The chatty, folksy annual report of Berkshire Hathaway is out.? I have occasionally been a critic of Buffett, but this year, I see little to criticize.? In a bad year, he told it straight.? He lost more book value in 2008 than any other year in percentage and dollar terms.? Worse yet, the market capitalization fell much more.

But guess what?? Berky is the biggest financial company in the US, bar none, by a wide margin.? Financials have done horribly, Berky less so.? Comparing the book value performance of Berky versus the market value of the S&P 500, this was one of Berky’s best years.

Looking at his divisions, insurance, utilities, and other businesses did well, and his investing did horribly, like most of the rest of us.? Sure, his timing was bad with some of his preferred stock purchases, and his willingness to write index put options.? But if those that Berky invested in survive the crisis, Buffett will come back smiling broadly.

Here’s another pillar of strength.? A lot of capital has been destroyed in the insurance industry in the capital markets, reducing surplus.? Those that have surplus will benefit.? Who is the most ready to write more business?? Berky.? After that, maybe PartnerRe.? Insurance should do well for Berky in the intermediate term.

Though I don’t own it, I find Berky to be intriguing.? Who knows, I might finally join the Buffett cult and buy some under $75,000.

PS — Give Buffett credit?? I would argue that Berky is cheap relative to other insurance credits.? Complexity creates the discount, but the firm is well-managed.

Full disclosure: long PRE