Thursday, 1 March 2012

Buffett Loves The Insurance Operations that deliver "float" or costless capital of $70 BILLION .



• Our insurance operations continued their delivery of costless capital that funds a myriad of other opportunities.

  • This business produces “float” – money that doesn’t belong to us, but that we get to invest for Berkshire’s benefit. 
  • And if we pay out less in losses and expenses than we receive in premiums, we additionally earn an underwriting profit, meaning the float costs us less than nothing. 
  • Though we are sure to have underwriting losses from time to time, we’ve now had nine consecutive years of underwriting profits, totaling about $17 billion. 
  • Over the same nine years our float increased from $41 billion to its current record of $70 billion. Insurance has been good to us


http://www.berkshirehathaway.com/letters/2011ltr.pdf

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