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What if we add book value plus float, subtract out the assets of the operating companies, capitalize their earnings and add that figure back in?


This would undervalue the insurance arm. Take 2000 as an example since the divisions were broken out better.

In 2000 Insurance Float was $27,871 and Insurance Book Value was $38,667 for a total of $66,538.

Total Book Value was $61,724, adding the float gives us $89,595 then subtracting all non-insurance assets ($43,503) returns a value of $46,092. This is $20 billion below the insurance book + float value.

If you subtracted out the operating companies book value then you'd be okay.


Berkshire is worth book plus float plus a good bit, because of its vastly superior potential to grow owner earnings as we go forward.


I agree with this. You could frame it another way: the operating companies are worth more than book value. In a valuation if one took Berkshire's entire book value and added float then by construct the operating subs are being valued at book.

Ryan

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