Insurance is one of the quietest winners from higher rates, and the numbers from 2024 and 2025 show why.
Property and casualty insurers earned a record $89 billion in investment income in 2024, per AM Best, while Berkshire Hathaway's insurance arm followed it up with $12.51 billion of its own in 2025. The mechanism behind both numbers is the same, and it is called float.
Insurers collect premiums up front and pay claims later, sometimes years later.
The money sitting in between is called float, and it is the cash insurers get to invest while they wait for claims to come in. When short-term yields are near zero, float does not do much, but when yields move into the 4% to 5% range, it starts compounding into real money.
That is exactly what happened in 2023 and 2024, as the Fed pushed rates to their highest level in two decades.
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AM Best tracked the U.S. P&C industry's gross yield on invested assets rising to 4.0% (up from 3.6% in 2023) in 2024, with a bond portfolio yield of 4.1%, the best the industry has seen in more than a decade.
The $89 billion in investment income that followed was up about 20% from the year before. For an industry that often pays out roughly what it takes in on premiums, that kind of investment return is most of the profit.
It is also why insurance stocks have held up while other rate-sensitive names struggled.
Berkshire Hathaway's insurance float reached about $176 billion at the end of 2025, up $5 billion from the year before.
That pile of capital threw off $12.51 billion in investment income for the year, down slightly from $13.67 billion in 2024. Underwriting profit came in at $7.26 billion, lower than 2024's $9.02 billion, with most of the drop tied to higher catastrophe losses.
The bottom line: even in a slower year, Berkshire's insurance arm still made nearly $20 billion in pre-tax profit between underwriting and investments.
The variable that matters most is short-term yields.
Schwab's base case calls for two or three more Fed cuts in 2026, which would slowly bring portfolio yields down from their peak. But with float at $176 billion at Berkshire alone, the gap between rates near zero and rates near 4% is the difference between a few hundred million and several billion in yearly profit.
The math behind float quietly favors anyone holding a big one.
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