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”神”の声を聞く！バフェット総会実況解説
PAN-san
・それでは、保険はもちろん、バークシャーの今朝の収益の大きな話題の1つです。Evercoreのデビッド・モトが、トラベラーズ、プログレッシブ、チャブなどに関するバイレーティングを語るために参加しています。第1四半期にバークシャーの保険事業、特にGEICOが価格に動きを見せ、マージンを増やし広告費を削減したことについて話していました。業界全体のトレンドかもしれませんが、保険市場の競争状況全体で何が起こっているかについて説明しています。
In the personal automobile insurance market, a significant hard market is observed, and GEICO is taking quite aggressive actions in this field. Profit orientation is reflected in the results, with a 13% decrease in the number of insurance contracts. This is due to a 15% increase in premiums, with industry-wide price increases being one factor. In GEICO's case, the number of units has decreased significantly, leading to improved profitability. It is also evident that advertising expenses have been greatly reduced, focusing on profit orientation.
I would like to move on to discussing revenue, explaining what we are aiming for, with a few small slides. Then, we will proceed to Q&A. Operating profit for the first quarter was reported to slightly exceed 8 billion dollars. Operating profit basically refers to Berkshire Hathaway's GAAP-based common earnings, excluding realized and unrealized capital gains. While there are a few other items, essentially, we expect capital gains to increase over time. This is because there is no reason to hold stocks. Overall, things are going well in the long run, but it may not be the case on a daily, quarterly, annual, or even five-year basis at times. In the business world, there have been incredible successes, but there have also been extreme cases like Godzilla during World War II. This time was also an extreme situation. A good system was missing, people shopped without waiting for sales. If something didn't sell, it was put into the backlog for something else. It was a very peculiar time. However, that time has passed, employment is not plummeting, but the situation is different from 6 months ago, and many executives are adapting to the changes.
Although slightly different from bank deposits, there are very important distinctions. Bank deposits must pay interest, and interest rates have recently been high. Running a bank involves many tasks. Essentially, this money represents prepayments of unpaid losses in insurance. It gives us the discretion that is shown as net liabilities on the balance sheet to manage funds, an opportunity not available to other insurance companies around the world to my knowledge. Because we have a lot of net assets, with a float (insurance underwriting) reaching 165 billion dollars. The person sitting on the far left has the responsibility to raise that number almost every year since 1986 from the bench to this incredible figure, making sure it doesn't cost us anything, like employees or interest-free banks that cannot withdraw money. It is a very valuable asset for us.
First, think about Geico and float, which marks the beginning of my career. When considering the balance sheet, there are assets and liabilities, with the liability side funding the asset side. Shareholder capital is very expensive, and long-term debt is temporarily cheap but can become expensive or come due. Float is displayed as a liability but does not incur costs, and does not suddenly disappear. It funds the asset side just like shareholder capital. No one else thinks of it that way, but we have always thought of it that way and it has been increasing over time. Regarding cash and bonds until March 31, it is shown at the bottom. And I will inform you that about 7 billion dollars were added in April. Partly because we didn't buy many stocks, it will lead to reducing cash and bonds. Ultimately, we bought approximately 0.4 billion dollars worth of stocks in April, but that is a negative.
However, selling stocks and gaining about 4 billion dollars, and of course, operating profit probably around 2.5 billion dollars, in my estimate, cash and bonds likely increased by 6 to 0.7 billion dollars monthly. I want you to perceive all of Berkshire's cash flows. And let's move on to the last final additional slide.
Depending on factors such as hurricanes and earthquakes, probabilistically in the future, there is a high chance that this year's insurance underwriting will be better than last year's.
Let's move on to the second slide. The purpose of providing these operating profit figures is to understand the overview based on the progress since the pandemic began and the previous year. As you know, we are maintaining all profits. Therefore, we are maintaining between 30 billion and 35 billion dollars annually or more. This is expected to lead to an increase in operating profit over time. These figures are expected to increase significantly over the next 5, 10, 15 years. This is because we have the advantage of maintaining profits. When we started, it made little sense to reach these numbers, but we have grown by maintaining profits. It is not a great success for these numbers to continue to rise to maintain profits in the future. What we hope for is that they will rise at a reasonable rate. Historically, there have been times when they have risen at irrational rates, but we are now dealing with much smaller scales.
This question comes from Ben Norm in Minneapolis, who has been a Berkshire shareholder for 30 years and has attended many Berkshire meetings. He is also attending this year. This question is addressed to Ajit and Gregg. He asked about GEICO and BNSF being put at a disadvantage against their respective major competitors last year. This is regarding telematics for GEICO and precision scheduled railroading for BNSF. Ajit expects GEICO to make progress in 1-2 years. Gregg spoke about his pride in BNSF but did not directly address the threat of precision scheduled railroading. Please share your thoughts on the respective competitive challenges and our strategies to address them.
Regarding GEICO and telematics, we observe that GEICO is actively working on closing the gap with competitors, rapidly advancing. In the context of telematics and competitors, approximately 90% of all new business now includes elements of telematics in pricing decisions. Unfortunately, less than half of them are being utilized by policyholders. Another point to be made is that even though improvements are being made to close the telematics gap, we have yet to start enjoying the true benefits. The primary bottleneck is technology.
While the results are very good, they cannot be taken to the bank. This is because two abnormal items are contributing to it. First, there is something called prior year reserves, which reduced the prior year's reserves and contributed. Also, the first quarter of each year tends to be a seasonally good quarter for auto insurance. Putting these two factors together, Geico is expected to end with a combined ratio slightly below 100 versus the target of 96.
Rather than getting excited about reaching 96, it is important to understand that it is the result of losing policyholders. There is a trade-off between profitability and growth. Clearly, we are not in a position to prioritize growth over profitability, and it will take us 2 years to return to the track of continuing the fight for both profitability and growth.
Todd Combs has returned to GEICO by our choice to address the issue of aligning rates with the risk, which is at the core of insurance. He joined just before the pandemic started. Many things have changed, but Todd is doing a great job at GEICO. He works closely with GE and since he has a home in Omaha, he sometimes comes back here on weekends to spend time with us.
There are reports of a company that started in the last 10 years that nobody has generally heard of. As far as I know, one company that has achieved overwhelming success in this is a company formed by GE and people to develop the new business 'Berkshire Hathaway'. This special company currently has assets of hundreds of billions of dollars, perhaps more than all of these companies combined.
There are questions about AI and robotics.
Malia, who reported a massive loss for the company, did not need capital. However, there is a company that nobody has heard of generally. To my knowledge, among the companies that started in the past 10 years, there is one company that has achieved overwhelming success. It is a company established to develop a new business 'Berkshire Hathaway' in collaboration with GE. Currently, this special company has billions of dollars in assets, probably more float than all these companies combined.
Hello, this is Dallas Z with a question from Santa Clara, California. Considering the emergence of innovative technologies that significantly improve productivity, including AI, I would like to ask Charlie and Warren. What does the future of value investing look like in the new era? What new principles and approaches do you think investors should adopt? And what recommendations do you have for investors to continue succeeding in rapidly changing circumstances? Thank you.
Warren stated that value investors will face more challenging conditions in the future as many competitors enter the field where opportunities for value investing are decreasing. He advises value investors to get used to decreasing profits. However, he claims that technological advancements do not take away opportunities but rather create them when others do foolish things. Therefore, it is believed that there will still be sufficient opportunities in the future.
In the 58 years since we started operating Berkshire Hathaway, it can be said that there are more people doing foolish things. Part of the reason is that funding has become much easier to obtain than before. Even by setting up 10 - 15 foolish insurance companies in the past 10 years, one can potentially become wealthy if successful. However, when this is done on a large scale, foolish things that were unthinkable 50 years ago end up happening.
Currently, there is funding in the hands of many intelligent people who are trying to outsmart each other and aim to extract more money from others. This is a world completely different from the one we started with, where opportunities exist but unpleasant events may also occur. Attempts to outsmart one another will continue in the areas where these individuals compete.
Berkshire mentions that when conducting similar transactions like the deal with AIG, there is no need to match bonds. These assets are put into a pool of common assets along with liquid assets and managed. It is stated that this is something only Berkshire can do and other insurance companies cannot.
At the moment, the amount we have to pay is modest, and if I provided incorrect information, I will be corrected. The amount to be paid based on the proportion of losses we bear is expected to be slightly lower than the anticipated amount.
One way to assess how well the AIG deal is functioning is to compare the actual payment amount with the expected payment amount based on forecasts at the time of the transaction. These two figures are very close. Specifically, the actual payment amount is 96% of the expected payment amount, which is good but not great. Borrowing money at very attractive interest rates and generating a $1 million fee in 1990 if paying less than expected was found to be still unresolved although satisfied with the deal.
- Berkshire Hathaway's property insurance companies hold four times the normal funds behind shareholder capital and premium contributions. In addition, more than $2.5 billion flows in annually from sources unrelated to insurance, with no obligations to pay dividends or incur excessive debt. Furthermore, Berkshire Hathaway boasts overwhelming strength in the insurance industry, having unparalleled payment ability that enables them to pay out $1 billion. Berkshire Hathaway earns substantial profits monthly, has almost no debt, with debt only in the railroad and energy sectors, yet without a guarantee.
- The questioner inquired about the importance of planning who would run the business if the founder were to no longer be present. They pointed out that their children were not prepared and sought advice on how to prepare them to take over the business.
- Buffett revealed that he spends a lot of time on this issue and emphasized the importance of giving children the necessary skills and knowledge. He stated that it is important for business owners to contemplate how to pass on their skills, expressing doubt about whether they are suitable for the business. He also stressed the importance of selecting reliable partners and boards of directors for business owners and the need to carefully consider how to run the business. Additionally, he mentioned that succession plans for the business are as crucial as when running the business, always needing to be updated to reflect the latest circumstances.
- Warren Buffett stated about inheritance division, "it depends on the family." There are many factors involved in inheritance division, explaining the various factors such as how families feel towards each other, the type of business they have, and more. He mentioned that having Berkshire shares is a simple matter for them, but not everyone, emphasizing that what is important to families extends beyond inheritance division to human relationships.
- It is important to handle situations appropriately if children do not get along with each other. When wanting one's children to have specific values, it is important to live by those values oneself and discuss how to teach them. Wills should be made to align with those values, expressed as children grow up. Additionally, plans should be made according to the size of the inheritance, varying between family-run businesses and those with marketable securities. As the scale increases, there may be more issues related to inheritance, highlighting the importance of reconciliation among heirs in such cases.
- It is discussed that when acquiring a company, instead of laying off its employees, they choose to absorb the employees to operate the company. Furthermore, when selling to private equity funds, they begin to consider exit strategies when signing contracts. Additionally, they move into the banking industry.
- This question comes from Don Grigstein in Seattle. He criticized Warren for his handling of the Norfolk Southern Railroad derailment, while remaining silent on BNSF's actions. In March of this year, a federal court ruled that BNSF had engaged in intentional breach of contract and illegal conduct by transporting long oil trains in tribal areas of Washington state. In the same month, a BNSF train derailed in a tribal area, causing oil to spill in an environmentally sensitive location. Although he has been a Berkshire owner for over 20 years, he worries about the lack of systems in Berkshire to identify and address reprehensible actions by BNSF and other subsidiaries he calls for. Warren responded to criticisms of his silence regarding BNSF's actions, emphasizing the need for them to take environmental issues seriously despite the necessity of BNSF as a transporter of energy. He highlighted the many reports and metrics on BNSF's sustainability efforts and the programs they have to address such issues. Additionally, he explained that BNSF operates legally, and personally, he cannot take any action, but Berkshire has systems in place to ensure its employees fulfill ethical responsibilities.
- In response to questions from investors, the BNSF Railway Company acknowledged that it had violated contracts for transporting oil in tribal areas and stated that discussions with tribes are ongoing. The company recognizes the importance of complying with contractual obligations and is making efforts to resolve the issue. Furthermore, they swiftly dealt with the derailment of trains they operate in cooperation with the tribe, explaining that there were no long-term environmental impacts. Berkshire Hathaway emphasized its utmost efforts in fulfilling ethical responsibilities.
This question is about the devastating floods in Nebraska. Berkshire's railroad company BNSF had its railway severed by the floods, causing disruptions in operations for over two weeks, impacting many customers. Investors are concerned about how Berkshire will take responsibility for its customers. They also want to know how BNSF will be improved in case of similar situations in the future.
The questioner asked how many trains BNSF operates in a year. Mr. Buffett explained that over 1,000 trains are operated in the entire railway industry, and mentioned that BNSF, being a normal carrier, can carry very heavy freight. He also added that BNSF can operate even in 100-degree high-temperature environments.
Hello, Mr. Warren Buffett and Mr. Charlie Munger. I am Susie Ha from China. I am honored to be here today. With increasing concern for environmental protection and current government support for the new energy industry, what are your thoughts on the continuous development of new energy? How can new energy companies achieve better development in the future?
Since acquiring Berkshire Hathaway Energy (formerly known as MidAmerican Energy Holdings), Warren Buffett has discussed efforts to address environmental issues in annual reports. The company invests heavily among U.S. utility companies, although the journey is ongoing and complicated due to different jurisdictions across state borders. The company acknowledges being a significant contributor to the country's still inadequate power grid.
With growing interest in environmental protection, the questioner inquired about the development of new energy. Learning about Berkshire Hathaway Energy, they asked how it contributes to new energy development. A representative explained the ongoing global energy transformation, with their three public utilities operating in multiple states, emphasizing the need to integrate plans across states. The company aims for a 50% reduction in CO2 emissions by 2030 compared to 2005, already progressing on this path. However, the company's efforts are complex, requiring substantial investments, particularly in appropriate power grids for renewable energy supply.
Warren Buffett mentioned Berkshire Hathaway's advantage of having a strong balance sheet, enabling them to handle large and complex insurance contracts. Despite recognizing that not all companies share the same views on insurance contracts, he emphasized their ability to undertake large risk insurance contracts due to the size of their balance sheet and experience. Buffett stated that in their experience with large insurance contracts, they never had to make payments beyond expectations.
They introduced a debt guarantee transaction at London Lloyd's in 1998. Since then, although the debts have decreased, Berkshire Hathaway assumes risk as the insured, with Lloyd's taking on the risk. This is quite unusual for insurance companies, but Berkshire Hathaway can engage in such large insurance transactions due to its abundant capital compared to other insurers. They forecast the necessary annual payments after the transaction, comparing them to past payments. As past payments were 96% of the forecast, there is a possibility of lower-than-expected payments, still resulting in profits. However, cautionary optimism is necessary considering ongoing insurance payouts for future risks.
Industries experience alternating good and bad periods. They believe in using gains from good times during difficult times. With a strong balance sheet, significant cash reserves, low debt, and ownership of excellent companies, they are well-prepared to handle any situation. They are prepared to acquire more excellent companies in the future, but only at good prices. They avoid acquisitions that may cause them to lose the trust of shareholders, considering what shareholders desire and what investments they have made.
At the time the trade was made, we predicted how much we needed to pay each year. We are monitoring the performance from the contract establishment by comparing the actual payment amount. As Bernie mentioned, these two numbers are very close. Specifically, the actual payment amount is 96% of the predicted amount at the moment, which is good but not great. If payments are less than the forecast amount, we will borrow money at a very attractive interest rate. Furthermore, we can receive a fee of 1 million dollars by 1990, which will result in profits exceeding our expectations. Therefore, we are very satisfied with this transaction online. We believe that we made the right decision, but this is not the end. More responsibilities will come our way. We are cautiously optimistic that this deal will yield results beyond our expectations.
Berkshire Hathaway has a strong financial foundation as an insurance company and generates over 25 billion dollars in revenue from sources other than insurance every year. Since they do not pay dividends, the business can continue even if dividends are reduced. In terms of assets and liabilities, they have a significant amount of debt in the railroad and energy sectors, but the insurance sector has relatively less debt.
Berkshire Hathaway also has over 2.5 billion dollars in revenue from non-insurance sectors and does not pay dividends. If they were to pay dividends and then reduce them, they would no longer be able to rely on insurance. Berkshire Hathaway does not invest 1 billion dollars into 5 or 10-year bonds but has monthly earnings. Additionally, they do not carry much debt. The presence of Berkshire Hathaway is not only due to the strong capital of the insurance company but also because of stable monthly earnings. However, they do not guarantee debt.
The business model of Berkshire Hathaway is discussed. The company generates over 25 billion dollars in profit annually from a wide range of businesses, besides being an insurance company, and boasts an extremely strong balance sheet due to having little debt. Their credibility is very high, with emphasis on having a powerful financial foundation that surpasses 1 billion-dollar deals, and their unique business model with distinctive management methods sets them apart without direct competitors being mentioned.
Discussion on Berkshire Hathaway's business model is presented. The company generates over 25 billion dollars in profit annually from various businesses, not just as an insurance company, and is in a strong financial position with minimal debt. Their high credibility and emphasis on having a powerful financial foundation that surpasses 1 billion-dollar deals are highlighted, along with their unique business model, leading to a lack of direct competitors.
Mr. Jinbei
Warren Buffett was appreciated by former employees for saving a company named Farmers. Employees expressed gratitude for saving the company and employees, including themselves and their families. Buffett talks about the strength of America, acknowledging the risks of compromising that strength, yet believing that America, with its flaws, is the best country to create a great America. Buffett discussed the challenges modern society faces and the need for us to adapt to overcome them. He also expressed an optimistic view of America's future and its remarkable capabilities.
In Manual Report, Berkshire always holds cash and U.S. Treasury backing. They also avoid actions that may require cash during inconvenient times like financial panics.
Unprecedented insurance losses. After Warren's death, his Class A shares will be converted into Class B shares and distributed to various foundations. The foundations will sell the shares based on the cause, a process that in overseas markets is said to take 12 to 15 years. I worry that corporate raiders like Kiraricon and Group will buy enough of these shares to dominate Berkshire, ignoring Warren's philosophy of warrants and holding a large amount of cash in U.S. bonds, and instead become greedy and reckless.
This is a very speculative move that could ruin Berkshire's strong financial fortress. Warren and Charlie are also worried that such events could occur, prompting them to create subsidiaries and run the Du. It has been stated.
• Always holding cash and U.S. bonds to prepare for financial crises and insurance losses. Also, after Warren Buffett's death, his shares will be distributed to foundations, which will sell them for their own purposes. Some are concerned that a change in shareholders might lead the company to deviate from the Buffett philosophy. However, the company should be treated as a national asset and be prepared for the survival of the business no matter what happens.
• Question from Mr. North. One of the reasons we are here is that you are great storytellers, and you take those stories back to your homes. Can you share some stories that we have not heard before? This is about Mr. Abel and Ms. Jane.
• In 1986, G decided to enter the reinsurance business, managed it for 17 years, but did not try to improve the system and got caught up in the game. Later, with the help of an insurance expert G met, he succeeded in the market. G was recognized as one of the top 10 insurance managers in the world and still talks to him. He focused on hiring based on character rather than education, not sticking to schools he went to.
• Warren Buffett also talked about another individual, Mr. Ben Rosner, who worked for a company he purchased. Mr. Ben had extensive knowledge in the retail industry from self-education and regional information in Illinois, and he looked at all aspects of the business. It is also said that Mr. Ben felt an obligation to give half of the profits to the wife of a wealthy individual.
• The host introduces another question. The question is from Chai Gohill. "The reinsurance industry is experiencing the toughest pricing environment in the past 15 years. Historically, Berkshire has participated in such high-pressure times with very attractive economic returns. This year, A. Bias Berkshire did not show interest in investing resources in property catastrophe reinsurance, despite these strong returns. Please explain why the company did not participate in these spicy returns. Also, what are your thoughts on the reinsurance business after the acquisition of Allegheny?"
• The Berkshire executives respond. Concerning Allegheny, they handle the operating unit independently and continue to operate under the Allegheny brand name, with no changes in strategy or management. Regarding Strawberry Cash, there is mention of increasing investments in real estate insurance, an imbalanced investment portfolio, reaching the limit of capacity, but maintaining a healthy profit margin. However, risks exist due to natural disasters like hurricanes. There is also mention of the desire to actively invest, viewing the current investment amount as approximately 55% exposure for the entire company.
Question for Mr. Guadalajara in Mexico. "I have a question for Warren and Charlie. Companies face an eternal dilemma between creating products that can generate profits and enhancing their competitiveness. In the best case, as Google did, companies can create products that have both characteristics simultaneously. However, in most cases, companies need to choose between short-term profits and long-term defenses."
For example, Amazon, in order to expect to gain wider long-term profits in the future, initially refrained from gaining a stronger network effect with limited profits, for which Amazon is famous. You always emphasize the importance of creating competitive bots. This dilemma essentially involves purchasing short-term profits and securing long-term defense. What advice would you give to CEOs on how to balance this?
They mention that they aim to find good businesses while not succumbing to pressure from investors and shareholders, freely making their own mistakes. Understanding consumer behavior is crucial to business success. While they may not be well-versed in the technical aspects of investments, they understand consumer behavior. They are always learning and seeking to understand why good businesses turn into bad businesses and how to maintain competitiveness. Lastly, they believe that big ideas are necessary and are striving to find good businesses.
Mr. Buffett mentioned the top 5 trading companies in Japan. Warren Buffett recounted an episode where simple investments in Japan turned out to be a significant opportunity for Berkshire Hathaway. Berkshire has found about 5 substantial companies that earn around 14% in profit compared to the amount they plan to pay for purchase. Dividends are paid out appropriately, and share buybacks are also conducted. Berkshire has purchased over 5% of these companies and has further acquired more. Currently, Berkshire owns 7.4% of the companies, but they will not exceed 9.9% without their consent. Although Berkshire is the largest borrower outside of Japan, it conducts direct business in Japan. Investments in these companies are expected to increase Berkshire's value by $4-0.5 billion annually. Berkshire stated that it will continue to seek business opportunities in Japan.
Question: How do you perceive the evaluation and price difference between current internet companies in the United States and China? There have been many uncertainties, such as geopolitical tensions and substantial cost optimization. While American dispatched employees work diligently as if on fire, Chinese tech companies have already experienced everything.
While American dispatched employees burn out, Chinese tech has already ended everything. There is tension. I think there are economic relations between the United States and China. Tensions are arising in the wrong way for both sides. I believe we are committing equally foolish mistakes.
Both countries believe that they should not take actions that escalate tensions or respond kindly to external foolish acts. It is important to understand the situation in which these countries will be placed over the next 100 years, and it is essential for leaders and people to understand each other. It is not good to be absorbed in the game without considering the other party. The dangers of authoritarianism and the importance of avoiding conflicts are crucial. Leaders need to explain the situation to the people and advocate against reckless actions. Moreover, attention is required in a dangerous world, especially in the context of cybersecurity and pandemics.
There are ways to get along with China, engage in plenty of free trade with China for mutual benefit. It's a given, isn't it? Because it's so safe and creative. Think about that. Partnership with China, a major supplier, is crucial. It is beneficial for both Apple and China. Business with China is like that, and it will continue to increase.
- Regarding Taiwan Semiconductor: Taiwan Semiconductor is a top advantaged company, considered an important corporation worldwide. And I think the same can be said 5 years, 10 years, or 20 years from now. I am just bothered by its location in Taiwan. However, they are expected to clearly expand their chip production capacity. In fact, one of our subsidiaries in Allegheny is involved in Arizona.
- Question about EVs: Electric vehicles are insured by manufacturers rather than auto insurance companies. According to a recent article from The Wall Street Journal, while the proportion of electric car sales is small, it is increasing, and companies like Tesla and GM are reportedly providing their own insurance. What is Geico planning to do to counter this?
- Geico is considering selling auto insurance in-store and collaborating with many auto manufacturers. Since there are still few success stories in this sector, they are cautiously observing. While there are rival companies looking to compete with Apple, the margins for auto insurance are very small at 4%, making it difficult to maintain profitability. Additionally, Geico is cooperating with original equipment manufacturers to improve its in-house insurance.
- Focusing on auto insurance for electric vehicles, there is a trend where manufacturers independently provide EV insurance rather than relying on traditional auto insurance companies. Geico is also exploring providing insurance in collaboration with EV manufacturers, but it is a complex process that requires a lot of driver data. The difficulty of improving current systems and the profitability of auto insurance are challenges.
- Regarding Berkshire's stocks: In 2019, Berkshire repurchased a huge amount of shares, reducing the number of shares by approximately 10% while increasing them. Offering significant value per share to continuing shareholders. Greg is expected to become the CEO as Warren's successor. He will be responsible for crucial capital allocation decisions, including future share buybacks, but I believe he has been key to Berkshire Hathaway Energy's development. He is a decision-maker in capital allocation. Have they both been involved in the execution of share buybacks in recent years? Will they continue to work together and ensure it?
- Also, it is important to closely observe the company and take action when necessary. Having a strong personal interest in the company and investing most of one's net worth in the company is crucial. If there are issues with the management or the board, changes may need to be made to keep the business running smoothly. However, it is also important to recognize that some businesses do not require extensive management, while others need significant support for success. The board of directors must carefully assess leadership candidates without being influenced by Wall Street. Ultimately, to be a successful leader, one must face challenges and make tough decisions.
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PAN-US : So insurance is of course one of the big topics in Berkshire's earnings this morning. Evercore's David Moto is participating to talk about bi-ratings on Travellers, Progressive, Chubb, etc. We were talking about Berkshire's insurance business, specifically GEICO, showing price movements in the first quarter, increasing margins and reducing advertising costs. It may be an industry-wide trend, but it explains what's going on in the overall competitive landscape of the insurance market.
181701902 : Thank you in advance.
PAN-US : We are seeing a significant hard market in the personal car insurance market, and GEICO is taking pretty aggressive action in this area. The focus on profit has been shown in the results, and the number of insurance policies has decreased by 13%. This is partly due to insurance premiums rising 15% and price increases across the industry. In the case of GEICO, the number of units has declined considerably, thereby increasing profitability. Also, you can see that advertising costs have been drastically reduced and that the focus is on focusing on profit.
PAN-US : This time I hope to answer at least 60 questions. I would like to move on to the directors' opinions on earnings posted on the web page this morning. I'll tackle the question soon.
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