ZACKSยท2025-11-14 15:06Core Insights - The Federal Reserve has cut interest rates twice in 2025, with potential for more cuts, while equity markets are performing well due to economic growth [1] - The insurance industry is influenced by better pricing, climate-related risks, and rapid digitalization, with improved pricing supporting profitability despite catastrophe losses [1] Factors to Consider for Berkshire Hathaway (BRK.B) - Berkshire Hathaway is a diversified conglomerate with over 90 subsidiaries, with insurance accounting for about 25% of total revenues, providing stability through various economic conditions [4] - The company has a growing insurance float, increasing from approximately $114 billion in 2017 to about $176 billion by Q3 2025, which serves as a low-cost funding source for high-quality investments [7] - Berkshire's return on equity is 7.3%, below the industry average of 8.1%, but its shares have gained 13.2% year-to-date, outperforming the industry's 7.7% increase [9] Factors to Consider for Markel Group (MKL) - Markel Group aims for $10 billion in annual premiums within five years, targeting $1 billion in underwriting profit, focusing on complex and underserved market segments [11][13] - The company has a solid balance sheet with rising liquidity and engages in share buybacks while prioritizing organic growth initiatives for its insurance business [16] - Markel's return on equity is 7.8%, significantly lower than the industry average of 36.7%, but its shares have gained 20.6% year-to-date [16] Estimates for BRK.B and MKL - The Zacks Consensus Estimate for BRK.B's 2025 revenues indicates a 4.8% year-over-year increase, while EPS is expected to decrease by 6% [17] - For MKL, the 2025 revenue estimate suggests a 2.6% year-over-year increase, with EPS expected to rise by 23% [18] Valuation Metrics - Berkshire is trading at a price-to-earnings multiple of 24.63, above its five-year median of 22.48, while MKL's multiple is at 19.24, higher than its median of 17.24 [20] Conclusion - Berkshire Hathaway is led by Warren Buffett, known for creating shareholder value, with a transition to Greg Abel as CEO starting January 1, 2026 [21] - Markel benefits from its niche focus and effective risk management, positioning itself for long-term growth through acquisitions and organic initiatives [22]