MediumVII Reinsurance & Specialty Risk7 November 2026, Saturday
Berkshire's insurance profit falls 43% as US property competition curbs volume
Berkshire Hathaway said on 7 November that third-quarter after-tax insurance underwriting profit fell from $2.369 billion to $1.352 billion. Insurance investment income of $2.734 billion was more than double underwriting profit in the same quarter; the company wrote that price competition in the US property market had limited premium volume.
According to the company's press release of 7 November, insurance underwriting profit fell 43% year on year, and over nine months it slipped from $5.697 billion to $4.800 billion. Insurance investment income also fell in the quarter, from $3.181 billion to $2.734 billion, or about 14%. The release does not explain the drop in investment income, and the reason could not be verified. Operating earnings fell from $13.485 billion to $12.705 billion; the company bought back $9.6 billion of its own shares in the quarter.
Reinsurance News's breakdown of the 10-Q shows pre-tax underwriting profit at the reinsurance group falling from $884 million to $582 million. In property-casualty reinsurance the combined ratio, losses and expenses as a share of premium, rose from 79.4% to 84.5%. Written property-casualty reinsurance premiums climbed from $5.183 billion to $5.544 billion. The increase came from a deal taking a proportional share of Tokio Marine's non-life portfolio for 10 years, under which about $700 million of premium had been written by 30 September.
The constraint is price, not capital. The company wrote that volume outside Tokio Marine was limited by growing price competition in the US property market, and written premiums at the primary insurance group fell 7.9% in the quarter. No major catastrophe losses were recorded in nine months, and $1.2 billion of prior-year reserves were released. The insurance float, the money the company holds until it is paid out to policyholders, reached $178.5 billion on 30 September.
Talay assessment
Bottom line
One of the deepest balance sheets is not chasing volume in cheapening US property catastrophe; it is tying its capital to a 10-year quota share. A 43% fall in underwriting profit shows the pricing cycle is not yet near the bottom, and investment income at more than twice underwriting profit shows returns still rest on interest rates. The most likely path is that property catastrophe prices keep falling at 1 January while big balance sheets stay selective.
Likely effects
- Property catastrophe reinsuranceUncertainWeeks
When large capacity like Berkshire turns down cheap business, follower capital and cat bonds fill the gap; prices keep falling, but selectivity rises in the top layers.
- Japanese insurance marketPositive6 months+
Tokio Marine's 10-year proportional cession eases the Japanese insurer's capital burden; about $700 million of premium had been written under the deal by 30 September.
- Reinsurer profitabilityNegative1–6 months
A combined ratio rising from 79.4% to 84.5% shows margins narrowing even without a major catastrophe; if rates fall, investment income cannot make up the loss.
Possibilities, ranked
- 1Selective patience continues55%
Berkshire keeps its US property catastrophe volume low at 1 January and seeks growth through proportional deals.
Watch: Property-casualty reinsurance premiums excluding Tokio Marine in the fourth-quarter 10-K
- 2Another large quota deal30%
Berkshire or a similar balance sheet enters a multi-year proportional cession with another large insurer.
Watch: Announcements of multi-year quota shares above $1 billion before January 2027
- 3Return to pricing power15%
A major catastrophe hardens prices and Berkshire again writes large shares of property catastrophe layers.
Watch: A catastrophe with insured losses above $30 billion before the end of December
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Insurance underwriting profit▼ −43%
- Insurance investment income▼ −14%
- P&C reinsurance premiums▲ +7%