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Berkshire Hathaway Q3 underwriting earnings drop 43% as GEICO and primary group weigh
By Insurance Wire Staff, . Insurance Wire.
Berkshire Hathaway's insurance and reinsurance businesses earned $1.352 billion in net underwriting profit in the third quarter of 2026, down 43% from the same period a year earlier, according to Reinsurance News. Pre-tax underwriting earnings across the group came in at $1.683 billion for the quarter and $6.128 billion for the first nine months of the year, against $3.163 billion and $7.419 billion respectively in 2025.
What drove the decline
GEICO, Berkshire's auto insurer and one of the largest in the United States, recorded lower underwriting earnings for both the quarter and the nine-month period. The primary insurance group, which covers commercial and specialty lines, earned $119 million pre-tax in Q3 against $506 million a year earlier, though its nine-month total of $868 million is well ahead of the $425 million it posted through September 2025. Premiums written in the primary group fell 7.9% in the quarter and 4% over nine months, with declines across property, student health, and commercial package policy business.
The Berkshire Hathaway Reinsurance Group, which sells coverage to other insurers rather than directly to businesses or individuals, earned $582 million pre-tax in Q3 against $884 million a year earlier. Over nine months, however, it earned $1.868 billion, well above the $1.227 billion it posted in the same period of 2025.
The Tokio Marine effect
The reinsurance group's property and casualty business is being materially shaped by a long-term deal with Tokio Marine, Japan's largest insurer. Under the arrangement, Berkshire's National Indemnity Company assumes, on a quota share basis, a portion of Tokio Marine's non-life premiums and related losses over a ten-year term. A quota share arrangement means Berkshire takes a set percentage of both the premiums and the claims.
Premiums written under that agreement reached approximately $700 million through September 30, 2026. Berkshire said plainly that without those premiums, volumes in 2026 "were constrained by increased price competition in U.S. property markets." That is a notable admission: the underlying book is under pressure from competitors willing to write business more cheaply, and the Tokio Marine deal is doing real work to offset it.
Including those premiums, P&C reinsurance premiums written rose to $5.544 billion in Q3 from $5.183 billion a year earlier, and to $16.762 billion over nine months from $16.34 billion.
Why the nine-month numbers look better
The nine-month comparison benefits from two factors that have nothing to do with pricing. First, the P&C reinsurance business recorded no losses from significant catastrophe events in the first nine months of 2026, compared with $760 million in losses from the California wildfires in the same period of 2025. Second, revisions to prior years' loss estimates reduced losses and loss adjustment expenses by $1.2 billion in the first nine months of 2026, against $898 million in reductions a year earlier, driven primarily by lower-than-expected property losses, partially offset by higher casualty estimates.
The combined ratio, a standard measure of underwriting profitability where anything below 100% means the insurer is making money on the policies it writes, came in at 84.5% for Q3 2026 against 79.4% a year earlier, reflecting the quarterly deterioration. Over nine months it improved to 82.9% from 86% in 2025.
Float and what to watch
Berkshire's insurance float, the pool of premiums collected but not yet paid out as claims that the company invests in the meantime, grew by $2.1 billion from the end of 2025 to reach $178.5 billion at September 30, 2026. At that scale, even modest investment returns on the float generate substantial income independent of underwriting results.
The harder question heading into the fourth quarter is whether the competitive pressure Berkshire flagged in U.S. property markets is easing or intensifying. If property reinsurance rates continue to soften, the Tokio Marine deal will matter even more to Berkshire's top line in 2027, when the full-year effect of that quota share will be visible in the annual results.
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