这场经典的赛事，甚至还用慢动作播放精彩的第四节，我们以今年封面的颜色表 .31

这场经典的赛事，甚至还用慢动作播放精彩的第四节，我们以今年封面的颜色表 .31

infrequent but extremely large when they occur, his business is sure to

be far more volatile than most insurance operations. To date, we have

benefitted from good luck on this volatile book. Even so, Ajit's

achievements are truly extraordinary.

而自从Ajit全心全力投入巨灾的再保业务之后，这是损失发生及不稳定，但一

发生即非常惨重的险种，可以肯定的是，Ajit绝对将面临比其它险种变动更大的

状况，所幸到目前为止，Berkshire在这类业务的运气还算不错，但即便如此，

Ajit的表现依然可圈可点。

In a smaller but nevertheless important way, our "other primary"

insurance operation has also added to Berkshire's intrinsic value. This

collection of insurers has delivered a $192 million underwriting profit

over the past five years while supplying us with the float shown in the

table. In the insurance world, results like this are uncommon, and for

their feat we thank Rod Eldred, Brad Kinstler, John Kizer, Don Towle and

Don Wurster.

其它规模较小但同等重要的"其它保险"营运一样为Berkshire增添了许多实质价

值，总结过去五年来，这群保险公司为我们贡献了1.92亿美元的承保利益，外

加下表所显示的浮存金，在保险世界里，能够有这样的成绩实属不易，这都要感

谢Rod、Brad、John、Don等人。

　As I mentioned earlier, the General Re operation had an exceptionally

poor underwriting year in 1999 (though investment income left the

company well in the black). Our business was extremely underpriced,

both domestically and internationally, a condition that is improving but

not yet corrected. Over time, however, the company should develop a

growing amount of low-cost float. At both General Re and its Cologne

subsidiary, incentive compensation plans are now directly tied to the

variables of float growth and cost of float, the same variables that

determine value for owners.

就像是先前我曾提过的，通用再保1999年的承保绩效相当的惨烈，(虽然投资

利益足以让这家公司免于赤字)，我们的保费订价实在是过低，不管是国内或海

外业务皆是如此，虽然目前情况已有改进但却尚未完全矫正过来，不过就长期而

言，我认为这家公司应该还是能够稳定地贡献低成本的浮存金，目前在通用再保

以及其位于科隆的子公司，经理人的绩效奖金多寡完全取决于浮存金成长速度以

及其取得成本，这同时也是股东们最重视，也是决定公司价值的几项主要数据。

　Even though a reinsurer may have a tightly focused and rational

compensation system, it cannot count on every year coming up roses.

Reinsurance is a highly volatile business, and neither General Re nor

Ajit's operation is immune to bad pricing behavior in the industry. But

General Re has the distribution, the underwriting skills, the culture, and

-- with Berkshire's backing -- the financial clout to become the world's

most profitable reinsurance company. Getting there will take time,

energy and discipline, but we have no doubt that Ron Ferguson and his

crew can make it happen.

虽然再保业者都有一套相当明确、合理的奖励计画，但实在是很能保证每年都能

够有亮丽的成绩，再保业是变动相当大的产业，不管是通用再保或甚至是Ajit

都很难免除业者杀价竞争的不当行为，不过通用再保拥有行销通路、承保技巧、

企业文化等优势，加上在Berkshire强大的财务支持之下，极有潜力成为全世界

获利最佳的再保公司，当然要达到这样的目标绝对需要时间、精力以及纪律，相

信Ron Ferguson及其经营团队绝对能够完成这个目标。

GEICO (1-800-847-7536 or GEICO.com)

盖可保险 (1-800-847-7536 or GEICO.com)

GEICO made exceptional progress in 1999. The reasons are simple: We

have a terrific business idea being implemented by an extraordinary

manager, Tony Nicely. When Berkshire purchased GEICO at the

beginning of 1996, we handed the keys to Tony and asked him to run

the operation exactly as if he owned 100% of it. He has done the rest.

Take a look at his scorecard:

盖可1999年的成长十分惊人，原因很简单：一个绝佳的经营想法由最优秀的经

理人-Tony Nicely加以落实，当Berkshire在1996年初买下盖可时，我们立

刻把钥匙交到Tony的手上，请他把这家公司当作是自己拥有的一样的心态去经

营，接下来就看他的表演，大家可以看一看他的成绩单。

　 　 New Auto Auto Policies

Years 　 Policies(1)(2) In-Force(1)

1993 346,882 2,011,055

1994 384,217 2,147,549

1995 443,539 2,310,037

1996 592,300 2,543,699

1997 868,430 2,949,439

1998 1,249,875 3,562,644

1999 1,648,095 4,328,900

1. "Voluntary" only; excludes assigned risks and the like.

2. (2) Revised to exclude policies moved from one GEICO company to another.

　　　In 1995, GEICO spent $33 million on marketing and had 652

telephone counselors. Last year the company spent $242 million, and

the counselor count grew to 2,631. And we are just starting: The pace

will step up materially in 2000. Indeed, we would happily commit $1

billion annually to marketing if we knew we could handle the business

smoothly and if we expected the last dollar spent to produce new

business at an attractive cost.

1995年，盖可花了3,300万美元在行销活动之上，旗下拥有652位电话咨询

顾问，去年公司预算提高为2.42亿美元，咨询顾问的人数增加为2,631位，这

还只是刚起步而已，展望2000年还会大幅的成长，行销预算预计会突破10亿

美元，只要我们确认每一块钱都花在刀口之上，同时自信有能力顺利处理蜂拥而

至的生意。

　Currently two trends are affecting acquisition costs. The bad news is

that it has become more expensive to develop inquiries. Media rates

have risen, and we are also seeing diminishing returns -- that is, as

both we and our competitors step up advertising, inquiries per ad fall

for all of us. These negatives are partly offset, however, by the fact that

our closure ratio -- the percentage of inquiries converted to sales --

has steadily improved. Overall, we believe that our cost of new business,

though definitely rising, is well below that of the industry. Of even

greater importance, our operating costs for renewal business are the

lowest among broad-based national auto insurers. Both of these major

competitive advantages are sustainable. Others may copy our model,

but they will be unable to replicate our economics.

就目前而言，有两项因素会影响到保单取得成本，不利的是现在每增加一通询问

电话的单位成本比过去大大提高，媒体曝光率虽然增加，但询问的响应却相对减

少，也就是说在我们与竞争对手同时卯足全力加强宣传时，每家业者每段广告所

贡献的询问电话也同步递减，所幸这种负面效果因为我们成交率(每通询问电话

真正成交的比率)稳定地增加而减少，总的来说，我们新保单的取得成本虽然增

加，但还是远低于同业的水准，而更重要的是，我们续约保单的营运成本更是全

美保险业者当中最低的，这两项极重要的竞争优势应该可以继续维持下去，别人

或许可以抄袭我们的营运模式，但他们绝对没有办法复制我们的经济规模。

The table above makes it appear that GEICO's retention of policyholders

is falling, but for two reasons appearances are in this case deceiving.

First, in the last few years our business mix has moved away from

"preferred" policyholders, for whom industrywide retention rates are

high, toward "standard" and "non-standard" policyholders for whom

retention rates are much lower. (Despite the nomenclature, the three

classes have similar profit prospects.) Second, retention rates for

relatively new policyholders are always lower than those for long-time

customers -- and because of our accelerated growth, our policyholder

ranks now include an increased proportion of new customers. Adjusted

for these two factors, our retention rate has changed hardly at all.

上表显示GEICO的保单续约率正在下降当中，这其中有两个原因造成此种假

象，第一，过去几年来，我们的产品组合重心已从原先续约率本来就比较高的指

定保户，转成续约率普遍比较低的标准与非标准保户，(虽然名称不同，但三者

的获利水准差异不大)，第二，新保户的续约率通常都比长期保户的续约率来得

低许多，而因为近年来我们的业务成长快速，所以新保户的比重相对提高，在扣

除这两项因素之后，我们的续约率其实变化不大。

We told you last year that underwriting margins for both GEICO and the

industry would fall in 1999, and they did. We make a similar prediction

for 2000. A few years ago margins got too wide, having enjoyed the

effects of an unusual and unexpected decrease in the frequency and

severity of accidents. The industry responded by reducing rates -- but

now is having to contend with an increase in loss costs. We would not be

surprised to see the margins of auto insurers deteriorate by around

three percentage points in 2000.

去年我就曾向各位表示1999年 GEICO以及整个保险业界的承保利润率将会下

滑，事后证明确是如此，过去几年来由于意外发生的频率与严重性出乎意料的

低，所以整个业界得以享有不错的利润率，而业者也因此陆续反应调降费率，只

是好景不常，最近损失又有逐步上扬的趋势，所以要是2000年的承保利润率再

下滑3个百分点的话，我们一点都不会感到意外。

Two negatives besides worsening frequency and severity will hurt the

industry this year. First, rate increases go into effect only slowly, both

because of regulatory delay and because insurance contracts must run

their course before new rates can be put in. Second, reported earnings

of many auto insurers have benefitted in the last few years from reserve

releases, made possible because the companies overestimated their

loss costs in still-earlier years. This reservoir of redundant reserves has

now largely dried up, and future boosts to earnings from this source will

be minor at best.

除此之外保险业还有两项因素可能使得意外发生的频率与程度加剧而受到伤

害，第一是费率的反应通常需要一段时间，一方面是法律规范的限制，一方面是

新费率要等到旧合约到期后才能开始实施，第二，许多保险同业由于几年来损失

成本普遍高估，所以损失准备回冲的结果，使得财务报表上盈余看起来还不错，

不过这些额外多出来的准备已损耗的差不多了，后续能够支撑盈余数字的准备数

量将极其有限。

In compensating its associates -- from Tony on down -- GEICO

continues to use two variables, and only two, in determining what

bonuses and profit-sharing contributions will be: 1) its percentage

growth in policyholders and 2) the earnings of its "seasoned" business,

meaning policies that have been with us for more than a year. We did

outstandingly well on both fronts during 1999 and therefore made a

profit-sharing payment of 28.4% of salary (in total, $113.3 million) to

the great majority of our associates. Tony and I love writing those

checks.

为了慰劳同仁们的辛劳，从Tony以降，GEICO都利用两项，惟二的两项数据

当作评估绩效与奖金分红的标准，1)是保费收入增长的比率；2)是续约保户(泛

指投保超过一年的客户)的承保获利表现，1999这年两项数字都十分优异，因此

我们加发了相当于28.4%年薪的奖金(金额合计1.133亿美元)给公司所有的同

仁，Tony跟我一向很乐意签发这类支票。

At Berkshire, we want to have compensation policies that are both easy

to understand and in sync with what we wish our associates to

accomplish. Writing new business is expensive (and, as mentioned,

getting more expensive). If we were to include those costs in our

calculation of bonuses -- as managements did before our arrival at

GEICO -- we would be penalizing our associates for garnering new

policies, even though these are very much in Berkshire's interest. So, in

effect, we say to our associates that we will foot the bill for new

business. Indeed, because percentage growth in policyholders is part of

our compensation scheme, we reward our associates for producing this

initially-unprofitable business. And then we reward them additionally

for holding down costs on our seasoned business.

在Berkshire，我们希望奖励规定不但明了易懂，且与我们希望同仁努力完成的

目标方向一致，签发新保单的成本相当的高(而且如同刚刚提到的，还有越来越

贵的趋势)，也因此如果将这部份的成本列入计算奖金的公式当中，这正是我们

在入主GEICO前公司经营阶层的做法，此举无异让员工认为取得新保单是对他

们的一种变相惩罚，虽然这明明对Berkshire来说是很有益处的一件事，所以我

们站出来告诉员工，请大家放心公司会为新保单所付出的成本买单，甚且把保户

成长率也当作是奖励公式的一部份，同仁得以因为这类新增加但不赚钱的保单而

获得奖励，当然要是有人能够降低续约保户维持成本的，同样也能获得奖励。

Despite the extensive advertising we do, our best source of new

business is word-of-mouth recommendations from existing

policyholders, who on the whole are pleased with our prices and service.

An article published last year by Kiplinger's Personal Finance Magazine

gives a good picture of where we stand in customer satisfaction: The

magazine's survey of 20 state insurance departments showed that

GEICO's complaint ratio was well below the ratio for most of its major

competitors.

虽然我们大举投入广告活动，但我们新保单的主要来源还是来自于原来保户的口

耳相传，因为他们对于我们的服务与价格感到满意而向其它人推荐，去年私人理

财杂志Kiplinger曾经发表一篇文章，贴切的说明GEICO在消费者心中满意的

程度，该杂志总计在访问了20个州立保险部门后发现，GEICO的申诉比率最

低，而且远低于主要竞争同业的平均数。

Our strong referral business means that we probably could maintain our

policy count by spending as little as $50 million annually on advertising.

That's a guess, of course, and we will never know whether it is accurate

because Tony's foot is going to stay on the advertising pedal (and my

foot will be on his). Nevertheless, I want to emphasize that a major

percentage of the $300-$350 million we will spend in 2000 on

advertising, as well as large additional costs we will incur for sales

counselors, communications and facilities, are optional outlays we

choose to make so that we can both achieve significant growth and

extend and solidify the promise of the GEICO brand in the minds of

Americans.

由于我们已建立了不错的口碑，所以很有可能我们每年只要花5,000万美元的

广告费就可以维持既有的保单数量，但那仅仅是大胆的猜测，永远没有人知道其

正确性，因为Tony仍然会持续地踩着强力广告的油门，(而我也会插一脚)，不

过有一点我必须要强调的是，在2000年的3亿到3.5亿广告预算以及更多投

资在销售顾问、通讯设备等花费当中，有绝大部份并非必要支出，但我们之所以

仍然愿意投入，主要就是希望在提升保费收入成长的同时，还能维持甚至加强美

国人心目中GEICO对于承诺付诸实现的形象。

Personally, I think these expenditures are the best investment Berkshire

can make. Through its advertising, GEICO is acquiring a direct

relationship with a huge number of households that, on average, will

send us $1,100 year after year. That makes us -- among all companies,

selling whatever kind of product -- one of the country's leading direct

merchandisers. Also, as we build our long-term relationships with more

and more families, cash is pouring in rather than going out (no Internet

economics here). Last year, as GEICO increased its customer base by

766,256, it gained $590 million of cash from operating earnings and

the increase in float.

就我个人观点而言，我认为这是Berkshire能够做的最好投资，经由大量广告，

GEICO可以直接与更多的美国家庭建立起直接的关系，年复一年每个家庭平均

提供1,100美元的资金给我们运用，这使得我们在众多销售各式各样产品的公

司当中，成为全美最畅销的直销产品之一，而随着我们与更多的美国家庭建立起

长期的关系，现金更将源源不绝的流入(在这里完全不靠网络)，去年随着GEICO

的客户数量增加到766,256人，包含营业利润以及浮存金增加就贡献了5.9亿

美元的资金。

In the past three years, we have increased our market share in personal

auto insurance from 2.7% to 4.1%. But we rightfully belong in many

more households -- maybe even yours. Give us a call and find out.

About 40% of those people checking our rates find that they can save

money by doing business with us. The proportion is not 100% because

insurers differ in their underwriting judgments, with some giving more

credit than we do to drivers who live in certain geographic areas or work

at certain occupations. Our closure rate indicates, however, that we

more frequently offer the low price than does any other national carrier

selling insurance to all comers. Furthermore, in 40 states we can offer a

special discount -- usually 8% -- to our shareholders. Just be sure to

identify yourself as a Berkshire owner so that our sales counselor can

make the appropriate adjustment.

过去三年以来，我们在汽车保险的占有率从原先的2.7%提高到4.1%，无疑地我

们属于全美许多家庭的，甚至可能是你们家的，打个电话给我们试看看，大约有

四成的人在看过我们的费率之后，会发现可以为他们省下一大笔钱，(我只所以

没说100%的原因在于，每家保险业者对于风险的估计都不同，有些保险公司对

于居住于某些特定地区的居民与从事某些特定职业的客户有偏好，不过我仍然坚

信我们提供给一般民众的费率通常都低于其它全国性的业者，在随年报附赠的

GEICO资料中，大家将可以看到我们提供给来自全美40州股东最高8%的折扣

费率，至于其它州的股东也接受开放申请取得不等的折扣。

* * * * * * * * * * * *

It's with sadness that I report to you that Lorimer Davidson, GEICO's

former Chairman, died last November, a few days after his 97th birthday.

For GEICO, Davy was a business giant who moved the company up to the

big leagues. For me, he was a friend, teacher and hero. I have told you of

his lifelong kindnesses to me in past reports. Clearly, my life would have