-
Warren Buffett's Letters to Berkshire
Shareholders-1977
BERKSHIRE HATHAWAY
INC.
To the Stockholders of Berkshire
Hathaway Inc.:
Operating earnings in 1977 of
$$21,904,000, or $$22.54 per share,
were
moderately better than anticipated a year ago. Of
these
earnings, $$1.43 per share
resulted from substantial realized
capital gains by Blue Chip Stamps
which, to the extent of our
proportional interest in that company,
are included in our
operating earnings
figure. Capital gains or losses realized
directly by Berkshire Hathaway Inc. or
its insurance subsidiaries
are not
included in our calculation of operating
too much attention should not be paid
to the figure for any single
year, over
the longer term the record regarding aggregate
capital
gains or losses obviously is of
significance.
1977
年本公司的营业净利为
2,190
万美元，每股约当
22.54
美元，表现较年
前的预期稍
微好一点，在这些盈余中，每股有
1.43
美元的盈余，系蓝筹
邮票
大量实现的资本利得，本公司依照投资比例认列投资收益所贡献，至于伯克希
尔本身及其保险子公司已实现的资本利得或损失，则不列入营业利益计算，建
< br>议大家不必太在意单一期间的盈余数字，因为长期累积的资本利得或损失才是
真正
的重点所在。
Textile operations came in well below
forecast, while the results
of the
Illinois National Bank as well as the operating
earnings
attributable to our equity
interest in Blue Chip Stamps were about
as anticipated. However, insurance
operations, led again by the
truly
outstanding results of Phil Liesche's managerial
group at
National Indemnity Company,
were even better than our optimistic
expectations.
纺织事业的表现远低于预估，至于伊利诺国家银行的成绩以及蓝筹邮票贡献
给我们的投
资利益则大致如预期，另外，由
Phil Liesche
领导
的国家产险
保险业务的表现甚至比我们当初最乐观的期望还要好。
Most companies define
record's earnings as a new high in earnings
per share. Since businesses customarily
add from year to year to
their equity
base, we find nothing particularly noteworthy in a
management performance combining, say,
a 10% increase in equity
capital and a
5% increase in earnings per share. After all, even
a
totally dormant savings account will
produce steadily rising
interest
earnings each year because of compounding.
通常公司会宣称每股盈余又创下历史新高，然而由于公
司的资本会随着盈余
的累积扩增，所以我们并不认为这样的经营表现有什么大不了的，比
如说每年
股本扩充
10%
或是每股盈余
成长
5%
等等，毕竟就算是静止不动的定存帐户，
由于复利的关系每年都可稳定地产生同样的效果。
Except for special cases (for example,
companies with unusual
debt-equity
ratios or those with important assets carried at
unrealistic balance sheet values), we
believe a more appropriate
measure of
managerial economic performance to be return on
equity
capital. In 1977 our operating
earnings on beginning equity
capital
amounted to 19%, slightly better than last year
and above
both our own long-term
average and that of American industry in
aggregate. But, while our operating
earnings per share were up 37%
from the
year before, our beginning capital was up 24%,
making the
gain in earnings per share
considerably less impressive than it
might appear at first glance.
除非是特殊的情况
(
比如说负债比例特别高或是帐上持有重大资产未予重
估
< br>)
，否则我们认为
“
股东权益报酬率
”
应该是衡量管理当局表现比较
合理的指
针，
1977
年我们期初股东
权益的报酬率约为
19%
，这比去年同期稍微好一
点，但远高于本身过去长期以及当年美国企业整体的平均数，所以虽然我们每
股的盈余成长了
37%
，但由于期初的资本也增加了
24%
，这使得我们实际的表
现并没有想象中那么
好。
We expect
difficulty in matching our 1977 rate of return
during
the forthcoming year. Beginning
equity capital is up 23% from a
year
ago, and we expect the trend of insurance
underwriting profit
margins to turn
down well before the end of the year.
Nevertheless,
we expect a reasonably
good year and our present estimate, subject
to the usual caveats regarding the
frailties of forecasts, is that
operating earnings will improve
somewhat on a per share basis
during
1978.
我们预期未来年度将很难再达到
1977
年这样的报酬率水准，一方面是因为
期
初资本又增加了
23%
，一方面我们预期保险核保利润会在年底
以前开始反
转，尽管如此，大家还是可以期待丰收的一年，而我们现在的估计是，虽然预
测有其先天上的限制，我认为每股营业利益在
1978
年应该还有些许成长的空
间。
Textile Operations
The textile business again had a very
poor year in 1977. We have
mistakenly
predicted better results in each of the last two
years.
This may say something about our
forecasting abilities, the nature
of
the textile industry, or both. Despite strenuous
efforts,
problems in marketing and
manufacturing have persisted. Many
difficulties experienced in the
marketing area are due primarily
to
industry conditions, but some of the problems have
been of our
own making.
纺织事业
1977
年纺织事业的表现依旧低迷不振，过去两年我们乐观的预期纷纷落空，
这或许也说
明了我们预测能力的薄弱，或是纺织产业的本质，尽管一再地努力与挣扎，行
销与制造的问
题依旧存在，虽然市场上面临的困境与产业情势相关，但也有不少问题是我
们自己造成。
A few
shareholders have questioned the wisdom of
remaining in the
textile business
which, over the longer term, is unlikely to
produce returns on capital comparable
to those available in many
other
businesses. Our reasons are several: (1) Our
mills in both
New Bedford and
Manchester are among the largest employers in each
town, utilizing a labor force of high
average age possessing
relatively non-
transferable skills.
Our workers and
unions have
exhibited unusual
understanding and effort in cooperating with
management to achieve a cost structure
and product mix which might
allow us to
maintain a viable operation. (2) Management also
has
been energetic and straightforward
in its approach to our textile
problems. In particular, Ken Chace's
efforts after the change in
corporate
control took place in 1965 generated capital from
the
textile division needed to finance
the acquisition and expansion
of our
profitable insurance operation.
(3)
With hard work and some
imagination
regarding manufacturing and marketing
configurations,
it seems reasonable
that at least modest profits in the textile
division can be achieved in the future.
部份股东开始质疑我们是否应该继续留在纺织产业，虽
然就长期而言其投资报酬率明显低
于其它的投资，但我们的理由有以下几个：
(1)
我们在
New Bedford
及
Manchester
的
工厂都是当地最大的雇主，员工的年龄偏高，缺乏转换工作的能力，同时我们的员工及其公
会也已经尽其所能地与经营阶层配合努力改善成本结构及产品组合，以使我们的经营得以维
< br>持下去
(2)
管理阶层也相当努力同时坦承面对产业的问
题，尤其是在
1965
年经营权易主
后
，
Ken Chace
依然尽力尽力地协助我们把纺织部门产生
稳定的资金流入转到获利更加的
保险事业投资与购并之上
(3)
努力工作加上对制造与行销组合的乐观预期，我们的纺织事业
在
未来看起来应该可以维持一个起码的利润空间。
Insurance Underwriting
Our insurance operation continued to
grow significantly in
1977.
It was early in 1967 that we made our
entry into this
industry through the
purchase of National Indemnity Company and
National Fire and Marine Insurance
Company (sister companies) for
approximately $$8.6 million. In that
year their premium volume
amounted to
$$22 million. In 1977 our aggregate insurance
premium
volume was $$151 million. No
additional shares of Berkshire
Hathaway
stock have been issued to achieve any of this
growth.
保险事业
我们的保险事业在
1977
年持续大幅
地成长，早在
1967
年我们以
860
万美
元购并国家产险及国家海上火险公司
(
两者为姊妹公司
)
的方式进军保险
业，当
年他们的保费收入大约为
2,200
万美元，时至今日，
1977
年的累积年保费收入
已达
1.51
亿美元，必须强调的是，在此期间
，伯克希尔没有再发行过任何一
股新股以支应成长。
Rather, this almost 600%
increase has been achieved
through
large gains in National Indemnity'S traditional
liability areas plus the starting of
new companies
(Cornhusker Casualty
Company in 1970, Lakeland Fire and
Casualty Company in 1971, Texas United
Insurance Company
in 1972, The
Insurance Company of Iowa in 1973, and
Kansas Fire and Casualty Company in
late 1977), the
purchase for cash of
other insurance companies (Home and
Automobile Insurance Company in 1971,
Kerkling
Reinsurance Corporation, now
named Central Fire and
Casualty
Company, in 1976, and Cypress Insurance Company
at yearend 1977), and finally through
the marketing of
additional products,
most significantly reinsurance,
within
the National Indemnity Company corporate
structure.
相反
地，这
600%
的成长几乎都是来自于国家产险本身的传统业务
的稳定成
长再加上新创立的公司
(
包含
1970
年的
Cornhusker<
/p>
产险、
1971
年的
Lakeland
火险、
1972
年的德州联合保险、
1973
年的爱荷华保险及
1977
年
的堪萨斯火险公司等
)
，以购并方式买下的
(1971
年
的家庭与汽车保险、
1976
年现已更名为中央火险的
Kerkling
再保险以及
1977
年的赛普路斯保险公
司
)
，以及最后透过行销新业务
-
主要以国家保险名下进行的再保
险业务所得。
In
aggregate, the insurance business has worked out
very well.
But it hasn't
been a one-way street.
Some
major mistakes have been made during
the decade, both in
products and
personnel.
We experienced significant
problems from (1) a surety
operation
initiated in 1969, (2) the 1973 expansion of
Home and Automobile's urban auto
marketing into the Miami,
Florida area,
(3) a still unresolved aviation
arrangement, and (4) our Worker's
Compensation operation
in California,
which we believe retains an interesting
potential upon completion of a
reorganization now in
progress. It is
comforting to be in a business where
some mistakes can be made and yet a
quite satisfactory
overall performance
can be achieved.
In a sense, this is
the opposite case from our textile
business where even
very good
management probably can average only modest
results.
One of the lessons
your management has learned
- and,
unfortunately, sometimes re-learned - is the
importance of being in businesses where
tailwinds prevail
rather than
headwinds.
总的来说，保险事业的表现还
算不错，但情况并非全然如此，过去十年来，
我们也犯过一些大错，不论是在产品或是人
员方面，比如说我们在以下方面就
曾遇到重大的困难：
(1)1
969
年推出的保证责任险
(2)1973
年扩充佛罗里达
迈阿密地区的家庭及汽车保险业务
(3)<
/p>
目前尚未解决的航空
”
前置
”
安排
(4)
我
们在加州的劳工退休金业务，我们相信这业务一旦改组完成应该还是相当有潜
力。保险这行业虽然小错不断，但大致上还是可以获得不错的成果，就某些方
面而言，
这情况与纺织业刚好完全相反，管理阶层相当优秀，但却只能获得微
薄的利润，各位的管
理阶层所学到的一课，很不幸一再学到的就是，选择顺风
而非逆风产业环境的重要性。<
/p>
In 1977 the
winds in insurance underwriting were squarely
behind
us. Very large rate increases
were effected throughout the
industry
in 1976 to offset the disastrous underwriting
results of 1974 and 1975.
But, because insurance policies
typically are written for one-year
periods, with pricing mistakes
capable
of correction only upon renewal, it was 1977
before the
full impact was felt upon
earnings of those earlier rate increases.
1977
年保险业核保的顺风
不断地从后方吹来，保费大幅度的调整在
1976
年
正式生效后，适时地抵消
1974
年及
1975
年惨痛的核保记录，而由于保单的
签订通
常以一年为期，所以定价的修正通常必须等到换新约时，所以实际上费
率的上涨一直等到
1977
年才充分反应在盈余之上。
The pendulum now is
beginning to swing the other way.
We
estimate that costs involved in the
insurance areas in which we
operate
rise at close to 1% per month.
This is
due to continuous
monetary
inflation affecting the cost of repairing humans
and
property, as well as social
inflation, a broadening definition by
society and juries of what is covered
by insurance
policies. Unless rates
rise at a comparable 1% per month,
underwriting profits must shrink.
Recently the pace of rate
increases has slowed dramatically, and
it is our expectation that
underwriting
margins generally will be declining by the second
half of the year.
可惜的是钟摆再度开始摆荡到另一方向，我们预估保险理赔成本以每个月
1%
的幅度增加，主要的原因除了持续性的通货膨胀使得修复人体及财产的成本不
停上涨，另一方面社会通膨，亦即社会及陪审团对于保单理赔范围不断扩大解
释的倾向，因此除非费率每个月也能同步上涨
1%
，否则核保
利益肯定会缩
水，只是最近保费调涨的速度明显趋缓，所以我们预期下半年的核保利润空
间
将大幅缩减。
We must again give credit to Phil
Liesche, greatly assisted by
Roland
Miller in Underwriting and Bill Lyons in Claims,
for an
extraordinary underwriting
achievement in National Indemnity's
traditional auto and general liability
business during 1977. Large
volume
gains have been accompanied by excellent
underwriting
margins following
contraction or withdrawal by many competitors in
the wake of the 1974-75 crisis period.
These conditions will
reverse before long.
In the
meantime, National Indemnity's
underwriting profitability has
increased dramatically and, in
addition, large sums have been made
available for investment.
As
markets loosen and rates become
inadequate, we again will face the
challenge of philosophically accepting
reduced volume. Unusual
managerial
discipline will be required, as it runs counter to
normal institutional behavior to let
the other fellow take away
business -
even at foolish prices.
讲到这里，我们必须再度将殊荣归予
Phil
Liesche
，在核保部门
Roland
Miller
以及理赔部门
Bill
Lyons
的大力协助下，国家产险
1977
< br>年在传统
的汽车及责任险业务方面又大放异彩，保费收入不但大幅成长，相较于其
它同
业不堪
1974-75
年的危机陆
续退出市场，其优异的核保利益更属难得，国家
产险的核保利益大幅地成长，此外可供投
资的资金亦迅速累积，只可惜这样的
情况维持不了多久，这些业者又会再度卷土重来，随
着市场紧绷情势转为宽
松，费率又将变得失控，届时我们又必须回复过去冷静地接受保费
收入锐减的
考验，严格的核保纪律绝对必须维持，如此我们才能抗拒直觉，眼睁睁地看着
其它业者以疯狂的价格抢走生意。
Our reinsurance department, managed by
George Young, improved its
underwriting
performance during 1977. Although the combined
ratio
(see definition on page 12) of
107.1 was unsatisfactory, its tr
end
was downward throughout the year.
In addition, reinsurance
generates unusually high funds for
investment as a percentage of
premium
volume.
1977
年由
George Youn
g
管理的再保险部门改善了其核保的绩效，虽然高
达
107.1
的综合比率不算理想
(
相关定义请参阅第
12
页
)<
/p>
，但至少趋势是向
下，此外再保险的保费收入依然贡献大量的资金
以供我们进行投资。
At
Home and Auto, John Seward continued to make
progress on all
fronts.
John was a battlefield promotion
several years ago when
Home and Auto's
underwriting was awash in red ink and the company
faced possible extinction. Under his
management it currently is
sound,
profitable, and growing.
John Ringwalt's homestate operation now
consists of five
companies, with Kansas
Fire and Casualty Company becoming
operational late in 1977 under the
direction of Floyd Taylor. The
homestate companies had net premium
volume of $$23 million, up from
$$5.5
million just three years ago. All four companies
that
operated throughout the year
achieved combined ratios below 100,
with Cornhusker Casualty Company, at
93.8, the leader. In addition
to
actively supervising the other four homestate
operations, John
Ringwalt manages the
operations of Cornhusker which has recorded
combined ratios below 100 in six of its
seven full years of
existence and, from
a standing start in 1970, has grown to be one
of the leading insurance companies
operating in
Nebraska
utilizing the conventional independent agency
system.
Lakeland Fire and
Casualty Company, managed by Jim
Stodolka, was the winner of the
Chairman's Cup in 1977 for
achieving
the lowest loss ratio among the homestate
companies. All
in all, the homestate
operation continues to make excellent
progress.
至于
John Seward
领导的家
庭与汽车保险在各个方面都有重大进展，几年
前当该公司因核保大幅亏损，面临倒闭危机
时，
John
跳上火线，在他的管理
之
下，公司的营运渐上轨道。
John Ringwalt
负责的
H
omestate
业务旗下主要包含五家公司，其中堪
萨斯火险
在
Floyd Taylor
筹备下于
1977
年底正式营运，
Homestate
1977
年的保费净收入达到
2,300
万美元，三年前不过只有
550
万美元，其
余四家的年度综合比率都低于
100
，其中
Cornhusker
甚至只有
93.8<
/p>
，
John
在努力管理其它四家公司的同
时，更让
Cornhusker
过去七年有六年的
综合比率低于
100
，从
1
970
年正式营运以来，该公司已顺利成为内布拉斯加
州传统独
立经纪系统的领导业者，至于由
Jim Stodolka
带领
的
Lakeland
火险则荣获
197
7
年主席杯的头衔，因为去年该公司的综合比率最低，总的来
说
，
Homestate
集团的营运在去年大有进展。
The newest
addition to our insurance group is Cypress
Insurance Company of South Pasadena,
California. This
Worker's Compensation
insurer was purchased for cash in
the
final days of
1977 and, therefore, its
approximate $$12.5 million of
volume for
that year was not included in our
results.
Cypress and
National Indemnity's present
California
Worker's Compensation operation will not be
combined, but will operate
independently utilizing
somewhat
different marketing strategies.
Milt
Thornton,
President of Cypress since
1968, runs a first-class
operation for
policyholders, agents, employees and
owners alike.
We
look
forward to working with him.
我们旗下保险事业最新加入的成员是位于加州
South Pa
sadena
的赛普路
斯保险，至于劳工退休金保险则因为是在
1977
年底以现金买下，所以其
1,
250
万美元的保费收入并未列入我们当年的营运记录，赛普路斯与国家产险
现有的加州劳工退休金保险业务不会合并，而会采用不同的行销策略各自独立
经营，赛普路斯现任总裁
Milt Thornton
，在保
户、业务员、员工及股东方
面的营运管理皆属一流，对于能与他一起共事，我们相当期待
。
Insurance
companies offer standardized policies
which can be copied by anyone.
Their only products are
promises. It is not difficult to be
licensed, and rates
are an open book.
There are no important advantages from
trademarks, patents, location,
corporate longevity, raw
material
sources, etc., and very little consumer
differentiation to produce insulation
from competition.
It is commonplace,
in corporate annual reports, to stress
the difference that people make.
Sometimes this is true
and
sometimes it isn't. But there is no question that
the nature of
the insurance
business magnifies the effect which
individual managers have on company
performance. We are
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