We’ve been reviewing the annual reports of property/casualty insurers over the past few weeks to unearth interesting insights from executives and board chairmen. What follows is a subjective compilation of what our editors saw as some of the highlights of commentary that addresses national and global economic and political change, industry market trends, and individual company strategies. (Some of the longer letters are excerpted multiple times.)

Warren Buffett, (AP Photo/Nati Harnik, File, 2012)

Warren Buffett, Chair and CEO, Berkshire Hathaway: A Country of Immigrants

“From a standing start 240 years ago—a span of time less than triple my days on Earth—Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.”

Evan Greenberg, Chair and CEO, Chubb Group: Sizing Up Economic, Global Disruption

“No longer having confidence in their public or private institutions to solve perennial problems, voters are receptive to populist rhetoric as they search for simple explanations for the cause of their suffering and immediate solutions to their problems. Their discontent is more attributable to the global financial crisis and technological disruptions that are replacing jobs than immigration, or trade and globalization. This issue is not going away—technology will continue to replace more jobs. Bring more manufacturing back to America, sure, but it will be substantially jobless. At the same time, we have not done enough to support those impacted.

…the domestic economic changes afoot in the U.S., if implemented, will have a substantial and positive impact, with the increased savings and investment generating many new jobs that would help ameliorate unemployment, underemployment and the lack of middle-income growth. On the other hand, the potential changes around our country’s approach to trade and security and the vision of our role in the world is worrisome, and they are beginning to cause a reaction around the globe that in my judgment is not in our country’s best interest.”

Ed Noonan

Ed Noonan, Chair and CEO, Validus Holdings: Whatever It Takes on M&A

“Finally, I should say a word about consolidation, a topic that has been widely covered of late. Given the fluidity of global markets, we continue to see a great deal of consolidation across the (re)insurance industry. We have always been opportunistic in our growth and continue to consider a variety of opportunities as a buyer. Conversely, we take our responsibility to you, our owners, very seriously, and if some other consolidator provides better value for our owners, we will be equally willing sellers. For now, I am confident that Validus is well positioned to weather the current soft market and we are focused on building the foundation to make the most of better market conditions down the road.”

Evan Greenberg, Chair and CEO, Chubb Group: Hands-Off Asian Investors

“Insurance and reinsurance capital continues to expand from retained earnings and new sources, both strategic such as Asian investors as well as short-term investors simply seeking returns. They are for the most part passive investors, entering the business at a difficult time. P&C insurance is a business that in my judgment requires hands-on management. Passive or remote investors who buy P&C companies and allow owner management to cash out while still expecting them to run their companies are creating a misalignment of interests and will be disappointed.”

Weston Hicks, President, Alleghany Capital: Cracks and Illusions

“Since the 2008-2009 Recession, the industry has enjoyed good underwriting results—despite a lack of pricing power—as claims emergence has generally been favorable relative to pricing and reserving expectations. The industry does a good job of adjusting its prices to trailing loss experience, but historically it has not been very good at calling inflection points in these trends.

In the second half of 2016 cracks began to appear in the foundation of the industry’s underwriting account and loss reserves. We believe that these cracks will become more visible and more significant in 2017 as stress levels in the industry continue to rise. Companies that have been excessively focused on top-line growth by definition are only able to produce growth by pricing below market, and to do so requires that underwriters assume a continuation of the benign claims environment of the past five-plus years. As Nobel Prize winner Daniel Kahneman said: ‘The illusion that we understand the past fosters overconfidence in our ability to predict the future.'”

Evan Greenberg

Evan Greenberg, Chair and CEO, Chubb Group: Abusive Behavior in London?

“Another sign of a soft insurance market is the abusive behavior on the part of some brokers who enrich themselves at the expense of both their customers and underwriters. Cloaked in the mantra of ‘customer best interest’ or ‘treating customers fairly,’ they seek the cheapest price and broadest coverage at commission terms that by any measure are excessive.

Forcing underwriters to succumb to the lowest common denominator is hardly in the customer’s, or the industry’s, best interest. These predatory behaviors, which have shown up around the world and in London in particular, are simply unsustainable from an underwriting perspective and will come back to haunt these brokers. There will be customer and regulator backlash, or worse. Remember, distribution can be disintermediated.”

Six Members of ‘The Band’ at Markel (aka, Alan I. Kirshner, Executive Chairman; Markel’s three Vice Chairs—Tony and Steven Markel and Michael Crowley; and co-CEOs Richie Whitt and Thomas Gaynor): Think E-Street Band and Green Bay Packers

“As Bruce Springsteen wrote in his recent autobiography, ‘Rock and roll bands that last have to come to one basic human realization. It is: the guy standing next to you is more important than you think he is.’…Vince Lombardi pointed to the same sort of thing when he said, ‘Individual commitment to a group effort—that is what makes a team work, a company work, a society work, a civilization work…’

We’ve successfully sustained and grown this business…by following the Springsteen principle of understanding that the people next to us in this organization are more important than we think they are, and in Lombardi fashion, we as individuals pour ourselves out completely in order to be worthy of mutual respect from others…

The challenges of the future…involve technology, speed and hyper competition. Those factors will never go away [and] will probably accelerate and intensify as time goes by. That said, our secret weapon will continue to be the human trust and interconnectedness that allows each of us to operate as a group that will accomplish far more than what we could as individuals.”

Warren Buffett, Chair and CEO, Berkshire Hathaway: When to Make Hay

“GEICO’s reaction to the profit squeeze…was to accelerate its new-business efforts. We like to make hay while the sun sets, knowing that it will surely rise again.”

Weston Hicks, President, Alleghany Capital: Frankenstein in Reinsurance

“In the classic 1974 film ‘Young Frankenstein,’ Dr. Frederick Frankenstein (played by Gene Wilder) brings the corpse of a dead criminal back to life by transplanting a new brain (labeled ‘Abnormal’) into the body. After the monster comes to life, he tries to calm the concerned citizens of the town by arranging a show in which the monster (played by Peter Boyle) and Dr. Frankenstein perform ‘Puttin’ on the Ritz’ in top hats and tails. Needless to say, things don’t go according to plan. Are the alternative reinsurance markets today’s monster performing a bad version of a classic?

Some new business models that separate the underwriting decision from the capital provider/risk bearer are, in our view, problematic because of a misalignment of incentives. The industry has demonstrated time and time again that ‘giving someone the pen’ without tight controls and/or an alignment of interests is a bad idea, whether it be program business or Lloyd’s prior to the creation of the Franchise Performance Director function in 2002. To the extent unaffiliated capital is used to assume (re)insurance risks, it is best done side-by-side with true risk takers who have skin in the game.”

Richie Whitt

Markel’s Chairs and Co-Executives: Now and Forever

“We think about your company in two distinct yet completely connected time horizons—namely, forever and right now.

Those two time frames guide our actions. We believe that Markel remains unique among most publicly traded companies in emphasizing the forever time horizon as much as we do. That is an immense competitive advantage for us as we continue to navigate into an always uncertain future that continues to change at faster and faster rates.

We won’t sugarcoat it. Business (and life) these days resembles an all-out, full-sprint, winner-take-all race to adapt to the changes wrought by technology. We must continuously learn and adapt to new conditions, adopt new technological tools, abandon obsolete business practices and systems, find new markets, develop new products, acquire new businesses, and succeed at every other challenge you can think of to continue to build Markel…

Ironically, we are served immensely well in this task by our dual time horizon culture. The emphasis on right now means we need to make appropriate changes and adapt to this way of doing business right now! There is no time for cherishing old ways and reminiscing about an idyllic past…

In the midst of…urgency, we have a profound competitive advantage. Namely, we think about each of the right now decisions in the context of forever. We’re not making decisions for the expediency of getting through one day. We are thinking about them in the context of what is the best decision we can make today in order to build the long-term durability and profitability of the Markel Corporation forever.”

Nikolaus von Bomhard, Chairman of the Board of Management, Munich Re: Transitioning to a Digital World

“Munich Re is…a company in transition. Digitalization is shifting client and customer demand and enabling a comprehensive reorganization of our business. Innovative business models and partnerships that would previously not have been taken into consideration are now being set up. All this has the effect of changing our company. My successor as Chairman of the Board of Management, Joachim Wenning, will continue to drive this process forward.”

Peter Hancock/Bloomberg

Peter Hancock, CEO, AIG: A Time to Reflect; Command and Control Gives Way to Collaboration

“Writing this final letter to my fellow AIG shareholders has caused me to reflect on my own time at the company, including the challenges we have faced and the obstacles we have overcome, but also the dramatic progress we have made since 2010.

I cannot talk about my seven years at AIG without some mention of how the leadership approach of the company has evolved from its traditional roots of ‘command and control.’ When Tom Russo, then General Counsel, and I joined Bob Benmosche shortly after he arrived at AIG, it was clear that we needed to model a collaborative and transparent approach to leadership. Over time, we embedded leadership practices and a culture that will guide decisions throughout this large and diverse company for years to come.

Bob’s inclusion of Tom and me in strategic decision-making throughout his tenure highlights this as a period of continuous transformation. I will also leave behind a leadership team that I have included in strategic decisions, and who have developed the mutual trust and collaboration essential to effectively run what is still a large and complex organization.”

Douglas M. Steenland, Non-Executive Chairman of the Board, AIG: The Right Path Forward

“The Board and management team believe strongly that we are on the right strategic path. In fulfilling our fiduciary duties to you, the Board regularly examines strategic options. We previously rejected a potential split of the company between our Commercial and Consumer businesses as the analysis showed this to be value-destructive.

This analysis still stands. Beyond the capital demands of such a scenario, we would also be sacrificing the value of AIG’s global franchise. Across our Commercial and Consumer platforms, we see opportunities to serve our customers through our broad offering of product solutions.”