The Japanese Insurer Berkshire Hathaway Quietly Took a Stake In: Should U.S. Investors Follow?

When Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), the conglomerate Warren Buffett built, invests in an insurance company, the market pays attention.

That's exactly what happened in March, when Berkshire subsidiary National Indemnity purchased a 2.5% stake in Tokio Marine (OTC: TKOMY), one of Japan's largest insurers. The investment clocked in at about $1.8 billion at the time of buy-in and is now worth roughly $2.2 billion after a sharp rise in Tokio Marine's stock price.

The question is whether individual investors should follow Berkshire's lead.

Image source: Getty Images.

Why Berkshire likes insurance businesses

Insurance has always been the foundation of Berkshire Hathaway's success.

The company's insurance subsidiaries generate billions of dollars in premium income each year, creating what Buffett calls "float." This is money that's invested before claims are paid. That float has helped Berkshire build one of the world's largest investment portfolios and acquire dozens of businesses over the past six decades.

As a result, it's safe to say that Buffett knows how to identify high-quality insurance operators.

And this is probably one reason Berkshire has steadily expanded its investments in Japan.

While investors often focus on Berkshire's stakes in Japanese trading houses, the Tokio Marine investment suggests Buffett also sees opportunity in Japan's insurance sector.

A business built on underwriting discipline

Tokio Marine has developed a reputation for underwriting discipline, a trait Buffett has consistently favored. Insurance companies make money from investment income and underwriting profits. The best insurers do both.

Tokio Marine has demonstrated a long history of underwriting profitability, with many of its core insurance operations consistently reporting combined ratios below 100. In the insurance industry, a combined ratio below 100 indicates that underwriting operations are profitable before investment income is taken into account.

That's particularly notable given rising catastrophe losses, inflation, and higher reinsurance costs across the global insurance industry in recent years.

Tokio Marine is global

Despite its name, Tokio Marine isn't simply a bet on Japan. The company has spent years expanding through acquisitions across North America, Europe, and Asia, and today its international insurance operations contribute a significant share of overall earnings.

And that international expansion has helped fuel strong financial results. In 2025, Tokio Marine reported nearly $7 billion in annual net income. That's up around 45% from $4.8 billion in 2024. The company has also continued to return capital to shareholders through dividend increases and share repurchases, while targeting mid-teen returns on equity.

For fiscal 2026, Tokio Marine reported adjusted net profit of $4.47 billion, up from approximately $3.8 billion in the prior-year period, representing 17% year-over-year growth.

Should you follow National Indemnity?

No investment is guaranteed to succeed, even one backed by Berkshire Hathaway. Still, Tokio Marine combines several attractive traits: a leading market position, disciplined underwriting culture, global diversification, strong profitability, and shareholder-friendly capital allocation.

The valuation is also reasonable. Shares currently trade for roughly 14 times forward earnings, a modest multiple for a company generating double-digit earnings growth, buying back stock, and producing billions in annual profit.

If you're looking beyond domestic financial stocks, Tokio Marine's American depositary receipt offers one way to gain exposure to a high-quality global insurer.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.