Financials outside the model
The Moat Score reads a business through margins and returns on invested capital. That lens fits companies that make things or sell services — but a bank’s raw material is deposits, an insurer’s is float, and for both, leverage isn’t a risk bolted onto the business model; it is the business model. Concepts like gross margin and invested capital stop meaning what the scoring formulas need them to mean.
So rather than force the wrong lens and publish a confident-looking number, the Index excludes banks and credit institutions, insurers, and real-estate businesses — REITs and holding and investment offices included — from scoring. They’re marked not scored, which you’ll notice on our Berkshire page: a large slice of Berkshire’s book is financials, and we’d rather show honest gaps there than invented scores.
How the Moat Index applies this
This is where our usage deliberately differs from common usage. Elsewhere you’ll see banks rated on net interest margin, return on equity, or combined ratios — reasonable tools we don’t currently compute, because our published model doesn’t cover those businesses. The methodology states this limit plainly, and any future change to what gets scored would arrive as a new methodology version in the append-only history, never as a silent edit. It’s the model’s own circle of competence: better a marked boundary than a stretched formula.