• 2001年致股东的信
  • 第一部分
    • • 伯克希尔·哈撒韦公司股东：
      • To the Shareholders of Berkshire Hathaway Inc.:
      • 2001年的收购
      • Acquisitions of 2001
      • 财产/意外险的经济学
      • The Economics of Property/Casualty Insurance
      • 保险承保原则
      • Principles of Insurance Underwriting
      • 2001年的保险业务
      • Insurance Operations in 2001
      • ”损失发展”与保险会计
      • “Loss Development” and Insurance Accounting
      • 2001年信函
      • 投资
      • 慈善捐赠
      • 年会

Title: 2001 Letter

Part 1/2

To the Shareholders of Berkshire Hathaway Inc.:

Berkshire’s loss in net worth during 2001 was $3.77 billion, which decreased the per-share book value of both our Class A and Class B stock by 6.2%. Over the last 37 years (that is, since present management took over) per-share book value has grown from $19 to $37,920, a rate of 22.6% compounded annually.*

*All figures used in this report apply to Berkshire’s A shares, the successor to the only stock that the company had outstanding before 1996. The B shares have an economic interest equal to 1/30th that of the A.

Per-share intrinsic grew somewhat faster than book value during these 37 years, and in 2001 it probably decreased a bit less. We explain intrinsic value in our Owner’s Manual, which begins on page 62. I urge new shareholders to read this manual to become familiar with Berkshire’s key economic principles.

Two years ago, reporting on 1999, I said that we had experienced both the worst absolute and relative performance in our history. I added that “relative results are what concern us,” a viewpoint I’ve had since forming my first investment partnership on May 5, 1956. Meeting with my seven founding limited partners that evening, I gave them a short paper titled “The Ground Rules” that included this sentence: “Whether we do a good job or a poor job is to be measured against the general experience in securities.” We initially used the Dow Jones Industrials as our benchmark, but shifted to the S&P 500 when that index became widely used. Our comparative record since 1965 is chronicled on the facing page; last year Berkshire’s advantage was 5.7 percentage points.

Some people disagree with our focus on relative figures, arguing that “you can’t eat relative performance.” But if you expect — as Charlie Munger, Berkshire’s Vice Chairman, and I do — that owning the S&P 500 will produce reasonably satisfactory results over time, it follows that, for long-term investors, gaining small advantages annually over that index must prove rewarding. Just as you can eat well throughout the year if you own a profitable, but highly seasonal, business such as See’s (which loses considerable money during the summer months) so, too, can you regularly feast on investment returns that beat the averages, however variable the absolute numbers may be.

Though our corporate performance last year was satisfactory, my performance was anything but. I manage most of Berkshire’s equity portfolio, and my results were poor, just as they have been for several years. Of even more importance, I allowed General Re to take on business without a safeguard I knew was important, and on September 11th, this error caught up with us. I’ll tell you more about my mistake later and what we are doing to correct it.

Another of my 1956 Ground Rules remains applicable: “I cannot promise results to partners.” But Charlie and I can promise that your economic result from Berkshire will parallel ours during the period of your ownership: We will not take cash compensation, restricted stock or option grants that would make our results superior to yours.

Additionally, I will keep well over 99% of my net worth in Berkshire. My wife and I have never sold a share nor do we intend to. Charlie and I are disgusted by the situation, so common in the last few years, in which shareholders have suffered billions in losses while the CEOs, promoters, and other higher-ups who fathered these disasters have walked away with extraordinary wealth. Indeed, many of these people were urging investors to buy shares while concurrently dumping their own, sometimes using methods that hid their actions. To their shame, these business leaders view shareholders as patsies, not partners.

Though Enron has become the symbol for shareholder abuse, there is no shortage of egregious conduct elsewhere in corporate America. One story I’ve heard illustrates the all-too-common attitude of managers toward

owners: A gorgeous woman slinks up to a CEO at a party and through moist lips purrs, “I’ll do anything — anything — you want. Just tell me what you would like.” With no hesitation, he replies, “Reprice my options.”

One final thought about Berkshire: In the future we won’t come close to replicating our past record. To be sure, Charlie and I will strive for above-average performance and will not be satisfied with less. But two conditions at Berkshire are far different from what they once were: Then, we could often buy businesses and securities at much lower valuations than now prevail; and more important, we were then working with far less money than we now have. Some years back, a good $10 million idea could do wonders for us (witness our investment in Washington Post in 1973 or GEICO in 1976). Today, the combination of ten such ideas and a triple in the value of each would increase the net worth of Berkshire by only ¼ of 1%. We need “elephants” to make significant gains now — and they are hard to find.

On the positive side, we have as fine an array of operating managers as exists at any company. (You can read about many of them in a new book by Robert P. Miles: The Warren Buffett CEO.) In large part, moreover, they are running businesses with economic characteristics ranging from good to superb. The ability, energy and loyalty of these managers is simply extraordinary. We now have completed 37 Berkshire years without having a CEO of an operating business elect to leave us to work elsewhere.

Our star-studded group grew in 2001. First, we completed the purchases of two businesses that we had agreed to buy in 2000 — Shaw and Johns Manville. Then we acquired two others, MiTek and XTRA, and contracted to buy two more: Larson-Juhl, an acquisition that has just closed, and Fruit of the Loom, which will close shortly if creditors approve our offer. All of these businesses are led by smart, seasoned and trustworthy CEOs.

Additionally, all of our purchases last year were for cash, which means our shareholders became owners of these additional businesses without relinquishing any interest in the fine companies they already owned. We will continue to follow our familiar formula, striving to increase the value of the excellent businesses we have, adding new businesses of similar quality, and issuing shares only grudgingly.

Acquisitions of 2001

A few days before last year’s annual meeting, I received a heavy package from St. Louis, containing an unprepossessing chunk of metal whose function I couldn’t imagine. There was a letter in the package, though, from Gene Toombs, CEO of a company called MiTek. He explained that MiTek is the world’s leading producer of this thing I’d received, a “connector plate,” which is used in making roofing trusses. Gene also said that the U.K. parent of MiTek wished to sell the company and that Berkshire seemed to him the ideal buyer. Liking the sound of his letter, I gave Gene a call. It took me only a minute to realize that he was our kind of manager and MiTek our kind of business. We made a cash offer to the U.K. owner and before long had a deal.

Gene’s managerial crew is exceptionally enthusiastic about the company and wanted to participate in the purchase. Therefore, we arranged for 55 members of the MiTek team to buy 10% of the company, with each putting up a minimum of $100,000 in cash. Many borrowed money so they could participate.

As they would not be if they had options, all of these managers are true owners. They face the downside of decisions as well as the upside. They incur a cost of capital. And they can’t “reprice” their stakes: What they paid is what they live with.

Charlie and I love the high-grade, truly entrepreneurial attitude that exists at MiTek, and we predict it will be a winner for all involved.

* * * * * * * * * * * *

In early 2000, my friend, Julian Robertson, announced that he would terminate his investment partnership, Tiger Fund, and that he would liquidate it entirely except for four large holdings. One of these was XTRA, a leading lessor of truck trailers. I then called Julian, asking whether he might consider selling his XTRA block or whether, for that matter, the company’s management might entertain an offer for the entire company. Julian referred me to Lew Rubin, XTRA’s CEO. He and I had a nice conversation, but it was apparent that no deal was to be done.

Then in June 2001, Julian called to say that he had decided to sell his XTRA shares, and I resumed conversations with Lew. The XTRA board accepted a proposal we made, which was to be effectuated through a tender offer expiring on September 11th. The tender conditions included the usual “out,” allowing us to withdraw if the stock market were to close before the offer’s expiration. Throughout much of the 11th, Lew went through a particularly wrenching experience: First, he had a son-in-law working in the World Trade Center who couldn’t be located; and second, he knew we had the option of backing away from our purchase. The story ended happily: Lew’s son-in-law escaped serious harm, and Berkshire completed the transaction.

Trailer leasing is a cyclical business but one in which we should earn decent returns over time. Lew brings a new talent to Berkshire, and we hope to expand in leasing.

* * * * * * * * * * * *

On December 3rd, I received a call from Craig Ponzio, owner of Larson-Juhl, the U.S. leader in custom-made picture frames. Craig had bought the company in 1981 (after first working at its manufacturing plant while attending college) and thereafter increased its sales from $3 million to $300 million. Though I had never heard of Larson-Juhl before Craig’s call, a few minutes talk with him made me think we would strike a deal. He was straightforward in describing the business, cared about who bought it, and was realistic as to price. Two days later, Craig and Steve McKenzie, his CEO, came to Omaha and in ninety minutes we reached an agreement. In ten days we had signed a contract.

Larson-Juhl serves about 18,000 framing shops in the U.S. and is also the industry leader in Canada and much of Europe. We expect to see opportunities for making complementary acquisitions in the future.

* * * * * * * * * * *

As I write this letter, creditors are considering an offer we have made for Fruit of the Loom. The company entered bankruptcy a few years back, a victim both of too much debt and poor management. And, a good many years before that, I had some Fruit of the Loom experience of my own.

In August 1955, I was one of five employees, including two secretaries, working for the three managers of Graham-Newman Corporation, a New York investment company. Graham-Newman controlled Philadelphia and Reading Coal and Iron (“P&R”), an anthracite producer that had excess cash, a tax loss carryforward, and a declining business. At the time, I had a significant portion of my limited net worth invested in P&R shares, reflecting my faith in the business talents of my bosses, Ben Graham, Jerry Newman and Howard (Micky) Newman.

This faith was rewarded when P&R purchased the Union Underwear Company from Jack Goldfarb for $15 million. Union (though it was then only a licensee of the name) produced Fruit of the Loom underwear. The company possessed $5 million in cash — $2.5 million of which P&R used for the purchase — and was earning about $3 million pre-tax, earnings that could be sheltered by the tax position of P&R. And, oh yes: Fully $9 million of the remaining $12.5 million due was satisfied by non-interest-bearing notes, payable from 50% of any earnings Union had in excess of $1 million. (Those were the days; I get goosebumps just thinking about such deals.)

Subsequently, Union bought the licensor of the Fruit of the Loom name and, along with P&R, was merged into Northwest Industries. Fruit went on to achieve annual pre-tax earnings exceeding $200 million.

John Holland was responsible for Fruit’s operations in its most bountiful years. In 1996, however, John retired, and management loaded the company with debt, in part to make a series of acquisitions that proved disappointing. Bankruptcy followed. John was then rehired, and he undertook a major reworking of operations. Before John’s return, deliveries were chaotic, costs soared and relations with key customers deteriorated. While correcting these problems, John also reduced employment from a bloated 40,000 to 23,000. In short, he’s been restoring the old Fruit of the Loom, albeit in a much more competitive environment.

Stepping into Fruit’s bankruptcy proceedings, we made a proposal to creditors to which we attached no financing conditions, even though our offer had to remain outstanding for many months. We did, however, insist on a very unusual proviso: John had to be available to continue serving as CEO after we took over. To us, John and the brand are Fruit’s key assets.

I was helped in this transaction by my friend and former boss, Micky Newman, now 81. What goes around truly does come around.

* * * * * * * * * * * *

Our operating companies made several “bolt-on” acquisitions during the year, and I can’t resist telling you about one. In December, Frank Rooney called to tell me H.H. Brown was buying the inventory and trademarks of Acme Boot for $700,000.

That sounds like small potatoes. But — would you believe it? — Acme was the second purchase of P&R, an acquisition that took place just before I left Graham-Newman in the spring of 1956. The price was $3.2 million, part of it again paid with non-interest bearing notes, for a business with sales of $7 million.

After P&R merged with Northwest, Acme grew to be the world’s largest bootmaker, delivering annual profits many multiples of what the company had cost P&R. But the business eventually hit the skids and never recovered, and that resulted in our purchasing Acme’s remnants.

In the frontispiece to Security Analysis, Ben Graham and Dave Dodd quoted Horace: “Many shall be restored that now are fallen and many shall fall that are now in honor.” Fifty-two years after I first read those lines, my appreciation for what they say about business and investments continues to grow.

* * * * * * * * * * * *

In addition to bolt-on acquisitions, our managers continually look for ways to grow internally. In that regard, here’s a postscript to a story I told you two years ago about R.C. Willey’s move to Boise. As you may remember, Bill Child, R.C. Willey’s chairman, wanted to extend his home-furnishings operation beyond Utah, a state in which his company does more than $300 million of business (up, it should be noted, from $250,000 when Bill took over 48 years ago). The company achieved this dominant position, moreover, with a “closed on Sunday” policy that defied conventional retailing wisdom. I was skeptical that this policy could succeed in Boise or, for that matter, anyplace outside of Utah. After all, Sunday is the day many consumers most like to shop.

Bill then insisted on something extraordinary: He would invest $11 million of his own money to build the Boise store and would sell it to Berkshire at cost (without interest!) if the venture succeeded. If it failed, Bill would keep the store and eat the loss on its disposal. As I told you in the 1999 annual report, the store immediately became a huge success — and it has since grown.

Shortly after the Boise opening, Bill suggested we try Las Vegas, and this time I was even more skeptical. How could we do business in a metropolis of that size and be closed on Sundays, a day that all of our competitors would be exploiting? Buoyed by the Boise experience, however, we proceeded to locate in Henderson, a mushrooming city adjacent to Las Vegas.

The result: This store outsells all others in the R.C. Willey chain, doing a volume of business that far exceeds the volume of any competitor and that is twice what I had anticipated. I cut the ribbon at the grand opening in October — this was after a “soft” opening and a few weeks of exceptional sales — and, just as I did at Boise, I suggested to the crowd that the new store was my idea.

It didn’t work. Today, when I pontificate about retailing, Berkshire people just say, “What does Bill think?” (I’m going to draw the line, however, if he suggests that we also close on Saturdays.)

The Economics of Property/Casualty Insurance

Our main business – though we have others of great importance – is insurance. To understand Berkshire, therefore, it is necessary that you understand how to evaluate an insurance company. The key determinants are: (1) the amount of float that the business generates; (2) its cost; and (3) most critical of all, the long-term outlook for both of these factors.

To begin with, float is money we hold but don’t own. In an insurance operation, float arises because premiums are received before losses are paid, an interval that sometimes extends over many years. During that time, the insurer invests the money. This pleasant activity typically carries with it a downside: The premiums that an insurer takes in usually do not cover the losses and expenses it eventually must pay. That leaves it running an”underwriting loss,“which is the cost of float. An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money.

Historically, Berkshire has obtained its float at a very low cost. Indeed, our cost has been less than zero in about half of the years in which we’ve operated; that is, we’ve actually been paid for holding other people’s money. Over the last few years, however, our cost has been too high, and in 2001 it was terrible.

The table that follows shows (at intervals) the float generated by the various segments of Berkshire’s insurance operations since we entered the business 35 years ago upon acquiring National Indemnity Company (whose traditional lines are included in the segment “Other Primary”). For the table we have calculated our float – which we generate in large amounts relative to our premium volume – by adding net loss reserves, loss adjustment reserves, funds held under reinsurance assumed and unearned premium reserves, and then subtracting insurance-related receivables, prepaid acquisition costs, prepaid taxes and deferred charges applicable to assumed reinsurance. (Got that?)

Last year I told you that, barring a mega-catastrophe, our cost of float would probably drop from its 2000 level of 6%. I had in mind natural catastrophes when I said that, but instead we were hit by a man-made catastrophe on September 11th — an event that delivered the insurance industry its largest loss in history. Our float cost therefore came in at a staggering 12.8%. It was our worst year in float cost since 1984, and a result that to a significant degree, as I will explain in the next section, we brought upon ourselves.

If no mega-catastrophe occurs, I — once again — expect the cost of our float to be low in the coming year. We will indeed need a low cost, as will all insurers. Some years back, float costing, say, 4% was tolerable because government bonds yielded twice as much, and stocks prospectively offered still loftier returns. Today, fat returns are nowhere to be found (at least we can’t find them) and short-term funds earn less than 2%. Under these conditions, each of our insurance operations, save one, must deliver an underwriting profit if it is to be judged a good business. The exception is our retroactive reinsurance operation (a business we explained in last year’s annual report), which has desirable economics even though it currently hits us with an annual underwriting loss of about $425 million.

Principles of Insurance Underwriting

When property/casualty companies are judged by their cost of float, very few stack up as satisfactory businesses. And interestingly — unlike the situation prevailing in many other industries — neither size nor brand name determines an insurer’s profitability. Indeed, many of the biggest and best-known companies regularly deliver mediocre results. What counts in this business is underwriting discipline. The winners are those that unfailingly stick to three key principles:

1. They accept only those risks that they are able to properly evaluate (staying within their circle of competence) and that, after they have evaluated all relevant factors including remote loss scenarios, carry the expectancy of profit. These insurers ignore market-share considerations and are sanguine about losing business to competitors that are offering foolish prices or policy conditions.

2. They limit the business they accept in a manner that guarantees they will suffer no aggregation of losses from a single event or from related events that will threaten their solvency. They ceaselessly search for possible correlation among seemingly-unrelated risks.

3. They avoid business involving moral risk: No matter what the rate, trying to write good contracts with bad people doesn’t work. While most policyholders and clients are honorable and ethical, doing business with the few exceptions is usually expensive, sometimes extraordinarily so.

The events of September 11th made it clear that our implementation of rules 1 and 2 at General Re had been dangerously weak. In setting prices and also in evaluating aggregation risk, we had either overlooked or dismissed the possibility of large-scale terrorism losses. That was a relevant underwriting factor, and we ignored it.

In pricing property coverages, for example, we had looked to the past and taken into account only costs we might expect to incur from windstorm, fire, explosion and earthquake. But what will be the largest insured property loss in history (after adding related business-interruption claims) originated from none of these forces. In short, all of us in the industry made a fundamental underwriting mistake by focusing on experience, rather than exposure, thereby assuming a huge terrorism risk for which we received no premium.

Experience, of course, is a highly useful starting point in underwriting most coverages. For example, it’s important for insurers writing California earthquake policies to know how many quakes in the state during the past century have registered 6.0 or greater on the Richter scale. This information will not tell you the exact probability of a big quake next year, or where in the state it might happen. But the statistic has utility, particularly if you are writing a huge statewide policy, as National Indemnity has done in recent years.

At certain times, however, using experience as a guide to pricing is not only useless, but actually dangerous. Late in a bull market, for example, large losses from directors and officers liability insurance (“D&O”) are likely to be relatively rare. When stocks are rising, there are a scarcity of targets to sue, and both questionable accounting and management chicanery often go undetected. At that juncture, experience on high-limit D&O may look great.

But that’s just when exposure is likely to be exploding, by way of ridiculous public offerings, earnings manipulation, chain-letter-like stock promotions and a potpourri of other unsavory activities. When stocks fall, these sins surface, hammering investors with losses that can run into the hundreds of billions. Juries deciding whether those losses should be borne by small investors or big insurance companies can be expected to hit insurers with verdicts that bear little relation to those delivered in bull-market days. Even one jumbo judgment, moreover, can cause settlement costs in later cases to mushroom. Consequently, the correct rate for D&O “excess” (meaning the insurer or reinsurer will pay losses above a high threshold) might well, if based on exposure, be five or more times the premium dictated by experience.

Insurers have always found it costly to ignore new exposures. Doing that in the case of terrorism, however, could literally bankrupt the industry. No one knows the probability of a nuclear detonation in a major metropolis this year (or even multiple detonations, given that a terrorist organization able to construct one bomb might not stop there). Nor can anyone, with assurance, assess the probability in this year, or another, of deadly biological or chemical agents being introduced simultaneously (say, through ventilation systems) into multiple office buildings and manufacturing plants. An attack like that would produce astronomical workers’ compensation claims.

Here’s what we do know:

(a) The probability of such mind-boggling disasters, though likely very low at present, is not zero.

(b) The probabilities are increasing, in an irregular and immeasurable manner, as knowledge and materials become available to those who wish us ill. Fear may recede with time, but the danger won’t — the war against terrorism can never be won. The best the nation can achieve is a long succession of stalemates. There can be no checkmate against hydra-headed foes.

(c) Until now, insurers and reinsurers have blithely assumed the financial consequences from the incalculable risks I have described.

(d) Under a “close-to-worst-case” scenario, which could conceivably involve $1 trillion of damage, the insurance industry would be destroyed unless it manages in some manner to dramatically limit its assumption of terrorism risks. Only the U.S. Government has the resources to absorb such a blow. If it is unwilling to do so on a prospective basis, the general citizenry must bear its own risks and count on the Government to come to its rescue after a disaster occurs.

Why, you might ask, didn’t I recognize the above facts before September 11th? The answer, sadly, is that I did — but I didn’t convert thought into action. I violated the Noah rule: Predicting rain doesn’t count; building arks does. I consequently let Berkshire operate with a dangerous level of risk — at General Re in particular. I’m sorry to say that much risk for which we haven’t been compensated remains on our books, but it is running off by the day.

At Berkshire, it should be noted, we have for some years been willing to assume more risk than any other insurer has knowingly taken on. That’s still the case. We are perfectly willing to lose $2 billion to $2½ billion in a single event (as we did on September 11th) if we have been paid properly for assuming the risk that caused the loss (which on that occasion we weren’t).

Indeed, we have a major competitive advantage because of our tolerance for huge losses. Berkshire has massive liquid resources, substantial non-insurance earnings, a favorable tax position and a knowledgeable shareholder constituency willing to accept volatility in earnings. This unique combination enables us to assume risks that far exceed the appetite of even our largest competitors. Over time, insuring these jumbo risks should be profitable, though periodically they will bring on a terrible year.

The bottom-line today is that we will write some coverage for terrorist-related losses, including a few non-correlated policies with very large limits. But we will not knowingly expose Berkshire to losses beyond what we can comfortably handle. We will control our total exposure, no matter what the competition does.

Insurance Operations in 2001

Over the years, our insurance business has provided ever-growing, low-cost funds that have fueled much of Berkshire’s growth. Charlie and I believe this will continue to be the case. But we stumbled in a big way in 2001, largely because of underwriting losses at General Re.

In the past I have assured you that General Re was underwriting with discipline — and I have been proven wrong. Though its managers’ intentions were good, the company broke each of the three underwriting rules I set forth in the last section and has paid a huge price for doing so. One obvious cause for its failure is that it did not reserve correctly — more about this in the next section — and therefore severely miscalculated the cost of the product it was selling. Not knowing your costs will cause problems in any business. In long-tail reinsurance, where years of unawareness will promote and prolong severe underpricing, ignorance of true costs is dynamite.

Additionally, General Re was overly-competitive in going after, and retaining, business. While all concerned may intend to underwrite with care, it is nonetheless difficult for able, hard-driving professionals to curb their urge to prevail over competitors. If “winning,” however, is equated with market share rather than profits, trouble awaits. “No” must be an important part of any underwriter’s vocabulary.

At the risk of sounding Pollyannaish, I now assure you that underwriting discipline is being restored at General Re (and its Cologne Re subsidiary) with appropriate urgency. Joe Brandon was appointed General Re’s CEO in September and, along with Tad Montross, its new president, is committed to producing underwriting profits. Last fall, Charlie and I read Jack Welch’s terrific book, Jack, Straight from the Gut (get a copy!). In discussing it, we agreed that Joe has many of Jack’s characteristics: He is smart, energetic, hands-on, and expects much of both himself and his organization.

When it was an independent company, General Re often shone, and now it also has the considerable strengths Berkshire brings to the table. With that added advantage and with underwriting discipline restored, General Re should be a huge asset for Berkshire. I predict that Joe and Tad will make it so.

* * * * * * * * * * * *

At the National Indemnity reinsurance operation, Ajit Jain continues to add enormous value to Berkshire. Working with only 18 associates, Ajit manages one of the world’s largest reinsurance operations measured by assets, and the largest, based upon the size of individual risks assumed.

I have known the details of almost every policy that Ajit has written since he came with us in 1986, and never on even a single occasion have I seen him break any of our three underwriting rules. His extraordinary discipline, of course, does not eliminate losses; it does, however, prevent foolish losses. And that’s the key: Just as is the case in investing, insurers produce outstanding long-term results primarily by avoiding dumb decisions, rather than by making brilliant ones.

Since September 11th, Ajit has been particularly busy. Among the policies we have written and retained entirely for our own account are (1) $578 million of property coverage for a South American refinery once a loss there exceeds $1 billion; (2) $1 billion of non-cancelable third-party liability coverage for losses arising from acts of terrorism at several large international airlines; (3) £500 million of property coverage on a large North Sea oil platform, covering losses from terrorism and sabotage, above £600 million that the insured retained or reinsured elsewhere; and (4) significant coverage on the Sears Tower, including losses caused by terrorism, above a $500 million threshold. We have written many other jumbo risks as well, such as protection for the World Cup Soccer Tournament and the 2002 Winter Olympics. In all cases, however, we have attempted to avoid writing groups of policies from which losses might seriously aggregate. We will not, for example, write coverages on a large number of office and apartment towers in a single metropolis without excluding losses from both a nuclear explosion and the fires that would follow it.

No one can match the speed with which Ajit can offer huge policies. After September 11th, his quickness to respond, always important, has become a major competitive advantage. So, too, has our unsurpassed financial strength. Some reinsurers — particularly those who, in turn, are accustomed to laying off much of their business on a second layer of reinsurers known as retrocessionaires — are in a weakened condition and would have difficulty surviving a second mega-cat. When a daisy chain of retrocessionaires exists, a single weak link can pose trouble for all. In assessing the soundness of their reinsurance protection, insurers must therefore apply a stress test to all participants in the chain, and must contemplate a catastrophe loss occurring during a very unfavorable economic environment. After all, you only find out who is swimming naked when the tide goes out. At Berkshire, we retain our risks and depend on no one. And whatever the world’s problems, our checks will clear.

Ajit’s business will ebb and flow — but his underwriting principles won’t waver. It’s impossible to overstate his value to Berkshire.

* * * * * * * * * * * *

GEICO, by far our largest primary insurer, made major progress in 2001, thanks to Tony Nicely, its CEO, and his associates. Quite simply, Tony is an owner’s dream.

GEICO’s premium volume grew 6.6% last year, its float grew $308 million, and it achieved an underwriting profit of $221 million. This means we were actually paid that amount last year to hold the $4.25 billion in float, which of course doesn’t belong to Berkshire but can be used by us for investment.

The only disappointment at GEICO in 2001 — and it’s an important one — was our inability to add policyholders. Our preferred customers (81% of our total) grew by 1.6% but our standard and non-standard policies fell by 10.1%. Overall, policies in force fell .8%.

New business has improved in recent months. Our closure rate from telephone inquiries has climbed, and our Internet business continues its steady growth. We, therefore, expect at least a modest gain in policy count during 2002. Tony and I are eager to commit much more to marketing than the $219 million we spent last year, but at the moment we cannot see how to do so effectively. In the meantime, our operating costs are low and far below those of our major competitors; our prices are attractive; and our float is cost-free and growing.

* * * * * * * * * * * *

Our other primary insurers delivered their usual fine results last year. These operations, run by Rod Eldred, John Kizer, Tom Nerney, Michael Stearns, Don Towle and Don Wurster had combined premium volume of $579 million, up 40% over 2000. Their float increased 14.5% to $685 million, and they recorded an underwriting profit of $30 million. In aggregate, these companies are one of the finest insurance operations in the country, and their 2002 prospects look excellent.

“Loss Development” and Insurance Accounting

Bad terminology is the enemy of good thinking. When companies or investment professionals use terms such as “EBITDA” and “pro forma,” they want you to unthinkingly accept concepts that are dangerously flawed. (In golf, my score is frequently below par on a pro forma basis: I have firm plans to “restructure” my putting stroke and therefore only count the swings I take before reaching the green.)

In insurance reporting, “loss development” is a widely used term — and one that is seriously misleading. First, a definition: Loss reserves at an insurer are not funds tucked away for a rainy day, but rather a liability account. If properly calculated, the liability states the amount that an insurer will have to pay for all losses (including associated costs) that have occurred prior to the reporting date but have not yet been paid. When calculating the reserve, the insurer will have been notified of many of the losses it is destined to pay, but others will not yet have been reported to it. These losses are called IBNR, for incurred but not reported. Indeed, in some cases (involving, say, product liability or embezzlement) the insured itself will not yet be aware that a loss has occurred.

It’s clearly difficult for an insurer to put a figure on the ultimate cost of all such reported and unreported events. But the ability to do so with reasonable accuracy is vital. Otherwise the insurer’s managers won’t know what

2001年信函

第2/2部分

维持卓越的安全性、保障和服务水平始终成本高昂，而坚持这些标准的成本因9·11事件而进一步加剧。无论成本多高，我们都将继续在这三个方面保持行业领先地位。对客户提供最佳服务的坚定承诺，深植于公司CEO兼分时所有权发明者Rich Santulli的DNA中。我对他在这方面的执着感到欣慰，这既是为了公司，也是为了我的家庭：我相信巴菲特家族每年飞行分时所有权的时间超过800小时，比任何其他家庭都多。如果你好奇的话，我们使用的是与NetJets其他客户完全相同的飞机和机组人员。

NetJets在9·11事件后不久经历了一轮新订单激增，但此后销售速度已恢复正常。每位客户的使用量在年内有所下降，可能原因是经济衰退。

作为分时所有权业务的绝对领先者，我们和客户都从中获得了显著的运营优势。我们在美国拥有超过300架飞机，几乎时刻在飞行，因此几乎可以在极短时间内将飞机部署到客户需要的任何地点。我们机队的广泛分布也降低了我们的“定位”成本，使其低于机队规模较小的运营商。

这些规模优势以及其他优势，使NetJets在竞争中拥有显著的经济优势。然而，在可能持续几年的竞争条件下，我们的优势最多只能带来微薄利润。

• 我们的金融与金融产品业务部门现包括XTRA、通用再保险证券（目前处于长期清算模式）以及一些其他规模较小的业务。然而，该部门的大部分资产和负债来源于我管理的几种固定收益策略，这些策略涉及高度流动的AAA级证券。这项活动只有在特定市场关系存在时才有意义，过去曾带来良好回报，并且未来一两年内继续获得合理回报的前景尚可。

投资

下表列出了我们的普通股投资。其中截至2001年底市值超过5亿美元的项目已单独列出。

2001年我们的投资组合变动不大。总体而言，我们的大额持股在过去几年表现不佳，部分原因是经营业绩令人失望。查理和我仍然看好我们持有的所有公司的基本业务。但我们并不认为伯克希尔的股权投资组合整体被低估。

我们对这些证券的有限热情，与我们对未来十年左右股市整体前景的明显冷淡态度相匹配。我在7月份艾伦公司会议上的一次演讲中表达了我对股票回报的看法（这是对两年前类似演讲的跟进），演讲的编辑版出现在12月10日的《财富》杂志上。我附上该文章的副本。你也可以在我们的网站www.berkshirehathaway.com上查看我1999年演讲的《财富》版本。

查理和我相信美国企业长期会表现良好，但认为当前的股价预示着投资者只能获得温和的回报。市场在很长一段时间内超越了企业表现，这种现象必然终结。然而，一个仅仅与企业进步同步的市场，很可能会让许多投资者失望，尤其是那些相对较新的投资者。

这里有一个有趣巧合：大泡沫于2000年3月10日结束（尽管我们几个月后才意识到这一点）。那天，纳斯达克指数（最近为1,731点）触及历史最高点5,132点。同一天，伯克希尔股价交易于40,800美元，这是自1997年中期以来的最低价。

2001年，我们在“垃圾”债券领域比平时更为活跃。需要强调的是，这些债券通常不适合普通公众投资，因为这些证券往往名副其实。我们从未购买过新发行的垃圾债券，而这正是大多数投资者被鼓动购买的唯一类型。此外，在这一领域发生亏损时，往往是灾难性的：许多债券最终价值仅剩原始发行价的一小部分，有些甚至变得一文不值。

尽管存在这些风险，我们仍定期发现少数极少数对我们有吸引力的垃圾证券。到目前为止，我们在不良债务领域的50年经验已被证明是富有成效的。在1984年的年报中，我们描述了购买华盛顿公共电力系统债券的情况，当时该发行人声誉扫地。多年来，我们还介入过其他明显的危机，如克莱斯勒金融、德士古和RJR纳贝斯克——所有这些后来都恢复了信誉。尽管如此，如果我们继续活跃在垃圾债券领域，你可以预期我们偶尔会遭受损失。

有时，购买不良债券会引导我们涉足更大的交易。在Fruit of the Loom破产初期，我们以面值约50%的价格购买了该公司的公开债务和银行债务。这是一次不寻常的破产，因为优先债务的利息支付从未中断，这意味着我们获得了约15%的当期收益。我们的持仓增至Fruit优先债务的10%，这笔投资最终可能使我们获得约面值70%的回报。通过这项投资，我们间接地将整个公司的收购价格略微降低。

2000年末，我们开始购买陷入困境的金融公司FINOVA集团的债务，这也最终促成了一项重大交易。当时FINOVA约有110亿美元未偿债务，我们以面值约三分之二的价格购买了其中的13%。我们预计该公司会破产，但相信其资产清算将为债权人带来远高于我们成本的回报。随着2001年初违约逼近，我们与Leucadia National Corporation联手向该公司提出了一项预包装破产计划。

该计划随后进行了修改（此处我简化了说明），规定债权人将获得面值70%的现金支付（外加全部利息），并将获得一张新发行的7.5%利率的票据，用于支付其权利要求中未以现金清偿的30%。为了资助FINOVA的70%分配，Leucadia和伯克希尔成立了一家共同所有的实体——名字悦耳动听地称为Berkadia——该实体通过FleetBoston借入56亿美元，然后将这笔资金转贷给FINOVA，同时获得对其资产的优先求偿权。伯克希尔为Berkadia借款的90%提供担保，并对Leucadia承担主要责任的10%部分提供次级担保。（我提到过我在简化吗？）。

Berkadia支付的借款利率与从FINOVA获得的利率之间约有2个百分点的利差，这利差90%归伯克希尔，10%归Leucadia。在我撰写本文时，每笔贷款已分别偿还至39亿美元。

作为2001年8月10日批准的破产计划的一部分，伯克希尔还同意，对于FINOVA发行的32.5亿美元新7.5%债券中，最多5亿美元本金金额，以面值70%的价格进行收购。（其中，由于我们持有原始债务的13%，我们已经获得了4.268亿美元本金金额。）我们的收购要约将持续至2001年9月26日，但在多种条件下可以撤回，其中之一是，如果在收购期内纽约证券交易所关闭。当9月11日那一周确实发生这种情况时，我们立即终止了要约。

FINOVA的许多贷款涉及飞机资产，其价值因9·11事件而大幅缩水。该公司持有的其他应收款也因当天的袭击造成的经济后果而面临风险。因此，FINOVA的前景不如我们向破产法院提出方案时那么好。尽管如此，我们仍认为整体交易将为伯克希尔带来满意的结果。Leucadia负责FINOVA的日常运营，我们一直对其主要高管的商业头脑和管理才能印象深刻。

又是似曾相识的时刻：1965年初，当我运营的投资合伙企业控制了伯克希尔时，该公司的主要银行关系是波士顿第一国民银行和一家大型纽约市银行。此前，我与这两家银行都没有业务往来。

快进到1969年，当时我希望伯克希尔收购伊利诺伊州罗克福德的国家银行与信托公司。我们需要1000万美元，我联系了这两家银行。纽约那边没有回应。然而，波士顿银行的两位代表立即来到奥马哈。他们告诉我，他们会为我们的收购提供资金，细节以后再谈。

在接下来的三十年里，我们几乎没有从银行借过钱。（债务在伯克希尔是个四字母词。）然后，在2月份，当我们构建FINOVA交易时，我再次打电话给波士顿，那里的第一国民银行已演变为FleetBoston。公司总裁Chad Gifford的反应与1969年的Bill Brown和Ira Stepanian一样——“你们拿到了钱，细节我们以后再谈。”

事情就这样发生了。FleetBoston为60亿美元的贷款组织了银团（结果证明我们并不需要其中的4亿美元），并且迅速被全球17家银行超额认购。所以……如果你需要60亿美元，只需给Chad打个电话——前提是你的信用是AAA级。

关于我们的投资还有一点：媒体经常报道“巴菲特正在买入”某种证券，这些“事实”来源于伯克希尔提交的报告。这些报道有时是正确的，但伯克希尔报告的交易有时实际上是由Lou Simpson执行的，他为GEICO管理着一个20亿美元的投资组合，相当独立于我。通常，Lou不会告诉我他买什么或卖什么，我只有在每月末几天后收到GEICO投资组合摘要时才知道他的操作。Lou的想法当然与我很相似，但我们最终通常投资于不同的证券。这主要是因为他的资金量较小，因此可以投资于比我规模更小的公司。哦，对了，我们之间还有一个微小差异：近年来，Lou的业绩远比我好。

慈善捐赠

伯克希尔在慈善捐赠方面遵循一种非常不寻常的政策——但查理和我都认为这对所有者来说既合理又公平。

首先，我们让旗下运营子公司自行做出慈善决定，只要求那些曾经独立经营这些公司的所有者/经理人用自己的资金向他们个人的慈善机构捐款，而不是使用公司资金。当我们的经理人使用公司资金时，我们相信他们能够以对其管理的业务产生相应有形或无形利益的方式进行捐赠。去年伯克希尔子公司捐赠总额为1920万美元。

在母公司层面，除了股东指定的捐赠外，我们不进行任何捐赠。我们不为董事或员工的捐款提供匹配，也不向巴菲特或芒格家族偏爱的慈善机构捐款。然而，在我们收购之前，我们的少数子公司有员工匹配捐赠计划，我们对于他们继续这一计划感到满意：干涉成功的商业文化不是我们的风格。

为了实施我们所有者的慈善意愿，每年我们都会通知A股（A股占我们股本的86.6%）的记名持有人，他们会得到一个每股金额，可以指示我们向最多三个慈善机构捐款。股东指定慈善机构；伯克希尔开具支票。任何符合《国内税收法》资格的机构都可以被股东指定。去年，伯克希尔根据5,700名股东的指示进行了1,670万美元的捐赠，他们指定了3,550家慈善机构作为受益方。自启动该项目以来，我们股东的捐赠总额已达1.81亿美元。

大多数上市公司避免向宗教机构捐赠。然而，这些是我们股东钟爱的慈善机构，去年他们指定了437座教堂和犹太会堂接受捐赠。此外，还有790所学校成为受益方。我们的一些大股东，包括查理和我，指定他们个人的基金会接受捐赠，以便这些实体能够广泛分配资金。

我每周都会收到几封批评伯克希尔向美国计划生育联合会捐款的信件。这些信件通常由一个希望抵制伯克希尔产品的组织所引发。信件总是礼貌而真诚，但写信人忽略了一个关键点：做出慈善决定的不是伯克希尔，而是其所有者——而这些所有者的观点差异之大，超乎你的想象。例如，他们在堕胎问题上的立场可能与美国人口的比例大致相同。我们会遵循他们的指示，无论他们指定的是美国计划生育联合会还是大都市生命权利组织，只要该慈善机构拥有501(c)(3)资格即可。这就好比我们支付了股息，然后股东将其捐赠出去。然而，我们的支付形式在税收上更有效率。

无论是在购买商品还是招聘人员时，我们从不考虑交易对象的宗教信仰、性别、种族或性取向。这样做不仅错误，而且愚蠢。我们需要尽可能多地寻找人才，并且我们深知，有能力且值得信赖的经理、员工和供应商来自非常广泛的人群。

要参与我们未来的慈善捐赠计划，您必须拥有以实际所有者名义登记的A类股票，而不是以经纪商、银行或存管机构的代名人名义登记。未在2002年8月31日以这种方式登记的股票将没有资格参与2002年的计划。当您收到我们的捐款表格时，请及时寄回。逾期提交的指定将不予处理。

年会

今年的年会将于5月4日星期六举行，我们将再次在市政礼堂举行。大门将于早上7点开放，电影将在8:30开始，会议本身将于9:30开始。中午将短暂休息以供应食物。（三明治可以在市政礼堂的摊位购买。）除了这个间隙，查理和我会回答问题直到下午3:30。尽管提出你们最尖锐的问题。

至少在未来一年内，位于市中心的市政礼堂是我们唯一可用的场地。因此，我们必须将会议安排在周六或周日，以避免工作日肯定会出现的交通和停车噩梦。不过，奥马哈很快就会有一个拥有充足停车设施的新会议中心。假设我们随后前往该中心，我将对股东进行投票，看看你们是否希望恢复2000年之前的周一会议惯例。我们将根据股东人数（而非持股数量）来决定结果。（但这并非我们将用来决定谁应该担任CEO的制度。）

随本报告附上的委托书材料的附件说明了如何获得参加会议和其他活动所需的凭证。至于飞机、酒店和汽车预订，我们再次签约美国运通（800-799-6634）为您提供特别帮助。他们每年都为我们做得非常出色，我对此表示感谢。

按照惯例，我们将从较大的酒店安排巴士前往会场。之后，巴士将返回酒店以及内布拉斯加家具城、波仙珠宝店和机场。即便如此，您可能还是会发现汽车很有用。

今年我们为伯克希尔增加了许多新公司，我不打算一一详述我们将在会议上销售的所有产品。但请准备好把从砖块到糖果的所有东西都带回家。当然，还有内衣。假设我们的Fruit of the Loom收购在5月4日前完成，我们将销售Fruit的最新款式，这将使您成为所在社区的时尚引领者。买够一辈子的用量。

GEICO将设立一个展位，由来自全国各地的多位顶级顾问提供服务，他们都将随时准备为您提供汽车保险报价。在大多数情况下，GEICO能够为您提供特殊的股东折扣（通常为8%）。这项特殊优惠在我们运营的49个司法管辖区中的41个获得许可。请带上您现有保险的详细信息，看看我们能否为您省钱。

周六在奥马哈机场，我们将展出NetJets®的常规系列飞机供您参观。只需向市政礼堂的代表咨询如何查看这些飞机即可。如果您在周末购买了我们认为足够数量的商品，您可能确实需要自己的飞机才能把它们带回家。而且，如果您购买了一架飞机的部分所有权，我们甚至可能会免费赠送三件套的三角裤或平角裤。

在内布拉斯加家具城，位于72街道奇街和太平洋街之间占地75英亩的场地上，我们将再次进行“伯克希尔周末”定价，这意味着我们将为股东提供通常只给予员工的折扣。五年前我们开始在NFM实行这种特殊定价，“周末”期间的销售额从1997年的530万美元增长到2001年的1150万美元。

要获得折扣，您必须在5月2日星期四至5月6日星期一期间购物，并出示您的会议凭证。该时期的特殊定价甚至适用于几个享有盛誉的制造商的某些产品，这些制造商通常对打折有严格规定，但本着我们股东周末的精神，为您破例。我们感谢他们的合作。NFM在工作日上午10点至晚上9点营业，周六和周日则为上午10点至下午6点。

波仙珠宝店——全美最大的珠宝店，仅次于蒂芙尼的曼哈顿店——将举办两场仅有股东参加的活动。第一场是5月3日星期五下午6点至10点的鸡尾酒招待会。第二场主要庆祝活动将于5月5日星期日上午9点至下午5点举行。股东价格将从周四到周一有效，因此，如果您希望避开周五晚上和周日聚集的大量人群，可以在其他时间前来，并表明您的股东身份。周六我们将营业至下午6点。波仙珠宝店的毛利率比其主要竞争对手低整整20个百分点，所以您买得越多，省得越多（至少我的妻子和女儿是这么告诉我的）。请光临，让我们为您进行一场“钱包切除术”。

在波仙珠宝店外的商场里，周日下午我们将安排一些世界顶尖的桥牌专家与我们的股东对弈。我们预计Bob和Petra Hamman以及Sharon Osberg会主持牌桌。曾两次获得美国国际象棋冠军的Patrick Wolff也将在商场里，蒙着眼睛与所有挑战者对战！去年，Patrick曾同时进行六局蒙目棋——牢牢地蒙着眼睛——今年他将尝试七局。最后，Bill Robertie，仅有的两位两次赢得世界双陆棋锦标赛冠军的选手之一，将在场测试您在该游戏上的技巧。周日来商场参加门萨奥林匹克吧。

Gorat’s——我最喜欢的牛排馆——将于5月5日星期日再次专门为伯克希尔股东开放，营业时间为下午4点至晚上10点。请记住，要在周日去Gorat’s，您必须预订。请在4月1日（但不要提前）拨打402-551-3733进行预订。如果周日已满，可以尝试在您待在城里的其他晚上去Gorat’s。通过点一份带骨牛排搭配双份土豆饼来展示你的品味。

传统的棒球比赛将于周六晚上7点在罗森布拉特体育场举行。今年奥马哈皇家队将对阵奥克拉荷马红鹰队。去年，为了模仿贝比·鲁斯的职业转换，我放弃了投球，尝试了击球。奥马哈本地人鲍勃·吉布森站在投手丘上，我很害怕，担心鲍勃著名的近身投球。相反，他投出了一个好球区的快速球，我用类似马克·麦奎尔的挥棒，成功打出了一个滚地球，却莫名其妙地在内野停下了。我没有跑垒：到了我这个年纪，打一局桥牌都会喘不过气来。

我不确定今年棒球场会发生什么，但请来体验惊喜吧。我们的委托书声明中包含获取比赛门票的说明。那些订购年会门票的人将收到一本小册子，其中包含各种信息，应该能帮助您在奥马哈享受您的访问。城里会有很多活动。所以，请来参加伍德斯托克周末，加入我们在市政礼堂的资本主义庆典。

最后，我要感谢世界总部（面积5,246.5平方英尺）那些出色且生产力惊人的员工，他们让我的工作变得如此轻松。伯克希尔去年增加了约40,000名员工，使我们的员工总数达到110,000人。在总部，我们增加了一名员工，现在有14.8人。（我曾试图让JoEllen Rieck将她的工作周从四天改为五天，但未成功；我想她喜欢通过作为0.8人而获得的全国认可。）

处理我们目前规模和范围所带来的各种职责，以及一些几乎为伯克希尔所独有的额外活动——例如我们的股东盛会和有指定捐赠计划——需要一群非常特别的人。而我们确实拥有这样一群人。

2002年2月28日

沃伦·E·巴菲特
董事会主席