Commenting on Berkshire's operations, Mr. Buffet in his annual letter to shareholders said the problems with its reinsurance unit have been fixed and that last year was "a terrific year for our insurance business."

"Float reached record levels and it came without cost, as all major segments contributed to Berkshire's $1.7 billion pre-tax underwriting profit" during 2003, he said.

Mr. Buffet remarked that 2003 was a turnaround year for Berkshire's reinsurance unit, General Re. "Gen Re is fixed," Mr. Buffet declared. "General Re had been Berkshire's problem child in the years following our acquisition of it in 1998," he said. "Unfortunately, it was a 400-pound child, and its negative impact on our overall performance was large. That's behind us."

Mr. Buffet said that one year ago, he saw discipline being restored to both underwriting and reserving at General Re, "and events during 2003 solidified my view."

For full-year 2003, Gen Re reported a $145 million underwriting gain, pre-tax, compared with 2002, when the reinsurance unit posted a $1.4 billion pre-tax underwriting loss.

But Mr. Buffet cautioned that these improving results don't mean there won't be occasional setbacks in its insurance operations.

To illustrate potential short-term volatilities, he noted that last year, Berkshire underwrote an unusual policy involving a promotional campaign by PepsiCo, which offered participants a chance to win a $1 billion prize in a drawing. "So we wrote a $1 billion policy, retaining the risk entirely for our own account. The drawing was held on Sept. 14. [We] held our breath, as did the finalist in the contest," Mr. Buffet said. Luckily for Berkshire, though, "we left happier than he. PepsiCo has renewed for a repeat contest in 2004."

Berkshire's auto insurance unit GEICO also reported strong profit growth last year. In 2003, both the number of inquiries coming into GEICO and its closure rate on these rose significantly. "As a result, our preferred policyholder count grew 8.2 percent, and our standard and non-standard policies grew 21.4 percent," Mr. Buffet said. For full-year 2003, GEICO reported pre-tax underwriting profit of $452 million, up 8.6 percent from $416 million reported during 2002.

Berkshire's smaller insurers had another "terrific year," Mr. Buffet said. In total, Berkshire's insurance units reported $1.72 billion in underwriting gain, pre-tax, in contrast to pre-tax underwriting loss of $398 million during 2002.

Insurance units' investment income also improved, to $2.28 billion in 2003 compared with $2.10 billion during 2002.

Meanwhile, Berkshire's non-insurance subsidiaries, which include businesses as diverse as Dairy Queen and Fruit of the Loom, earned $1.75 billion during 2003, higher than the $1.67 billion reported by these units one year ago.