Berkshire Hathaway had disappointing insurance results in the second quarter, and that raises a question about whether the company's vaunted insurance underwriting discipline is eroding.

Berkshire's ove rall second-quarter earnings were good, as operating profits after taxes rose around 6% excluding currency swings, Barron's estimates. That was driven largely by strength in the company's large group of industrial businesses.

Those results helped boost Berkshire's stock as the Class B shares gained 1.5% Monday, but the shares gave back all those gains -- and then some -- as they fell 2.5% Tuesday to $516.38.

One issue could be Berkshire's insurance operations -- the biggest and most valuable part of the $1.1 trillion (market value) conglomerate. Berkshire has more capital in its insurance operations at more than $300 billion than any other insurer. It has a history of above-average underwriting profitability, a trend often cited by chairman Warren Buffett.

The company's insurance underwriting results fell 13% to $1.7 billion after taxes in the second quarter, and the reported drop probably understates the decline since the company benefited from reserve releases in the period. These occur when insurers have overestimated losses in the past and realize a gain. Investors tend to focus on underwriting results excluding reserve releases.

All this reflects tougher conditions in the property and casualty insurance market, which has experienced deteriorating pricing trends and higher losses, driven by inflation and lawsuits. The industry calls this a softening market.

Berkshire had some of the weaker results among its insurance peers in its three main property and casualty insurance units: Geico, the No. 3 U.S. auto insurer; its reinsurance operations, which include General Re; and its primary P&C business. Berkshire's disappointing results came despite a lack of catastrophe losses.

Geico's underwriting results were worse than expected and so were those at the other units, excluding reserve releases.

Brian Meredith, the UBS analyst, wrote that "underlying trends were worse than expected" in reinsurance and "underlying underwriting trends deteriorated more than expected" in the primary insurance unit. Meredith is bullish with a Buy rating and price target of about $600 on the B shares.

In a client note, TD Cowen analyst Andrew Kligerman noted that Berkshire's primary insurance business had a combined ratio excluding reserve releases of 99.9%, the worst result among nine specialty insurance peers including WR Berkley and Arch Capital Group. The average among them was 93.6%. A lower combined ratio, a measure of underwriting profits, is favorable, since it measures insurance losses and expenses as a percentage of premiums.

"If world-class Berkshire is posting the weakest underwriting combined ratio, pricing, not execution, is a problem," he wrote.

Kligerman's view is that Berkshire remains a top underwriter despite the softer second-quarter results.

One issue, however, is whether Berkshire is investing enough in technology. Travelers, for instance, have spent heavily on AI and its impressive results and strong stock price reflect that , as Barron's recently highlighted.

Berkshire allowed Geico to fall way behind peers like Progressive in technology and has been playing catch-up. Buffett's view is that Geico is fixed. But it's hard to determine how big a technology gap persists between the two rivals. Progressive continues to best Berkshire on growth and profits. The two are leaders in the auto insurance industry when ranked by premium volume.

Berkshire declined to comment.

Geico has a solidly profitable combined ratio of about 91% in the quarter, but it was worse than Meredith was expecting.

Pricing is eroding in the competitive auto insurance business and that is holding down premium growth, after big increases in recent years.

"Looking ahead, we expect further underlying margin deterioration in 2026/27 as rate cuts persist and competitive conditions in personal auto remain elevated," Meredith wrote of Geico.

Berkshire's reinsurance operations had an underlying combined ratio of 89.5% excluding reserve releases, which was worse than all but one of its seven peers in the second quarter, Kligerman wrote.

Investors will be focused on Berkshire's insurance results in the coming quarters to see if the second-quarter results were an anomaly or sign of eroding competitiveness in an industry where the company long has been a standout.