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 .11
mistakes of this type.
不过有一点我绝对可以向各位保证的是，我们拥有全世界最优秀的霹雳猫保险保险专
家，那就是Ajit Jain，他在Berkshire的价值大到难以想象，在再保险这一行，恐怖
的灾难时常发生，我很清楚的原因是我个人在1970年代就抱了不少个地雷，而
GEICO在1980年代初期，即使当时拥有最能干的经理人，也同样签了一堆愚蠢的保
险合约，不过提到Ajit，我可以向各位保证，绝对不会再犯同样的错误。
I have mentioned that a mega-catastrophe might cause a catastrophe in
the financial markets, a possibility that is unlikely but not far-fetched.
Were the catastrophe a quake in California of sufficient magnitude to tap
our coverage, we would almost certainly be damaged in other ways as well.
For example, See's, Wells Fargo and Freddie Mac could be hit hard. All in
all, though, we can handle this aggregation of exposures.
另一方面我也说过，自然灾害的发生同样也会间接导致金融风暴的发生，这样的可能
性不大，但也不是不可能，要是加州真的发生规模大到我们理赔下限的大地震，我们
旗下其它事业也可能会受到严重的打击，比如说喜斯糖果、富国银行或Freddie Mac
等，不过总的来说，我们应该可以妥善处理发生的状况。
In this respect, as in others, we try to "reverse engineer" our future
at Berkshire, bearing in mind Charlie's dictum: "All I want to know is
where I'm going to die so I'll never go there." (Inverting really works:
Try singing country western songs backwards and you will quickly regain
your house, your car and your wife.) If we can't tolerate a possible
consequence, remote though it may be, we steer clear of planting its seeds.
That is why we don't borrow big amounts and why we make sure that our
super-cat business losses, large though the maximums may sound, will not
put a major dent in Berkshire's intrinsic value.
就这方面而言，我们试着事先规划Berkshire的未来，时时谨记查理常说的一句格言，
「希望能够知道自己最后会死在哪里，然后打死都不去那里！」(事先回想真的有效，
大家可以试着多唱唱以前流行的乡村歌曲，很快的你就会发现重新找回你的房子、车
子跟老婆)，如果我们没办法承担可能的后果，不管其可能性有多小，那么我们就必须
避免播下罪恶的种子，这也是为什么我们不大幅举债的原因，同时虽然霹雳猫损失理
赔的上限金额看起来很大，但对Berkshire本身价值的影响却极其有限。
Insurance - GEICO and Other Primary Operations
保险事业营运-GEICO以及其它主要保险
When we moved to total ownership of GEICO early last year, our
expectations were high - and they are all being exceeded. That is true
from both a business and personal perspective: GEICO's operating chief,
Tony Nicely, is a superb business manager and a delight to work with.
Under almost any conditions, GEICO would be an exceptionally valuable
asset. With Tony at the helm, it is reaching levels of performance that
the organization would only a few years ago have thought impossible.
去年当我们完全取得GEICO的所有权之后，我们曾对它抱以深切的期望，如今这些
期望不但全部实现，甚至是有过之而无不及，不论是从企业或个人的观点来看皆是如
此，GEICO的领导者Tony Nicely不但是一个杰出的经理人同时也是令人感到愉快
的工作伙伴，不论在任何的情况下，GEICO永远都是我们价值不菲的珍贵资产，有
Tony负责掌舵，GEICO甚至迈入几年前根本就想象不到的营运高峰。
There's nothing esoteric about GEICO's success: The company's
competitive strength flows directly from its position as a low-cost
operator. Low costs permit low prices, and low prices attract and retain
good policyholders. The final segment of a virtuous circle is drawn when
policyholders recommend us to their friends. GEICO gets more than one
million referrals annually and these produce more than half of our new
business, an advantage that gives us enormous savings in acquisition
expenses - and that makes our costs still lower.
GEICO的成功没有任何深奥的道理，该公司的竞争优势完全拜其超低成本的经营模式
所赐，低成本代表低售价，低售价自然能够吸引并留住优良的保险客户，而整个营业
流程在满意的客户向他们的朋友推荐GEICO时划下完美的句点，靠着客户的推荐，
GEICO每年至少因此增加100万张保单，占新接业务量的半数以上，也使得我们新
接业务成本大幅下降，从而又进一步降低我们的成本。
This formula worked in spades for GEICO in 1996: Its voluntary auto
policy count grew 10%. During the previous 20 years, the company's bestever
growth for a year had been 8%, a rate achieved only once. Better yet,
the growth in voluntary policies accelerated during the year, led by major
gains in the nonstandard market, which has been an underdeveloped area at
GEICO. I focus here on voluntary policies because the involuntary business
we get from assigned risk pools and the like is unprofitable. Growth in
that sector is most unwelcome.
这种模式在1996年大放异彩，自动上门的保险量成长了10%，过去二十年来，该公
司最高也不过是在有一年达到8%而已，更好的是，这些自愿保单的增加主要源自于
非制式的保单市场，这个市场对GEICO来说算是亟待开发的一块，我之所以一再强
调自愿保单的原因在于，从别处分配到的集体性非自愿的保单根本就没什么利润，那
方面的成长就可有可无。
GEICO's growth would mean nothing if it did not produce reasonable
underwriting profits. Here, too, the news is good: Last year we hit our
underwriting targets and then some. Our goal, however, is not to widen our
profit margin but rather to enlarge the price advantage we offer customers.
Given that strategy, we believe that 1997's growth will easily top that of
last year.
如果不能产生合理的承保获利，GEICO保费收入的成长就没有任何意义，不过再一次
我们得到的答案是正面的肯定，去年我们顺利达到原先设定的承保目标，甚至还超
越，不过我们真正的目标不是要扩大承保的利差，而是将利润透过价格的调整回馈给
客户，在这样的策略之下，我们相信1997年的成长一定还会超越1996年的表现。
We expect new competitors to enter the direct-response market, and
some of our existing competitors are likely to expand geographically.
Nonetheless, the economies of scale we enjoy should allow us to maintain or
even widen the protective moat surrounding our economic castle. We do best
on costs in geographical areas in which we enjoy high market penetration.
As our policy count grows, concurrently delivering gains in penetration, we
expect to drive costs materially lower. GEICO's sustainable cost advantage
is what attracted me to the company way back in 1951, when the entire
business was valued at $7 million. It is also why I felt Berkshire should
pay $2.3 billion last year for the 49% of the company that we didn't then
own.
同时我们也预期会有新的竞争者加入直效行销的市场，而现有的一些竞争同业也有可
能会扩大他们的营业区域，不过不管怎样，我们目前所建立的规模经济，绝对可以确
保甚至是扩大我们现在占有的经济堡垒，我们在拥有最高市占率的地区尽量降低成
本，预期还会将成本进一步地降低，GEICO永续性的成本优势是当初在1951年吸引
我投资该公司的主要原因，当时整家公司的市值不过只有700万美元，而那也是为
什么我在去年愿意花23亿美元买下另外一半不属于Berkshire的股权的原因。
Maximizing the results of a wonderful business requires management and
focus. Lucky for us, we have in Tony a superb manager whose business focus
never wavers. Wanting also to get the entire GEICO organization
concentrating as he does, we needed a compensation plan that was itself
sharply focused - and immediately after our purchase, we put one in.
想要让一家好公司的表现发挥到极致，必须依赖优秀的管理人员与明确的目标方向，
值得庆幸的是我们已经有像Tony这样优秀的专业经理人以及绝对不会动摇的目标，
而为了确保GEICO所有的组织成员都能像Tony一样专注一致，我们需要一套能够
搭配的薪资酬劳计画，所以在整个购并案完成之后，我们立刻落实执行。
Today, the bonuses received by dozens of top executives, starting with
Tony, are based upon only two key variables: (1) growth in voluntary auto
policies and (2) underwriting profitability on "seasoned" auto business
(meaning policies that have been on the books for more than one year). In
addition, we use the same yardsticks to calculate the annual contribution
to the company's profit-sharing plan. Everyone at GEICO knows what counts.
现在，以Tony为首的几个主要高阶经理人所领取的薪资奖励主要就看两个指数︰(1)
自愿性保单的成长，以及(2)常态性保单承保的获利(指留在公司超过一年的保单)，此
外，我们也将同样的标准运用于公司每年员工盈余分配的计画，所以基本上在GEICO
每个人都知道真正重要的是什么。
The GEICO plan exemplifies Berkshire's incentive compensation
principles: Goals should be (1) tailored to the economics of the specific
operating business; (2) simple in character so that the degree to which
they are being realized can be easily measured; and (3) directly related to
the daily activities of plan participants. As a corollary, we shun
"lottery ticket" arrangements, such as options on Berkshire shares, whose
ultimate value - which could range from zero to huge - is totally out of
the control of the person whose behavior we would like to affect. In our
view, a system that produces quixotic payoffs will not only be wasteful for
owners but may actually discourage the focused behavior we value in
managers.
GEICO这项计画充分说明的Berkshire薪资奖励的原则，那就是必须要能够达到以下
目标(1)适用于个别公司经营状况(2)简单明了的规则，如此可以很清楚的加以衡量(3)
与每个参与的员工直接相关；所以很自然的，我们避免给予员工不劳而获的乐透彩，
比如说Berkshire的认股权，其最终的价值可能由极少到极大，但这却不是那些我们
想要影响其行为的人员所能够直接控制影响的，在我们的观念中，不合理的薪资奖励
办法，不但是浪费股东的钱，同时也会让旗下的经理人分心而产生不当的行为。
Every quarter, all 9,000 GEICO associates can see the results that
determine our profit-sharing plan contribution. In 1996, they enjoyed the
experience because the plan literally went off the chart that had been
constructed at the start of the year. Even I knew the answer to that
problem: Enlarge the chart. Ultimately, the results called for a record
contribution of 16.9% ($40 million), compared to a five-year average of
less than 10% for the comparable plans previously in effect. Furthermore,
at Berkshire, we never greet good work by raising the bar. If GEICO's
performance continues to improve, we will happily keep on making larger
charts.
每一季，GEICO公司总共9,000名的员工都可以看到根据盈余分配计画所计算出来
的结果，1996年他们确实享受到这项成果，因为根据这项计画所计算出来的数字早
已打破当初规划时的最高上限，连我也知道要如何解决这个问题，那就是把上限再扩
大，到最后，员工总共分配到年度获利的16.9%，金额将近有4,000万美元，远高
于过去五年平均不到10%的比率，同时在Berkshire对于员工辛勤工作的表现，我们
绝对不会回以更高的门槛，如果GEICO的员工继续保持如此优异的表现，我们还会
继续提高奖励的上限。
Lou Simpson continues to manage GEICO's money in an outstanding
manner: Last year, the equities in his portfolio outdid the S&P 500 by 6.2
percentage points. In Lou's part of GEICO's operation, we again tie
compensation to performance - but to investment performance over a fouryear
period, not to underwriting results nor to the performance of GEICO as
a whole. We think it foolish for an insurance company to pay bonuses that
are tied to overall corporate results when great work on one side of the
business - underwriting or investment - could conceivably be completely
neutralized by bad work on the other. If you bat .350 at Berkshire, you
can be sure you will get paid commensurately even if the rest of the team
bats .200. In Lou and Tony, however, we are lucky to have Hall-of-Famers
in both key positions.
负责管理GEICO资金的Lou Simpson同样继续其优异的表现，去年他的投资组合超
越S&P 500指数整整6.2个百分点，关于Lou在GEICO的表现，再一次我们将其
奖励计画跟其投资绩效绑在一起，不看GEICO的承保绩效或整体的成绩，而是以过
去四年平均的投资绩效为准，对于有些保险公司不分承保部门或投资部门，完全不顾
一方优异的表现可能被另一方糟糕的表现所抵消掉的情况，而将其薪资奖励计画完全
绑在一起，一视同仁的做法感到愚不可及，在Berkshire如果你的打击率高达三成五，
我可以向你保证绝对不会亏待你，即使其它同队的球员平均打击率只有二成而已，不
过很庆幸在GEICO，不论是在保险或投资部门，我们都拥有像Lou与Tony这类足
以列入名人堂的优秀球员。
* * * * * * * * * * * *
Though they are, of course, smaller than GEICO, our other primary
insurance operations turned in equally stunning results last year.
National Indemnity's traditional business had a combined ratio of 74.2 and,
as usual, developed a large amount of float compared to premium volume.
Over the last three years, this segment of our business, run by Don
Wurster, has had an average combined ratio of 83.0. Our homestate
operation, managed by Rod Eldred, recorded a combined ratio of 87.1 even
though it absorbed the expenses of expanding to new states. Rod's threeyear
combined ratio is an amazing 83.2. Berkshire's workers' compensation
business, run out of California by Brad Kinstler, has now moved into six
other states and, despite the costs of that expansion, again achieved an
excellent underwriting profit. Finally, John Kizer, at Central States
Indemnity, set new records for premium volume while generating good
earnings from underwriting. In aggregate, our smaller insurance operations
(now including Kansas Bankers Surety) have an underwriting record virtually
unmatched in the industry. Don, Rod, Brad and John have all created
significant value for Berkshire, and we believe there is more to come.
虽然比起GEICO，我们其它主要保险事业规模要小得多，但他们在去年同样缴出惊人
的成绩单，国家赔偿公司的传统业务综合比率只有74.2，同时以其保费收入来看，
还贡献了大量的浮存金，过去三年以来，这个由Don Wurster负责的部门平均的综
合比率只有83.0；另外由Rod Eldred负责的Homestate业务也有相当幅度的成长，
去年虽然必须负担开拓新州业务的费用，但综合比率仍只有87.1，过去三年平均为
83.2；另外原先由Brad负责的加州劳工退休基金现在已将业务重心移到其它六个
州，虽然初期须负担沉重的开办费用，但是仍然能维持可观的承保获利；最后负责中
央州立产险公司营运的John Kizer则依然表现出色，保费收入不但大幅成长，同时
承保利益更大幅增加，总的来说，我们几个小型保险事业(包含堪萨斯银行家保险在内)
的表现是其它同业所比不上的，Don、Rod、Brad与John全都替Berkshire创造了
可观的价值，而我们也相信他们未来的潜力仍然可期。
Taxes
租税问题
In 1961, President Kennedy said that we should ask not what our
country can do for us, but rather ask what we can do for our country. Last
year we decided to give his suggestion a try - and who says it never hurts
to ask? We were told to mail $860 million in income taxes to the U.S.
Treasury.
1961年，甘乃迪总统曾经说过一句名言︰不要问国家能为你做些什么，问问你能为
国家做些什么! 去年我们决定照他的建议试一试，不过不知道是谁说问问没有关系
的 我们最后得到的答案是总共要缴8.6亿美元的所得税给美国国库。
Here's a little perspective on that figure: If an equal amount had
been paid by only 2,000 other taxpayers, the government would have had a
balanced budget in 1996 without needing a dime of taxes - income or Social
Security or what have you - from any other American. Berkshire
shareholders can truly say, "I gave at the office."
这个数字到底有多大呢? 如果全美能够有2,000名跟Berkshire一样的纳税义务人的
话，则美国国库不需要再征收其它任何的所得税、社会安全捐或任何你想得到名目的
税捐，1996年的预算收支就能够打平，所以Berkshire的股东可以大声地说自己，
功在国库。
Charlie and I believe that large tax payments by Berkshire are
entirely fitting. The contribution we thus make to society's well-being is
at most only proportional to its contribution to ours. Berkshire prospers
in America as it would nowhere else.
查理跟我本人对于Berkshire必须支付如此高额的税负感到完全接受，我们对于整个
社会的贡献远远比不上社会对我们所作的贡献，要不是身在美国，Berkshire不可能
有这样的荣景。
Sources of Reported Earnings
帐列盈余的来源
The table that follows shows the main sources of Berkshire's reported
earnings. In this presentation, purchase-accounting adjustments are not
assigned to the specific businesses to which they apply, but are instead
aggregated and shown separately. This procedure lets you view the earnings
of our businesses as they would have been reported had we not purchased
them. For the reasons discussed on pages 65 and 66, this form of
presentation seems to us to be more useful to investors and managers than
one utilizing generally-accepted accounting principles (GAAP), which
require purchase-premiums to be charged off business-by-business. The
total earnings we show in the table are, of course, identical to the GAAP
total in our audited financial statements.
下表显示Berkshire帐列盈余的主要来源，在这张表中商誉的摊销数与购买法会
计调整数会从个别被投资公司分离出来，单独加总列示，之所以这样做是为了让
旗下各事业的盈余状况，不因我们的投资而有所影响，过去我一再地强调我们认
为这样的表达方式，较之一般公认会计原则要求以个别企业基础做调整，不管是
对投资者或是管理者来说，更有帮助，当然最后损益加总的数字仍然会与经会计
师查核的数字一致。
(in millions)
--------------------------------------
Berkshire's Share
of Net Earnings
(after taxes and
