Berkshire Hathaway, Other P&C Insurers Could Post Strong Earnings. Thank the Weather.

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway. (David Paul Morris/Bloomberg)

Warren Buffett’s Berkshire Hathaway could report record third-quarter operating earnings along with many other property and casualty insurers, thanks in part to an unusually light hurricane season so far.

No named hurricanes made landfall in the U.S. during September for the first time in a decade, and the lack of major storm activity has continued into the first half of October.

JPMorgan analyst Jimmy Bhullar projects $10 billion of U.S. insured catastrophe losses in the third quarter, half the total in the same period of 2024. That bodes well for Berkshire and other P&C insurers’ results, which could give their stocks a much-needed boost.

In a recent note, Bhullar significantly raised his third-quarter projections for a raft of P&C insurers—including Allstate , Chubb , and RenaissanceRe —due to “lower than previously assumed catastrophe losses.” Meanwhile, CFRA analyst Cathy Seifert lifted her third-quarter operating earnings estimate for Berkshire.

JPMorgan’s Bhullar lifted his third-quarter earnings estimate for Allstate to $6.92 from $3.50 a share and his 2025 projection to $22.24 from $18.60. For Chubb, his third-quarter estimate went to $6.59 a share from $5.18. His estimate for reinsurer RenaissanceRe more than doubled to $10.28 from $4.79.

Allstate is Bhullar’s top pick in the sector, and he is less optimistic about reinsurers due to pricing.

“Reinsurance prices have been declining over the past two years and we expect them to drop further with 1/1/26 renewals given limited cat [catastrophe] activity during hurricane season (thus far),” he wrote.

Seifert lifted her Berkshire operating earnings estimate by 15 cents to $5.55 for the third quarter using the company’s Class B shares. That would be a record quarter for Berkshire and translate into about $12 billion of after-tax operating profits. She boosted her 2025 projection by 15 cents to $20.65 for the B shares. She lifted her price target on the B shares to $510, against a current price of $495, but maintained a Hold rating on the stock.

The company should have a robust third-quarter based on both operating earnings (which exclude investment gains or losses) and overall profits given strong gains in the company’s $300 billion equity portfolio led by Apple. Barron’s estimates that third-quarter book value could top $485,000 based on the A shares, up close to 5% versus the June 30 figure.

Berkshire’s Class A stock, now at $743,000, trades for about 1.5 times that third-quarter estimate, in line with the price-to-book ratio in recent years.

“We expect operating revenue growth, firm-wide, to be muted, and we still see operating revenues flat to up 5% in 2025. We expect 2025 to be a transitional year for Berkshire, largely due to the significant managerial changes amid [CEO] Warren Buffett’s upcoming retirement at year end,” she wrote.

So far, however, the stocks of P&C insurers—including Berkshire, which operates the largest P&C business globally ranked by capital—haven’t benefited from low levels of catastrophes**.** That’s because investors have been concerned about some deterioration in insurance pricing, favoring defensive financial stocks like banks instead.

“While we expect personal lines and commercial margins to compress, they are likely to remain strong nonetheless,” Bhullar wrote. “Sentiment on the group is downbeat as well given concerns about margins/growth and optimism for large-cap banks.”

Many of these stocks are behind the S&P 500 ’s 14% gain this year: Allstate is up around 9% this year, while RenaissanceRe Holding has risen 6%, and Everest Re is off 2%.

Berkshire, up 9% year to date, is five percentage points behind the S&P 500. It had been more than 20 points ahead of the index just before the annual meeting on May 3 when Buffett made his surprise announcement that he will step down as CEO at year end.

Two of the largest P&C insurers ranked by market value, Chubb and Progressive, are also lagging. Chubb, at $283, is up 2% this year, compared with the S&P 500’s 14% gain. Progressive, whose shares are down 7% Wednesday to $223 on weaker-than-expected third-quarter results, is down 3% year to date.

Progressive is an auto insurance specialist and is less affected by catastrophe losses than many of its P&C peers. Auto insurers have generated record profit margins in recent quarters, and Progressive’s results indicate that those margins may have peaked. Progressive cited an adverse regulatory development in Florida for a sharp erosion in its profits in the period.

Write to Andrew Bary at andrew.bary@barrons.com