Charlie Munger on the insurance business and ethical limits
Views on the
insurance business and ethical limits
I don’t think the
insurance business will be that great for most people in it. I think we will do
way better. We have great people. When I was younger, I probably wouldn’t have
even tried to get into the game. It’s like a juggler with milk bottles who ends
up juggling ten. Before we knew it, Berkshire had 10 insurance businesses.
[Munger asked Gen Re CEO Joe Brandon to comment and he said, “We have the best collection
in the world.” Munger continued:] That may be an absolutely correct statement.
We gradually learned our way into that position. It didn’t happen overnight. If
you’re not a learning machine, it won’t happen.
My father had a friend who used to say everyone’s the same
over the years, only more so. To some extent we’re more so. We learned good
lessons when we were young. We’ve been more selective. I don’t think we’ve ever
regretted not making a lot of easy money when we decided it was beneath us.
Warren told the story of the opportunity to buy Conwood, the
#2 maker of chewing tobacco. I never saw a better deal, and chewing tobacco
doesn’t create the same health risks as smoking. All of the managers chewed tobacco
– it was admirable of them to eat their own cooking. Warren and I sat down,
said we’re never going to see a better deal; it’s a legal product; and we can
buy it at a wonderful price; but we’re not going to do it. Another fellow did
and made a couple of billion easy dollars. But I don’t have an ounce of regret.
I think there are a lot of things you shouldn’t do because it’s beneath you.