Posted on 03/01/2008 12:06:03 AM PST by TigerLikesRooster
Buffett's Insurance Bust
Ruthie Ackerman, 02.29.08, 9:30 PM ET
All good things must come to an end -- even billionaire investor Warren Buffett's success in the insurance business.
On Friday in Buffett's eagerly awaited annual letter to shareholders, he acknowledged 2007 was a good year, thanks to Berkshire Hathaway's stable insurance operations in a disaster-free 12 months, but he's not expecting a repeat.
"That party is over,” he wrote. “It is a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. Prices are down, and exposures inexorably rise.”
He predicted that even with another catastrophe-free year, the industry's profitability will decline. “If the winds roar or the earth trembles, results could be far worse.”
Berkshire posted an 11.0%, or $12.3 billion, gain in net worth, last year. Over the last 43 years, since Buffett began running the firm, per share book value has soared at a rate of 21.1%, compounded annually. Just to make sure everybody knows it, Buffett has never split the stock, though he has created a Class B share worth 1/30th of the famously pricey A share.
The A shares were down 0.2%, or $250, to $140,000.00 on Friday. Berkshire Hathaway Class B shares inched upwards 0.3%, or $14.50, to $4,674.50.
Berkshire Hathaway returned 28.7% to investors last year.
Call it luck or call it wise choices but Berkshire Hathaway seems to have avoided the problems of rival insurers, who had exposure to the financial turmoil of 2007, especially via the U.S. subprime mortgage market.
(Excerpt) Read more at forbes.com ...
Ping!
Does this mean fewer GEICO Caveman and Gecko commercials?
Warren needs to feel the pain when Hillary (who he supports) or Obama decide they need to take some of his money for his own good to help the children. Here is a guy who diligently works to avoid taxes legally then goes on TV to complain he isnt paying enough. How sickening.
You were overly generous, I think you meant: "Warren needs to feel the pain when Hillary (who he supports) or Obama decide they need to take most of his money..."
Although he supports high taxes and backs the estate tax, Warren has taken pains to make sure it never bites him. He will avoid the estate tax on his $50+ billion dollar estate. He has pledged most of it to the tax-exempt Gates Foundation trust and has sent billions to his grown children for their “charities.” Warren knows he can better spend his own money than the government can. He’s just pretty certain the rest of us are stupider than he is.
Yes, and he also wants that Estate Tax re-established for the purpose of promoting his life insurance business. If you can’t count on the government to compell customers, what’s an insurance guy to do?
I read that Gecko’s contract is up and he’s now a free agent. Gonna cost some bucks wherever he signs next.
bump for later
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