Business The post-Covid labor market might look very different as it rebounds

On May 3, the 2020 Buffett shareholders meeting was held in Omaha. The 90-year-old investor must not have imagined that such a shareholder meeting without audience would be held in his lifetime (affected by COVID-19, the press conference was conducted online). And this time, his partner Charlie Munger, who has accompanied him for 60 years, did not appear at the conference due to health problems. Buffett said that without Charlie Munger sitting there, it did not feel like an annual meeting.

In addition to these different details, the outside world paid more attention to Berkshire's first quarter financial report released just before the shareholders meeting. The financial report showed that Berkshire's net loss in the first quarter was 49.746 billion US dollars, a record high. The investment portfolio suffered a "huge book loss" of over US$54.5 billion, and meanwhile book cash reached a record high of US$137.3 billion. It is huge loss of investment portfolio on one side and record high of book cash on another. Buffett's 2020 is just as struggling as the world.

When we talk about Buffett, we always use stock god to describe this old man. But in fact, Buffett's performance in investment in mergers and acquisitions may be better than stocks.

Over the past few decades, Buffett's continuous investment in mergers and acquisitions have made Berkshire a super business giant. Its subsidiaries are involved in many industries. Specifically, they mainly include five sectors: insurance, securities investment, railway and energy, manufacturing, and retail service industries.

From the perspective of business sectors, service retail and insurance businesses contributed most of the operating income, while industrial investment contributed most of the profits.

Buffett's huge investment funds come from Berkshire's insurance business. After being taken over by Buffett at the verge of bankruptcy in 1965 and transformed into an insurance group, this original textile factory has grown into a top investment group with total asset of more than 700 billion US dollars and ranked 12th in 2008 Fortune Global 500 after 55 years of ups and downs. Its insurance + investment model has also been imitated by other insurance giants in the world. Today, InsurView will introduce you to this insurance giant: Berkshire Hathaway.

Berkshire's development history

When it comes to Berkshire, what everyone talks about most must be its stock price. On January 17, 2020, Berkshire's stock price reached $3,474,000 per share, making it the most expensive stock in the world so far. Before Buffett took over in 1964, its stock price was only $19. Its compound annual growth rate was 19% and far outpaced the 9.8% annualized growth rate of S&P 500 and other indexes.

Berkshire was a textile company before Buffett entered. At that time, Buffett continued to buy company stocks at low prices, and formally took over the management in 1965. As the textile business was declining, Buffett began to join the insurance industry three years later, using Berkshire's surplus funds to acquire the National Insurance Company (NICO) and the National Fire and Maritime Insurance Company. During this period, Berkshire's net assets nearly doubled, with an annualized rate of 18.4%, and its stock price increased rapidly from $19 in 1964 to $66.

The period from 1969 to 1998 is the 30 golden years for Warren Buffett's Insurance + Investment. On the one hand, Buffett completely built Berkshire into an insurance company. First of all, Buffett began to buy GEICO shares in the secondary market in 1976, and Berkshire finally completed the acquisition of GEICO in 1996. Secondly, in 1998, Berkshire acquired General Reinsurance Company for 22 billion U.S. dollars and became a giant in the reinsurance field. As of 1999, Berkshire's premium income was $14.3 billion. On the other hand, Buffett made a large amount of value investment by using abundant insurance floating funds. The classic stock investments during this period included the well-known Coca-Cola and Gillette, as well as famous acquisitions like See's Candies. In this acquisition, Buffett only spent 15 million US dollars, and in the decades after the acquisition, See's Candies has created billions of dollars in profits for Berkshire.

In the 30 golden years of insurance + investment, Berkshire has grown from $66 to $70,000 per share, and its net assets have increased by 987 times, at an annualized rate of 26%, far exceeding 8.2% of the S&P 500. Berkshire's total assets reached 122.2 billion US dollars. At this point, Buffett has officially become the "stock god."

The 20 years from 1999 can be regarded as Berkshire's mature period. With the continuous growth of the group's net assets, stock earnings could not meet the company's requirements. So Buffett put a lot of energy in corporate mergers and acquisitions during this period, and successively initiated Burlington Northern Santa Fe Railway, Heinz Company and Precision Castparts Corporation. The three major mergers and acquisitions, costing US$94 billion, covered diversified industries such as heavy industry, energy, and consumption. In 2008, due to the financial crisis, Buffett got the opportunity to buy Goldman Sachs shares at a relatively low price. Five billion U.S. dollars consolidated the foundation of Buffett's investment empire.

Over the past 20 years, Berkshire has completed the transformation from investing in stocks to focusing on corporate mergers and acquisitions. Total assets have increased from US$122.2 billion to US$700 billion, an annualized rate of 9.2%. Net assets increased from 57.4 billion U.S. dollars to 348.7 billion U.S. dollars, an annualized rate of 9.4%, and the stock price rose from 70,000 U.S. dollars to 300,000 U.S. dollars.

Insurance + investment helps build Berkshire's business empire

If Buffett's investments in mergers are like a precise sniper rifle, then Berkshire's insurance sector is his continuous ammunition depot. For Buffett, insurance sector means far more than its own revenue and profits. From the perspective of the nature of insurance, it first collects a certain premium from customer, and then pays it to the insured person on agreed conditions in the future. This model allows insurance companies to have a large amount of funds in their hands, that is, "float". Although insurance companies do no own float, they are entitled to use it and they could invest it in mergers and acquisitions. This is the Buffett's famous insurance + investment model.

How did Buffett enlarge the float scale?

The first is to continuously acquire insurance companies to increase premium income. Buffett acquired the National Insurance Company (NICO) and the National Fire and Marine Insurance Company for the first time in 1967, acquired GEICO Insurance in 1996, and acquired General Reinsurance in 1998. As of 2019, Berkshire ranks 10th in the global insurance industry with premium income of US$61.078 billion, and 4th in the United States. It is one of the world's largest insurance companies.

After continuous acquisition and integration, there are currently three major insurance operators, namely GEICO, Berkshire Reinsurance (BHRG) and BH Primary. They are involved in car insurance, reinsurance and special insurance businesses, with a total 27 insurance subsidiaries.

Among them, GEICO has been the main contributor to Berkshire Hathaway's premium income. In 2019, it contributed nearly 60% of the premium income, and the insurance income of BHRG and BH Primary accounted for 27% and 15% respectively.

The second is to get large reinsurance orders by the advantage of capital. The reinsurance business has the following characteristics: higher risk concentration, higher policy premiums, and higher premium income. As the world's third largest reinsurance company, Berkshire has maintained a 3A rating for a long time, and is able to sign many large orders that many reinsurance companies cannot take. Buffett said in 2015 that there were only 8 property and casualty insurance policies with a single premium of more than $1 billion in history, all of which were signed by Berkshire. Secondly, the compensation process of reinsurance is longer than everyone thinks. Because reinsurance business has a huge amount of work in loss determination and settlement, sometimes the compensation process can be as long as several decades. This ensures that Berkshire can manage compensation pressure and cash flow is more stable.

With enough capital, it then depends on leader's investment ability.

In terms of investment choices, Buffett has always preferred traditional industries, but his interest in technology companies has gradually increased in recent years.

According to Berkshire's 2019 annual report, among Buffett's top ten heavyweight stocks, banking stocks account for almost half. He has publicly stated that the banking industry is a good industry with a high rate of return on tangible assets.

The consumption industry is also favored by Buffett. Consumers have a lasting and stable daily consumption demand. Once being liked by consumers as a brand, it will form customer stickiness and dominate the competition. Coca-Cola is Buffett's most outstanding investment in the consumption industry. Although the share of consumer stock holdings in market value has slowly declined from 17% in 1980 to 10% in 2019, Buffett still loves consumption industry the most.

The technology industry was once Buffett's least favorite industry. Although the growth prospects of the technology industry are huge, the competitive landscape is often subverted by the emergence of new technologies. The difficulty of forecasting is beyond Buffett's ability, so it has been excluded from his investment for a long time. However, as Buffett's investment in Apple and other high-tech companies has gradually taken shape, it shows that his investment philosophy is still evolving, and Apple has become the largest stock in Buffett's holdings.

Can the insurance + investment model be copied?

If a company makes a lot of investment in mergers and acquisitions, it is often considered to be inefficient and difficult to integrate. But Buffett established Berkshire's business empire through continuous investment in mergers and acquisitions.

InsurView believes that the secret lies in Buffett's own famous saying: investing in good companies at a reasonable price is better than investing in mediocre companies at a good price. In Buffett's long investment career, he is always good at finding good companies in the market that are undervalued in the short term. Its investment logic is centered on the intrinsic value of the enterprise, avoiding junk assets, and no interests in industrial integration.

This could ensure that most Berkshire's subsidiaries can maintain stable performance and contribute large amount of profits, even though they are not much integrated and associated with each other.

Secondly, Buffett's success is largely credited to the rapid development of US economy. Buffett is firmly optimistic about the development prospects of United States, and dares to act when others are pessimistic and fearful. He has been willing to grow together with high-quality companies, and enjoy the economic development of United States.

Since the beginning of this year, U.S. stocks have plummeted due to the pandemic. Despite the strong rescue policy of Fed, the Dow Jones Index ushered in a violent rebound. But this time, the stock god has become a mortal, cutting his flesh before dawn. After his announcing the clearance of aviation stocks at the general meeting of shareholders, aviation stocks began to rebound slightly. Especially in the past two trading days, after significant progress has been made on China-US routes, American aviation stocks rebounded violently. Among them, American Airlines rebounded more than 110% in two trading days.

So Trump seized the opportunity to poke fun at Buffett when he delivered a speech at the White House last week.

But in any case, the old Omaha's investment career in the past few decades is legendary enough. At the same time, there is a country in the far east that has carried out drastic reforms to the capital market in recent years. Whether the dividends of the times can create an Oriental Berkshire, we have to wait and see.

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Help acting more professional

Posted: 29 Jun 2021 12:26 AM PDT

I just got my first corporate type job and I'm definitely not your typical office employee I come from a pretty uhhh different background I need help acting more professional as one of head managers sees potential in me but I tend to act very immature and have a problem with telling people dumb shit I've done in my life any advice?

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13 insurance institutions in China have invested in nearly 60 elderly community projects

Posted: 29 Jun 2021 12:08 AM PDT

At the first China Insurance and Elderly Care Integration and Development Forum held on June 25, He Xiaofeng, Chairman of Dajia Insurance Group, introduced that, including Dajia Insurance, there are already 13 insurance institutions investing in nearly 60 elderly community projects in the market, which will provide more than 80,000 beds in over 20 cities and provinces across the country.

The insurance companies' elderly communities are still in its infancy in China. From the perspective of operating model, the income of elderly community includes entry fees, membership cards, monthly fees and other service fees. It could realize connection with insurance business by giving eligible insurance users entry qualifications, priority access rights and partial discounts. The regulatory requirements of "rent only, no sale" also have prolonged the investment return cycle of insurance companies' elderly communities. At present, most elderly communities are still in the stage of operating losses.

Source: Xinhua News Agency

translation: InsurView

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Is this illegal?

Posted: 28 Jun 2021 06:59 PM PDT

I sell cleaning supplies, plus I have a courier business in conjunction with the cleaning supply business.

I make around $1,000 A MONTH with a cleaning contractor. However, I want to build some revenue for my business so that I can get loans in the future. Though, I should be closing up two deals with two accounts for my courier business. However, I just want to establish some revenue.

I have $10,000 in my savings... if I purchase cleaning supplies from myself on a weekly basis to clean my house, my mom's house, my brother's house, and my leasing office. And let's say that I deposit $2,500 weekly into my business banking account totaling $10,000 monthly in deposits. And at the end of each month, withdrawal that $10,000 and repeat the same routine. Until I get some more income pumping in. Just to have something to show for my business revenue when I try to get a business loan?

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Is it normal to charge a friend 10% for this kind of service?

Posted: 28 Jun 2021 10:40 PM PDT

My friend and I live in Australia. This friend of mine started a business selling things on Facebook marketplace and he told me he ordered the products from 1688.com. I asked him if he could help me to order the same products as him as I wanted to sell things online too but I don't have a Chinese bank account or Alipay, he said he was happy to do so and he ordered everything on his own 1688 account. In the end, he gave me a quote of 9079.19 CNY and charged me 1 AUD to 4 CNY when it was 1 AUD to 4.4 CNY at that time so I paid him 2270 AUD. He rounded everything up. I did tell him that the rate 4.4 was high but then he didn't seem happy and he said friend is friend, business is business, he ordered 4 boxes of products for me, he had to do many things for me, ordering, recording, arranging delivery, but i told him he never told me about the fee beforehand and i would not charge my friends anything if they needed help to order things online. He was using his account to buy the products, he was able to earn points as well. I paid him in the end as I didn't want to cause drama. He did send me a document of what he ordered, how many of them and how much they were, but after receiving my parcels, i realized the document was not fully recorded correctly. Some quotes were wrong. There were more than 30 pieces of items missing from my parcels, i asked him about it and he said i should ask the merchants or the delivery company. He did pay me something back after several confrontations but I told him I didn't receive one of the products at all (20 pieces) and he showed me evidence that he ordered them already but he wouldn't want to pay me back. In the end, I was manage to buy things on 1688.com by myself, and I found out it is not as hard as he said it was. Do you think it is reasonable to charge a friend 10% for this kind of service?

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Buying an ATM Machine

Posted: 28 Jun 2021 01:36 PM PDT

Does anyone have any experience with owning an ATM? What's the process like/things I should look out for or know about? I'm thinking about investing in a machine but I think i'm missing some vital information

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Help with a low definition video recording app or hardware

Posted: 28 Jun 2021 05:26 PM PDT

The header explains most of it. Basically I want to record a custom video for every new client my business takes on board. Nothing too extravagant - probably only 30-45 seconds per video. I just think it'll make my service a little better.

Is there anyone out there who does this who can suggest either an app or even a program of some sort that'll allow me to do this? Most would be while I'm on the move so an app would be best.

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Cathie Wood’s Ark Invest files to create a bitcoin ETF

Posted: 28 Jun 2021 07:56 PM PDT

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What would a business be called that does public relations, marketing, design, and content development?

Posted: 28 Jun 2021 07:41 PM PDT

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International business

Posted: 28 Jun 2021 12:26 PM PDT

Hey everyone, I'm considering an undergraduate degree in international business. What schools should I look at and what should I expect? Thanks.

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Maize wheat rice export from india

Posted: 28 Jun 2021 10:47 AM PDT

Hi all , my parents have export business of grains , we actually export it only in india . Now due to lockdown I am home now so I was planning to expand the business and think of exporting it into international market . Is it a good idea to start ? How can I plan for this ? What shoy be my strategy I need some suggestions and guidance.

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More Than A Trend: Entering The Metaverse Will Become A Necessity For Brands

Posted: 28 Jun 2021 05:22 PM PDT

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��MyShibaFloki �� About to Launch ��Fair Launch today ��

Posted: 28 Jun 2021 08:07 PM PDT

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Should I open an LLC as a realtor?

Posted: 28 Jun 2021 02:45 PM PDT

I recently got my real estate license in New York, and have heard some business parters recommend opening an LLC and others not. Does anyone know the best route to go with this? Thank you!

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Can a insurance company possibly grow as fast a facebook in the early stages?

Posted: 28 Jun 2021 01:24 PM PDT

So I have been really interested in insurance businesses lately and I thought to myself " can an insurance company grow as fast as Facebook 2004 to 2010? " for reference Facebook made 360K in the first year, then 9 MILLON IN THE SECOND?? Thats a 2300% you growth, now Facebook started with almost nothing, mark zuckerberg started it as a program where students can get together and talk about stuff, even if an insurance company start with $1,000,000 is still thank that a 2300% growth in revenue is crazy. Of course Facebook and many venture capitalits invest in it but even if a insurance company had that I still think thats crazy. Idk what do you think?

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Getting a small business loan with bad credit for a government contract

Posted: 28 Jun 2021 07:13 AM PDT

Hi. I'm looking for some advice on getting a small business loan with bad credit. I have a 550 experian personal credit score. No business credit history. 2 years of tax returns, LLC, about $3000/m in revenue, have duns number. I really need a line of credit to draw from but a loan is fine too. Any advice? So far I've been turned down because of my personal credit score and all the lenders I've come across wand 620+.

Update I've been doing more research and have determined that I'm in need of a purchase order factoring company or a business line of credit. Let me know if anyone has advice in reference to this for businesses with less than perfect credit.

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Business The post-Covid labor market might look very different as it rebounds

Business The post-Covid labor market might look very different as it rebounds

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