But few people think about where Buffett's endless funds come from.
The annual investment profit is naturally part of it, but Buffett mainly relies on the insurance group behind him to provide a steady stream of cheap funds.
The first company Buffett bought was a textile company named Berkshire Hathaway, but the benefits of this textile company were not good. Even if Buffett's means are superb, he can't stop the downward trend.
However, Buffett used the early cash flow of textile companies to buy insurance companies. First, 1967, he invested $8.6 million to acquire Omaha local state compensation company and national fire and marine insurance company.
On 1976, Buffett kept buying shares of GEICO (American Government Employees Insurance Company) until 1995, when he completely controlled GEICO.
Finally, in 1998, GeneralRe Corporation was acquired again for1600 million dollars.
As of 20 18, Buffett's insurance company income has accounted for 23% of the total income, while his investment income only accounts for 2% of the total income.
This shows Buffett's love for insurance companies.
However, Buffett's love for insurance companies is not a case of the rich. In China, this kind of case is also very common.
No, some time ago, Contemporary Ampere Technology Co., Ltd. invested 900 million yuan to acquire Sino-French Life Insurance and changed its name to Xiaokang Life Insurance.
But do you know what kind of company this 900 million has acquired?
20 17 to 2020, the premium income is less than 200,000 for four consecutive years, and the risk supervision ability is rated as a D-level insurance company.
To be honest, I don't understand the 900 million acquisition of such a company, but I was greatly shocked.
According to the truth, Contemporary Amp Technology Co., Ltd., a new energy company, has no reason to spend so much money on an insurance company, what's more, the company looks like a mess.
However, the official response of Contemporary Ampere Technology Co., Ltd. is this: "Based on the needs of the future new energy industry chain layout."
This answer fully reflects the profoundness of our language and culture and seems to answer the question. Looking back, I found it was like saying nothing.
But in fact, the insider directly hit the nail on the head: "Insurance funds are relatively easy to raise and are an important long-term stable source of funds. Obtaining an insurance license in the era of Contemporary Ampere Technology Co., Ltd. will help Contemporary Ampere Technology Co., Ltd. to better invest in upstream and downstream, and at the same time establish its own moat. "
To put it simply, the interest rate of funds raised in the form of bank loans and bond issuance is too high and the stability is insufficient, or insurance funds are more cost-effective.
Not only contemporary Ampere Technology Co., Ltd., but also our bosses from all walks of life like insurance companies, such as:
Evergrande Life Insurance: an insurance company controlled by Evergrande Real Estate.
Luxury Life Insurance: an insurance company with Kweichow Moutai as its major shareholder.
Zhongan Online: Tencent Group is one of the major shareholders.
.........
Reasonable, the business of the above companies has nothing to do with insurance, but they just like to engage in insurance companies. What is this for?
Obviously, the reputation of China's insurance industry is already at the level of "rotten street", and it is definitely impossible to earn word of mouth.
Is it because insurance companies make money? But other industries can also make money, which is certainly not the main reason why big names flock to insurance companies.
After thinking about it, the main reason may be that experts in the industry say that it provides stable and long-term cheap funds.
Maybe you don't feel much about this sentence, so let's give an example, which is the "Wanbao dispute" that we have all heard of.
I don't want to go into those details here, just want to talk about the source of funds of Baoneng.
The capital of Baoneng's acquisition of Vanke is divided into three parts, of which Qianhai Life Insurance contributed 65.438+0.042 billion yuan, Baoneng Group provided 6 billion yuan, and Jushenghua's own capital was 6.2 billion yuan.
Are you saying that Qianhai Life Insurance is really rich? Actually, it is not. The net income of Qianhai Life Insurance from 20 18 to 2020 is only 945 million, 604 million and165438+39 million respectively.
Then how did Qianhai Life Insurance come up with such a large sum of money at once? In fact, this money is the premium we pay, of which the universal insurance premium accounts for the vast majority.
Maybe you don't know what universal insurance is, so I'll give you some popular science here:
To put it simply, the insurance company has set up a VIP account for us personally, which belongs to the customer himself.
Customers can get the funds in the universal account at any time. This account has a guaranteed rate of return, which generally fluctuates between 1.75%~3%, mostly 2%.
As for the loan interest rate of enterprises to banks, as of June 20th, the LPR (Loan Time Quotation) published by Bank of China is 3.85% for one year and 4.65% for five years and above. It is not impossible for customers with poor quality and qualifications to get a loan interest rate of 8%.
Comparing the two, it is obvious that insurance funds are cheap.
As for other products, such as annuity insurance like this:
It seems that the income is very high and attractive, but it is actually a time difference. The carefully calculated annualized rate of return may not even be 3%.
The last one is return insurance, which costs twice as much as consumer insurance, and the premium will be returned to you after several decades, such as the following:
We paid 148000 yuan in 20 years. Although we received a refund of 290 thousand when we were 70 years old, the annualized interest rate was about 2.3%.
And this is before the age of 70 without serious illness. If you have been seriously ill and paid the insurance premium, the premium will not be returned.
In addition, these insurance payment periods are long, at least five years, which ensures a stable cash flow in the future, which is also the reason why a large number of enterprises compete to set up insurance companies.
So we have been emphasizing whether to buy insurance or give priority to protection. Before the protection is not comprehensive, don't think too much about financial insurance for the time being.
Regarding the returned critical illness insurance, we have repeatedly stressed that the form of consumer critical illness insurance plus term life insurance can be adopted, which not only provides comprehensive protection, but also is cheaper than the returned critical illness insurance.
After all, some insurance is really not done to protect consumers, but to provide insurance companies with a steady stream of cheap funds.