Berkshire Hathaway vs. Travelers: Which Insurer Offers Better Return?

Better pricing, growing climate-related risks, and rapid digitalization are poised to influence the insurance industry's course through 2025. While insurers continue to face catastrophe losses, improved pricing is supporting profitability. In the second quarter of 2025, commercial insurance rates climbed 2.8%, with personal lines seeing a steeper 4.6% increase.Although the Federal Reserve has kept interest rates steady at 4.25%–4.5% since December, speculation is mounting around two possible rate cuts in 2025. Against this backdrop, Berkshire Hathaway Inc. (BRK.B) and The Travelers Corporation TRV — two leading insurers — are expected to maintain their strength.Meanwhile, as digital innovation accelerates across the industry, merger and acquisition (M&A) activity is likely to pick up, especially in technology-driven transactions, according to Willis Towers Watson’s Quarterly Deal Performance Monitor. But for long-term insurance-focused investors, which stock offers the more compelling opportunity? Let’s take a closer look at both companies' fundamentals.Factors to Consider for BRK.BBerkshire Hathaway is a diversified conglomerate with ownership in more than 90 subsidiaries across a broad range of industries, including insurance and consumer products. This helps to minimize concentration risk. Of these, insurance is the most prominent, contributing approximately one-fourth of the company’s total revenues. This segment is well-positioned for continued growth, driven by increased market exposure, disciplined underwriting practices and favorable pricing trends.The growth of its insurance business not only expands its float but also strengthens earnings, improves return on equity and provides the financial flexibility to pursue strategic acquisitions. With a strong cash position, Berkshire frequently acquires companies or raises its stakes in those that deliver consistent earnings and high returns on equity. While large acquisitions introduce new growth opportunities, smaller bolt-on deals enhance operational efficiency and profitability.Led by Warren Buffett, Berkshire has consistently followed a disciplined investment philosophy, targeting undervalued assets with strong long-term potential. Key investments in firms such as Coca-Cola, American Express, Apple, Bank of America, Chevron and Occidental Petroleum reflect this strategy.Financially, the company remains solid, with its net margin improving by 190 basis points year over year. With over $100 billion in cash reserves, minimal debt and a strong credit profile, Berkshire Hathaway’s balance sheet continues to reflect exceptional resilience and financial strength.Berkshire’s return on equity of 7.2% lags the industry average of 7.8% but this company has improved the same over time. BRK.B shares have gained 5% year to date, outperforming the industry’s increase of 4.1%.Factors to Consider for TRVTravelers is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance. Going by the progress and continued growth at the profitable agency auto and homeowners business, the company remains optimistic about the trajectory of its personal lines of business. High levels of retention, improved pricing and an increase in new business, while achieving a positive renewal premium change, drive its commercial businesses. Travelers also plans additional capability and product releases in 2025 that further consolidate competitive advantages in Bond & Specialty. It also remains focused on sharpening its cyber insurance capabilities to capitalize on the cyber insurance opportunities.Travelers has maintained strong underwriting results, consistently achieving a combined ratio well under 95%.In tandem with the industry's ongoing technological transformation, Travelers has been harnessing cutting-edge technologies—including artificial intelligence, the Internet of Things, data analytics and cloud computing—to enhance its underwriting, claims handling, customer experience and risk management capabilities.  As a part of its commitment to innovation, Travelers plans to invest more than $1 billion annually in technology to support continued advancement and operational efficiency.Net margin has expanded by 170 basis points over the past two years, supported by prudent underwriting practices. Despite these challenges, Travelers’ disciplined capital deployment strategy continues to support growth and shareholder returns. However, its relatively high debt level remains a concern, with leverage and interest coverage metrics falling short of industry benchmarks.Its return on equity of 16.1% is better than the industry average. TRV shares have gained 5.7% year to date and outperformed the industry.Estimates for BRK.B and TRVThe Zacks Consensus Estimate for BRK.B’s 2025 revenues implies a year-over-year increase of 8.6% while that for EPS implies a year-over-year decrease of 6.7%.  EPS estimates have moved 2.7% north over the past 60 days. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for TRV’s  2025 revenues implies a year-over-year increase of 5.8% while that for EPS implies a year-over-year decrease of 14.9%.  EPS estimates have moved 2 cents down over the past 60 days.Image Source: Zacks Investment ResearchAre BRK.B and TRV Shares Expensive?Berkshire is trading at a price-to-book multiple of 1.56, above its median of 1.40X over the last five years. TRV’s price-to-book multiple sits at 2.04, above its median of 1.77X over the last five years.Image Source: Zacks Investment ResearchConclusionHolding shares of Berkshire Hathaway adds dynamism to shareholders’ portfolios. It has Warren Buffett at its helm, who has been creating tremendous value for shareholders over nearly six decades with his unique skills. However, all eyes are now on how the behemoth fares when Greg Abel succeeds Warren Buffett as CEO of Berkshire, starting Jan. 1, 2026. Warren Buffett will continue to be the company's executive chairman.Travelers Companies demonstrates steady profitability, supported by strong underwriting discipline and a consistently favorable combined ratio below 95%. Its diversified insurance offerings across commercial, personal, and bond & specialty segments help reduce reliance on any single line of business. However, higher claims costs driven by inflation and more frequent catastrophe events may put pressure on margins. In addition, growing competition within the property and casualty insurance sector could limit its ability to expand premiums.On the basis of return on equity, which reflects a company’s efficiency in generating profit from shareholders' equity as well as gives a clear picture of the company's financial health, TRV scores higher than BRK.B.  Though both these stocks carry a Zacks Rank #3 (Hold), BRK.B has an edge over TRV. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Travelers Companies, Inc. (TRV): Free Stock Analysis Report Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks