Memo to Berkshire Hathaway Managers

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The last few weeks have been tough times for all of us in our personal lives and for many of us in our business activities. At Berkshire we have estimated our September 11 insurance loss was $2.2 billion. We've labeled this a "guess" because that's all it is. It will be many years before we can tell the world within a narrow range what the true figure was. A very high percentage of the loss occurred in our U.S. insurance companies, with the balance in German and U.K. entities. Because we have regularly paid very large amounts of U.S. income taxes, we will bear 65% of the cost applicable to the U.S. operations\; the government will bear 35%. Many insurers will not have their loss mitigated in this manner and some may not survive. Though much of our loss will be paid very soon, significant payments in the liability area will take a considerable time to settle. Even with tax recoveries, our loss is huge. Nevertheless, it's one Berkshire can easily bear.