Berkshire Hathaway Letters to Shareholders: 1965-2024

by Warren Buffett

Here’s what we do know: (a) The probability of such mind-boggling disasters, though likely very low at present, is not zero. (b) The probabilities are increasing, in an irregular and immeasurable manner, as knowledge and materials become available to those who wish us ill. Fear may recede with time, but the danger won’t — the war against terrorism can never be won. The best the nation can achieve is a long succession of stalemates. There can be no checkmate against hydra-headed foes. (c) Until now, insurers and reinsurers have blithely assumed the financial consequences from the incalculable risks I have described. (d) Under a “close-to-worst-case” scenario, which could conceivably involve $1 trillion of damage, the insurance industry would be destroyed unless it manages in some manner to dramatically limit its assumption of terrorism risks. Only the U.S. Government has the resources to absorb such a blow. If it is unwilling to do so on a prospective basis, the general citizenry must bear its own risks and count on the Government to come to its rescue after a disaster occurs. Why, you might ask, didn’t I recognize the above facts before September 11th? The answer, sadly, is that I did — but I didn’t convert thought into action. I violated the Noah rule: Predicting rain doesn’t count; building arks does. I consequently let Berkshire operate with a dangerous level of risk — at General Re in particular. I’m sorry to say that much risk for which we haven’t been compensated rem...