2001 Letter to Shareholders
To the Shareholders of Berkshire Hathaway Inc.:
Berkshire's results in 2001 were disappointing, with net earnings of $3.76 billion, down 22.7% from 2000. The book value per share of both Class A and Class B stock increased by 6.5%, a bit better than the 5.1% decline in the S&P 500.
The events of September 11th had a significant impact on our insurance operations, particularly on our reinsurance business. The terrorist attacks created losses that were both large and difficult to estimate accurately. In addition to the direct losses, there was also a general softening of the insurance market, which put pressure on pricing and underwriting margins.
Our non - insurance businesses, however, performed relatively well. Many of our subsidiaries continued to generate strong cash flows and maintain their competitive positions in their respective industries. For example, our manufacturing, retail, and service businesses showed resilience in the face of a challenging economic environment.
In the investment arena, we remained focused on finding undervalued businesses with strong long - term prospects. We did not make any major acquisitions in 2001, as we continued to be cautious in the face of economic uncertainty. We also maintained a significant cash position, which provided us with the flexibility to take advantage of opportunities as they arose.
We used the letter to discuss the importance of corporate governance and the responsibilities of directors. We emphasized that directors should act in the best interests of shareholders and ensure that the company is managed in a way that promotes long - term value creation. We also commented on the need for transparency and honesty in financial reporting, especially in the wake of several high - profile accounting scandals.
Looking forward, we remained optimistic about Berkshire's long - term prospects. We believed that our diversified business model, combined with our experienced management team and disciplined investment approach, would enable the company to weather various economic cycles and continue to create value for shareholders.
Best regards,
Warren E. Buffett
Chairman of the Board
