Improved pricing, increasing climate-related risks and rapid digital transformation are set to influence the insurance industry’s outlook in 2026. Although insurers remain exposed to catastrophe losses driven by climate change, stronger pricing continues to support profitability. According to Global Insurance Market Index, global commercial insurance rates declined 4% in the fourth quarter, marking the sixth straight quarterly drop, largely due to abundant capacity and heightened competition among insurers.
The Federal Reserve reduced interest rates three times in 2025 and is likely to implement one more cut in 2026 amid a soft labor market and subdued economic growth. Despite this environment, industry giants Berkshire Hathaway Inc. BRK.B and The Travelers Corporation TRV are expected to remain resilient.
At the same time, increasing adoption of digital technologies is likely to drive a rise in merger and acquisition (M&A) activity, particularly in tech-focused deals, as highlighted by Willis Towers Watson’s Quarterly Deal Performance Monitor. Against this backdrop, which of these stocks presents a more compelling opportunity for long-term investors focused on the insurance sector? Let’s take a closer look at their fundamentals.
Factors to Consider for BRK.B
Berkshire Hathaway is a highly diversified conglomerate with more than 90 subsidiaries spanning industries such as insurance, utilities, railroads, manufacturing, and consumer goods. This broad diversification reduces concentration risk and enhances resilience across economic cycles.
Insurance remains the cornerstone of Berkshire’s operations, contributing about one-fourth of total revenues. The segment is well-positioned for growth, supported by steady demand, disciplined underwriting and favorable pricing. Expansion in insurance also increases the company’s float, which boosts earnings, enhances return on equity, and provides substantial capital for investments and acquisitions—an enduring competitive advantage.
Backed by significant cash reserves, Berkshire continues to pursue acquisitions of entire businesses while also increasing stakes in companies with strong earnings potential, durable competitive advantages, and attractive returns. Large deals create new growth opportunities, while smaller bolt-on acquisitions strengthen existing operations.
Warren Buffett’s value-driven investment approach emphasizes undervalued companies with solid long-term prospects. Recent investments in Japanese trading houses reflect this strategy. Long-term holdings in firms like Coca-Cola, American Express, Apple, Bank of America, Chevron, and Occidental Petroleum highlight Berkshire’s focus on high-quality businesses.
Financially, Berkshire remains strong, with more than $100 billion in cash, low debt levels, and a robust credit profile. However, net margins have declined by 840 basis points over the past two years. Its return on equity of 6.5% trails the industry average of 7.3%, though it has shown gradual improvement. BRK.B shares have declined 4.2% year to date.
Factors to Consider for TRV
Travelers is a major U.S. insurer, offering auto, homeowners, and commercial property-casualty coverage. Its positive outlook is supported by steady growth across both personal and commercial segments. The company remains confident about its agency auto and homeowners businesses, driven by consistent profitability and solid momentum.
In the commercial segment, its performance benefits from strong customer retention, disciplined pricing and continued new business growth. Favorable renewal premium trends further strengthen its competitive position. Travelers is also expanding its cyber insurance offerings to capitalize on rising demand amid increasing digital risks.
The company has maintained strong underwriting discipline, reflected in a combined ratio below 95%, highlighting effective risk selection and operational efficiency. At the same time, Travelers is advancing its technological capabilities and investing in artificial intelligence, data analytics, IoT, and cloud computing to improve underwriting accuracy, claims processing, and customer experience. Annual technology investments are expected to exceed $1 billion.
Financially, Travelers has achieved a 570-basis-point improvement in net margin over the past two years, supported by prudent underwriting. Its capital allocation remains disciplined, enabling both business growth and shareholder returns, including 21 consecutive years of dividend increases and an 8% CAGR.
However, higher debt levels pose some concern, with leverage and interest coverage below industry norms. Despite this, a 16.1% return on equity—above the industry average—reflects strong profitability, with management targeting mid-teens core ROE. The stock has risen 3% year to date, outperforming the broader industry.
Estimates for BRK.B and TRV
The Zacks Consensus Estimate for BRK.B’s 2026 revenues implies a year-over-year increase of 6.7%, while that for EPS implies a year-over-year decrease of 2.1%. EPS estimates have moved 3.4% south over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TRV’s 2026 revenues implies a year-over-year increase of 2.6% while that for EPS implies a year-over-year decrease of 1.5%. EPS estimates have moved 0.4% north over the past 30 days.
Image Source: Zacks Investment Research
Are BRK.B and TRV Expensive?
Berkshire is trading at a price-to-book multiple of 1.44, below its median of 1.45 over the last five years. TRV’s price-to-book multiple sits at 1.95, higher than its median of 1.92 over the last five years.
Image Source: Zacks Investment Research
Conclusion
Holding shares of Berkshire Hathaway adds dynamism to shareholders’ portfolios. It gives the feel of investing in mutual funds while rewarding investors with higher returns. However, investors are still waiting to see how the conglomerate fares under the leadership of the new CEO. BRK.B has a VGM Score of D.
Travelers maintains consistent profitability through disciplined underwriting and a combined ratio under 95%. Its diversified portfolio across commercial, personal, and specialty insurance limits concentration risk. However, rising claims from inflation and increased catastrophes, along with intensifying competition, may put pressure on margins and constrain premium growth. TRV has a VGM Score of A.
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. Price appreciation, optimistic analyst sentiment and a favorable VGM Score give an edge to TRV.
BRK.B carries a Zacks Rank #4 (Sell) while TRV carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quantum Computing Stocks Set To Soar
Artificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.
Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power , you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.
Access the Report Free Now >>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 Report
This article originally published on Zacks Investment Research (zacks.com).