Berkshire Hathaway Annual report

From the 2004 Berkshire Hathaway Annual report:

"... Berkshire has access to two low-cost, non-perilous sources of leverage that allow us to safely own far more assets than our equity capital alone would permit: deferred taxes and "float", the funds of others that our insurance business holds because it receives premiums before needing to pay out losses. Both of these funding sources have grown rapidly and now total about $55 billion.

"Better yet, this funding to date has often been cost-free. Deferred tax liabilities bear no interest. And as long as we can break even in our insurance underwriting the cost of the float developed from that operation is zero. Neither item, of course, is equity; these are real liabilities. But they are liabilities without covenants or dates attached to them. In effect, they give us the benefit of debt -- an ability to have more assets working for us -- but saddle us with none of its drawbacks."