National Indemnity

Jack Ringwalt's insurance company generated $19 million in float when Buffett acquired it in 1967 for $8.6 million. That $19 million float—premiums collected upfront, claims paid later—became the trunk from which Berkshire's entire conglomerate branched. By 2024, Berkshire's insurance operations held $171 billion in float while generating $11 billion in underwriting profit. National Indemnity and GEICO alone posted $7.8 billion in underwriting profit that year, making them the industry's most profitable entities on a statutory basis.

The biological parallel is homeostasis: maintaining stable internal conditions despite external volatility. Insurance float provides Berkshire with cost-free capital—sometimes even negative-cost when underwriting is profitable—that buffers every subsidiary against economic shocks. During the 2008 financial crisis, while competitors faced margin calls and forced asset sales, Berkshire had $171 billion in investable premiums. During COVID, when Precision Castparts hemorrhaged value, insurance float covered the losses without requiring external financing.

National Indemnity itself practices extreme underwriting discipline, the mechanism that prevents the float from becoming a liability. Ringwalt's founding principle: there's a profitable premium for any valid risk, but the insurer must make the right judgment. This means walking away from business when pricing is inadequate—what biologists call resource selectivity. In soft markets when competitors chase volume, National Indemnity shrinks. In hard markets when pricing improves, it expands.

The 2025 operating environment turned challenging. Berkshire's commercial primary insurance operations saw underwriting profit plummet 77% in Q2 2025 to $63 million, down from $279 million the prior year. The January 2025 Southern California wildfires imposed roughly $300 million in losses, while prior-year liability claims required $401 million in reserve boosts. Total Q2 underwriting profit across all insurance operations dropped 11% to $2.5 billion.

Yet this volatility validates the homeostatic function. A single-quarter underwriting setback doesn't threaten Berkshire's capital position when sitting on $171 billion in float. The insurance trunk doesn't just provide resources—it provides resilience through time horizons measured in decades. National Indemnity's 58-year track record demonstrates that underwriting discipline, maintained across market cycles, creates the most durable form of corporate metabolism: turning other people's money into permanent capital.