In an article in Sunday's editions of The Sun, Geico Corp.'s policy on what type of drivers it insures was reported incorrectly. In fact, Geico insures preferred risk drivers as well as standard and non-standard drivers.
The Sun regrets the error.
For just four almost throwaway sentences, they produced a remarkable worldwide glare of publicity.
But the paragraph was written by the world's richest man, Warren Buffett, about Louis A. Simpson, co-president of Geico Corp. of Chevy Chase.
FOR THE RECORD - CORRECTION
A simple nugget of praise convinced much of the financial world that the 65-year-old chairman of Berkshire Hathaway Corp. might be using his closely watched annual report to hint at who will succeed him.
"Lou takes the same conservative, concentrated approach to investments that we do at Berkshire," wrote Mr. Buffett, whose annual pronouncements are about the only glimpse into a company whose executives rarely grant interviews.
"His presence on the scene assures that Berkshire would have an extraordinary professional immediately available to handle its investments if something were to happen to [Vice Chairman Charles Munger] and me."
And so the spotlight turned full force on Geico and Mr. Simpson, 59, who prefers to stay in the wings and declined to be interviewed.
Mr. Munger tamped the fuss by telling Business Week that Berkshire didn't mean to make a succession announcement "in some crazy, indirect way."
But the episode focused Wall Street anew on the record Mr. Simpson has built since Mr. Buffett hired him to run Geico's investments in 1979.
Most of Geico's $4 billion portfolio is in government bonds, but most of Mr. Simpson's reputation stems from his work with stocks.
Since 1980, Mr. Simpson's stock picks have earned an average of 22.7 percent a year -- numbers that make pros whistle in admiration.
Most struggle to keep up with the market: The average diversified stock mutual fund has gained 12.9 percent a year over the same period, according to Lipper Analytical Services Inc. of Summit, N.J.
The Standard & Poor's 500-stock index has climbed 15.7 percent a year.
Mr. Simpson's work is not quite Buffettian -- in only three years since 1965 have Berkshire's returns been less than 11 percent, and Berkshire once made 32 percent in a year when the stock market fell -- but Warren Buffett is a rare person.
"Lou is low-key. He's not what you would call charismatic; Warren Buffett is," said Merrill Lynch & Co. insurance analyst A. Michael Frinquelli.
"Warren Buffett is not what you would call shy. Lou Simpson is almost shy. Lou is a nonthreatening guy, but razor-sharp. The mind is always working."
Mr. Simpson joined Geico as it was recovering from life-threatening reversals during the mid-1970s.
The company had bet disastrously wrong on its pricing policies, and had taken on far more high-risk drivers than it could handle at premiums too low to break even on their business.
But Mr. Buffett liked Geico for the same reasons that led him to start buying its stock as a student -- especially its direct marketing system, which lets Geico sell without agents and their hefty commissions.
Instead, the company uses a cheaper force of operators and sells most of its insurance over the phone.
So the Nebraskan bought heavily at the bottom.
He piled up about half of Geico's stock at an average cost of only $1.33 a share, which had him sitting on a $2.3 billion gain by the time Berkshire bought the rest of Geico this year.
The cost of the other half, coincidentally, was about $2.3 billion.
Mr. Buffett hired a new chief executive in 1976 and helped lead the company toward its present policy of offering very cheap insurance to the lowest-risk drivers -- and rates to everyone else so high that they repel drivers likely to cost Geico money.
Three years later, he and Geico CEO Jack Byrne brought on Lou Simpson.
"They liked the way he thought about the stock market and investing in general," said Robert G. Hagstrom, a Philadelphia money manager who wrote a 1994 best seller about Mr. Buffett's career.
"He's a very concentrated, buy-and-hold investor, which is what Warren Buffett has done."
Mr. Simpson had had time to refine his approach.
Educated at Princeton, with a background in top positions at two money-management firms, he was a stranger to the insurance business.
But he wasn't being hired to run that: That job now belongs to Geico Co-president Olza M. "Tony" Nicely.
That allows Mr. Simpson to work out of California, near his San Diego home. His job is to turn a just better than break-even insurance business into a profit machine.
He has never talked much about his approach in public. Geico's annual reports give few insights into his thinking. But clues are evident in Securities and Exchange Commission filings.
First, like Mr. Buffett, Mr. Simpson makes very large bets on a very small number of companies.
Geico had $1.1 billion in stocks as of Dec. 31. In 10 stocks, to be precise.
Berkshire Hathaway had $22 billion in stocks at year-end, with $19 billion-plus in seven stocks.