We've increased our fair value estimate for Berkshire Hathaway to $600,000 per Class A share from
$555,000 after updating our forecasts for the company's operating businesses and insurance investment
portfolio. Our new fair value estimate is equivalent to 1.43 and 1.32 times our estimates for Berkshire's
book value per share, respectively, at the end of 2024 and 2025. For some perspective, during the past
five (10) years the shares have traded at an average of 1.40 (1.43) times trailing calendar year-end book
value per share. We use a 9.0% cost of equity in our valuation and assume that Berkshire pays a
minimum of 15% corporate alternative minimum tax on adjusted financial statement income for taxable
years beginning in 2023.


Our scenario analysis assumes a bull-case fair value estimate of $750,000 per Class A share and a bear-
case valuation of $480,000. In our upside case, we assume Berkshire's insurance segment performs
more strongly than in our base case, with both premium growth and underwriting profits coming in
higher than our expectations. We also assume stronger U.S. and global economic growth, with
Berkshire's two main noninsurance segments — manufacturing, service, and retailing and railroad,
utilities, and energy — benefiting even as we move through a recessionary environment in the near
term. We also expect Berkshire to put more capital to work in acquisitions and other investments than in
our base case.

As for our downside case, we assume Berkshire's insurance segment does not perform as well as we
are projecting in our base case, with Geico continuing its downward trajectory, and a short-lived
hardening of pricing in the property and casualty insurance market affecting results for both BHRG and
BHPG. We also assume growth at Berkshire's manufacturing, service, and retailing operations stalls,
with faltering economic growth in both the U.S. and global markets torpedoing the firm's more
economically sensitive operations. This scenario also assumes a far less robust outlook for Berkshire's
railroad, utilities, and energy division, with free cash flows overall declining, which limits the amount of
capital that Berkshire can commit to acquisitions and other investments.