit pension plans. Plan benefits are generally based on years of service and compensation or fixed benefit rates. Plan sponsors may contribute to the plans to meet regulatory requirements or may make discretionary contributions. Benefits under qualified U.S. and certain non-U.S. defined benefit pension plans are funded with assets held in trusts. Benefits under other non-qualified retirement plans are unfunded. Our net periodic pension expense (income) for each of the three years ending December 31, 2025 was as follows (in millions).

		2025				2024				2023
Service cost		$	95			$	107			$	111
Interest cost			627				617				640
Expected return on plan assets			(859	)			(818	)			(785	)
Other			(67	)			41				2
Net periodic pension expense (income)		$	(204	)		$	(53	)		$	(32	)

The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits earned based on service and compensation prior to the valuation date. The ABO was $11.1 billion at December 31, 2025 and $11.2 billion at December 31, 2024. The projected benefit obligation (“PBO”) is the actuarial present value of benefits earned based upon service and compensation prior to the valuation date and, if applicable, includes assumptions regarding future compensation levels.

Reconciliations of the changes in plan assets and PBOs for each of the two years ending December 31, 2025 and the asset and liability balances reflected in the Consolidated Balance Sheets at December 31, 2025 and 2024 follow (in millions).

		2025				2024
Plan assets
Balance at the beginning of the year		$	14,180			$	13,379
Employer contributions			108				111
Benefits paid			(1,084	)			(810	)
Settlements paid			(115	)			(354	)
Actual return on plan assets			319				1,909
Other			185				(55	)
Balance at the end of the year		$	13,593			$	14,180
Projected benefit obligations
Balance at the beginning of the year		$	11,720			$	12,767
Service cost			95				107
Interest cost			627				617
Benefits paid			(1,084	)			(810	)
Settlements paid			(115	)			(354	)
Actuarial (gains) losses and other			296				(607	)
Balance at the end of the year		$	11,539			$	11,720
Net funded status - asset (liability)		$	2,054			$	2,460
Balances included in other assets		$	3,100			$	3,490
Balances included in accounts payable and other liabilities		$	1,046			$	1,030

Weighted average assumptions used in determining PBOs and net periodic pension expense follow.

	2025			2024			2023
Discount rate applicable to PBOs		5.4	%		5.5	%		5.0	%
Expected long-term rate of return on plan assets		6.3			5.9			6.0
Rate of compensation increase, if applicable	2.6			2.6			2.6
Discount rate applicable to net periodic pension expense		5.5			5.1			5.3

Estimated benefit payments over the next ten years are (in millions): 2026 – $883; 2027 – $881; 2028 – $873; 2029 – $893; 2030 – $880; and 2031 through 2035 – $4,355. Our subsidiaries expect to make contributions of $95 million to the pension plans in 2026.

K-104

Notes to Consolidated Financial Statements

(24) Pension plans

Fair value measurements of plan assets as of December 31, 2025 and 2024 follow (in millions).

		Fair Value																Investments carried at net
		Total				Level 1				Level 2				Level 3				asset value
December 31, 2025
Cash and short-term investments		$	2,061			$	1,983			$	78			$	—			$	—
Equity securities			6,171				5,402				621				148				—
Fixed maturity securities			2,951				2,172				779				—				—
Investment funds and other			2,410				234				80				24				2,072
		$	13,593			$	9,791			$	1,558			$	172			$	2,072
December 31, 2024
Cash and short-term investments		$	600			$	556			$	44			$	—			$	—
Equity securities			9,757				9,036				581				140				—
Fixed maturity securities			1,747				953				794				—				—
Investment funds and other			2,076				385				144				23				1,524
		$	14,180			$	10,930			$	1,563			$	163			$	1,524

Plan assets are generally invested with the long-term objective of producing earnings to adequately cover expected benefit obligations. The expected rates of return on plan assets reflect subjective assessments of expected long-term investment returns. Generally, past investment returns are not given significant consideration when establishing assumptions for expected long-term rates of return on plan assets. Actual experience will differ from the assumed rates of return.

A reconciliation of the pre-tax accumulated other comprehensive income of our defined benefit pension plans for each of the two years ending December 31, 2025 follows (in millions).

		2025				2024
Balance at the beginning of the year		$	1,467			$	(161	)
Amount included in net periodic pension expense			(68	)			29
Actuarial gains (losses) and other			(732	)			1,599
Balance at the end of the year		$	667			$	1,467

Our subsidiaries may also sponsor defined contribution retirement plans, such as 401(k) or profit-sharing plans. Employee contributions are subject to regulatory limitations and specific plan provisions. Several of these plans provide for employer matching contributions as specified in the plans and may provide for additional discretionary employer contributions. Our defined contribution plan expense was approximately $1.4 billion in 2025, $1.3 billion in 2024 and $1.1 billion in 2023.

(25)

Accumulated other comprehensive income

A summary of the net changes in after-tax accumulated other comprehensive income attributable to Berkshire shareholders for each of the three years ending December 31, 2025 follows (in millions).

		Unrealized investment gains (losses)			Foreign currency translation			Long-duration insurance contracts			Defined benefit pension plans			Other			Total
Balance at December 31, 2022		$	(187	)	$	(6,142	)	$	1,541		$	(552	)	$	288		$	(5,052	)
Other comprehensive income			420			741			(188	)		466			(25	)		1,414
Reclassifications into net earnings			(43	)		8			—			(11	)		(79	)		(125	)
Balance at December 31, 2023			190			(5,393	)		1,353			(97	)		184			(3,763	)
Other comprehensive income			(43	)		(1,647	)		662			1,222			2			196
Reclassifications into net earnings			(30	)		1			—			23			(11	)		(17	)
Balance at December 31, 2024			117			(7,039	)		2,015			1,148			175			(3,584	)
Other comprehensive income			90			1,502			164			(570	)		37			1,223
Reclassifications into net earnings			28			—			—			(57	)		(58	)		(87	)
Balance at December 31, 2025		$	235		$	(5,537	)	$	2,179		$	521		$	154		$	(2,448	)

K-105

Notes to Consolidated Financial Statements

(26)

Business segment data

Berkshire’s chief operating decision maker is the Chief Executive Officer, who is ultimately responsible for significant capital allocation and investment decisions, as well as evaluating the operating performance of the operating segments. Berkshire’s numerous and diverse businesses are managed on an unusually decentralized basis. These businesses are aggregated into operating segments in a manner that reflects how Berkshire views the business activities. Certain operating segments are aggregated into reportable business segments based upon similar products or product lines, marketing strategies, and selling and distribution characteristics.

Berkshire’s reportable business segments are as follows.

Business Segment		Principal Business Activities
Insurance:
GEICO		Underwriting primarily private passenger automobile insurance policies
Berkshire Hathaway Primary Group (“BH Primary”)		Underwriting multiple lines of property and casualty insurance policies, primarily commercial accounts
Berkshire Hathaway Reinsurance Group (“BHRG”)		Underwriting excess-of-loss, quota-share and facultative reinsurance contracts
Burlington Northern Santa Fe (“BNSF”)		Operator of a large freight rail transportation system in North America
Berkshire Hathaway Energy (“BHE”)		Operator of regulated electric and gas utilities, natural gas pipelines and other power generation and distribution businesses, and real estate brokerage activities
Manufacturing		Manufacturers and distributors of numerous industrial, consumer and building products, as well as home building and related financial services
Service and retailing		Providers of a variety of services, including shared aircraft ownership programs, aviation pilot training, electronic components distribution, and over-the-road trailer and furniture leasing and retailing operations, including automobile dealerships and home furnishings retailers
McLane Company (“McLane”)		Wholesale distributor of food and non-food items to retailers and restaurants
Pilot Travel Centers (“Pilot”) (1)		Operator of retail travel centers in North America and a marketer of fuel on a wholesale basis

——————

(1) Pilot’s statement of earnings and capital expenditure data in 2023 is for the eleven months ending December 31, 2023. Earnings for the month of January 2023 were determined under the equity method and included in equity method earnings.

The tabular information that follows shows data of Berkshire’s business segments reconciled to amounts reflected in our Consolidated Financial Statements. Intersegment transactions are not eliminated from segment results when those transactions are considered in assessing the results of the respective segments and are not considered to be material. Furthermore, investment gains and losses, goodwill and indefinite-lived intangible asset impairments and amortization of certain acquisition accounting adjustments or certain other corporate income and expense items are not considered in assessing the financial performance of operating businesses. Collectively, these items are included in corporate, eliminations and other to reconcile segment totals to consolidated amounts.

The cost and expense information provided is based on the information regularly provided to the chief operating decision maker. Given the number and diversity of Berkshire’s operating segments and the differences in revenue streams and cost structures, there are wide variances in the form, content and levels of such expense information significant to the business. Expenses considered significant for one operating segment may not be significant in others.

With respect to insurance underwriting, the chief operating decision maker considers pre-tax underwriting earnings to allocate resources and capital, together with perceived risks and opportunities in the insurance markets that affect rates and risks of loss. Typically, there are no budgeted or forecasted premiums or underwriting results.

For most non-insurance businesses, pre-tax earnings are considered in allocating resources and capital, although income taxes are also considered at BHE, given the magnitude of production tax credits associated with wind-powered electricity generation investments and the related impacts from regulation. The chief operating decision maker generally considers actual operating results versus budgets or forecasts, as well as unique perceived risks and opportunities associated with the individual operating businesses.

K-106

Notes to Consolidated Financial Statements

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Business segment data

We view our insurance segment as possessing two distinct activities – underwriting and investing. Underwriting decisions are the responsibility of the underwriting managers. Accordingly, performance of underwriting operations is evaluated without any allocation of investment income. As such, the insurance net investment income is presented in the aggregate as a separate component of insurance segment operating earnings. Earnings data of our business segments for each of the three years ended December 31, 2025 are shown in the following tables (in millions).

	2025
Insurance	GEICO			BH Primary			BHRG			Total Underwriting			Investment Income			Total
Premiums earned and investment income	$	44,481		$	18,713		$	25,708		$	88,902		$	15,310		$	104,212
Costs and expenses:
Losses and LAE		32,144			12,519			12,644			57,307			—			57,307
Life, annuity and health benefits		—			—			4,379			4,379			—			4,379
Other segment items		5,513			5,409			6,834			17,756			49			17,805
Total costs and expenses		37,657			17,928			23,857			79,442			49			79,491
Earnings before income taxes	$	6,824		$	785		$	1,851		$	9,460		$	15,261		$	24,721
	2024
Insurance	GEICO			BH Primary			BHRG			Total Underwriting			Investment Income			Total
Premiums earned and investment income	$	42,252		$	18,733		$	27,272		$	88,257		$	16,812		$	105,069
Costs and expenses:
Losses and LAE		30,331			12,666			13,189			56,186			—			56,186
Life, annuity and health benefits		—			—			3,858			3,858			—			3,858
Other segment items		4,108			5,212			7,488			16,808			64			16,872
Total costs and expenses		34,439			17,878			24,535			76,852			64			76,916
Earnings before income taxes	$	7,813		$	855		$	2,737		$	11,405		$	16,748		$	28,153
	2023
Insurance	GEICO			BH Primary			BHRG			Total Underwriting			Investment Income			Total
Premiums earned and investment income	$	39,264		$	17,129		$	27,010		$	83,403		$	11,619		$	95,022
Costs and expenses:
Losses and LAE		31,814			11,224			14,149			57,187			—			57,187
Life, annuity and health benefits		—			—			4,029			4,029			—			4,029
Other segment items		3,815			4,531			6,928			15,274			38			15,312
Total costs and expenses		35,629			15,755			25,106			76,490			38			76,528
Earnings before income taxes	$	3,635		$	1,374		$	1,904		$	6,913		$	11,581		$	18,494

Other segment items related to insurance underwriting include commissions and brokerage expenses and other insurance underwriting expenses.

BNSF				2025			2024			2023
Revenues				$	23,533		$	23,572		$	23,876
Costs and expenses:
Compensation and benefits					5,531			5,872			5,551
Fuel					3,011			3,267			3,684
Depreciation and amortization					2,722			2,621			2,627
Interest expense					1,098			1,078			1,048
Other segment items					3,996			4,086			4,352
Total costs and expenses					16,358			16,924			17,262
Earnings before income taxes				$	7,175		$	6,648		$	6,614

Other segment items of BNSF include purchased services, equipment rents and materials and other expenses.

K-107

Notes to Consolidated Financial Statements

(26)

Business segment data

BHE				2025			2024			2023
Revenues				$	26,297		$	26,348		$	26,008
Costs and expenses:
Energy cost of sales					6,346			6,616			7,057
Energy operations and maintenance					5,445			5,470			6,456
Energy depreciation and amortization					4,180			3,957			3,960
Real estate operating costs and expenses					4,302			4,509			4,316
Interest expense					2,642			2,528			2,283
Other segment items					1,040			976			996
Total costs and expenses					23,955			24,056			25,068
Earnings before income taxes				$	2,342		$	2,292		$	940

Other segment items of BHE primarily consist of property taxes and other expenses. Energy operations and maintenance includes losses associated with the 2020 and 2022 Wildfires. See Note 27.

	Manufacturing									Service and Retailing
	2025			2024			2023			2025			2024			2023
Revenues	$	78,487		$	77,231		$	75,405		$	42,647		$	39,874		$	39,996
Costs and expenses:
Cost of sales and services		50,937			50,702			50,389			25,579			23,818			23,915
Cost of leasing		1,174			1,142			1,051			6,453			5,917			5,011
Interest expense		1,211			934			784			113			118			101
Other segment items		12,594			12,558			11,736			6,463			6,321			6,248
Total costs and expenses		65,916			65,336			63,960			38,608			36,174			35,275
Earnings before income taxes	$	12,571		$	11,895		$	11,445		$	4,039		$	3,700		$	4,721

Other segment items of manufacturing, service and retailing segments primarily consist of selling, general and administrative expenses.

	McLane									Pilot
	2025			2024			2023			2025			2024			2023
Revenues	$	50,998		$	51,907		$	52,607		$	42,198		$	46,891		$	51,739
Costs and expenses:
Cost of sales and services		46,572			47,604			48,495			38,003			42,591			47,505
Depreciation and amortization		214			217			208			1,095			1,012			796
Other segment items		3,536			3,452			3,449			2,910			2,674			2,470
Total costs and expenses		50,322			51,273			52,152			42,008			46,277			50,771
Earnings before income taxes	$	676		$	634		$	455		$	190		$	614		$	968

Other segment items of McLane include general and administrative expenses. Other segment items of Pilot primarily consist of store operating, interest and general and administrative expenses.

Reconciliations of revenues and earnings before income taxes of our business segments to the consolidated amounts for each of the three years ended December 31, 2025 follows (in millions).

	Revenues									Earnings before income taxes
	2025			2024			2023			2025			2024			2023
Total operating businesses	$	368,372		$	370,892		$	364,653		$	51,714		$	53,936		$	43,637
Investment gains (losses)		—			—			—			39,078			52,799			74,855
Equity method earnings (losses)		—			—			—			(9,590	)		1,841			1,973
Corporate, eliminations and other		3,072			541			(171	)		1,257			1,800			(299	)
	$	371,444		$	371,433		$	364,482		$	82,459		$	110,376		$	120,166

K-108

Notes to Consolidated Financial Statements

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Business segment data

Additional segment data for each of the three most recent years follows (in millions).

	Interest expense									Income tax expense (benefit)
Business segments	2025			2024			2023			2025			2024			2023
Insurance	$	—		$	—		$	—		$	4,949		$	5,462		$	3,497
BNSF		1,098			1,078			1,048			1,699			1,617			1,527
BHE		2,642			2,528			2,283			(1,785	)		(1,871	)		(2,022	)
Manufacturing		1,211			934			784			2,529			2,598			2,487
Service and retailing		113			118			101			982			912			1,135
McLane		32			22			—			171			152			117
Pilot		227			302			414			27			—			169
		5,323			4,982			4,630			8,572			8,870			6,910
Reconciliation to consolidated amount
Investment gains (losses)		—			—			—			8,316			11,179			15,930
Equity method earnings (losses)		—			—			—			(2,234	)		322			223
Corporate, eliminations and other		(254	)		218			373			545			444			(44	)
	$	5,069		$	5,200		$	5,003		$	15,199		$	20,815		$	23,019

	Capital expenditures									Depreciation and amortization
Business segments	2025			2024			2023			2025			2024			2023
Insurance	$	109		$	99		$	68		$	438		$	411		$	401
BNSF		3,796			3,690			3,920			2,722			2,621			2,627
BHE		10,589			9,013			9,148			4,220			4,003			4,010
Manufacturing		2,681			2,779			2,714			2,464			2,422			2,290
Service and retailing		2,604			2,360			2,590			1,643			1,522			1,335
McLane		207			236			264			214			217			208
Pilot		941			799			705			1,095			1,012			796
	$	20,927		$	18,976		$	19,409			12,796			12,208			11,667
Reconciliation to consolidated amount
Corporate, eliminations and other											680			647			819
										$	13,476		$	12,855		$	12,486

		Goodwill at year-end							Identifiable assets at year-end
Business segments		2025			2024				2025			2024
Insurance		$	16,557		$	16,557			$	571,145		$	539,884
BNSF			15,351			15,351				82,532			80,813
BHE			11,778			11,669				136,515			128,276
Manufacturing			26,928			27,716				122,132			119,860
Service and retailing			5,682			5,878				39,124			37,198
McLane			232			232				7,135			7,165
Pilot			6,546			6,477				18,828			19,652
		$	83,074		$	83,880				977,411			932,848
Reconciliation to consolidated amount
Corporate and other										161,691			137,153
Goodwill										83,074			83,880
									$	1,222,176		$	1,153,881

K-109

Notes to Consolidated Financial Statements

(26)

Business segment data

Insurance premiums written by geographic region (based upon the domicile of the insured or reinsured) are summarized below (in millions).

	Property/Casualty										Life/Health
	2025			2024			2023				2025			2024			2023
United States	$	72,461		$	71,723		$	67,831			$	1,424		$	1,358		$	1,285
Western Europe		5,002			5,252			5,014				1,597			1,407			1,323
Asia Pacific		4,592			5,043			5,306				1,469			1,548			1,760
All other		2,019			1,668			2,188				812			694			725
	$	84,074		$	83,686		$	80,339			$	5,302		$	5,007		$	5,093

Consolidated sales, service and leasing revenues were $209.6 billion in 2025, $211.6 billion in 2024 and $215.6 billion in 2023. Sales, service and leasing revenues attributable to the United States were 87% in 2025, 86% in 2024 and 87% in 2023 of such amounts. The remainder of sales, service and leasing revenues were primarily in Europe, the Asia-Pacific region and Canada. Railroad, utilities and energy revenues were $49.7 billion in 2025 and $49.8 billion in 2024 and 2023. Railroad, utilities and energy revenues attributable to the United States were 96% in 2025, 95% in 2024 and 96% in 2023 of such amounts. At December 31, 2025, approximately 91% of our consolidated property, plant and equipment and equipment held for lease was located in the United States with the remainder primarily in the United Kingdom and Canada.

(27)

Contingencies and commitments

We are parties in a variety of legal actions that routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not currently believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. Information concerning certain legal matters involving certain of our subsidiaries follows.

Wildfires

PacifiCorp, a wholly-owned subsidiary of Berkshire Hathaway Energy Company (“BHE”), operates as a regulated electric utility in Utah, Oregon, Wyoming and other Western states.

PacifiCorp is a defendant in numerous complaints and demands alleging similar claims related to wildfires that have been filed in Oregon and California, including a class action complaint in Oregon for which certain jury verdicts were issued as described later in this Note. The plaintiffs in these complaints seek damages for economic losses, noneconomic losses, including mental suffering, emotional distress, personal injury and loss of life, as well as punitive damages and attorneys’ fees. Several insurance carriers also filed subrogation complaints in Oregon and California with allegations similar to those made in the aforementioned complaints.

Additionally, the U.S. and Oregon Departments of Justice issued correspondence to PacifiCorp regarding the potential recovery of certain costs and damages alleged to have occurred on federal and state lands in connection with certain of the wildfires. In December 2024, the United States of America filed a complaint against PacifiCorp in conjunction with the correspondence from the U.S. Department of Justice. The civil cover sheet accompanying the complaint demands damages estimated to exceed $900 million. On February 20, 2026, the United States Attorney for the District of Oregon and the United States Attorney for the Eastern District of California approved a settlement agreement for $575 million between PacifiCorp and the United States of America resolving all known federal government complaints and demands associated with the Wildfires. In accordance with the settlement agreement, PacifiCorp will pay $575 million within 10 calendar days of the February 20, 2026 effective date. PacifiCorp is actively cooperating with the Oregon Department of Justice on resolving the alleged claims.

Amounts sought in the remaining unsettled complaints and demands filed in Oregon and in certain demands in California total approximately $50 billion and exclude any doubling or trebling of damages or punitive damages included in the complaints, and of which approximately $48 billion represents the economic and noneconomic damages sought in the James mass complaints described later in this Note. Oregon law provides for the doubling of economic and property damages in the event the defendant is found to have acted with gross negligence, recklessness, willfulness or malice. Oregon law provides for trebling of damages associated with certain vegetation in the event the defendant is determined to have willfully and intentionally trespassed. Generally, the complaints filed in California do not specify damages sought and are excluded from this amount.

K-110

Notes to Consolidated Financial Statements

(27)

Contingencies and commitments

Amounts specified by the plaintiffs in the class action complaints include amounts based on estimates of the potential class size, which ultimately may be significantly greater than estimated. Additionally, damages are not limited to the amounts specified in the initially filed complaints, as plaintiffs are frequently allowed to amend their complaints to add additional damages and amounts awarded in a court proceeding may be significantly greater than the damages specified. However, plaintiffs included in the James mass complaints are required to amend their complaints to align the economic damages to the facts specific to their complaints rather than the common per plaintiff damages specified in the originally filed mass complaints.

Final determinations of liability will only be made following the completion of comprehensive investigations, which may be or have been performed by various entities, including the U.S. Department of Agriculture Forest Service (“USFS”), the California Public Utilities Commission, the Oregon Department of Forestry (“ODF”) and the Oregon Department of Justice, as well as litigation or similar processes. The outcome of these activities and processes, if adverse, could have a material adverse effect on PacifiCorp’s financial condition.

2020 Wildfires

In September 2020, a severe weather event with high winds, low humidity and warm temperatures contributed to several major wildfires, which resulted in real and personal property and natural resource damage, personal injuries, loss of life and widespread power outages in Oregon and Northern California. The wildfires spread across certain parts of PacifiCorp’s service territory and surrounding areas across multiple counties in Oregon and California, burning over 500,000 acres in aggregate and included the Santiam Canyon, Beachie Creek, South Obenchain, Echo Mountain Complex, 242, Archie Creek, Slater and other fires. The Slater fire occurred in both Oregon and California. Third-party reports for these wildfires (the “2020 Wildfires”) indicate over 2,000 structures destroyed, including residences, several other structures damaged, multiple individuals injured, and several fatalities.

In May 2022, the USFS issued its report of investigation into the Archie Creek fire concluding that the probable cause of the fire was power lines owned and operated by PacifiCorp. The Archie Creek fire USFS report also stated that evidence indicates failure of power line infrastructure. The USFS report of investigation into the Slater fire for the investigation period October 5, 2020 to December 8, 2020 concluded that the fire was caused by a downed power line owned and operated by PacifiCorp. The Slater fire USFS report also stated that evidence indicated that wind blew over a 137-foot tree onto a power line and that the tree had internal rot, but showed no outward signs of distress and would not have been classified or identified as a hazard tree.

To date, settlements have been reached with substantially all individual plaintiffs, timber companies and insurance subrogation plaintiffs in both the Archie Creek and Slater fires. Additionally, settlements have been reached for all wrongful death claims and all federal government demands and complaints associated with the 2020 Wildfires.

In April 2023, the USFS issued its report of investigation into a wildland fire that began in the Opal Creek wilderness outside of the Santiam Canyon first reported on August 16, 2020 (“Beachie Creek Fire”), approximately three weeks prior to the September 2020 wind event previously described. In March 2025, the ODF issued its final investigation report on the Santiam Canyon fires (“ODF’s Report”), concluding that embers from the pre-existing Beachie Creek Fire caused 12 fires within the Santiam Canyon. The ODF’s Report also found that PacifiCorp’s power lines did not contribute to the overall spread of fire into the Santiam Canyon, even though its power lines ignited seven spot fires within the Santiam Canyon that were each suppressed.

The Beachie Creek fire that spread into the Santiam Canyon burned approximately 193,000 acres; the South Obenchain fire burned approximately 33,000 acres; the Echo Mountain Complex fire burned approximately 3,000 acres; and the 242 fire burned approximately 14,000 acres. The James cases described in the following section are associated with the Beachie Creek (Santiam Canyon), South Obenchain, Echo Mountain Complex and 242 fires, which were four distinct fires located hundreds of miles apart.

K-111

Notes to Consolidated Financial Statements

(27)

Contingencies and commitments

The James Case

On September 30, 2020, a class action complaint against PacifiCorp was filed captioned Jeanyne James et al. v. PacifiCorp (“James”), in Oregon Circuit Court in Multnomah County, Oregon (the “Multnomah Court”). The complaint was filed by Oregon residents and businesses who sought to represent a class of all Oregon citizens and entities whose real or personal property was harmed beginning on September 7, 2020, by wildfires in Oregon allegedly caused by PacifiCorp. In November 2021, the plaintiffs filed an amended complaint to limit the class to include Oregon citizens allegedly impacted by the Santiam Canyon, Echo Mountain Complex, South Obenchain and 242 fires, as well as to add claims for noneconomic damages. The amended complaint alleged that PacifiCorp’s assets contributed to the Oregon wildfires occurring on or after September 7, 2020, and that PacifiCorp acted with gross negligence, among other things. The amended complaint seeks damages not less than $600 million of economic damages and in excess of $1 billion of noneconomic damages for the plaintiffs and the class. Since filing of the original class action complaint, numerous James class members have been named and damages specified in various complaints as described below. Additionally, numerous cases were consolidated into the original James complaint.

As of December 2025, various mass complaints against PacifiCorp naming approximately 1,760 class members have been filed referencing the James case as the lead case, with complaints for some of the plaintiffs subsequently dismissed. These James mass complaints make damages-only allegations with substantially all plaintiffs individually seeking $5 million of economic damages, $25 million of noneconomic damages and punitive damages equal to 0.25 times the amount of economic and noneconomic damages, as well as doubling of economic damages.

Approximately 1,500 additional plaintiffs were granted the ability to not be represented by James lead counsel, a small portion of which filed complaints seeking damages similar to those in the mass complaints. In November 2025, PacifiCorp settled with approximately 1,400 of these plaintiffs for $150 million.

As a result of dismissals for the mass complaints and the November 2025 settlement, James complaints for approximately 1,700 individual plaintiffs remain outstanding, substantially all of which are represented by lead counsel. PacifiCorp believes the magnitude of damages sought by the class members in the James case mass complaints to be of remote likelihood of being awarded based on the amounts awarded in the jury verdicts described below that are being appealed.

James trial activity

In June 2023, a jury verdict was issued in the first James trial finding PacifiCorp’s conduct grossly negligent, reckless and willful as to each of the 17 named plaintiffs and the entire class. The jury awarded economic and noneconomic damages. After the jury verdict, the Multnomah Court doubled the economic damages, in accordance with Oregon law, and added punitive damages by applying a 0.25 multiplier to the awarded economic and noneconomic damages. PacifiCorp filed a motion with the Multnomah Court requesting the court offset the damage awards by deducting insurance proceeds received by any of the plaintiffs. Net damages awarded to the 17 plaintiffs were $92 million. In January 2024, PacifiCorp filed a notice of appeal associated with the June 2023 verdict, including whether the case can proceed as a class action.

Subsequent to the June 2023 James verdict, numerous damages phase trials were held with separate jury verdicts issued and damages awarded for each on a basis consistent with the initial trial and relying on the liability determination in the June 2023 James verdict. PacifiCorp amended its January 2024 appeal of the June 2023 James verdict to include the jury verdicts for the first two damages phase trials. PacifiCorp has filed and will continue to file notices of appeal for the subsequent jury verdicts in the damages phase trials once the limited judgments are entered and any post-trial motions are filed. The appeals process and further actions could take several years.

Aggregate net damages awarded in the subsequent trials through December 31, 2025, including estimates for additional damages expected to be awarded by the Multnomah Court for certain of these trials consistent with other awards, were approximately $646 million. For each limited judgment entered in the court, PacifiCorp has posted or expects to post a supersedeas bond, which stays any effort to seek payment of the judgments pending final resolution of any appeals. Under Oregon Revised Statutes 82.010, interest at a rate of 9% per annum will accrue on the judgments commencing at the date the judgments were entered until the entire money award is paid, amended or reversed by an appellate court.

K-112

Notes to Consolidated Financial Statements

(27)

Contingencies and commitments

James court activity

In April 2025, PacifiCorp filed its appellate brief with the Oregon Court of Appeals in connection with its appeal of the June 2023 James verdict and the verdicts for the first two James damages phase trials. In the appellate brief, PacifiCorp addressed numerous procedural and legal issues, including that (1) the class certification is improper due to the plaintiffs being impacted by distinct fires with independent ignition points that were hundreds of miles apart; (2) awarding of noneconomic damages is not allowed under Oregon law; (3) plaintiffs failed to prove that PacifiCorp caused harm to every class member; and (4) jury instructions applied incorrect legal standards in assessing class-wide evidence and individual claims. Additionally, PacifiCorp incorporated the ODF’s Report into its appellate brief. Various parties, who are not party to the James case, filed supportive amicus briefs with the court. Plaintiffs filed their combined answering and cross-appeal with the Oregon Court of Appeals on August 21, 2025. PacifiCorp has filed additional appellate briefs and will continue to file individual appellate briefs in connection with appeals of each of the verdicts for additional James damages phase trials.

In November 2025, the Oregon Court of Appeals issued an order for expedited oral argument in response to PacifiCorp’s October 2025 request to facilitate a more prompt decision from the court. As a result of the order, oral argument for the appeal was held on February 4, 2026.

Subsequent to the first two damages phase trials, nine damages phase trials were scheduled to be held in 2025 in accordance with the Multnomah County Circuit Court Oregon’s October 2024 case management order, adjudicating the damages of approximately 10 plaintiffs per trial. In March 2025, PacifiCorp filed a motion to stay the additional damages phase trials scheduled under the October 2024 case management order in consideration of the ODF’s Report, but the motion was denied in April 2025. Refer to “James trial activity” above for information regarding the damages phase trials held in 2025.

In July 2025, the Multnomah Court issued Case Management Order No. 11 (“CMO No. 11”) in response to the May 2025 hearing that was held to evaluate the scheduling of additional damages phase trials. As ordered, CMO No.11 proposes to schedule dozens of trials in 2026 and over 100 more in 2027 and 2028. Currently, approximately 1,500 plaintiffs are scheduled for trial under CMO No.11, including substantially all of those included in the James mass complaints previously described and reflecting the impacts of settlements and dismissals. CMO No. 11 requires plaintiffs included in the mass complaints to amend their complaints alleging the specific facts that support their claims for economic damages within 180 days before the start of their respective trials. Additionally, CMO No. 11 requires mediation every other month.

In August 2025, PacifiCorp filed a motion with the Oregon Court of Appeals to stay the James damages phase trials addressed in CMO No. 11. In September 2025, the Appellate Commissioner of the Oregon Court of Appeals denied PacifiCorp’s motion to stay. PacifiCorp’s subsequent request for reconsideration of the stay denial with the Chief Judge of the Oregon Court of Appeals was denied in October 2025. In November 2025, PacifiCorp petitioned the Oregon Supreme Court to review the Oregon Court of Appeals decisions. In December 2025, plaintiff’s counsel filed its opposition to the petition, and a decision is expected in 2026.

PacifiCorp believes the CMO No. 11 proposed schedule is likely to put significant strain on the Multnomah Court system, which PacifiCorp believes may challenge the Multnomah Court’s ability to fulfill the trials scheduled for approximately 1,500 plaintiffs. PacifiCorp has posted bonds totaling $606 million associated with the limited judgments entered to date for 109 plaintiffs. These bonding requirements will continue to apply to future judgments associated with the CMO No. 11 trials. Due to the volume of James damages phase trials scheduled under CMO No. 11 combined with the requirement to bond judgments for each verdict to stay payment of damages during the appeals process, PacifiCorp may be unable to obtain the necessary funding to meet its liquidity needs.

2022 Wildfire

According to the California Department of Forestry and Fire Protection, a wildfire began on July 29, 2022, in the Oak Knoll Ranger District of the Klamath National Forest in California within PacifiCorp’s service territory (the “2022 Wildfire”), which burned over 60,000 acres. Third-party reports indicate that the 2022 Wildfire resulted in 11 structures damaged, 185 structures destroyed, including residences, 12 injuries and four fatalities. The USFS issued a Wildland Fire Origin and Cause Supplemental Incident Report. The report concluded that a tree coming in contact with a power line was the probable cause of the 2022 Wildfire. Settlements have been reached with substantially all individual plaintiffs, timber companies and insurance subrogation plaintiffs in the 2022 Wildfire. Additionally, settlements have been reached for all wrongful death claims and all federal government demands and complaints in connection with the 2022 Wildfire.

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Notes to Consolidated Financial Statements

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Contingencies and commitments

Wildfire loss information

The 2020 Wildfires and 2022 Wildfire discussed previously are referred to as the “Wildfires.” A provision for a loss contingency is recorded when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. PacifiCorp evaluates the related range of reasonably estimated losses and records a loss based on its best estimate within that range or the lower end of the range if there is no better estimate.

Estimated probable losses associated with the Wildfires were based on the information available and considered (i) the ongoing cause and origin investigations; (ii) the ongoing settlement and mediation activities; (iii) other litigation matters and upcoming legal proceedings; and (iv) the status of the James case. Estimated losses on the Wildfires include estimates for fire suppression costs, real and personal property damages, natural resource damages and noneconomic damages such as personal injury damages and loss of life damages that are considered probable of being incurred and reasonably estimable at this time. It is reasonably possible PacifiCorp will incur significant additional losses beyond the amounts currently accrued.

Through December 31, 2025, PacifiCorp recorded cumulative estimated probable Wildfire losses, before taxes and expected related insurance recoveries, of approximately $2.85 billion, of which approximately $1.7 billion has been paid in connection with settlements.

Wildfire loss accrual estimates recorded were $100 million in 2025, $346 million in 2024 and $1.9 billion in 2023. Estimated unpaid liabilities were approximately $1.2 billion at December 31, 2025. Insurance recoveries received to date were $530 million, which were recorded prior to 2024. No further insurance recoveries are expected to be available.

HomeServices of America, Inc.

HomeServices of America, Inc. (“HomeServices”) is also a wholly-owned subsidiary of BHE. HomeServices is currently defending against several antitrust cases, all in federal district courts. In each case, plaintiffs claim HomeServices and certain of its subsidiaries (and in one case, BHE) conspired with co-defendants to artificially inflate real estate commissions by following and enforcing multiple listing service (“MLS”) rules that require listing agents to offer a commission split to cooperating agents in order for the property to appear on the MLS (“Cooperative Compensation Rule”). None of the complaints specify damages sought. However, two cases also allege Texas state law deceptive trade practices claims, for which plaintiffs have asserted damages totaling approximately $9 billion by separate written notice as required by Texas law.

In one of these cases, Burnett (formerly Sitzer) et al. v. HomeServices of America, Inc. et al. (the “Burnett case”), a jury trial in the U.S. District Court for the Western District of Missouri (“U.S. District Court”) returned a verdict for the plaintiffs on October 31, 2023, finding that the named defendants participated in a conspiracy to follow and enforce the Cooperative Compensation Rule, which conspiracy had the purpose or effect of raising, inflating, or stabilizing broker commission rates paid by home sellers. The jury further found that the class plaintiffs had proved damages of $1.8 billion. Joint and several liability applies for the co-defendants. Federal law authorizes trebling of damages and the award of pre-judgment interest and attorney fees. To date, all defendants have reached settlements with the plaintiffs. All settlements received U.S. District Court approval, had final judgments entered by the court and were appealed to the U.S. Court of Appeals for the Eighth Circuit. All appeals were fully briefed by December 19, 2025, and oral arguments took place on January 14, 2026. A ruling from the court on the appeals is pending.

The final HomeServices settlement agreement reached with the plaintiffs on April 25, 2024 settles all claims asserted against HomeServices and certain of its subsidiaries in the Burnett case and effectuates a nationwide class settlement. The final settlement agreement includes scheduled payments totaling $250 million to be paid over four years. HomeServices has made payments in escrow of $67 million. If the settlement is not affirmed by the U.S. Court of Appeals for the Eighth Circuit, HomeServices intends to vigorously appeal on multiple grounds the jury’s findings and damage award in the Burnett case, including whether the case can proceed as a class action. The appeals process and further actions could take several years.

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Notes to Consolidated Financial Statements

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Contingencies and commitments

Other legal matters

In September 2024, National Indemnity Company (“NICO”) entered into a settlement agreement concerning certain non-insurance affiliates that filed voluntary petitions under Chapter 11 of the bankruptcy code in the United States Bankruptcy Court for the District of New Jersey (the “Court”) in 2023. Under the terms of the settlement agreement, NICO agreed to pay $535 million to the bankruptcy estate in consideration of a release of all estate causes of action against NICO and its affiliates. In connection with the settlement agreement, NICO recorded a pre-tax charge of $490 million in September 2024, which is net of $45 million from a third party that was covered under the release. The Court’s approval of the settlement agreement over the objections of certain creditors is pending, as are appeals by certain creditors of prior rulings in favor of the bankruptcy estate.

Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We currently believe that liabilities that may arise as a result of such other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

Commitments and other

Our subsidiaries regularly make commitments in the ordinary course of business to purchase goods and services in the future, which are not yet reflected in our Consolidated Financial Statements. The most significant of our long-term commitments relate to our railroad, utilities and energy businesses, our shared aircraft ownership and leasing business and certain materials purchase commitments. As of December 31, 2025, estimated future payments under those arrangements over the next five years were as follows: $10 billion in 2026, $6 billion in 2027, $4 billion in 2028, $3 billion in 2029, $2 billion in 2030, and thereafter $17 billion.

On February 15, 2026, PacifiCorp and Portland General Electric Company and an affiliate of Portland General Electric Company (together, the “PGE Entities”) entered into an Asset Purchase and Service Area Transfer Agreement to sell to the PGE Entities certain PacifiCorp assets and liabilities associated with PacifiCorp’s Washington operations for $1.9 billion in cash plus additional cash consideration for the value of specified assets delivered at closing, subject to customary purchase price adjustments. The transaction is subject to various regulatory approvals and customary closing conditions and is expected to close in the first half of 2027.

On September 30, 2024, BHE repurchased 5.85% of its outstanding common stock held by certain noncontrolling BHE shareholders for $2.9 billion and in September and October 2024, Berkshire acquired the remaining 2.12% of BHE’s outstanding common stock held by noncontrolling shareholders in exchange for 2,291,631 shares of Berkshire Class B common stock valued at $1.045 billion. After these transactions, BHE became a wholly-owned subsidiary of Berkshire. In January 2024, we acquired the remaining noncontrolling interests in Pilot for $2.6 billion, increasing our ownership of Pilot to 100%.

In September 2023, a BHE subsidiary acquired an additional 50% limited partner interest in Cove Point LNG, LP (“Cove Point”) for $3.3 billion, which increased our economic interest from 25% to 75%. Prior to the transaction, we also held 100% of the general partner interest and we consolidated Cove Point for financial reporting purposes.

The acquisitions of these noncontrolling interests represented equity transactions. We recorded the differences between the consideration paid and the carrying value of the noncontrolling interests acquired and applicable deferred income tax assets or liabilities arising from the transactions to capital in excess of par value. We recorded an increase to capital in excess of par value of $891 million with respect to the 2024 transactions and a decrease to capital in excess of par value of $667 million with respect to the 2023 transaction.

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