Benzinga - by Natan Ponieman, Benzinga Editor.
Berkshire Hathaway (NYSE:BRKA), Warren Buffett‘s conglomerate, posted a record $157 billion in cash holdings on its Saturday earnings call.
The record in cash comes accompanied by a whopping 41% year-over-year rise in operating profit — $7.65 billion in the third quarter of 2022 to $10.76 billion in Q3 of this year.
Despite spreading its empire across a variety of industries — which include energy, transportation, manufacturing and consumer products — a large part of Berkshire's portfolio consists of insurance companies.
In 1967, Buffet purchased Berkshire's first insurance company, National Indemnity, for $8.6 million. The acquisition proved to be a winning strategy for his firm: as insurers collect premiums before paying their clients, they have a constant flow of cash, or float, that can be invested in other assets along the way.
Today, Berkshire handles more insurance float than any other holding company on the planet. In 2022 its float rose from $147 billion to $164 billion.
Buffet recently told investors that Berkshire's insurance float grew 8,000-fold since the purchase of National Indemnity 55 years ago.
"Though not recognized in our financial statements, this float has been an extraordinary asset for Berkshire," said Buffet.
About $2.4 billion worth of the company's most recent quarterly operating profit came from its insurance arm. The insurance gains were largely pushed by profits coming from car insurer Geico. The company managed to turn around its balance sheet by hiking rates by almost 17%. It also cut the number of policies it issues by 13%, according to CFRA Research.
In contrast, Insurers had $1.1 billion in loss for Berkshire in Q3 2022.
Top Five Dividend-Paying Insurance Stocks Rather than pay dividends, Berkshire Hathaway reinvests its money in an effort to maximize returns for its investors.
But for those looking to get a share of the insurance industry's gains, investing in dividend-paying insurance companies can be the right strategy. Consider these five, U.S.-based dividend-paying insurance companies by market cap:
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