1985-02-25 Warren Buffett.Errors in Loss Reserving
Errors in Loss Reserving
损失准备金计提的误差
Any shareholder in a company with important interests in the property/casualty insurance business should have some understanding of the weaknesses inherent in the reporting of current earnings in that industry. Phil Graham, when publisher of the Washington Post, described the daily newspaper as "a first rough draft of history". Unfortunately, the financial statements of a property/casualty insurer provide, at best, only a first rough draft of earnings and financial condition.
任何在财产/意外险业务中持有重要权益的公司的股东，都应当对该行业当期盈利报告中固有的缺陷有所了解。Washington Post的出版人Phil Graham曾将日报描述为"历史的第一份草稿"。遗憾的是，一家财产/意外险保险公司的财务报表，充其量也只是其盈利状况和财务状况的第一份草稿。
The determination of costs is the main problem. Most of an insurer's costs result from losses on claims, and many of the losses that should be charged against the current year's revenue are exceptionally difficult to estimate. Sometimes the extent of these losses, or even their existence, is not known for decades.
成本的确定是核心难题。保险公司的大部分成本源于理赔损失，而其中许多应计入当年收入的损失极难估算，有时这些损失的规模甚至其是否存在，数十年后才能知晓。
The loss expense charged in a property/casualty company's current income statement represents: (1) losses that occurred and were paid during the year; (2) estimates for losses that occurred and were reported to the insurer during the year, but which have yet to be settled; (3) estimates of ultimate dollar costs for losses that occurred during the year but of which the insurer is unaware (termed "IBNR": incurred but not reported); and (4) the net effect of revisions this year of similar estimates for (2) and (3) made in past years.
财产/意外险公司当期损益表中列示的损失费用，包含以下几个部分：（1）当年发生并已赔付的损失；（2）当年发生并已向保险公司报案、但尚未结案的损失估算；（3）当年已发生但保险公司尚不知晓的损失最终金额估算（即"IBNR"：已发生未报告）；（4）本年度对以往年度就（2）和（3）所作类似估算进行修正的净影响。
Such revisions may be long delayed, but eventually any estimate of losses that causes the income for year X to be misstated must be corrected, whether it is in year X + 1, or X + 10. This, perforce, means that earnings in the year of correction also are misstated. For example, assume a claimant was injured by one of our insureds in 1979 and we thought a settlement was likely to be made for $10,000. That year we would have charged $10,000 to our earnings statement for the estimated cost of the loss and, correspondingly, set up a liability reserve on the balance sheet for that amount. If we settled the claim in 1984 for $100,000, we would charge earnings with a loss cost of $90,000 in 1984, although that cost was truly an expense of 1979. And if that piece of business was our only activity in 1979, we would have badly misled ourselves as to costs, and you as to earnings.
此类修正或许会延迟很久，但最终，任何导致X年收益被误报的损失估算都必须加以纠正，无论是在X+1年还是X+10年。这必然意味着，修正当年的收益同样被误报。举例而言，假设某索赔人于1979年被我们的一名被保险人所伤，我们当时估计赔付金额约为1万美元。那一年，我们会在损益表中列支1万美元作为损失的估算成本，并在资产负债表上相应设立等额负债准备金。如果我们在1984年以10万美元结案，我们就需要在1984年的损益中列支9万美元的损失成本，尽管这笔成本实质上是1979年的费用。倘若那笔业务是我们1979年的唯一业务，我们对成本的判断和你们对收益的认知，都将严重失实。
The necessarily-extensive use of estimates in assembling the figures that appear in such deceptively precise form in the income statement of property/casualty companies means that some error must seep in, no matter how proper the intentions of management. In an attempt to minimize error, most insurers use various statistical techniques to adjust the thousands of individual loss evaluations (called case reserves) that comprise the raw data for estimation of aggregate liabilities. The extra reserves created by these adjustments are variously labeled "bulk", "development", or "supplemental" reserves. The goal of the adjustments should be a loss-reserve total that has a 50-50 chance of being proved either slightly too high or slightly too low when all losses that occurred prior to the date of the financial statement are ultimately paid.
在财产/意外险公司损益表中，那些以看似精确的形式呈现的数字，在汇总过程中必然大量依赖估算，这意味着无论管理层的初衷多么端正，误差都必然会渗入其中。为尽量减少误差，大多数保险公司采用各种统计技术，对构成总体负债估算原始数据的数千项个别损失评估（称为"案件准备金"）进行调整。这些调整所产生的额外准备金，被冠以"批量"、"发展"或"补充"准备金等不同名称。调整的目标，应当是使损失准备金总额在财务报表日期之前发生的所有损失最终赔付完毕时，有50%的概率被证明略微偏高，也有50%的概率被证明略微偏低。
At Berkshire, we have added what we thought were appropriate supplemental reserves but in recent years they have not been adequate. It is important that you understand the magnitude of the errors that have been involved in our reserving. You can thus see for yourselves just how imprecise the process is, and also judge whether we may have some systemic bias that should make you wary of our current and future figures.
在Berkshire，我们虽然计提了我们认为适当的补充准备金，但近年来这些准备金并不充足。让你们了解我们在准备金计提中所涉及的误差幅度，是至关重要的。如此你们便可以亲眼见证这一过程究竟有多不精确，并判断我们是否存在某种系统性偏差，从而对我们当前和未来的数据保持应有的警惕。
The following table shows the results from insurance underwriting as we have reported them to you in recent years, and also gives you calculations a year later on an "if-we-knew-then-what-we think-we-know-now" basis. I say "what we think we know now" because the adjusted figures still include a great many estimates for losses that occurred in the earlier years. However, many claims from the earlier years have been settled so that our one-year-later estimate contains less guess work than our earlier estimate:
下表列示了近年来我们向你们报告的保险承保结果，并同时提供了一年后在"若当时知道我们现在自以为知道的事情"基础上的测算数据。我之所以说"自以为知道"，是因为调整后的数字仍然包含大量对早年发生损失的估算。然而，由于早年的许多索赔已经结案，我们一年后的估算所含的猜测成分，已少于此前的估算：
To help you understand this table, here is an explanation of the most recent figures: 1984's reported pre-tax underwriting loss of $45.4 million consists of $27.6 million we estimate that we lost on 1984's business, plus the increased loss of $17.8 million reflected in the corrected figure for 1983.
为帮助你们理解这张表格，以下是对最新数据的说明：1984年报告的税前承保亏损4,540万美元，由两部分构成：我们估计在1984年业务上亏损的2,760万美元，加上1983年修正数据所反映的新增亏损1,780万美元。
As you can see from reviewing the table, my errors in reporting to you have been substantial and recently have always presented a better underwriting picture than was truly the case. This is a source of particular chagrin to me because: (1) I like for you to be able to count on what I say; (2) our insurance managers and I undoubtedly acted with less urgency than we would have had we understood the full extent of our losses; and (3) we paid income taxes calculated on overstated earnings and thereby gave the government money that we didn't need to. (These overpayments eventually correct themselves, but the delay is long and we don't receive interest on the amounts we overpaid.)
从这张表格可以看出，我向你们报告时所犯的误差相当巨大，而且近年来始终呈现出比实际情况更为乐观的承保状况。这令我深感痛惜，原因有三：（1）我希望你们能够信赖我所说的话；（2）我们的保险管理层和我本人，因未能充分认识到损失的全貌，行动的紧迫感无疑不如应有的程度；（3）我们按高估的收益缴纳了所得税，将本不必要缴纳的钱白白交给了政府。（这些超额缴纳最终会自行纠正，但延迟时间漫长，且我们对超额缴纳的金额收不到任何利息。）
Because our business is weighted toward casualty and reinsurance lines, we have more problems in estimating loss costs than companies that specialize in property insurance. (When a building that you have insured burns down, you get a much faster fix on your costs than you do when an employer you have insured finds out that one of his retirees has contracted a disease attributable to work he did decades earlier.) But I still find our errors embarrassing. In our direct business, we have far underestimated the mushrooming tendency of juries and courts to make the "deep pocket" pay, regardless of the factual situation and the past precedents for establishment of liability. We also have underestimated the contagious effect that publicity regarding giant awards has on juries. In the reinsurance area, where we have had our worst experience in under reserving, our customer insurance companies have made the same mistakes. Since we set reserves based on information they supply us, their mistakes have become our mistakes.
由于我们的业务偏重于意外险和再保险险种，在估算损失成本方面，我们比专注于财产险的公司面临更多困难。（当你承保的一栋建筑付之一炬，你能很快确定损失成本；但当你承保的一位雇主发现其某位退休员工罹患了数十年前工作导致的疾病，情况便大相径庭。）但我仍然为我们的误差感到难堪。在直接业务方面，我们严重低估了陪审团和法院强迫"深口袋"付款的愈演愈烈的倾向——无论事实情况如何，也无论过去确立责任的判例是什么。我们也低估了巨额判决的媒体报道对陪审团的传染效应。在准备金计提不足问题最为严重的再保险领域，我们的客户保险公司犯了同样的错误，而由于我们是依据他们提供的信息来设定准备金的，他们的错误也就变成了我们的错误。
I heard a story recently that is applicable to our insurance accounting problems: a man was traveling abroad when he received a call from his sister informing him that their father had died unexpectedly. It was physically impossible for the brother to get back home for the funeral, but he told his sister to take care of the funeral arrangements and to send the bill to him. After returning home he received a bill for several thousand dollars, which he promptly paid. The following month another bill came along for $15, and he paid that too. Another month followed, with a similar bill. When, in the next month, a third bill for $15 was presented, he called his sister to ask what was going on. "Oh", she said. "I forgot to tell you. We buried Dad in a rented suit."
我最近听到一个故事，与我们的保险会计问题颇为贴切：一个男人在海外旅行时接到姐姐的电话，得知父亲突然离世。他无法赶回家参加葬礼，便告诉姐姐一切葬礼事宜由她安排，账单寄给他。回家后，他收到了一张数千美元的账单，随即付清。下个月又来了一张15美元的账单，他也付了。再下个月，同样的账单又来了。当第三张15美元的账单出现时，他打电话问姐姐怎么回事。"哦，"她说，"我忘了告诉你。我们给爸爸穿的是租来的西装。"
If you've been in the insurance business in recent years—particularly the reinsurance business—this story hurts. We have tried to include all of our "rented suit" liabilities in our current financial statement, but our record of past error should make us humble, and you suspicious. I will continue to report to you the errors, plus or minus, that surface each year.
如果你近年来身处保险业——尤其是再保险业——这个故事会刺痛你。我们已尽力将所有"租来的西装"式负债纳入当前财务报表，但我们过去的误差记录理应让我们保持谦逊，也理应让你们保持警惕。我将继续向你们报告每年浮现的误差，无论正负。
Not all reserving errors in the industry have been of the innocent-but-dumb variety. With underwriting results as bad as they have been in recent years—and with managements having as much discretion as they do in the presentation of financial statements—some unattractive aspects of human nature have manifested themselves. Companies that would be out of business if they realistically appraised their loss costs have, in some cases, simply preferred to take an extraordinarily optimistic view about these yet-to-be-paid sums. Others have engaged in various transactions to hide true current loss costs.
行业中并非所有准备金误差都属于"无辜但愚蠢"的那一类。近年来承保结果如此糟糕，加之管理层在财务报表的列报上又拥有如此大的自由裁量空间，人性中一些不那么光彩的一面便由此显现。某些公司若如实评估损失成本便会面临倒闭，在这种情况下，它们干脆选择对这些尚未赔付的金额持极度乐观的态度。还有一些公司则通过各种交易手段来掩盖真实的当期损失成本。
Both of these approaches can "work" for a considerable time: external auditors cannot effectively police the financial statements of property/casualty insurers. If liabilities of an insurer, correctly stated, would exceed assets, it falls to the insurer to volunteer this morbid information. In other words, the corpse is supposed to file the death certificate. Under this "honor system" of mortality, the corpse sometimes gives itself the benefit of the doubt.
这两种做法都能"奏效"相当长的时间：外部审计师无法有效监督财产/意外险公司的财务报表。如果一家保险公司如实列报的负债超过资产，那么披露这一不祥信息的责任便落在保险公司自己身上。换句话说，尸体应当自己去填写死亡证明。在这种"荣誉制度"下，尸体有时会给自己一个"从宽认定"的余地。
In most businesses, of course, insolvent companies run out of cash. Insurance is different: you can be broke but flush. Since cash comes in at the inception of an insurance policy and losses are paid much later, insolvent insurers don't run out of cash until long after they have run out of net worth. In fact, these "walking dead" often redouble their efforts to write business, accepting almost any price or risk, simply to keep the cash flowing in. With an attitude like that of an embezzler who has gambled away his purloined funds, these companies hope that somehow they can get lucky on the next batch of business and thereby cover up earlier shortfalls. Even if they don't get lucky, the penalty to managers is usually no greater for a $100 million shortfall than one of $10 million; in the meantime, while the losses mount, the managers keep their jobs and perquisites.
当然，在大多数行业，资不抵债的公司终将耗尽现金。保险业则不同：你可以已经破产，账上却依然充裕。由于保费在保单生效时即行收入，而损失赔付则发生在很久之后，资不抵债的保险公司在净资产耗尽后很久才会出现现金短缺。事实上，这些"行尸走肉"往往变本加厉地承揽业务，几乎接受任何价格和风险，只为维持现金的持续流入。它们的心态如同一个将盗用款项挥霍于赌桌的挪用公款者，寄望于下一批业务能够交上好运，从而掩盖早前的亏空。即便运气不来，管理层为1亿美元亏空所受的惩罚，通常也不会比1,000万美元的亏空更重；与此同时，在损失不断累积的过程中，管理层依然保住了自己的职位和特权。
The loss-reserving errors of other property/casualty companies are of more than academic interest to Berkshire. Not only does Berkshire suffer from sell-at-any-price competition by the "walking dead", but we also suffer when their insolvency is finally acknowledged. Through various state guarantee funds that levy assessments, Berkshire ends up paying a portion of the insolvent insurers' asset deficiencies, swollen as they usually are by the delayed detection that results from wrong reporting. There is even some potential for cascading trouble. The insolvency of a few large insurers and the assessments by state guarantee funds that would follow could imperil weak-but-previously-solvent insurers. Such dangers can be mitigated if state regulators become better at prompt identification and termination of insolvent insurers, but progress on that front has been slow.
其他财产/意外险公司的损失准备金误差，对Berkshire而言绝非仅具学术意义。Berkshire不仅深受这些"行尸走肉"不计代价的竞争之苦，还在它们的资不抵债最终被承认时再度受累。通过各州征收摊派款的担保基金，Berkshire最终要为这些资不抵债保险公司承担一部分资产缺口——而这些缺口通常因错误报告导致延迟发现而被进一步放大。甚至还存在引发连锁危机的潜在风险：几家大型保险公司的破产及随之而来的州担保基金摊派，可能会将原本虽弱但尚有偿付能力的保险公司拖入困境。如果州监管机构能够更及时地识别和处置资不抵债的保险公司，此类风险或可得到缓解，但在这方面的进展一直迟缓。
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