Berkshire Hathaway Letter 1967

Author: Malcolm G. Chace, Jr. & Kenneth V. Chace Date: March 8, 1968

Overview

This letter marks a pivotal moment: Berkshire's acquisition of National Indemnity Company and National Fire & Marine Insurance Company in March 1967, representing the company's first major step toward diversification beyond textiles.

Key Points

Insurance Acquisition

"We are highly pleased with the results of our insurance subsidiaries since their acquisition in March 1967. These two companies... continue under the very able management of Mr. Jack Ringwalt."

Strategic Significance

"We expect that there will be years in the future when the order of relative profitability is reversed, reflecting different stages in both the insurance and textile cycles. However, we believe it is an added factor of strength to have these two unrelated sources of earnings rather than to be solely exposed to the conditions of one industry."

Financial Performance

• Insurance subsidiaries earned substantially more than the textile business despite smaller capital investment
• All insurance earnings retained to build capital strength
• Premium volume increased with termination of certain reinsurance arrangements

Future Objectives

"Management continues to be alert to opportunities to expand our operations in either the textile business, the insurance business or unrelated areas."

Source

Malcolm G. Chace, Jr. & Kenneth V. Chace, March 8, 1968.