Berkshire's 2025 annual shareholder meeting: Watch the full morning session

If everyone will please take their seats.

Now, this is my 60th annual meeting and it's the biggest and I think it'll be the best yet. Before I start, I'd like to give you a few figures from yesterday because we set all kinds of records. Yesterday we had 19,700 people that joined us in the afternoon between noon and 5:00. And that was up from 16,200 which was a previous record the year before. And in every aspect we set records. See's Candy did $317,000 against $283,000 the year before. And most of these were limited by capacity. I mean, there were lines there throughout the total day. Brooks did $310,000. It was an all-time record sales day for them. And I think they have close to 3,000 runners lined up for Sunday, which is a lot of people to get up. I think we've had 2,200 or 2,400 before, but 3,000. And that doesn't count me and it won't count me. And I could go up and down the line. Jazwares, around $250,000, double the previous year's. They just sell as fast as they can sell. Most every place had people lined up at the cash register sometimes for a lot longer wait than we wished we had. But we'll learn the game eventually. And it goes on and on. Every company set records and there's no way of knowing how many people we have here today. We have people listening in around the world. But I think we'll probably set records in a great variety of ways. And we're going to have in a minute we'll get to the question and answer, but I'd like to first introduce our directors. I'm Warren Buffett and I was born and bred here in Omaha. We have Greg Abel. He was born and bred in Canada and we have Ajit Jain who was born and bred in India. So we have a very diverse group. And in the audience, and I will introduce them alphabetically and if they'll stand as I introduce them and I know it'll be an effort but withhold your applause till the end so that we can get through the list. But we'll start alphabetically with Howard Buffett. Howard, just stand and withhold the applause. It'll go to his head. Susan Buffett. We have Steve Burke, Ken Chenault, Chris Davis, Sue Decker, who's our lead director, Charlotte Guyman, Tom Murphy Jr., Ron Olson, and I'll have a few and when we finish I'll have a few more things to say about him. Wally Weitz and Meg Whitman. And with that you've got our all-star cast. And Ron, if you don't mind standing, I would like to point out that Ron, they finally got through an age director thing at Berkshire. I think we had five that were over 90 here not so long ago, but we put in the highest or Sue tells me anyway that it's the highest age limit that any of the companies she checked out came up with. But Ron has been on the board for 28 years and been associated with Charlie Munger at Munger, Tolles for many years beyond that and has been around at a variety of times of crisis and joy and disappointments and surprises and everything else at Berkshire and has been of invaluable help to us. So I think I'd like to give a special hand to Ron Olson.

And I think I'll do something else that isn't done usually at annual meetings, but I haven't had a chance. I listened to them on Thursday afternoon. It's the only investment quarterly call that I listen to, but I listen to Tim Cook and I understand and it'll be tough for me to see him from up here, but Tim Cook, there he is. I'm somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I've ever made Berkshire Hathaway. I credit should be given to him for I knew Steve Jobs briefly and Steve of course did things that nobody else could have done in developing Apple. But Steve picked out Tim to succeed him and he really made the right decision. Steve died young as you know and nobody but Steve could have created Apple but nobody could but Tim could have developed it like it has. So on behalf of all of Berkshire, thank you Tim. There's a couple other people I'd like to thank. I don't do any work in terms of the show or anything else around Berkshire, but what you see today is the product of a lot of people at Berkshire. They forget, you know, that they don't think of themselves as the one who's supposed to screw a light in and leave for somebody else specialist to come along and do other things. The people of Berkshire put on this show every year and you know our chief financial officer and just everybody pitches in. It's a remarkable organization that way. But it's led this year in the last few years by Melissa Shapiro and she's made this whole thing work. Melissa.

And then we got an idea a while back. Well, many years ago, well, I'll take it all the way back. Maybe 65 years ago, I met Carrie Sauer's grandfather and his wife. Well, they had nine children and Susie and I joined a playhouse group. And I don't look like the kind of guy that would join a playhouse group, but it turned out to be a great move in many ways. First of all, I enjoyed the plays. But beyond that, I met not only Carrie's grandfather who ran an insurance company in Omaha, Bill Sauer, but I also met the Pfefferkorn boys' parents, Louie and Francis. Oh, in one sort of accident when I was in my 20s, came up with all kinds of good things. And in connection with Carrie, her father ran a company called Central States and later on we bought that company and then her father ran the company. Her sister went to work for Berkshire some years ago and then she decided to have a family and subsequently had four kids. So she left but Carrie moved right in and Carrie had amazing talents behind just like a good many people do. They have talents you don't realize till you give them some responsibility. And so 10 or 11 years ago, I asked Carrie to do a 50th anniversary book about Berkshire and just use her imagination and she never she didn't need to check with me or do anything. She'd never edited a book. She'd never published a book. She'd never dealt with the printers before, but she just went out and promptly put together this 50th anniversary book. And then this year, well, then Carrie, of course, got married and had three kids, so she had to leave us. But and we go to a baseball game once a year and we invite some of our distinguished alumni like Carrie to join us. And Carrie even though she was raising three children and you may have met one or two of them in the last day or so, she volunteered to bring together a 60th anniversary book which I asked for and again she took the whole thing. She just did it. She kept doing the things with her kids and every now and then I'd ask her how it was going and she'd tell me how it was going and so she put together the 60th anniversary book and got it done by you know maybe a week before the meeting because I gave her the assignment very late. And yesterday we sold I think it was 4,000 plus 4,400 maybe. We printed 8,000. We intended to print 5,000, but so we sold 4,400 books yesterday and we'll have I guess roughly 3,600 left out there today. And it's kind of a whimsical but accurate and if she came out with just the book I hope she would come out with. And then as we went through this publishing experience, Carrie wouldn't take a dime. But I did get her to name her favorite charity and the Stevens Center which takes care of homeless people and does a great many other things. It's located about five or six miles from where we are here south and has been doing a wonderful job. Her grandfather helped form it. Her husband's now joined the board. And we are selling 20 copies of this is a commercial place, isn't it? We are selling 20 copies that we sold 10 prior to the meeting. That's all we let them sell and we raised a few hundred thousand doing that. I think we sold one for $100,000. But we limited that to 10. And the only difference in these and the $25 version is that Carrie and I signed them. But we saved six for yesterday and the six brought $148,000 which is a pretty good average per book of about 20 odd thousand. And I then I had them save four more. So, this afternoon when we disband at 1:00, the area right behind us that has all the goods in it in the bookstore, they will sell the final four and when we get all through, I'll match whatever we've raised for the 20 and we'll give the Stevens Center a boost both financially, but also in awareness. So anyway, that and when you look at that book Carrie really did the whole thing. I mean there's a lot of information in there and she dug through it and she came through a couple times maybe to check a fact or two but she got material from the Munger family. She just did a wonderful job and I couldn't get her to take a penny for it. So, I'm going to ask her to do a lot of other things in the future. But okay. With that, I think we've covered all the business. So, we will move to Becky questions that she's received from I don't know how many she's received, but from all over the country and perhaps outside the country and she's picked out a group of them which she has not shared with me. And we will alternate questions between Becky and the audience which we have by zones. And with that I will turn things over to Becky for the first question.

Yeah. Well, the import certificates were distinct, but their goal was to balance imports against exports and so that the trade deficit would not grow in an enormous way. In fact, it would have and it had various other provisions in it to help third world countries as they were called to perhaps catch up a little bit. And they had a variety of aspects to them but basically they were designed to balance trade. And I think you can make some very good arguments for the fact that balanced trade is good for the world and the more balanced trade there is the better it will continue to be better for cocoa to be raised in Ghana and coffee in Colombia and a few things. And over time the American industry has gone from being an agricultural country. This was nothing but an ag country. I mean that virtually and that was only 250 years ago and we have become a very industrial country. And we did not want to make that a situation in my view where we ran greater and greater deficits building up greater and greater debts against the country. So I designed this import certificate thing which Charlie thought was a little too much like Rube Goldberg. I don't know whether that name is but it's gimmicky. But it's certainly a lot better than anything I think than we're talking about now. And there's no question that trade can be an act of war. And I think it's led to bad things. Just the attitudes it's brought out in the United States. I mean, we should be looking to trade with the rest of the world and we should do what we do best and they should do what they do best. And I don't think that's what we did originally. I mean, we were good at producing tobacco and cotton 250 years ago and we traded it. And we want a prosperous world with eight countries with nuclear weapons, including a few that are what I would call quite unstable. I do not think it's a great idea to try and design a world where a few countries say, 'Haha, we've won.' And other countries are envious. So, my import certificate idea which went no place. I think we got extra copies with not a great demand for the copies. If anybody and if you'd like and write the office, I think we could probably send you a copy of it. But the main thing to do is not use trade should not be a weapon. And the United States, we've won. I mean, we have become an incredibly important country starting from nothing. 250 years ago, there's nothing been anything like it. And it's a big mistake in my view when you have 7 and a half billion people that don't like you very well and you got 300 million that are crowing in some way about how well they've done. And I don't think it's right and I don't think it's wise. I do think that the more prosperous the rest of the world becomes, it won't be at our expense, the more prosperous we'll become and the safer we'll feel and your children will feel someday. So that's but don't expect my import certificate idea to go up there with Adam Smith's Wealth of Nations or anything.

Okay. Let's go to area one.

Well, I'm going to extend the same goodwill to Japan that you've just extended to me. I let the people of Japan determine their best course of action in terms of economics. It's an incredible story. And it's been about six years now as you pointed out. I was just going through a little handbook that probably had two or three thousand Japanese companies in it. One problem I have is that I can't read that handbook anymore. The print's too small. But here were these five trading companies. They have a special name for them in Japan, but they were selling at ridiculously low prices. And so I spent about a year acquiring them. And then we got to know the people better. And everything that Greg and I saw we liked better as we went along. So, we got fairly close to the 10% limit that we told the company we would never exceed without their permission. And so we did ask them reasonably whether that limit could be relaxed and it's in the process of being relaxed somewhat. I would say that I'll speak for Greg beyond me that in the next 50 years, and I hope he's running things, we won't give a thought to selling those. I mean they had and Japan's record has been extraordinary actually in terms of that. My guess is that Tim would tell you Tim Cook would tell you that iPhone sales there are about as great as any country outside the United States. American Express would tell you that they sell their product very very well in Japan. Coca-Cola that we do business with another big investment of ours, they do extraordinarily well in Japan. They have a number of habits in a civilization that operates differently than ours. Japan is by far the biggest they this is the container they've always preferred their soft drinks and they have a whole different sort of distribution system there. But we have been treated extremely well by the five companies. They talk with Greg primarily. I went over there a year or two ago, but Greg's more cosmopolitan than I am, so he's saying much actually, but very little. And but he is How many times do you think you've met with representatives of one company or the other?

It's super long-term and they have different customs. They have different approaches to business. That's true around the world. And we don't have any intention in any way of trying to change what they've done because they do it very successfully. And our main activity is just to cheer and clap and that I can still do at 94. So we will own those, you know, we will not be selling any stock. I mean that is just it's that that will not happen in decades if then. And my guess is that they will find things because they cover the world pretty much. The five trading companies, we will find things occasionally that may be very large for any individual company there. They may in some way be assisted by some help we bring to the situation. But that will be an expanding relationship. It's too bad that Berkshire has gotten as big as it is because we love that position and I'd like it to be a lot larger than it is. But even with the five companies being they're very large companies and they're large companies in Japan. And we've got at market that you know in the range of 20 billion dollars invested, but I'd rather have a hundred billion than 20 billion. And that's the way I feel about several other investments we have. But size is an enemy of performance at Berkshire. And I don't know any good way to solve that problem. But Charlie always told me that having a few problems was good for me. I never quite understood that. If you listen to him long enough, you would understand. And it's not an impossible problem at all. The Japan investment has just been right up our alley. You want to add anything on that?

Yeah. I would say they want to they would like to present us with opportunities. We would like to receive them. We've got the money. We both get along very well with each other. And they have some different customs than we have. They drink the number one Coca-Cola product they drink over there something called Georgia coffee. So I haven't converted them to Cherry Coke and they're not going to convert me to Georgia Coffee. But it's a perfect relationship. I just wish we could get more like it. And I never dreamt of that when I picked up that little wasn't so little. It was about that thick and sometimes two companies to a page and a couple thousand pages I believe. But it's amazing what you can find when you just turn the page there. We showed a movie last year about turn every page and I would say that turning every page is one important ingredient to bring to the investment field. And very few people do turn every page and the ones who turn every page aren't going to tell you what they're finding. So you got to do a little of it yourself. Okay.

Yeah. Well, I wouldn't do anything nearly so noble as to withhold investing myself just so that Greg could look good later on. Now, if he gets any edge of what I believe, I'll resent it. So, now the amount of cash we have is we would spend well, we came pretty close to spending 10 billion not that long ago, for example, but we'd spend a hundred billion. I mean, and those decisions are not tough to make. When something is offered that makes sense to us and that we understand and offers good value and where we don't worry about losing. And the one problem with the investment business is that things don't come along in an orderly fashion and they never will. I mean, it isn't like every day. The long-term record is sensational, but that is not a product. And I've been in let's see, I've had 200 trading days times 80 years. I've had 16,000 trading days. It would be nice if every day you got four opportunities or something like that and they were expected to be equally attractive. You know if I was running a numbers racket every day would have the same expectancy of that I would keep 40% of whatever the handle was and so the only question would be is how much we transacted. But we're not running that kind of a business. And so we're running a business which is very very opportunistic. And Charlie always thought I did too many things. He thought if we did about five things in our lifetime we'd end up doing better than if we did 50. And that we never concentrated enough. So that we would rather have if we've got 335 billion now in treasuries, we would rather have conditions that are developed where we would have like 50 billion or something like that. But that just isn't the way the business works. And we have made a lot of money by not wanting to be fully invested at all times. And we don't think it's improper actually for people who are passive investors just to make a few simple investments and sit for their life. But we've made the decision to be in the business. So we think we can do a little better than that by behaving in a very irregular manner. But if you told me that I had to invest well let's say that we have roughly 40 billion a year coming in and we start with 335. If you told me I had to invest 50 billion every year till we got down to 50 billion, that would be the dumbest thing in the world to invest in that manner. Things get extraordinarily attractive very occasionally. The long-term trend is up. Nobody knows. And I certainly don't know. Greg doesn't know. Ajit doesn't know. Nobody knows what the market is going to do tomorrow, next week, next month. Nobody knows what business is going to do tomorrow, next week or next month. But they spend all their time talking about it because it's easy to talk about but it has no value. I've never found anybody I wanted to listen to on the subject. And on the other hand, I found the leafing through things like that big Japanese book that I can't read anymore. That's a treasure hunt. And every now and then you find something and occasionally, very occasionally, but it'll happen again that I don't know when it won't. It could be next week. It could be 5 years off, but it won't be 50 years off. You will have we will be bombarded with offerings that we'll be glad we have the cash for. And it'd be a lot more fun if it would happen tomorrow, but it's very unlikely to happen tomorrow. Very very unlikely to happen tomorrow, but it's not unlikely to happen in five years. And then the probabilities get higher as you go along. It's kind of like death. I mean, if you're 10 years old, the chances that you're going to die the next day are low. If you get to be 115 or something like that, it's almost a cinch. Particularly if you're a male. I mean, all the records are held by females in terms of age. And I tried to get Charlie to have a sex change so he could test out whether it he did pretty well for being a male. I'll put it that way. Okay.

Station two.

Yeah. Well, in respect to real estate, it's so much harder than stocks in terms of negotiation of deals, time spent, the involvement of multiple parties in the ownership. Usually when real estate gets in trouble, you find out you're dealing with more than the equity holder. But there have been times when large amounts of real estate have changed hands at bargain prices, but usually stocks were cheaper, but they were a lot easier to do. So Charlie did more real estate. Charlie enjoyed real estate transactions. And he actually did a fair number of them in the last 5 years of his life. But he was, you know, he was playing a game that it was an interesting game to him. But I think if you'd asked him to make a choice when he was 21, he had to either be in stocks exclusively the rest of his life or real estate the rest of his life, he would have chosen stocks for the second. There's just so much more opportunity at least in the United States. There's so much more opportunity that presents itself in the security market than it does in real estate. And in real estate, you're dealing with usually dealing with a single owner or a family that owns maybe a large property they've had a long time. Maybe they've borrowed too much money against it. Maybe the population trends are against them. But to them, it's an enormous decision. When you walk down to the New York Stock Exchange, you can do billions of dollars worth of business, totally anonymous, and you can do it in 5 minutes. And the trades are complete when they're complete. In real estate, when you make a deal, a big deal with a distressed lender, when you sign the deal, then you go into another phase. I mean then people start negotiating more things and more things and it's a whole different game and a different type of person to some extent enjoys the game. We did a few real estate deals that came our way in 2008 and but the amount of time that they would take us compared to doing something intelligent and probably better in securities there was just no comparison. I mean, in a real estate deal, every sentence is as important to the person and in stocks, if somebody needs to sell 20,000 shares of Berkshire or something and they call us and the price is right, it's done in 5 seconds and it closes all the time. People who you certainly wouldn't want to have marry your daughter they behave well actually in stocks. Partly that's because they're probably having their wires or phones or whatever it is recorded as to what they've said and everything. But the completion rate for working on anything in stocks is assuming you've got a meeting of the minds on price essentially 100%. In real estate, it just begins when you agree on deals and then they take forever. So that for a guy 94 it's not the most interesting thing to get involved in something where the negotiations could take years. And we have the capability. There have been some huge failures in fact. If you go all the way back to Zeckendorf in the 1960s he was going to change the world and Century City out in California is a product of his. And if you go to Urus if you go to he was sitting on top of the world with the earth buildings. So people tend to get in trouble in that business. The banks usually don't want to recognize it, but that takes a long time to go through the bank processes. They just got through redoing the Musk cologne that he made when he was buying it three years ago. The company that's now X and you know 3 years to work out a transaction where you've got parties on both sides that aren't ready to act that we find it much better when people are just ready to pick up the phone and you can do hundreds of millions of dollars worth of business in the day. I've been spoiled but I like being spoiled so we'll keep it that way. Okay, Becky.

Okay, Becky. And Ajit's got about 100 points of IQ on me and he's just going to be here this morning, so I'm going to let him answer the question first.

Well, there is no question in my mind that AI is going to be a real game changer and it's going to change the way we assess risk, we price risk, we sell the risk and then the way we end up paying claims. Having said that, I certainly also feel that people end up spending enormous amount of money trying to chase the next new fashionable thing. We are not very good in terms of being the fastest or the first mover. Our approach is more to wait and see until the opportunity crystallizes and we have a better point of view in terms of risk of failure upside downside. So right now the individual insurance operations do dabble in AI and try and figure out what is the best way to exploit it. But we have not yet made a conscious big-time effort in terms of pouring a lot of money into this opportunity. And my guess is we will be in a state of readiness and should that opportunity pop up we'll be in a state where we'll jump in promptly.

Yeah. And I was just add I wouldn't trade everything that's developed in AI in the next 10 years for Ajit. So if you gave me a choice that gave me a choice of having a hundred billion dollars available to participate in the property casualty insurance business for the next 10 years and a choice of getting the top AI product out of whoever's developing it or having Ajit making the decision. I would take Ajit anytime and I'm not kidding about that. Okay, station three.

Well, I'll have to ask Greg about that because I don't know anything about it. So, maybe he bought it when I was looking the other way. But I think I got to call a friend on this one. Yeah. I we own a lot of companies, but I do like to think I know most of them, but and maybe a subsidiary of a subsidiary in some way, but I really don't know a thing about it. I'm sorry, but that may be a good thing. I do know something about hot dogs, though.

No, I look at the financial statements of about perhaps 50 or

60 of our companies every month. But in the case of Marmon for example, Marmon itself owns over 100 companies and it was created by Jay Pritzker and his brother Bob. It was a remarkable company when we bought it but it was highly diversified already and then we've diversified it further. So it is something of a Berkshire within Berkshire and we found that that's working very good as an arrangement.

It was interesting. Jay Pritzker was a remarkable manager and there's various branches of the Pritzker family. So it really goes back to an N. Pritzker before J and so on. But in 1954 they changed the federal tax code very dramatically in the United States. It was quite a blow to me because I'd been at Columbia and I'd been reading a J.K. Lasser book about the tax code and then they went and changed the whole damn thing. So '54 was a big year of big change. Those years come every now and then like 1986 and you may see a big one one of these days.

And there was a company called Rockwood Chocolates in Brooklyn and they made Rockwood Chocolate Bits, which we used to sell at the Buffett grocery store and people made chocolate chip cookies out of them and everything. And then it turned out that cocoa, which lately has had a big run too, cocoa was 5 cents a pound in 1941 when LIFO was first allowed for tax purposes. And the Rockwood Chocolate company went into on the LIFO message. So they owned like 30 million pounds or thereabouts of cocoa. And then cocoa took a run in 1955. And I had just moved to New York.

And there was a provision in the new tax code that if you were in two or more companies and you did certain things and you've been in them for 5 years and you got out of one of them that there would be no capital gains tax on LIFO inventory gains and tax rates were around 48% maybe 52% and so there was this huge profit because the cocoa had gone up in price, but that made it terrible for them in selling Rockwood Chocolate Bits because the price of retail of the chocolate bits did not match what was going on at wholesale. Something almost identical's been happening in the chocolate business recently. Hershey Chocolate just came out said they're going to have a bad quarter and we're paying $4.50 a pound for chocolate because things are going on in West Africa that make cocoa prices go up dramatically.

In any event, Jay Pritzker bought control of Rockwood the chocolate company. And like I say, I was 24 or 25 years old. And they called the meeting to split off one of the chocolate businesses in a way that would then enable them to recognize the gain on these cocoa beans without paying roughly 50% federal taxes on the gain. So I went to the meeting which was in Brooklyn and nobody was there. This is in the turn every page category except one guy and I was 24 and he was 29 and it was Jay Pritzker and nobody had showed up at the meeting and it was kind of a crummy building they had but they had a lot of cocoa there and Jay just gave me a lecture or a lesson really I should say on the tax code and I mean I could have gone to graduate school for years and never learned as much as he did.

And then later we actually bought the company that Rockwood Company after he did some other things became the basis for Marmon. And Marmon among other things developed the car that won the first Indianapolis Speedway race and it invented the rear view mirror which I'm not sure is a great great advantage in economics or anything but the guy that would they used to have on the Indianapolis 500 they had two people in the car. One guy was to look back and see what the other people were doing and the other guy was to drive the car and our guy got sick and so they invented a rear view mirror. So if you want to look at the kind of you know what's going on in the laboratories of Berkshire Hathaway and we got people working on things like the rear view mirror.

Hey, a war. Yep. I'm happy a friend did call. So that still works. Peter Eastwood, who runs one of our Berkshire subsidiaries and does a great job of running it, tracked down that Portillo's is owned by a private equity firm called Berkshire Partners. So that was the basis of the question, but it's not associated with Berkshire. So we got to the bottom of that one. Yeah. Thank you, Peter. That's just a sample of the way we operate around here.

Okay, Becky.

Well, I would say that Jessica, who I believe is it sounds as if she is the step-granddaughter of one of our managers that I mentioned in the annual report, may not be the same one. But in any event, America's been in significant and revolutionary changing really ever since it was developed. I mentioned that, you know, we started out as an agricultural society. We started out as a society with high promises and we didn't deliver on them very well. And we said all men were created equal. And then we wrote a constitution that said blacks get counted as three-fifths. And in Article II you'll find male pronouns used 20 times and no female pronouns used. So, you know, it took till 1920, I should say, until the 19th Amendment was passed, saying, 'Oh, yeah, we promised the women this back in 1776, and now we'll do something about it.' And then we didn't do something about it for a long time. So, we're always in the process of change. We'll always find all kinds of things to criticize in the country but the luckiest day in my life is the day I was born, you know, because I was born in the United States and at the time about 3% of all the births in the world were taking place in the United States and I'd like to say that I had something to do, you know, listen, sent messages out to my parents for God's sakes move to the United States before I'm born or anything. But I was just lucky and I was lucky to be born. I was lucky to be born white. I was all kinds of things. But it's been if you don't think the United States has changed since I was born in 1930. It's been we've gone through all kinds of things and gone through great recessions. We've gone through world wars. We've gone through the development of an atomic bomb that we never dreamt of, you know, at the time I was born. So I would not get discouraged about the fact that it doesn't look like we've solved every problem that's come along. And if I were being born today, you know, I would just keep negotiating in the womb until they said you can be in the United States. So we're all pretty lucky.

Do you want to give any? We've got two non-United States guys here just to get the other side. So who now live in the US.

Well, that's a good question and there are times when you have to act fast. In fact, we made a great deal of money because we're willing to act faster than anybody around. Jessica Tombs is I think she's the step-granddaughter of Ben Rosner, a manager of ours. And in 1966, I got a call from a fellow named Will Felsteiner in New York, and he said, 'I represent Mrs. Annenberg.' And there were actually nine Annenberg sisters, I believe, before Walter Annenberg came along as the son. But he said, 'We have a business we'd like to sell you.' So, I called Charlie up and I got a few details and it sounded very interesting and Charlie and I went back to the office of Will Felsteiner in New York. He was a marvelous guy. Never met him since but he was handling things for Mrs. Annenberg and her husband had been the partner of Ben Rosner, but he had died and Ben got kind of tense about working with her. And so he offered us this business at a bargain price. He offered us a business for $6 million. It had $2 million of cash. It had a $2 million piece of property in the 900 block of what's the key street in Philadelphia down there? Market Street. And it was making 2 million a year pre-tax. And the price was 6 million. And Charlie and I went back to this place and Ben Rosner was there and he really just was upset about doing business with his partner's widow. She was extremely wealthy and he just didn't he wasn't enjoying it. He was very nervous about selling it. And he said to me and Charlie, he said, 'I'll run this business for you until December 31st and then I'm out of here.' And I got Charlie. We went out in the hallway. And I said, 'If this guy quits at the end of the year, you can throw away every book on psychology I've ever read.' I believe and so that began a wonderful we bought the company and had a great relationship.

And did I know that morning when I got a phone call from Will Felsteiner there was background about it? I've had a couple of times and that was one of them where people in the East felt that they had a stereotype in their mind of what people from the Midwest were like. And Ben had been married, his first marriage was to a woman from Iowa. And he just figured that anybody from the Midwest was okay. And the trick when you do when you get in business with somebody or get in a room with somebody like that and they want to sell you something for $6 million that's got 2 million of cash and a couple million of real estate and it's making 2 million a year. You don't want to be patient then you want to be patient in waiting to get the occasional call. My phone will ring sometime, you know, and with something that, you know, wakes me up. I may be sleeping in there or something, but you just never know when it'll happen. And that's what makes it what makes it fun. I mean patience it's a combination of patience and a willingness to do something that afternoon if it comes to you. You don't want to be patient about acting on deals that make sense and you don't want to be very patient with people they're talking to you about things that will never happen. So, it's not a constant asset. It's not a constant liability to be patient.

Yeah. And of course it doesn't come in anything like an even flow. I mean it's the most uneven sort of activity you could get into. And the main thing you have to do is you have to be willing to hang up after 5 seconds and you have to be willing to say yes after 5 seconds. Absolutely. And you can't be filled with self-doubt in the business. You just forget it isn't going to work. Go into some other activity. But you also I mean one of the great pleasures it is the great pleasure actually in this business is having people trust you and that's really the why work at 90 when you've got more money than anybody could count, you know, if they started today and had machines there helping them and everything else. It means nothing in terms of how you're going to live or how your children are going to live or anything else. But both Charlie and I, we just enjoyed the fact that people trusted us and they trusted us 60 years ago or 70 years ago and partnerships we had and we never sought out professional investors to join our partnerships. Among all my partners, I never had a single institution. I never wanted an institution. I wanted people and I didn't want people that were sitting around and having people present to them every three months and tell them what they wanted to hear and all that sort of thing. So, and that's what we got and that's why we've got this group here today. So, it's all worked out. But you don't want to be patient when the time comes to act. You want to get it done that day.

Yeah. Todd has done a great job for us in terms of turning around the operations. When he took over there were two major issues that Geico was behind its competitors on. Firstly, the term Warren used and we all have been using is matching rate to risk and secondly telematics. We were at the bottom of the list in so far as telematics are concerned about five six years ago. Since then we have made rapid strides and telematics which used to be a source of competitive disadvantage to us is no longer so and I would argue that our telematics at Geico is about as good as anyone else's today. So that's been one huge catch up. Secondly, in terms of matching rate to risk, there again, I think we have caught up with our competitors and we're as good as anyone else in the field. All this together with the cost reduction effort that Geico and Todd gets a lot of credit for, he has basically reduced the workforce by 20,000. Starting with something close to 50 odd thousand, he's brought it down to 20,000 and that translates to I guess at least $2 billion per year. So all this has allowed Geico to become a much focused competitor. So much so in the last seven quarters, Geico has shown a combined ratio that has an eight in front of it. And I never thought I'd live to see the day when anyone could have a combined ratio at so low as it is right now. So I think Geico has done a great job. It's 80 combined translates to the largest profit anyone is making on the underwriting side in the personal automobile business. So you know we've achieved a lot, Todd has achieved a lot but I do not want to be so arrogant as to say that mission accomplished. We've achieved a lot but I still think we need to do a lot more in technology. AI as we talked about is going to be a big force and we need to play catch up there. Not catch up but we ought to be in a state of readiness. So I think Geico is in great shape right now. Warren, you want to add anything?

No, it's a fascinating case study, but and that's what's so interesting about the whole game of business, but particularly about our businesses is that each one is a little different. But they all have challenges of certain sorts and but they also many certain numbers have opportunities. We paid $50 million for half of Geico in 1976. What turned out to be half of Geico. 50 million. We now own 100% but 50% of two billion that we earned in the first quarter is a billion dollars which on a $50 million investment is you know 20 for one in a quarter. So it now that takes years to develop but the interesting thing is the auto insurance policy which didn't even exist 100 years ago. I mean you just well I should say 120 years ago. But it's by far the largest item in the property casualty insurance business. It's huge.

The only thing I'd like to add is in addition to the underwriting profit, Geico provides $29 billion of float.

Oh yeah. In addition, yeah. And that's not unimportant when you paid $50 million to get the business is giving you $29 billion to work with for nothing. And on top of that, gives you a billion dollars of profit in a quarter. The interesting thing about auto insurance is that we are the company was started in 1936. We're selling the same product as 1936. We're being more sophisticated about pricing it than we were then. Somebody just made the judgment. A fellow that came from USAA made the judgment that government employees the name Geico stands for Government Employees Insurance Company that government employees were better drivers than average and I don't think he was an actuary or anything else but he just made an observation and so he left USAA which is still a very successful company and he started Geico for a few hundred thousand and he made money the first year from underwriting. He made money the second year. This is not a public offering type thing deal, you know, use phony accounting for 10 years and all that sort of thing. Hey, just price it to make money and that's exactly what's been done since 1936. The policy really, you know, your insurance, your auto insurance policy looks a lot like the one that you had then. And this huge field has sprung up around us and it's still growing and of course nobody likes to buy insurance but they sure like to drive and Geico is a fascinating story and about three times over the years the company has gotten sidetracked one way or another and then it gets back to its basic and it's a wonderful wonderful business and we showed at this annual meeting one time a message from Lorimer Davidson and in January of 1950 was the only person in the building that I'd gone down on a Saturday to visit, but turned out they didn't work on Saturdays in Washington and I pounded on the door till finally a janitor let me in and I said to the janitor is there anybody I can talk to here except you and he didn't take it personally and he said well there's one guy up on the sixth floor and a fellow named Lorimer Davidson did wonderful things for me. You get a few breaks in life in terms of people you will meet who would just change your life dramatically. And if you you need a handful of those and when you get them, you treasure them. And we've had them on this board of Berkshire, we you know, if you take Tom Murphy and Sandy Gottesman and Walter Scott and Bill Scott, we one thing we've done is we've held on to human assets. We've made lifelong assets out of people that are the right sort and with incredible talent, but also just lots of fun to work with and always doing more than their share. And you know to get a chance to talk to Lorimer Davidson on a Saturday afternoon, you just listen carefully. And that comes in the category of turn every page. You know, some of them you want to turn pretty fast, but you just get lucky in life and you want to take advantage of your luck.