The engine
Insurance · float and underwriting
Insurance funds column one and, when combined ratios stay under 100, produces the franchise this desk capitalizes. Ratios and premiums below are from the 10-K / 10-Q reporting groups — GEICO, BH Primary and BHRG — not invented subsidiary valuations.
Float
$177.5B
$82.92 per B · not deducted
UW after-tax run-rate
$6.9B
H1 2026 annualized
GEICO combined · H1’26
89.3%
Loss 75.3 · expense 14.0
UW / float
3.9%
Implied after-tax underwriting yield on float
How the engine works
Three moving parts · only one is capitalized
01
Premiums become float
Policyholders pay now; claims are paid later. The lag is float — money Berkshire holds and invests until losses come due. It sits as a GAAP liability.
02
Float funds column one
That liability is the cheap revolving capital behind cash, T-bills and the public equity book. Adding float on top of those marks would double-count the same dollars.
03
Underwriting is the franchise
When combined ratios stay under 100, the cost of float is negative — Berkshire is paid to hold the capital. That underwriting profit is what this desk capitalizes.
Cost of float on this run-rate is −3.9% — negative: Berkshire is being paid to hold the capital. That is the H1 2026 picture, not a law of nature. Float is 16.7% of market cap. Franchise is 4.5% of IV at 8.0×.
GEICO loss vs expense
Stacked ratios to premiums earned. Combined = loss + expense. Line at 100 is break-even underwriting. H1 2026 is six months of GEICO, not a full year and not the whole group.
2022 was the loss-ratio spike (93.1% loss, combined 104.8%) — float was expensive. 2024 was the repair (combined 81.5%, expense held at 9.7%). H1’26 the loss ratio has drifted up and the expense ratio is rising as GEICO reinvests — still profitable, no longer spectacular.
Combined ratio by group
Under 100 = underwriting profit. BHRG is property/casualty only (ex life/health). H1 2026 BHRG omitted — P/C vs life mix is not split in the 10-Q table we use.
GEICO is a low-expense machine (~10–14%). Primary is specialty commercial: expense ratio near 28%, so a mid-90s combined is still an underwriting profit. Reinsurance P/C has run the mid-80s — catastrophe years will move it.
GEICO underwriting ledger
GEICO only. Premiums earned are the volume of the auto book; underwriting profit is what’s left after losses and expenses (1 − combined ratio). H1 2026 is six months — do not line it up against a full year. That $22.5B of GEICO premium is the large slice of the mix above.
| Period | Premiums earned | Loss ratio | Expense | Combined | UW profit |
|---|---|---|---|---|---|
| 2022full year | $39.0B | 93.1% | 11.7% | 104.8% | −$1.9B |
| 2023full year | $39.3B | 81.0% | 9.7% | 90.7% | $3.6B |
| 2024full year | $42.3B | 71.8% | 9.7% | 81.5% | $7.8B |
| 2025full year | $44.5B | 72.3% | 12.4% | 84.7% | $6.8B |
| H1 2026six months | $22.5B | 75.3% | 14.0% | 89.3% | $2.4B |
10-K years 2022–2025 and 10-Q for the six months ended June 30, 2026. Ratios are as reported (or loss + expense). H1’26 is a half-year, not annualized.
Desk treatment
Capitalize underwriting · do not add float
GEICO, the reinsurance group, and the primary-commercial cluster. Capitalized on after-tax underwriting profit only. Float funds column-one investments and is not added as equity; investment income is the yield on those same assets and is not capitalized. Slider is the same control as Overview — it writes to one store.
$55.2B
$6.9B × 8.0×
- In IV
- $55.2B franchise
- Not in IV
- $177.5B float
- Also not in IV
- $11.5B investment income (yield on column one)
Float through time
Year-end figures reconstructed from 10-Ks and shareholder letters; Q2 2026 is the desk seed ($177.5B). Not XBRL-tagged.
The insurance book
2025 calendar-year P/C earned premium and combined ratio at the reporting-group grain Berkshire actually publishes.
GEICO
Private-passenger auto. Direct writer; the scale engine of primary underwriting.
$44.5B earned
Auto · CR 84.7%
Berkshire Hathaway Reinsurance Group
National Indemnity, GenRe, TransRe — retrocessional, catastrophe, structured and treaty. P/C earned shown on the mix chart; life/health sits here too.
$20.4B earned
Reinsurance · CR 84.5%
Berkshire Hathaway Primary Group
Specialty commercial: MedPro, Guard, USLI, BH Specialty, RSUI. Higher expense ratio than GEICO; mid-90s combined is still underwriting profit.
$18.7B earned
Commercial · CR 95.8%
Letter-grounded
What the letters ask owners to notice
Paraphrase only. Originals on berkshirehathaway.com. Also Letters & Lessons.
Float is revolving capital, not a loan to repay tomorrow
The letters treat float as a rolling fund that is replaced as old policies run off and new ones are written. This desk therefore does not subtract it like parent bonds. That is a modelling choice — read the originals.
Cost of float is the underwriting result
When underwriting is profitable, Berkshire has described the cost of that capital as negative. When it is not, float can be expensive. The 2022 GEICO combined ratio above 100 is the recent reminder.
Do not capitalize investment income twice
Insurance investment income is the yield on cash, T-bills and stocks already marked in column one. Capitalizing it as a third earnings stream would count the same assets twice.
10-K years 2022–2025 and 10-Q for the six months ended June 30, 2026. Ratios are as reported (or loss + expense). H1’26 is a half-year, not annualized. Float is a judgement input — see Sources. Unofficial estimate, not investment advice.