But in this case, I think third-order is needed: the operating earnings are up compared to a year earlier solely because the underwriting profit, which is almost as volatile as the stock market, is up a lot. If you do a cyclical adjustment on the underwriting profit, the operating subs as a group are doing very poorly at the moment, for a variety of reasons. Some of the recent reasons are mentioned in the linked article, but not emphasized as much as I prefer to.

I estimate in advance what each quarter's "steady things" net operating profit is likely to be. This involves applying a simple seasonal adjustment, plus an average growth factor from recent years, to the prior 4-8 quarters of earnings. Have a look at the graph.

Yes, the extremely volatile underwriting doesn't really belong in the 'operating earnings' column, or if it does, we need another column that excludes underwriting. Your 'cyclical admjustment on the underwriting profit', I presume, is just replacing it with something like the 20-year average underwriting profit (itself adjusted for the effects of growth and inflation)? Or just substituting U/W with a percentage of float, you used to use 0.8%, which in my opinion is very conservative. But using that, and December 2022 float which was $164b, it would be $1.3b for the year, and the $3b (pre-tax) earned in the first 9 months of this year would have to be adjusted down by about 2/3.

In sum, when utilities are losing all their earnings to legal reserves, railroads are down a bit, and for a and manufacturing are all down, having the 'operating earnings' bacon saved by a light hurricane year is small consolation. Not a happy Q report.

dtb