Berkshire vs. Allstate: Which Insurance Leader Is the Better Pick?

Improved pricing, rising climate-related risks and rapid digitization are poised to shape the insurance industry's trajectory in 2026. While insurers continue to face exposure to catastrophe losses linked to climate change, stronger pricing is helping to sustain profitability. Per Global Insurance Market Index by Marsh, global commercial insurance rates fell 4% in the fourth quarter of 2025, marking the sixth consecutive quarterly decrease, driven by ample capacity and increased competition among insurers.

The Federal Reserve slashed interest rate three times in 2025 and hinted at one to two more cuts in 2026, given a soft job market and muted economic growth. Yet, Berkshire Hathaway Inc. BRK.B and The Allstate Corporation ALL — two insurance behemoths — are expected to stay strong.

Meanwhile, the industry's growing adoption of digital innovation is expected to fuel a surge in merger and acquisition (M&A) activity, especially in technology-driven deals, according to Willis Towers Watson’s Quarterly Deal Performance Monitor. Yet, as an investment option, which stock is more attractive for long-term insurance-focused investors? Let’s closely look at the fundamentals of these stocks.

Factors to Consider for BRK.B

Berkshire Hathaway is a highly diversified conglomerate with more than 90 subsidiaries operating across a wide range of industries, including insurance, utilities, railroads, manufacturing, and consumer products. This extensive diversification helps reduce concentration risk and enables the company to remain resilient across different economic cycles.

Insurance remains the core of Berkshire’s business, accounting for roughly one-fourth of total revenues. The segment is well-positioned for continued expansion, supported by steady demand, disciplined underwriting and favorable pricing conditions. Growth in insurance operations also generates a larger insurance float, which strengthens earnings, improves return on equity, and provides substantial capital for investments and acquisitions. This float-based model has long served as a key competitive advantage for Berkshire.

With its significant cash reserves, Berkshire actively seeks opportunities to acquire entire businesses while also increasing its ownership in companies that demonstrate durable earnings, strong competitive advantages and attractive returns on equity. Large acquisitions create new avenues for growth, while smaller bolt-on deals help strengthen and expand existing operations.

Warren Buffett’s investment philosophy focuses on identifying undervalued companies with solid long-term prospects. The company’s recent investments in Japanese trading houses reflect this disciplined and value-oriented strategy. Berkshire’s long-term holdings in companies such as Coca-Cola, American Express, Apple, Bank of America, Chevron and Occidental Petroleum further highlight its commitment to investing in high-quality businesses with durable competitive advantages.

Financially, the company remains solid, 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.

However, its net margin deteriorated 840 basis points year over year over last two years. Also, Berkshire’s return on equity of 6.5% lags the industry average of 7.3% but the company has improved the same over time. BRK.B shares have lost 2.1% year to date compared with the industry’s decrease of 2.2%.

Factors to Consider for ALL

Allstate is the third-largest property and casualty insurer and the largest publicly traded personal lines insurer in the United States. The company is currently executing a strategic transformation to become a more cost-efficient and digitally enabled insurer with broad distribution capabilities. Its auto insurance business recently regained targeted profitability, while the homeowners segment continues to deliver stable and attractive returns. As part of this shift, Allstate is focusing more closely on its core strengths and gradually exiting less profitable areas.

The company has been restructuring its portfolio to prioritize its personal property-liability operations, which offer higher returns and greater scalability. These businesses represent areas where Allstate already holds a strong competitive position. By concentrating on these core segments, the company aims to improve operational efficiency and support sustainable long-term profitability.

At the same time, Allstate is expanding its Protection Services segment to create additional growth opportunities beyond traditional insurance. Acquisitions such as SquareTrade, PlumChoice, iCracked and Kingfisher have strengthened its presence in device protection, home services and extended warranty solutions.

Over the past two years, Allstate’s net margin has increased by roughly 1,550 basis points, driven by disciplined underwriting and cost control measures. Additionally, inflation, supply chain challenges and advanced automotive technologies are increasing repair costs, potentially pressuring profitability. Despite these challenges, Allstate continues to support growth and shareholder value through disciplined capital allocation, though its relatively high debt levels remain a concern.

Its return on equity of 39.2% is better than the industry average. ALL shares have lost 1.5% year to date but outperformed the industry.

Estimates for BRK.B and ALL

The Zacks Consensus Estimate for BRK.B’s 2026 revenues implies a year-over-year increase of 7.2% while that for EPS implies a year-over-year increase of 1.2%. EPS estimates have moved 0.8% south over the past seven days.

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The Zacks Consensus Estimate for ALL’s 2026 revenues implies a year-over-year increase of 5.2% while that for EPS implies a year-over-year decrease of 27.1%. EPS estimates have moved 0.4% north over the past seven days.

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Are BRK.B and ALL Shares Expensive?

Berkshire is trading at a price-to-book multiple of 1.47, above its median of 1.45 over the last five years. ALL’s price-to-book multiple sits at 1.86, lower than its median of 2.17 over the last five years.

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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 F.

Allstate represents a compelling investment opportunity, underpinned by improved profitability through disciplined underwriting, ongoing digital transformation and a renewed emphasis on its core personal lines business. While short-term challenges such as inflation and elevated claims costs persist, the rebound in auto margins, increasing policy count, and a robust capital return strategy position the company well for sustained long-term growth. ALL 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, ALL scores higher than BRK.B. Optimistic analyst sentiment and a favorable VGM Score give an edge to ALL.

BRK.B carries a Zacks Rank #4 (Sell) while ALL sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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