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Brk seems pulled down by the industry. CB, PGR, AJG, BRO, fairfax all down. Not sure why?

Maybe the poor ADP jobs report makes interest rate cuts more likely. This could hurt returns from insurance companies bond portfolios.

FWIW- have read Centene's stock down hard due to its revised outlook, coupled with general concerns about rising healthcare costs and a weaker economic forecast, are the main drivers for the collective downturn in insurance company stocks today.

Property and Casualty rates are dropping. June renewal rates were reportedly soft. Chubb getting hammered. Reading auto rates have flattened and even dropped in some of the more expensive markets.

Lower interest rates are issue here too when you're sitting on 1/3 of the company in cash. Might not get a cut this month--but highly likely by fall.

A couple of huge tailwinds quickly becoming headwinds.

Insurance and short rates are a very big deal.

A couple of huge tailwinds quickly becoming headwinds.

Insurance and short rates are a very big deal.

And, of course, for Berkshire specifically you have the reversal of large gains from last year's US Dollar strength against the JPY and EUR.

(on the topic of tailwinds becoming headwinds that is)

Centene, Humana, and Molina all affected by Medicaid cuts as they offer plans in many states.

Property and Casualty rates are dropping. June renewal rates were reportedly soft. Chubb getting hammered. Reading auto rates have flattened and even dropped in some of the more expensive markets.

Maybe an opportunity for Buffett to make acquisitions. Or buyback stock if it falls a lot more.

Maybe he finally takes out Chubb

”Maybe he finally takes out Chubb”
Would Chubb willing to sell though?

After two years of significant rate increases, the property catastrophe reinsurance market is seeing a moderation in pricing at the June 1 renewals, according to reinsurance intermediary Howden Re. The firm said that average risk-adjusted property catastrophe reinsurance rates-on-line were 5% lower at midyear, compared to a year ago, with decreases typically ranging from -7.5% to -2.5%.

The reinsurance market is undergoing a period of adjustment, largely driven by a resurgence in dedicated capital in the property catastrophe reinsurance sector, according to the report. This capital now exceeds 2021 levels, leading to increased capacity at the top of property catastrophe reinsurance programs. As a result, risk-adjusted rates have seen reductions in the higher layers.

https://riskandinsurance.com/property-catastrophe-...

Insurance and short rates are a very big deal.

I don't think short rates matter that much, though of course many market players might think so.
Berkshire gets very little value from the cash pile, after tax and after inflation. It's usually negative.

The last little while has been an unusually good stretch for real short term interest rates. But still not material to Berkshire.
Three year average 3-month T-bill rate 4.72%, after tax 3.73%, after tax and US inflation 0.49%/year.

Jim

i asked chatgpt which companies berkshire might acquire next, ranked by odds. They are:
OXY
Chubb
Merkel
Progressive
Fedx
UPS
Costco

They would have to pay over $500 billion to acquire Costco.

Maybe AI should be renamed RD for Really Dumb.

Chatgpt did assign only 5% odds on costco.
But 20-30% odds on oxy, cb, and merkel

They would have to pay over $500 billion to acquire Costco.

I think there is zero chance that Buffett (or Abel) pays $500B for something that earns under $10B a year. Zero.

They would have to pay over $500 billion to acquire Costco.
...
I think there is zero chance that Buffett (or Abel) pays $500B for something that earns under $10B a year. Zero.

I agree with you, though I would not say that it's impossible Berkshire might buy a $500 billion company.

Jim

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