Berkshire's Insurance Slump Clouds a Brighter Case Elsewhere
Published on 11/10/2026 at 17:12 | Editorial boerse-global.de
Berkshire Hathaway's third-quarter 2026 report card reads less like a single verdict than a split decision. Underwriting profit at the conglomerate's insurance arm fell 43% to $1.352 billion, yet the railroad and utility businesses both grew, and Keefe, Bruyette & Woods responded on Saturday by lifting its price target on the stock from $735,000 to $765,000. The rating stayed at "Underperform."
The target hike followed operating earnings per share that came in ahead of expectations for the quarter. Group operating profit, however, eased to $12.7 billion from $13.5 billion a year earlier, weighed down by weaker results at Geico and softer gains on equity investments, according to Reuters. Net income dropped to $22.1 billion from $30.8 billion.
The insurance unit drew the closest scrutiny. Geico's loss ratio climbed to 76.6% from 71.5% in the prior-year quarter, with higher advertising spending adding to the pressure. Bloomberg Television called the insurance trends weaker than expected, while Morningstar took a more measured view, describing the results as solid given the absence of major catastrophe losses and the backdrop of falling prices.
A valuation question with two sides
Morningstar is weighing a modest increase to its fair value estimate after the quarter, though it still considers the shares slightly overvalued. Its current figure stands at $765,000 per A-share, or $510 per B-share, with the analysts flagging low valuation uncertainty and a narrow economic moat. Any upward revision, in their framing, would need to rest on durably higher earning power rather than a one-quarter bounce.
Should investors sell immediately? Or is it worth buying Berkshire Hathaway?
The case for a richer multiple leans on the parts of Berkshire that are pulling their weight. BNSF lifted profit 19.3% to $1.73 billion, and Berkshire Hathaway Energy added 8.3%. Manufacturing, services and retail posted decent revenue with margins normalizing, per Morningstar. Even so, BNSF's profitability trailed Union Pacific by roughly 400 basis points on a preliminary basis, leaving room to close the gap.
Berkshire Hathaway Energy carries its own overhangs. Morningstar points to wildfire litigation and renewable-energy legislation as potential future burdens — risks that, alongside softening insurance prices, temper how reliable a company-wide recovery would be.
Capital deployment stays heavy
Share repurchases totaled about $9.6 billion in the third quarter, bringing the nine-month tally to roughly $14.4 billion. Reuters also reported buybacks of about $2 billion in October. On top of that, Berkshire closed its $6.8 billion acquisition of Taylor Morrison Home Builders during the quarter, according to Bloomberg Television.
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Greg Abel is meanwhile steering a multi-year technology and AI overhaul, with Geico as a focal point. The effort could yield additional earning power if it genuinely improves costs and processes, though its multi-year horizon keeps it a medium-term lever rather than an immediate one.
The stock traded 0.3% lower today. The next concrete checkpoint arrives with the 13F filings expected next week, which could shed more light on how Berkshire is deploying capital across its equity portfolio — whether it has continued selling Bank of America shares or added to its Alphabet stake was, until recently, only hinted at. Paired with the operating trends, that disclosure should clarify where Berkshire is steering its future value.
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