Car Insurance Rates Skyrocketing: 10 Best Stocks to Buy

1. Berkshire Hathaway Inc. (NYSE:BRK-B)

Number of Hedge Fund Investors  in Q1 2024: 119

Berkshire Hathaway Inc. (NYSE:BRK-B) is the investment conglomerate headed by Warren Buffett. While typically thought of as an investment company or hedge fund, Berkshire Hathaway Inc. (NYSE:BRK-B)’s biggest business is its insurance business. It earned $24.6 billion in total insurance revenue during Q1 2024, which accounted for 27% of Berkshire Hathaway Inc. (NYSE:BRK-B)’s total revenue of $84.6 billion. As is characteristic of a business of this size, the firm offers both commercial and personal auto insurance products. These are separated across business divisions, with the larger GEICO business providing personal and the Berkshire Hathaway Primary Group offering commercial automobile insurance. Berkshire Hathaway Inc. (NYSE:BRK-B)’s GEICO division operates an insurance agency that offers existing auto customers homeowners insurance products. GEICO is one of America’s largest auto insurance providers too, which lends it stability particularly against severe claims.

Berkshire Hathaway Inc. (NYSE:BRK-B)’s management commented on its auto insurance in its first quarter earnings report where it shared:

Premiums written increased $736 million (7.3%) in the first quarter of 2024 compared to 2023, reflecting higher average premiums per auto policy (9.8%) due to rate increases, partially offset by a 6.6% decrease in policies-in-force over the past year. However, the rate of decline in policies-in-force slowed in the first quarter of 2024, driven by increased new business and higher retention rates. Premiums earned increased $608 million (6.3%) in the first quarter of 2024 compared to 2023.

Losses and loss adjustment expenses declined $578 million (7.2%) in the first quarter of 2024 compared to 2023. GEICO’s loss ratio (losses and loss adjustment expenses to premiums earned) was 72.5% in the first quarter of 2024, a decrease of 10.5 percentage points compared to 2023. The loss ratio decline reflected the impact of higher average premiums per auto policy and lower claims frequencies, partially offset by increases in average claims severities and less favorable development of prior accident years’ claims estimates.

BRK-B is the unsurprising top hedge fund insurance stock pick. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BRK-B but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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