significantly in 1988, with export business particularly strong.
World Book became available in the Soviet Union in September,
when that country largest American book store opened in Moscow.
Ours is the only general encyclopedia offered at the store.
寇比吸尘器与世界百科全书的1988年销售数量都大幅成长，尤其在外销部份更
是强劲，世界百科全书在九月配合莫斯科当地最大的一家美国百货公司开幕，正
式在苏联推出，成为该店唯一展示的一套百科全书。
Ralph personal productivity is amazing: In addition to
running 19 businesses in superb fashion, he is active at The
Cleveland Clinic, Ohio University, Case Western Reserve, and a
venture capital operation that has spawned sixteen Ohio-based
companies and resurrected many others. Both Ohio and Berkshire
are fortunate to have Ralph on their side.
Ralph个人的工作效率真是惊人，除了同时经营19项事业之外，他还投入相当
的时间在克里夫兰医院、Ohio大学等单位，另外还负责一个创投，创设了16
家位于Ohio的新公司，他可以称的上是Ohio与Berkshire之宝。
Borsheim
波仙珠宝
It was in 1983 that Berkshire purchased an 80% interest in
The Nebraska Furniture Mart. Your Chairman blundered then by
neglecting to ask Mrs. B a question any schoolboy would have
thought of: re there any more at home like you Last month I
corrected the error: We are now 80% partners with another branch
of the family.
Berkshire是在1983年买下内布拉斯加家具店80%的股权，当时我忘了问B
太太一个连小学生都会想到的问题，你还有没有其它兄弟姊妹，上个月我补救了
这个错误，现在我们又成为另一个家族分支80%的股东。
After Mrs. B came over from Russia in 1917, her parents and
five siblings followed. (Her two other siblings had preceded
her.) Among the sisters was Rebecca Friedman who, with her
husband, Louis, escaped in 1922 to the west through Latvia in a
journey as perilous as Mrs. B earlier odyssey to the east
through Manchuria. When the family members reunited in Omaha
they had no tangible assets. However, they came equipped with an
extraordinary combination of brains, integrity, and enthusiasm
for work - and that all they needed. They have since proved
themselves invincible.
当B太太1917年从苏俄往东经满州一路逃到美国之后，她的双亲与五位兄弟姊
妹也陆续来到美国，其中她有一个姊妹Rebecca在1922年跟着丈夫Friedman
冒着生命危险往西途经拉脱维亚，当家族在奥玛哈重新团聚时大家一无所有且身
无分文，然而只要身具智能、品格与热情一切就已足够，后来证明他们所向无敌。
In 1948 Mr. Friedman purchased Borsheim, a small Omaha
jewelry store. He was joined in the business by his son, Ike, in
1950 and, as the years went by, Ike son, Alan, and his sons-inlaw,
Marvin Cohn and Donald Yale, came in also.
1948年Friedman先生买下奥玛哈地区一家叫波仙的小珠宝店，后来他的儿子
与女婿陆续加入。
You won. be surprised to learn that this family brings to
the jewelry business precisely the same approach that the
Blumkins bring to the furniture business. The cornerstone for
both enterprises is Mrs. B creed: .ell cheap and tell the
truth.?Other fundamentals at both businesses are: (1) single
store operations featuring huge inventories that provide
customers with an enormous selection across all price ranges, (2)
daily attention to detail by top management, (3) rapid turnover,
(4) shrewd buying, and (5) incredibly low expenses. The
combination of the last three factors lets both stores offer
everyday prices that no one in the country comes close to
matching.
你应该不难预料，这个家族为当地珠宝业所带来的影响与B太太的情况相近，两
家店共同的特色就是东西实在又价美物廉，另外共通的特色还有(1)单店经营，
但货品样式价格种类齐全，满足消费者各式需求(2)老板每天专心经营(3)货品周
转快速(4)精明的采购(5)费用开销难以想象地低。后面三项特点让店内产品的售
价，全美其它地方都得比。
Most people, no matter how sophisticated they are in other
matters, feel like babes in the woods when purchasing jewelry.
They can judge neither quality nor price. For them only one rule
makes sense: If you don. know jewelry, know the jeweler.
大部分的人们不管在其它行业多么学有专精，但是遇到买珠宝首饰时，就像是迷
失在森林里的小孩子一样，不会判断东西的品质好坏与价格高低，对这些人来
说，只要记住一条，不懂珠宝没有关系，只要认识珠宝商就好。
I can assure you that those who put their trust in Ike
Friedman and his family will never be disappointed. The way in
which we purchased our interest in their business is the ultimate
testimonial. Borsheim had no audited financial statements;
nevertheless, we didn. take inventory, verify receivables or
audit the operation in any way. Ike simply told us what was so -
- and on that basis we drew up a one-page contract and wrote a
large check.
我敢保证大家只要放心交给Friedman家族，一定不会让各位失望，我们购买波
仙股权的方式就是最好的证明，波仙没有会计师查核报告，也没有盘点存货、验
证应收帐款或是做任何方式的查核，他们只是简单地告诉我们如何如何，于是双
方就草拟的一页简单的合约，并由我们开出一大笔金额的支票。
Business at Borsheim has mushroomed in recent years as the
reputation of the Friedman family has spread. Customers now come
to the store from all over the country. Among them have been
some friends of mine from both coasts who thanked me later for
getting them there.
随着Friedman家族声誉的远播，近年来波仙珠宝的生意越做越大，客户从美国
各地远道而来，其中也包含我一些从东西两岸来的朋友，他们也都很感谢我能带
他们去参观波仙。
Borsheim new links to Berkshire will change nothing in the
way this business is run. All members of the Friedman family
will continue to operate just as they have before; Charlie and I
will stay on the sidelines where we belong. And when we say .ll
members,?the words have real meaning. Mr. and Mrs. Friedman, at
88 and 87, respectively, are in the store daily. The wives of
Ike, Alan, Marvin and Donald all pitch in at busy times, and a
fourth generation is beginning to learn the ropes.
波仙的营运模式并不会因为Berkshire的加入而有所改变，所有的家族成员仍将
持续在各自的岗位上奋斗，查理跟我会站在旁边默默支持，事实上所有的成员包
含高龄88岁与87岁的老先生与老太太，仍然每天到店里工作，其它儿子媳妇
也是从早忙到晚，家族的第四代已正准备开始学习接班。
It is great fun to be in business with people you have long
admired. The Friedmans, like the Blumkins, have achieved success
because they have deserved success. Both families focus on
what right for the customer and that, inevitably, works out
well for them, also. We couldn. have better partners.
跟你所欣赏的人一起共事实在是一件很大的乐趣，Friedmans家族的成功就像
是B太太家族的成功一样，实至名归，两个家族都坚持对客户有益的事之上，同
时对他们自己也有很大的益处，这是我们最好的事业伙伴。
Insurance Operations
保险事业营运
Shown below is an updated version of our usual table
presenting key figures for the insurance industry:
下表是有关保险事业的几项主要的数据更新
Statutory
Yearly Change Combined Ratio Yearly Change Inflation Rate
in Premiums After Policyholder in Incurred Measured by
Written (%) Dividends Losses (%) GNP Deflator (%)
------------- ---------------- ------------ ----------------
1981 ..... 3.8 106.0 6.5 9.6
1982 ..... 3.7 109.6 8.4 6.4
1983 ..... 5.0 112.0 6.8 3.8
1984 ..... 8.5 118.0 16.9 3.7
1985 ..... 22.1 116.3 16.1 3.2
1986 ..... 22.2 108.0 13.5 2.7
1987 ..... 9.4 104.6 7.8 3.3
1988 (Est.) 3.9 105.4 4.2 3.6
Source: A.M. Best Co.
The combined ratio represents total insurance costs (losses
incurred plus expenses) compared to revenue from premiums: A
ratio below 100 indicates an underwriting profit, and one above
100 indicates a loss. When the investment income that an insurer
earns from holding on to policyholders?funds (.he float? is
taken into account, a combined ratio in the 107-111 range
typically produces an overall break-even result, exclusive of
earnings on the funds provided by shareholders.
综合比率代表的是保险的总成本(损失加上费用)占保费收入的比率，100以下代
表会有承销利益，100以上代表会有承销损失，若把持有保费收入浮存金(扣除
股东权益部份所产生的盈余)所产生的投资收益列入考量，损益两平的范围大概
是在107-111之间。
For the reasons laid out in previous reports, we expect the
industry incurred losses to grow by about 10% annually, even in
years when general inflation runs considerably lower. If premium
growth meanwhile materially lags that 10% rate, underwriting
losses will mount, though the industry tendency to underreserve
when business turns bad may obscure their size for a time. As
the table shows, the industry underwriting loss grew in 1988.
This trend is almost certain to continue - and probably will
accelerate - for at least two more years.
基于前几次年报所说明的理由，即使是通货膨胀在这几年来相对温和，我们预期
保险业每年损失增加的比率约在10%左右，若是保费收入成长没有到达10%以
上，损失一定会增加，虽然保险公司在景气不好时，会习惯性地将损失暂时隐藏
起来，如附表所示，1988年产业整体的损失确实增加，而这个趋势应该会继续
持续下去，甚至在未来两年还会加速恶化。
The property-casualty insurance industry is not only
subnormally profitable, it is subnormally popular. (As Sam
Goldwyn philosophized: n life, one must learn to take the
bitter with the sour.? One of the ironies of business is that
many relatively-unprofitable industries that are plagued by
inadequate prices habitually find themselves beat upon by irate
customers even while other, hugely profitable industries are
spared complaints, no matter how high their prices.
产险业的获利情况不但是相当的低，而且也是不太受尊重的行业，(就像是山姆
高德温曾说一个人要学会体验人生的苦与乐，不过这行很讽刺的是，做的要死要
活的同时，还要被客户糟蹋，不像有些赚翻了的行业，东西明明贵的要死，却是
一个愿打，一个愿挨)
Take the breakfast cereal industry, whose return on invested
capital is more than double that of the auto insurance industry
(which is why companies like Kellogg and General Mills sell at
five times book value and most large insurers sell close to
book). The cereal companies regularly impose price increases,
few of them related to a significant jump in their costs. Yet
not a peep is heard from consumers. But when auto insurers raise
prices by amounts that do not even match cost increases,
customers are outraged. If you want to be loved, it clearly
better to sell high-priced corn flakes than low-priced auto
insurance.
以早餐麦片为例，它的资产报酬率是汽车保险业的一倍(这也是为什么家乐氏与
通用磨坊的股价净值比是五倍，而保险业者的股价净值比仅为一倍)，麦片公司
常常在调整产品售价，即便其生产成本没什么变，但消费者却连一个屁都不吭一
声，但要是换做是保险业者，就算只是反映成本稍微调整一下价格，保户马上就
会生气地跳起来，所以若你识相，最好是选择去卖高价的玉米片，而不是低价的
汽车保险。
The antagonism that the public feels toward the industry can
have serious consequences: Proposition 103, a California
initiative passed last fall, threatens to push auto insurance
prices down sharply, even though costs have been soaring. The
price cut has been suspended while the courts review the
initiative, but the resentment that brought on the vote has not
been suspended: Even if the initiative is overturned, insurers
are likely to find it tough to operate profitably in California.
(Thank heavens the citizenry isn. mad at bonbons: If Proposition
103 applied to candy as well as insurance, See would be forced
to sell its product for $5.76 per pound. rather than the $7.60 we
charge - and would be losing money by the bucketful.)
一般大众对于保险业的敌视会造成严重的后果，去年秋天加州通过的一项103
提案，虽然成本一再上涨，却还威胁要将汽车保费价格大幅压低，所幸法院后来
检视这项提案予以搁置，但这次投票所带来的冲击未曾稍减，保险业者在加州已
很难再有营运获利的空间，(感谢老天还好加州人没有对巧克力糖果感到反感，
若是103提案也如保险般适用于糖果的话，喜斯可能被迫以每磅5.76元而不
是现在的每磅7.6元，果真如此，喜斯可能就要亏大钱了)
The immediate direct effects on Berkshire from the
initiative are minor, since we saw few opportunities for profit
in the rate structure that existed in California prior to the
vote. However, the forcing down of prices would seriously affect
GEICO, our 44%-owned investee, which gets about 10% of its
premium volume from California. Even more threatening to GEICO
is the possibility that similar pricing actions will be taken in
other states, through either initiatives or legislation.
对Berkshire来说，这项法案的短期影响不大，因为即使在这法案之前，加州现
行的费率结构也很难让我找到有获利的商机，然而这项压低保费的做法却会直接
影响到我们持有44%股权的GEICO，约有10%2的保费收入系来自加州，更具
威胁的是若其它州，不管是透过提案或是立法的方式，也跟进采取类似的行动，
If voters insist that auto insurance be priced below cost,
it eventually must be sold by government. Stockholders can
subsidize policyholders for a short period, but only taxpayers
can subsidize them over the long term. At most property-casualty
companies, socialized auto insurance would be no disaster for
shareholders. Because of the commodity characteristics of the
industry, most insurers earn mediocre returns and therefore have
little or no economic goodwill to lose if they are forced by
government to leave the auto insurance business. But GEICO,
because it is a low-cost producer able to earn high returns on
equity, has a huge amount of economic goodwill at risk. In turn,
so do we.
若民众坚持汽车保险费的价格一定要低于成本，则最后可能要由政府直接来负
责，股东或可暂时支应保户，但只有纳税人可以长久地给予支助，对大部分的产
物意外险业者来说，社会化的汽车保险对于其股东不会有太大影响，因为由于这
个产业是属于大众产品，保险业者所赚的投资报酬平平，所以若因此被政府强迫
退出市场，也不会有太大的商誉损失，但GEICO就不一样了，由于它的成本低，
相对地可以获得高报酬，所以可能会有很大的潜在商誉损失，而这当然会连带影
响到我们。
At Berkshire, in 1988, our premium volume continued to fall,
and in 1989 we will experience a large decrease for a special
reason: The contract through which we receive 7% of the business
of Fireman Fund expires on August 31. At that time, we will
return to Fireman Fund the unearned premiums we hold that
relate to the contract. This transfer of funds will show up in
our remiums written?account as a negative $85 million or so
and will make our third-quarter figures look rather peculiar.
However, the termination of this contract will not have a
significant effect on profits.
在1988年Berkshire的保费收入持续减少，到了1989年我们预期保费收入还
会大幅下滑，一方面是因为消防人员退休基金即将于八月底到期，届时依合约我
们必须将未到期的保费退还，估计总共退回的金额8,500万美元，这将使得我
们第三季的数字看起来有点奇怪，当然这对于我们公司本身的获利不会造成太大
的影响。
Berkshire underwriting results continued to be excellent
in 1988. Our combined ratio (on a statutory basis and excluding
structured settlements and financial reinsurance) was 104.
Reserve development was favorable for the second year in a row,
after a string of years in which it was very unsatisfactory.
Details on both underwriting and reserve development appear on
pages 36-38.
Berkshire 1988年的承保表现依旧相当不错，我们的综合比率(依照法定基础扣
除和解与财务再保)大约在104，损失准备提列在前几年不佳后，连续两年情况
还算良好)
Our insurance volume over the next few years is likely to
run very low, since business with a reasonable potential for
profit will almost certainly be scarce. So be it. At Berkshire,
we simply will not write policies at rates that carry the
expectation of economic loss. We encounter enough troubles when
we expect a gain.
我们的保费收入规模预计在未来几年内都会维持在相当低的水平，因为有利可图
的生意实在是少之又少，随它去，在Berkshire我们不可能在知道明明会亏钱的
情况下，还去硬接生意，光是接看起来有赚头的生意，就让我们的麻烦够多了。
Despite - or perhaps because of - low volume, our profit
picture during the next few years is apt to be considerably
brighter than the industry. We are sure to have an exceptional
amount of float compared to premium volume, and that augurs well
for profits. In 1989 and 1990 we expect our float/premiums
ratio to be at least three times that of the typical
property/casualty company. Mike Goldberg, with special help from
Ajit Jain, Dinos Iordanou, and the National Indemnity managerial
team, has positioned us well in that respect.
