QuestionerIn recent years, large private equity firms like Blackstone, Apollo, and KKR have aggressively expanded into insurance, raising permanent capital, managing float, and aiming to replicate the model that Berkshire pioneered decades ago. Given that these firms are now directly competing for insurance assets, often using higher leverage and more aggressive investment strategies, how do you view their impact on Berkshire's insurance operations and underwriting discipline, do you believe that the private equity model poses risks to policyholders in the broader financial system, and has this competition made it more challenging for Berkshire to find and price insurance opportunities safely and profitably today?
OtherOkay. Okay. Yeah.
WarrenPart of the question is very easy. There's no question the private equity firms have come into the space, and we are no longer competitive in the space. We used to do a fair amount in this space, but in the last three, four years, I have I don't think we've done a single deal. Now, you ought to separate this whole segment in two separate segments. One is the property casualty end of the business and the life end of the business. The private equity firms that you mentioned are all very active in the life end of the business, not the property casualty end of the business. You are right in identifying the risks in these private equity firms are taking on both in terms of leverage and in terms of credit risk. And while the economy is doing great and credit spreads are low, these, the private equity firms who have taken the assets from very conservative investments and I wouldn't say high octane, but they've certainly invested these assets in situations where that is, where they get a lot more return on the investment. And as I said, as long as the economy is good and credit spreads are low, they were make money, they'll make a lot of money because of leverage. However, there is always the danger that at some point the regulators might get cranky and say, you know, you're taking too much risk on behalf of your policyholders, and that could end in tears. We do not like the risk reward that these situations offer, and therefore we put up the white flag and said, you know, we can't compete in this segment right now.
CharlieYeah. I don't want to copy Berkshire's model, but usually they don't want to copy it by also copying the model of the CEO having all of his money in the company forever. And I mean, they've got a different equation. They're interested in, and that's capitalism, but they have a whole different situation, and they probably have a somewhat different fiduciary feeling. about what they're doing and sometimes it works and sometimes it doesn't work. And if it doesn't work, they go on to other things. And if I, what we do here at Berkshire doesn't work, I spend the end of my life regretting what I've created. So it's just a whole different personal equation and there is no property casually company that can basically replicate Berkshire.
QuestionerThank you.