Insurance float
BankingDefinition
Cash that an insurance company collects in premiums and holds before paying out claims. Earns the insurer investment income for years before being settled. Buffett built Berkshire on the float of GEICO and Gen Re — describing it as "money we hold but don't own."
Float is essentially a low-cost loan from policyholders. As long as underwriting is profitable (combined ratio < 100%), float is free leverage. Property & casualty insurers run float-heavy models; life insurers carry massive float over decades.
Float is essentially a low-cost loan from policyholders. As long as underwriting is profitable (combined ratio < 100%), float is free leverage. Property & casualty insurers run float-heavy models; life insurers carry massive float over decades.