QuestionerI know you lost a lot of money as a result of 9-11, but I would like to know how 9-11 changed your life and your investment strategy.
WarrenIt made everybody, I think, in the country aware. I mean, we've gone through world wars and all of that and essentially felt quite protected within these borders. And I have been quite worried about Charlie can attest to, you know, the possibility, particularly of some kind of nuclear. device in this country, probably more likely by terrorists than by some at least declared act of war by another state. And 9-11 made everybody realize that as humans have not progressed particularly in terms of how they behave with each other over the years, they have progressed enormously in their ability to inflict damage on those that they hate for one reason or another. In terms of business aspects of it, a question. Obviously, the area at Berkshire that it affects most significantly by miles is insurance. And prior to 9-11, even though we recognize that there could be huge monetary damages that flowed from the activities of what I would call the arranged people, we hadn't really written the contracts in such a way. as to either get paid for taking that risk or to exclude the risk. In other words, we were throwing it in for nothing. We had excluded risk for war. I mean, we knew that, I mean, we'd seen what had happened in England in the 40s, and so we had taken account of something that some of us had seen with our own eyes, but we didn't take account of something that we knew was possible, but we just hadn't seen. And that's, you know, that's the human condition to something. degree. Since September 11th, everybody in the insurance business recognizes that they've had exposures that they weren't charging for, and they either had to exclude those exposures or they had to charge for them. We have written, the first thing we had to do, of course, is we had lots of policies on the books that left us exposed to this, and most of those policies ran for a year starting at different points. Those have run off to a great degree, but they're not entirely run off. The other thing we did was on new policies. We have sold a fair amount, quite a large amount, of terrorism insurance that excludes what we call NCB, nuclear chemical and biological, as well as fire following nuclear. And we can take a fair amount of exposure to that sort of terrorism, because it doesn't, it
[3:05]
Warrenwon't aggregate. It aggregated at the Twin Towers in a way that World Trade Center in a way that just about was about as extreme as you could get for non-NCB type activities. I mean, that that was a huge amount of damage done without nuclear chemical or biological. But we can have tens of billions of dollars with NCB excluded throughout a greater New York area or something. But we can't have, we can't have hundreds of billions of explosions. that would be exposed, say, to nuclear activities because there an act or two or three coordinated could cause damage that would destroy the insurance industry. And if we had coverage on that, it would destroy us as well.