Annual Letters
Of course, with a minor interest we do not have the right to
direct or even influence management policies of SAFECO. But why
should we wish to do this? The record would indicate that they
do a better job of managing their operations than we could do
ourselves. While there may be less excitement and prestige in
sitting back and letting others do the... See more
direct or even influence management policies of SAFECO. But why
should we wish to do this? The record would indicate that they
do a better job of managing their operations than we could do
ourselves. While there may be less excitement and prestige in
sitting back and letting others do the... See more
Chairman's Letter - 1978
if management is 10/10 and operated efficiently, then why ever change what they are doing or try to take full control — if it ain’t broke, don’t fix it
Our experience has been that the manager of an already high-
cost operation frequently is uncommonly resourceful in finding
new ways to add to overhead, while the manager of a tightly-run
operation usually continues to find additional methods to curtail
costs, even when his costs are already well below those of his
competitors
cost operation frequently is uncommonly resourceful in finding
new ways to add to overhead, while the manager of a tightly-run
operation usually continues to find additional methods to curtail
costs, even when his costs are already well below those of his
competitors
Chairman's Letter - 1978
when spending is already high, the spender will find ways to keep spending
when spending is tight and constrained, spender will find ways to show restraint and curtail costs
It is very easy to fool yourself regarding underwriting
results in reinsurance (particularly in casualty lines involving
long delays in settlement), and we believe this situation
prevails with many of our competitors
results in reinsurance (particularly in casualty lines involving
long delays in settlement), and we believe this situation
prevails with many of our competitors
Chairman's Letter - 1978
results can look very good at the headline, which makes it very easy to fool oneself. this can distort market rates if all individuals within a market develop a self-delusion around the same metrics
need to stay disciplined
With hard work and some imagination
Chairman's Letter - 1977
conviction even when feedback could lower it
Some of our expansion efforts - largely
initiated by your Chairman have been lackluster, others have been
expensive failures.
initiated by your Chairman have been lackluster, others have been
expensive failures.
Chairman's Letter - 1978
not everything works
Earnings of $1.3 million in 1978, while much improved from
1977, still represent a low return on the $17 million of capital
employed in this business. Textile plant and equipment are on
the books for a very small fraction of what it would cost to
replace such equipment today. And, despite the age of the
equipment, much of it is functionally similar... See more
1977, still represent a low return on the $17 million of capital
employed in this business. Textile plant and equipment are on
the books for a very small fraction of what it would cost to
replace such equipment today. And, despite the age of the
equipment, much of it is functionally similar... See more
Chairman's Letter - 1978
in capital intensive commodity markets, margins will be near zero as the steady state supply > demand you have no product moats and any edge you might find to improve product (or margins) will be copied by the market hard to return capital
Of course, it takes at least several years to evaluate
underwriting results, but the early signs are encouraging and
Floyd’s operation achieved the best loss ratio among the
homestate companies in 1978.
underwriting results, but the early signs are encouraging and
Floyd’s operation achieved the best loss ratio among the
homestate companies in 1978.
Chairman's Letter - 1978
don’t get ahead of yourself at the first signs of success. it takes several years to see success
Our experience has been that pro-rata portions of truly
outstanding businesses sometimes sell in the securities markets
at very large discounts from the prices they would command in
negotiated transactions involving entire companies.
outstanding businesses sometimes sell in the securities markets
at very large discounts from the prices they would command in
negotiated transactions involving entire companies.
Chairman's Letter - 1977
in public market companies, you can sometimes find parts or subsidiary businesses that trade much cheaper than they would in a negotiated trade
This may say something about our forecasting abilities,
the nature of the textile industry, or both.
the nature of the textile industry, or both.