The process of estimating the ultimate losses resulting from an insurance company’s business is one of the most important tasks facing management. Many types of policies expose an insurer to liabilities over a very long period of time where the ultimate payout to policyholders will not be certain for years or even decades. Despite this uncertainty, management must estimate loss reserves for each financial reporting period. The credibility of these estimates depends, in part, on management’s track record with prior estimates. Read this article for more details.
Warren Buffett released his annual letter to shareholders this morning along with Berkshire Hathaway’s 2009 annual report. Our full package of analysis on Berkshire Hathaway will be available soon as part the Berkshire Hathaway 2010 Briefing Book. For now, this article highlights several notable statements that were made in the shareholder letter regarding Berkshire’s results, management philosophy, and future plans. Mr. Buffett also includes his usual commentary on broader economic issues. Read this article for more details.