Berkshire Hathaway insurance float hits record high as underwriting profit slips
The conglomerate’s insurance float reached $177.5 billion in the second quarter, even as underwriting earnings fell 13% due to higher claims costs at GEICO.
Berkshire Hathaway has reported that its insurance float reached a record $177.5 billion in the second quarter, an increase of $1.1 billion. This growth in the cash stockpile, which is primarily invested in U.S. Treasuries, stands in contrast to a 13% year-over-year decline in the company’s insurance underwriting profit.
The drop in insurance earnings was driven by higher claims costs and increased advertising expenditure at GEICO. The insurer’s loss ratio rose to 76.6% in the current quarter, up from 71.8% in the prior year. The rising loss ratio reflects higher automotive claims costs, while expenses also increased due to a boost in advertising spend.
Despite the pressure on the GEICO segment, Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group reported strong performance. These units benefited from lower-than-expected losses and solid premium growth, offsetting some of the weakness in the automotive insurance business.
The company’s overall second-quarter operating earnings rose 16% to nearly $13 billion, supported by growth in its manufacturing, service, and retail sectors. This broad-based growth demonstrates the resilience of the conglomerate’s diverse portfolio, which spans energy, transportation, utilities, and consumer products.
On the investment front, Berkshire Hathaway became a net buyer of equities for the first time in three and a half years. The company increased its stake in Alphabet to $40 billion and holds $365 billion in capital available for further investment.
Berkshire closed the quarter with total holdings of $324.9 billion in U.S. Treasuries and $323.8 billion in equities. The insurance float remains a key long-term growth driver, providing a steady stream of cash that the company can deploy across its various business lines.
