Claims

Promise · Their own work or organisation

“Because these transactions can materially distort our figures, we will tell you about them as they occur.”

Warren Buffett, Berkshire chairman, in annual letter · 28 February 2001 · Chairman's Letter (2000) (Berkshire Hathaway)

Because these transactions, which typically come in large chunks, can materially distort the company's figures, it will tell readers about them as they occur.

Mostly true True in substance, wrong in a detail.

The second judge would not resolve this claim; the verdict shown is the first judge's.

The evidence is the person's or their organisation's own records.

Said for an organisation they lead or work for; it counts on both records.

What would count as true or false

Ongoing disclosure promise from the 2000 letter about large, lumpy transactions that distort Berkshire's figures (e.g. retroactive reinsurance deals). True: later shareholder letters and annual reports from 2001 onward disclose such material transactions in the year they occur, including their effect on reported figures. Mostly true: they were generally disclosed promptly, with a minor lapse such as a brief mention or a slight delay for one transaction. Mixed: some material transactions were disclosed when they happened and others were not. Mostly false: disclosure was rare or came only well after the fact. False: later records show material distorting transactions of this type that were not disclosed to shareholders when they occurred.

Evidence

1. Management's Discussion Berkshire Hathaway Inc. Own record

   “Earned premiums in 2001 include $400 million from one retroactive reinsurance contract and a large quota share agreement.”

2. Management's Discussion Berkshire Hathaway Inc. Own record

   “Unamortized deferred charges under BHRG contracts were $3.1 billion as of December 31, 2001 compared to $2.6 billion at December 31, 2000.”

3. https://www.sec.gov/Archives/edgar/data/0001067983... U.S. Securities and Exchange Commission (filed by Berkshire Hathaway Inc.) Own record

   “year, a significant portion of which, derived from retroactive reinsurance and other large excess reinsurance contracts.”

4. Chairman's Letter Berkshire Hathaway Inc. · 28 February 2002 Own record

   “a staggering $800 million of loss costs that actually occurred in earlier years, but that were not then recorded, were belatedly recognized last year and charged against current earnings.”

Reasoning

Berkshire's 2001 annual-report MD&A separately reports $400 million of 2001 earned premiums from one retroactive reinsurance contract and a large quota share agreement (E1). It also gives year-over-year figures for unamortized deferred charges under BHRG contracts (E2). A 2001 Berkshire SEC filing says a significant portion of a year's figure derived from retroactive reinsurance and other large excess reinsurance contracts (E3), and the 2001 letter says about $800 million of loss costs from earlier years were charged against the latest year's earnings (E4). These are Berkshire's own published disclosures. They show such transactions were reported in the year they happened, but they cover only 2001, so whether the ongoing promise was kept in later years is not shown.

Cite this claim

Warren Buffett, “Because these transactions, which typically come in large chunks, can materially distort the company's figures, it will tell readers about them as they occur.” (said 28 February 2001). Verdict: mostly true. Reliability API, claim c_595efdbfcc37, method 0.1.0+28da144b. https://epistacklabs.com/claims/c_595efdbfcc37