Superior to Berkshire? Porter Teases a Game-Changing Stock Pick

Since stepping down as Marketwise’s CEO this summer, Porter Stansberry reshaped his Porter and Co. business. He now runs a free newsletter, Daily Journal of Porter Stansberry, where he shares macro insights and frequently promotes his main publication, the Major Insider in Wall Street.

This week, one of his updates stood out to me. He turned his attention to the insurance sector—a personal favorite of mine—and suggested an investment pick for the Major Insider readers that he claims is “Superior to Berkshire”. Let’s break down his perspective on this industry.

In an article titled “The Rigged Casino Tailored for You”, he discusses why property and casualty (P&C) insurance stocks are so attractive. He likens putting money into these firms to running a casino, where the house consistently has the upper hand. The real advantage, however, lies in using other people’s money rather than relying on one’s own capital.

While his explanation is a bit complex, he’s really discussing “float”—a term Warren Buffett made famous in the insurance world. Simply put, it’s an interest-free source of capital that insurers can invest before they need to pay out claims.

Berkshire Hathaway has certainly benefited from this model, with its float reaching $169 billion by late 2023—up from just $40 billion by the time I first started buying its shares, during the early 2000. Unlike most insurers, Berkshire openly reports its float for investors, and even dedicates a special section to it in the yearly report. If you’re curious, Warren Buffett’s explanation can be found on the 18th page.

If this business model is new to you. Insurance stocks tend to fall out of popularity occasionally, especially when interest rate decline. That means there will chances to buy high-quality insurance firms at compelling valuations—we can’t predict exactly when.

Many people wonder about the meaning of “P&C,” which represents Property and Casualty (P&C) insurance. This is broad category of insurance that most people think of, excluding life and health insurance and property insurance covers physical assets, like homes and vehicles, while casualty insurance covers legal liabilities, such as driver’s liability insurance, medical malpractice insurance, and other similar types.

Additionally, there’s a market for “admitted” insurance, which falls under regulation by the states and has standardized pricing. State regulators approve the pricing structures insurers use, which is why we often receive similar quotes for basic coverages like home or automobile insurance. However, there are “non-admitted” insurance policies, which cover more specialized risks and don’t follow the same state regulations. These policies often have more complex underwriting and come with a range of rates and coverage limitations. This type of insurance is known as “specialty” insurance. Companies like Markel, for example, provide customized Insurance for more unusual risks, such as covering summer camps or hairdressers.

One of the most extreme forms of specialty insurance is Excess and Surplus Lines insurance (E&S). These policies are custom-designed for specific properties or risks that the regulated insurance market cannot handle. They can include exclusions or specific conditions not found in the “regulated” insurance market, like coverage limits or exclusions for certain risks.

While “float” can be found in other types of insurance, such as life or annuity insurance, I find Property and Casualty (P&C) insurance particularly appealing. This is due to my understanding of the regulatory environment and its potential profitability.

It sounds like Porter’s latest hint was pointing to Kinsale Capital (KNSL) as his leading insurance choice, based on its exceptional float growth and underwriting profitability. His “more profitable than Berkshire” line was likely more of a marketing hook than a direct comparison—after all, Kinsale is a $10.0 billion specialty insurer focused on E&S policies, while Berkshire Hathaway is a trillion-dollar conglomerate with one of the largest insurance operations in the world.

That said, Kinsale’s growth story is impressive. Its float has expanded at a 31% annualized rate, growing from under $0.2 billion since 2015 to nearly $2,000 million last year. More importantly, it has remained a reliably profitable underwriter, something many fast-growing insurers struggle to achieve. Porter’s original May recommendation, calling it a “50% Compounder That Flies Under the Radar”, was backed up by his public pitch on Twitter/X in June, when the stock traded around $380–$400.

Kinsale’s valuation is undeniably high compared to most P&C insurers, making it a riskier bet for conservative investors. However, its strong execution and ability to compound book value at ~30% annually have justified the premium so far. I have increased my holdings this year, even after their most recent earnings report., and continue to hold the stock.

While calling it “superior to Berkshire” might be a stretch, Kinsale has certainly outperformed Berkshire’s insurance segment in recent years in terms of underwriting profitability and growth. Whether it can sustain that level of performance over decades remains to be seen.

The key takeaway? If you’re looking for a high-growth, high-quality insurer with a proven track record of underwriting profitability, Kinsale remains a compelling option—albeit at a premium valuation.

If we speculate on other P&C insurers Porter might recommend, two names stand out—W.R. Berkley (WRB) and Chubb (CB). Given his past emphasis on insurance stocks at Stansberry Research and his “God’s Investment” campaign in 2023, these seem like likely picks. Both stocks reached attractive valuations in mid-2023, coinciding with that campaign. I was also buying WRB and CB at the time, as they looked like obvious choices amid rising interest rates and increasing insurance premiums.

If Porter follows the valuation framework he previously used in Investment Advisory of Stansberry —targeting stocks trading at a 50 precent discount to combined float and book value—few high-quality insurers fit that mold. One exception is Markel, which was recommended earlier this year, with Markel’s float and book value are approaching $40 billion, yet its market cap remains under $20.0 billion. While it doesn’t fit the metric as cleanly as some traditional insurers, its valuation remains attractive.

My buying criteria are slightly more flexible. I am willing to accumulate consistently profitable underwriters at a 25 precent discount to “book + float.” Right now, my holdings in AFG, CB, WRB are currently above that threshold. If you’re in search of other insurance that Porter has mentioned, Travelers (TRV) is another solid pick—one of the strongest large-cap P&C insurers and currently trading at a reasonable valuation. Beyond that, you may have to either pay a premium for growth (as along with Kinsale or Progressive) or explore niche players and reinsurers like RenaissanceRe (RNR).

Does this analysis provide a definitive answer? Not necessarily, it offers a useful framework. The most crucial factor in selecting an insurer is underwriting profitability, a key metric that isn’t always readily available in financial databases. Many higher-growth insurers, like Kinsale, trade well above book + float (Kinsale, for instance, is valued at ~3x its book + float). A few reliable companies, like Markel, have compounded book value at ~10% annually, but Kinsale has achieved an exceptional 30% annual growth rate in the last 5 years.

Could Porter consider other high-growth insurers that don’t meet his typical “discounted” criteria? Possibly. Some fast-growing insurers, like SKWD Insurance (Skyward Specialty), trade near their book + float while delivering 30% annual book value growth. However, it’s a small, newly public company with a limited track record. Another name worth watching is Trisura. It’s about the same scale as Skyward but less consistent and trades at a higher valuation. These stocks don’t always appear in broad scans, but they warrant deeper research.

As for Porter’s full list of picks, we only have confirmation on Kinsale. WRB and CB seem highly probable, but the other 2 remain unknown. If he hints at another pick, we’ll get more clarity.

Currently, my portfolio includes Berkshire Hathaway, Markel, Chubb, W.R. Berkley, American Financial Group, and Kinsale, along with some insurance brokers and agencies. About half remain at reasonable buy levels. I’ll keep an eye on Trisura & Skyward Specialty as potential high-growth additions.