Berkshire Hathaway (NYSE:BRK.A,NYSE:BRK.B) is basically an insurance company, and Berkshire stock is largely an investment in insurers.

You seldom read that in stories about Buffett and BRK.B stock, but it’s true.

About 77% of its revenue comes from insurance, according to its most recent quarterly report. Berkshire’s profits from insurance, which amounted to about $4.6 billion in the third quarter, enable BRK to make the investments that everyone talks about.

Selling insurance is like owning a casino. While it looks risky, the odds are always with the owner. BRK sells almost every kind of insurance: life, accident, commercial property, and re-insurance. Using their large size and careful management, Berkshire’s insurance companies deliver reliable profits. They’re the jet engine that fuel Warren Buffett.

But everyone who talks about BRK.B and Buffett wants to discuss Buffett’s investment choices.

Will Apple (NASDAQ:AAPL) cause Berkshire to report a loss? What about Buffett’s big bet on U.S. banks? Why did he buy Oracle (NASDAQ:ORCL)? What do his bets on emerging markets mean? 

But if you are considering buying Berkshire stock today, most of what you’re buying has nothing to do with those bets.

How Is Berkshire’s Insurance Business Doing?

Insurance seems boring and, if you look for insurance headlines, you’ll likely be directed to controversial topics like health insurance.

But most of Berkshire’s insurance assets are in the less-controversial area of property and casualty. That has been a good business. Big claims, from fires and hurricanes, cut into profits but can also boost insurers’ pricing power down the road.

The insurance business evens out. It’s supposed to.

But the odds of insurers having to pay out claims are long. Most insurance premiums go back to the house, where they’re used to make other bets. Estimating losses and setting odds are what underwriting is all about.

Buffett has been fascinated with insurance since 1950, when he visited Geico’s offices in Washington D.C. while he was a student at Columbia Business School. Berkshire bought its first insurer in 1967, National Indemnity, and has kept buying them, eventually purchasing Geico itself. 

Risk Creates Opportunity

Wherever there is risk, there is opportunity in the insurance game. One of the fastest-growing niches in property and casualty is cyber insurance, which protects businesses against losses from cyberattacks, and BRK is a player in that business.

But there may be even bigger opportunities in health insurance for Berkshire stock, as effective analysis of data can drive better decisions and better outcomes. Along with JPMorgan Chase (NYSE:JPM) and Amazon.com Inc. (NASDAQ:AMZN), Berkshire is involved in a joint venture which is looking to cover the companies’ own employees and eventually offer health insurance to other employers. In five years, the venture could generate the lion’s share of Berkshire’s profit growth, providing a catalyst for Berkshire stock.

Berkshire Stock Is Mostly an Investment in Insurers

If you want to buy BRK.B stock, know what you’re buying. You’re mostly buying an insurance conglomerate.

Owners of Berkshire stock should also remember that Warren Buffett is 88, and vice chairman Charlie Munger is 94. Even Ajit Jain, the vice chairman of Berkshire’s insurance operations, is 67. 

BRK.B stock is Buffett for show and insurance for dough. Regardless of how long we’re fortunate enough to have Warren Buffett with us, you should know that insurance is the legacy you’re buying when you purchase Berkshire stock.

Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL and AMZN.