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Berkshire Hathaway (BRK-A) (BRK-B), the conglomerate run by Warren Buffett, was trading lower on Monday, down about 2% as of 2:30 p.m. Eastern.

The drop likely stemmed from the release of the company’s third-quarter earnings on Saturday (yes, Saturday), when it posted a net loss of $12.8 billion, or $5.88 per share.

However, if you look a little deeper into the numbers, the selloff may have been a knee-jerk reaction to what was actually a pretty good quarter. One business line in particular stood out for Berkshire Hathaway: insurance.

Net earnings down, operating income up

Berkshire Hathaway’s net loss stems from its over $350 billion investment portfolio, which sustained a nearly $24 billion net loss in the quarter and dragged down its overall net earnings. That reflects the overall performance of the market, as the S&P 500 was down 3.8% in the third quarter, while Buffett’s largest holding, Apple (AAPL), which makes up some 47% of the portfolio, dropped 11% in the quarter.

It is important to note that these are unrealized losses because these investments have yet to be sold. However, it does include about $560 million in after-tax realized gains on sales of investments.

It is also worth noting that the portfolio has returned some $30 billion through the first three quarters, so you have to look past the quarterly ups and downs to the long-term track record, which has been stellar. The portfolio has had an average annual return of about 22% since Buffett has been managing it.

Importantly, Berkshire Hathaway emphasized that investors should not put much stock in the portfolio losses for the most recent quarter.

“The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings (losses) per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” Berkshire’s latest report states.

The more significant metric to focus on is operating earnings, which is income generated through its wholly-owned businesses. Berkshire Hathaway posted a 40% year-over-year increase in operating earnings, which rose to about $10.8 billion in the quarter. That was based on a 21% year-over-year increase in revenue to $93 billion.

GEICO and insurance holdings lead the way

The firm’s earnings got a huge boost from its insurance businesses, which include GEICO, Berkshire Hathaway Primary Group, and Berkshire Hathaway Reinsurance Group. Insurance group revenue was up 19% to $24.3 billion, while net earnings were $5.9 billion, up from just $387 million a year ago in this same quarter.

GEICO recorded $1.1 billion in net earnings, up from a net loss of $759 million a year ago, while BH Reinsurance Group had earnings of $1.4 billion in the quarter, up from a net loss of $251 million in the third quarter of 2022.

GEICO earnings climbed on a 13% decrease in underwriting expenses, and its expense ratio — underwriting expense to premiums earned — was down 1.4 percentage points to 9.3% in the third quarter. For the first nine months, the expense ratio was down 2.1 percentage points to 9.7%, stemming from a 54% reduction in advertising expenses incurred. That may seem hard to believe, given how often those commercials seem to be on, but it’s true.

For the Reinsurance group, earned premiums surged more than 42% in the quarter to $5.7 billion, offset somewhat by higher losses and underwriting expenses. Some of the other businesses were either flat or down, but the great thing about Berkshire Hathaway is that its wide array of assets and holdings allows it to perform well in various market environments.

Thus, when you look at those numbers, the quarter looks much better. Overall, Berkshire Hathaway stock is up by about 12% year to date, and this solid earnings report confirms it as a stock to strongly consider.

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