巴菲特1970年致股东的信（英文版）

Dear Shareholders,

In the past year, the operating results across our portfolio of companies have varied significantly. Illinois National Bank & Trust reported record earnings, ranking among the top in the nation in terms of return on average assets. While our insurance operations saw a deterioration in underwriting results, the growth in investment income ultimately yielded strong returns. The textile business faced increasing operational challenges, yet managed to break even amidst a tough industry climate.

These factors combined to produce an approximate 10% average return on shareholder investment. Although this is just the median level in the US industry, it is relatively high compared to five years ago when the company's resources were solely invested in the textile business.

Sales of men's garment lining and home fabrics dropped significantly throughout the year. Consequently, we had to constantly adjust production schedules to prevent inventory build-up. This production reduction was costly for the company and posed burdens on the employees.

Textile prices remained low, and market demand showed no signs of strengthening. Despite the company's strenuous efforts, inventory levels, although reduced from the previous year, were still high relative to current sales. We continue to make changes in manufacturing and marketing, aiming to achieve profitability and provide more stable employment for our staff.

Under the leadership of Ken Chace, the management and employees in this business have demonstrated the same level of effort, attitude, and initiative as those in our more profitable ventures. However, over the past year, they have been going against the tide, a situation that persists to this very moment.

Our insurance business achieved outstanding results in the past year (despite a decline in underwriting quality). Our traditional business (National Indemnity, Fire and Marine Insurance) experienced a surge as the conventional auto insurance market became constrained. This aligns with our history of underwriting "surges" when standard markets encounter capacity or underwriting loss issues. Although the total loss and expense ratio of our traditional business rose to around 100% during the year, our management team, led by Jack Ringwalt and Phil Liesche, has the capability and determination to restore it to underwriting profitability.

Our new reinsurance business, managed by George Young, made very solid progress during the year. While it will take a few more years to assess the underwriting performance of this department, initial signs are encouraging. We have generated substantial business across multiple reinsurance fields and are building a more comprehensive team to handle additional business in the future.

The surety业务 / fidelity insurance business reported last year experienced significant underwriting losses in 1970. The results in the construction bond field were disappointing, and we will restrict our open underwriting scope. Although this means much less business, we hope for underwriting profits.

Our "home-state" business: We primarily conduct this business through "Cornhusker Casualty Company," a wholly-owned subsidiary of National Indemnity established at the beginning of 1970. Currently, the company only underwrites insurance business through agents in "Nebraska" and has had a strong start. By combining the capabilities of a large company (National Indemnity) with the convenience of a small company's channel network (Home State), the company can offer highly competitive products to top-tier agents. John Ringwalt has turned the concept into reality, worthy of our praise. We hope to replicate this approach and plan to launch another company later this year.

In 1970, Eugene Abegg faced the challenge of following up on the brilliant performance of 1969. He succeeded in maintaining the deposit base. Under the constraint of keeping liquidity above average, the net operating profit of Illinois Bank exceeded 2% of average deposits, excluding securities gains. This record indicates that the banking business has been very well managed. Bob Kline became the President of Illinois National Bank in January 1971, while Mr. Eugene Abegg will continue as Chairman and CEO. As a single-bank state, deposit growth in Illinois is difficult to achieve. In the year since Mr. Kline joined the bank, he has been working hard to create new deposits. Consistent with national trends, deposit growth will largely come from consumer savings, but at a high cost. With nationally low loan interest rates, the management team will face the challenge of maintaining profitability amidst a high-cost deposit portfolio.

In the final days of the 1970 fiscal year, the US passed a new law on bank holding companies. Since Berkshire Hathaway holds shares in Illinois National Bank, this law impacts us. In effect, we have about ten years to dispose of the bank's stock (which may involve distributing the bank's shares to our shareholders). It may take some time before we decide on a course of action. In the meantime, all future banking-related activities of the Berkshire Hathaway Group, including acquisitions, must comply with the Federal Reserve Board's laws and regulations.

Chairman
Warren E. Buffett