Free LeverageWide moat

Free leverage is the heart of why float matters. When Berkshire's insurers collect a premium today and pay the claim years from now, the money in between is Berkshire's to invest — billions of dollars it never borrowed and need not repay on any fixed schedule. If the underwriting merely breaks even, that capital costs less than nothing: Berkshire is paid, in effect, to hold other people's money and keep the returns on it. No bank loan works that way, because a loan carries interest and a due date; float carries neither, so long as the insurance is run sanely.

The power compounds because the returns on invested float flow to shareholders while the float itself keeps revolving. Old claims are paid, new premiums arrive, and the pool endures — a permanent block of investable capital renewed by the ordinary operation of the business. Over decades this is the difference between growing rich slowly on your own money and growing rich faster on money that costs you nothing.

The catch, and it is a real one, is that float is only free if the underwriting is disciplined. An insurer that underprices risk to grow its float is borrowing at a hidden, ruinous cost that surfaces later when the claims come due. Berkshire's willingness to earn an underwriting profit — or write nothing at all — is what keeps the leverage free rather than lethal. Handled carelessly, float — $177.5 billion of other people's money at Berkshire in June 2026¹ — is the fastest way an insurer has ever found to go broke.