The insurance businesses reported an underwriting loss of $2.2 billion as hurricanes and other natural disasters in 2017 weighed on results, leading to the first annual underwriting loss after a 14-year streak of gains, Buffett said in the letter.
Morgan Stanley estimates that Berkshire could see an earnings boost of as much as $35 billion in last year's final quarter.
"We will stick with our simple guideline: The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own", Buffett wrote.
Buffett says investors should pay more attention to operating earnings, which exclude the tax changes and investment values, to get a better sense of how Berkshire's 90-odd businesses are performing.
He also discussed some of the challenges to finding large acquisitions.
But he said the prices asked for businesses past year "hit an all-time high", and Berkshire will be looking for those available at "a sensible purchase price". The ample availability of extraordinarily cheap debt in 2017 further fuelled purchase activity.
Still, he said, the company "will have opportunities to make very large purchases" going forward, with emphasis on those available at 'a sensible purchase price'. That list included the likes of Apple Inc.
Buffett supported President Trump's Democratic rival, Hillary Clinton, during the 2016 election. Naturally, speculation is rife about who will replace him.
Berkshire made headlines in January when it teamed up with Amazon and J.P. Morgan Chase and announced that it plans to form an independent health care company with the goal of lowering medical-related costs for its employees. It covers a variety of topics, ranging from the financial health of his conglomerate, Berkshire Hathaway, to personal finance advice for individual investors.
Over the years, Buffett has lavished equal praise on both, but provided little indication as to his preferences about who he thinks will succeed him.
"You and I are lucky to have Ajit and Greg working for us". "Each has been with Berkshire for decades, and Berkshire's blood flows through their veins". The character of each man matches his talents.
But Bloomberg's annotation of the letter claims the company's focus on boosting profits for its non-insurance business may be an indicator of Buffett's thinking on the matter.