원문 보기
On September 18, 2026, Warren Buffett left the position he had held for 61 years, stepping down as chairman of Berkshire Hathaway—a title he had held since 1970—and becoming chairman emeritus, while remaining on the board of directors. His son, Howard Buffett, took over the duties of chairman. Greg Abel, who had already been appointed CEO, continued to manage the company's day-to-day operations.
The transition capped more than half a century of leadership of one of the most valuable companies ever created, a business now worth about $1.1 trillion. This number is almost impossible to reconcile with what the company started with. In 1965, when Buffett took control, Berkshire Hathaway was not an investment powerhouse.
It was a loss-making textile manufacturer in New Bedford, Massachusetts, suffering from cheaper labor in the southern United States and imports that were driving down prices even further. Buffett himself later called purchasing a stake in this company one of his worst financial decisions. So the real question isn't how a brilliant investor picked winning stocks over six decades.
And in how a declining factory became the engine of a trillion-dollar conglomerate and what specific financial mechanism made it possible. To find the answer, let's go back to the state of the textile business that Buffett inherited. New England mills once dominated cloth production in America. They were built on cheap hydropower and a large supply of low-wage labor attracted by decades of immigration.
By the middle of the 20th century, this advantage had evaporated. Southern factories paid workers less, used newer equipment, and lowered prices, undermining New England's position, while textile imports from Asia added further pressure to which New England manufacturers had no answer. Berkshire Fine Spinning and Hathaway Manufacturing had already merged in 1955, only to survive, forming Berkshire Hathaway.
And even this fusion only brought time, not healing. By the time Buffett began buying shares in the early 1960s, the company was only sporadically profitable, generating enough cash from aging, shrinking operations to become a classic “ butt”—his own term for a depreciated stock with one last free “pull” of value left.
Buffett bought it as just such a bet, expecting to squeeze out the remaining value and move on. Instead, a conflict with the company's management forced him to take full control in 1965. And he found himself at the helm of a textile business that he never planned to own long-term. Factories continued to close.
Capital continued to drain from cloth production, leaving no funds for investment in equipment that was already obsolete. For almost 2 years, Berkshire Hathaway operated as it always had. The dying manufacturer stayed afloat largely so that its cash could eventually be channeled elsewhere. This “somewhere else” turned out to be an industry that Buffett understood like almost no other textile executive .
Insurance. In 1967, he used cash from his textile business to buy a Nebraska insurance company that most Americans had never heard of. And in doing so, he stumbled upon a financial mechanism that would define Berkshire Hathaway for the next 60 years. That insurer was National Indemnity, a small company in Omaha that offered unusual , difficult-to-value policies that others avoided.
Everything from taxi liability insurance to circus performers. Buffett was n't attracted by the product itself. He was attracted by the peculiarity of how insurers are paid. The insured pays a premium today in exchange for a promise that the insurer will cover losses that may occur months or years from now, if they occur at all.
During the period between receiving the premium and paying the insurance claim, the insurer holds other people's money, and nothing prevents it from investing it during this time. Insurers call this pool of money a "fleet." And by 1967, Buffett had a clear plan for this. Using this as investment capital is similar to how a bank uses deposits, but without paying interest and without the same regulatory restrictions.
National Indemnity's fleet that first year was approximately $17 million—a modest sum even by the standards of the time. But the mechanism behind it was what mattered. Every dollar of fleet that Buffett could keep, instead of paying out on claims, was a dollar he could invest in stocks, bonds, or entire companies.
And any profits from that money belonged to Berkshire, not the policyholders who provided it. What made this scheme even more powerful was a detail that most people overlook in the economics of insurance. If an insurer carefully prices its policies, collecting more premiums over time than it pays out in claims and expenses, it earns an underwriting profit, meaning the fleet is n't just sitting idle.
The insurer is effectively paid to hold the investment capital, instead of paying interest on it , as a borrower would. Buffett and his longtime partner Charlie Munger considered the discipline of underwriting sacred for this very reason. An insurer that understates risk to attract customers can quickly increase its fleet but destroy its business at the same time .
Because a wave of insurance payouts can wipe out years of investment returns in one bad year. Berkshire's insurance divisions weren't always profitable on underwriting alone, but disciplined pricing often meant that the fleet cost Berkshire less than nothing. Once this mechanism worked, Buffett built his company around fueling it.
In 1976, Berkshire acquired a significant stake in GEICO, which was then nearly bankrupt due to insurance losses, and in 1996, it fully bought out the company. GEICO added billions to his “fleet”—funds that Buffett could invest in stocks of Coca-Cola, American Express, the Washington Post, and later in buying entire companies.
Each acquisition generated its own profit, and this money did not have to be returned to shareholders in the form of dividends. They could be directed anywhere within Berkshire where Buffett saw potential: to another insurance company, a railroad, a utility, or manufacturing. By 2000, Berkshire had taken control of Berkshire Hathaway Energy—a diversified utility and energy business.
And by 2010, it fully owned BNSF, one of the largest freight railroads in North America, as well as dozens of smaller companies that produced everything from bricks to underwear. The size of the "fleet" itself grew to incredible proportions. From about $17 million in 1967, it exceeded $ 25 billion in the late 1990s, $80 billion in the 2010s and reached about $176 billion by the end of 2025, according to Berkshire reports.
That's a nearly ten-thousandfold increase in less than 60 years, built almost entirely on insurance premiums paid by ordinary drivers, homeowners, and businesses for the coverage they needed. Not everyone has benefited equally from this growth. Berkshire shareholders, who held onto decades of reinvested earnings, instead of dividends, have enjoyed extraordinary returns thanks to compound interest.
The acquired companies gained a rare type of owner with a planning horizon of decades, ready to invest in infrastructure without immediate payoff requirements. But the policyholders who formed this "fleet" were never investors in this scheme. They paid for insurance, received services, and were not entitled to the profits that their contributions helped generate in other parts of the empire.
And this model carried a risk , the existence of which Buffett never denied. An insurer that mispriced policies or suffered a catastrophe that could deplete reserves could lose both the "fleet" and the capital built on it. Berkshire's insurance divisions covered billions in losses from hurricanes and other disasters, proving that a "fleet" is not free money, but a calculated risk that most often paid off.
By the time Berkshire's other businesses began generating their own income, the company was no longer just an investment vehicle based on an old textile factory. It became something of a financial organism, accumulating insurance premiums, capital, and profits through dozens of individual businesses, constantly directing them to where the most promising opportunity seemed, with Buffett and Munger deciding where every dollar should go .
It is this structure that makes the leadership change, which ended on September 18, 2026, more than just a ceremonial rotation. Greg Abel, the outsider who managed Berkshire's energy and non-insurance assets for decades, is now in charge of where the company's capital goes next. The same task that turned $17 million in insurance reserves into $176 billion.
Howard Buffett, Warren's son, becomes chairman of the board of directors not because he ran the insurance division or allocated capital better than others. And to preserve the culture and independence of a company that was famous for valuing merit and rational decisions above hereditary positions. Buffett himself has defended the arrangement for years, arguing that having a family chairman with no operating authority protects Berkshire's identity if the incoming CEO needs to be replaced quickly.
Critics see it differently. A trillion-dollar conglomerate built on the idea that capital should go where it generates the best return is ultimately delegating some of its management to brand rather than professional achievement. There is a second contradiction, which concerns not so much the family as the scale.
The reserves that made Berkshire possible depend on pricing insurance correctly year after year despite storms, wildfires, and catastrophes that have become more frequent and costly over the past two decades. Berkshire's insurance units have paid out billions after major hurricanes, and climate losses are now testing the same underwriting discipline that once made those reserves cheap.
The mechanism that built the empire is the same mechanism that, in a particularly bad year, can put real pressure on it. Buffett built a company almost perfectly insulated against normal market downturns, but left it vulnerable to a very different type of risk, one measured by wind speed and rainfall levels, not interest rates.
None of this changes the answer to the question that started this story. Berkshire Hathaway didn't become a trillion-dollar company just because Warren Buffett had an extraordinary knack for picking undervalued stocks, although that's certainly true. It became so because a loss-making textile mill, at the right time, provided enough cash to buy a small insurer in Nebraska, and because Buffett understood, better than almost anyone in American business, what insurance reserves could become if they were valued with discipline and invested with patience over 60 years.
Stock selection was the visible part. Insurance reserves and disciplined capital allocation were the engine beneath them. Which quietly rose while the rest of the market watched the stock pick. Berkshire shareholders have reaped a return on patience that few other investments in American history can match.
The companies that Berkshire acquired acquired an owner who was willing to wait for decades for profits. Millions of ordinary policyholders who paid premiums to National Indemnity, Geico and other Berkshire insurers got exactly what they paid for. Coverage when it was needed, and nothing more. While their contributions quietly transformed into one of the largest investment capitals on Earth.
And Buffett got what every insurance underwriter and every empire builder ultimately depends on. Enough discipline over a long enough period of time so that the float never turns into debt, which it could become at any moment. 61 years after taking control of a loss-making textile mill, Warren Buffett has handed over a company worth more than the combined stock markets of most countries, built not on one brilliant deal but on a mechanism that most people, looking at Berkshire's stock price, don't even think about.
Money that belonged to others and was held for exactly as long as was needed for its growth. If you want to continue uncovering the financial systems behind the fortunes you thought you knew everything about, subscribe to Money Made History for more stories about the people who quietly rewrote the rules of money, and the price every empire ultimately pays.
Comments 0