Here's a quote from a Bloomberg report:
March 2 (Bloomberg) -- Warren Buffett, the former hedge fund manager who built Berkshire Hathaway Inc. into a $195 billion company by gaining leverage through insurance premiums, said this traditional source of new funds is drying up.
Berkshire’s insurance units, which cover risks from fender benders to asbestos-related hospital bills, can no longer be relied on to provide new investment funds in the form of float, or accumulated premium, Buffett said in a Feb. 25 letter. Float, which rose to $70.6 billion as of Dec. 31 from $65.8 billion a year earlier and $39 million in 1970, is unlikely to “grow much -- if at all -- from its current level,” Buffett said.
[...] “It’s an engine of growth that is running out of gas,” said Jeff Matthews, a Berkshire shareholder and author of “Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett.” Berkshire “has now officially become a conglomerate. It no longer has the culture of an investment vehicle.”
Berkshire’s success in attracting more insurance business each year than it loses has allowed Buffett to use policyholder funds to buy securities and keep them, in some instances, for decades. “Money we hold but don’t own,” as Buffett called float in 1997, has advanced in 27 of the last 28 years. [...]
“Float has always been their secret sauce,” said Shields, who has a “hold” rating on Berkshire stock. “This is a pretty dramatic change.” [...]
Berkshire has declined 7.6 percent in New York in the last 12 months, compared with a gain of 5.2 percent in the Standard & Poor’s 500 Index. [...]
"If insurance businesses are shrinking then it’s a reversal of the whole leverage model," said Alice Schroeder, author of “The Snowball, Warren Buffett and the Business of Life” and a Bloomberg View columnist.Yes, it's true: deflation and delivering will hit everyone, and more so all the people who have been relying on leverage and credit expansion as their business model.