The Real Secret of Berkshire Hathaway's Success
To most investors, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) and its CEO, investing legend Warren Buffett, are two sides of the same coin. Buffett deservedly gets plenty of recognition for the amazing feats that Berkshire has achieved over its long history, and many find it difficult to imagine what Berkshire will be able to do without Buffett at the helm.
Yet within any big organization, there are always countless people playing supporting roles in making their leader look good. At Berkshire, those people include the insurance managers who are in charge of underwriting the policies that the company's massive insurance operation offers to its customers. Without their diligence, Berkshire's amazing track record might never have happened -- and Buffett might not be getting nearly as much credit as he's gotten during his tenure there.
The insurance industry is incredibly complex, but its business model boils down to a simple idea: Try to collect enough in premiums to pay out whatever losses occur and still have something left over as profit. In a highly competitive business, that's not as easy to achieve as it sounds.
Source Fool.com