Jack Ringwalt

Jack Ringwalt was a brilliant, if eccentric, insurance executive and investor who founded and ran the National Indemnity Company. Though not a household name, he is a significant figure in investment lore, primarily for being the man from whom Warren Buffett bought National Indemnity in 1967 for Berkshire Hathaway. Ringwalt was a master of both insurance underwriting and stock market investing, operating with a simple, no-nonsense philosophy that deeply impressed Buffett. He embodied the principles of focusing on profitability over sheer size and making large, concentrated bets on undervalued assets. His approach was a masterclass in rational capital allocation, demonstrating how operational excellence in one field (insurance) could be used to fuel spectacular returns in another (investing). For value investors, Ringwalt is a case study in how a disciplined, independent thinker can achieve extraordinary results by ignoring the crowd and sticking to what makes fundamental economic sense.

Jack Ringwalt was the quintessential self-made man. He started National Indemnity in Omaha, Nebraska, in 1940 with just $100,000 in capital. He built the company by focusing on niche, “specialty” insurance lines that larger competitors often overlooked or considered too risky. He was known for his sharp mind, gruff personality, and an almost fanatical aversion to bureaucracy and unnecessary costs. His path crossed with Warren Buffett's in the 1960s. Buffett, who was running his investment partnerships at the time, recognized the genius in Ringwalt's operation. He saw that National Indemnity wasn't just another insurance company; it was a highly efficient machine for generating investable cash, or float, at a net profit. In a famously quick meeting, Buffett agreed to buy the company, a pivotal acquisition that provided Berkshire Hathaway with the financial engine that would power its growth for decades to come.

Ringwalt’s genius can be broken down into two interconnected areas: how he ran his insurance business and how he invested its capital.

In the insurance world, many companies are happy to lose money on their core business of writing policies. They aim to break even or take a small loss, hoping to make up for it by investing the premiums they collect before paying out claims. Ringwalt thought this was insane. His philosophy was simple but radical: the business of insurance should be profitable on its own. He focused obsessively on achieving an underwriting profit, meaning the premiums collected were greater than the claims and expenses paid out. To do this, he:

• Priced risk intelligently, often taking on unusual policies others wouldn't touch, but only at a price that made sense.
• Kept a laser focus on costs. His office was famously spartan, and he despised waste. This discipline resulted in a very low combined ratio (the key measure of an insurer's profitability).

By consistently generating an underwriting profit, Ringwalt’s company was essentially being paid to hold and invest its float. This “negative-cost” float was the rocket fuel for his investment portfolio.

While a genius at insurance, Ringwalt was also a shrewd investor who applied the same principles of logic and simplicity to the stock market. His style was the polar opposite of modern portfolio theory.

• Extreme Concentration: Ringwalt scoffed at the idea of widespread diversification. He preferred to put huge amounts of his capital into a very small number of stocks he understood deeply. At times, his portfolio consisted of just one or two major positions. He believed it was better to know a few things well than to know a little about a lot.
• Deep Value: Like his contemporary Benjamin Graham, Ringwalt was a bargain hunter. He looked for stocks trading at a significant discount to their intrinsic worth, often in out-of-favor industries.
• Patience: He was a long-term holder. Once he made a high-conviction bet, he was willing to wait patiently for the market to recognize the value he saw.

His approach was a pure form of value investing: find an obvious bargain, bet big, and wait.

Jack Ringwalt's story offers timeless wisdom for any investor looking to build real wealth.

• Focus on Core Profitability: When analyzing any business, ask the same question Ringwalt did: Is its primary operation profitable? A company that relies on financial wizardry or secondary activities to make money is inherently riskier than one that profits from its core mission.
• Simplicity is a Strength: You don't need a complex strategy to succeed. A simple approach, rigorously applied, is often far more powerful. Focus on what you can understand.
• Conviction over Consensus: Ringwalt’s success came from his willingness to be different. True investment opportunities are often found where the crowd isn't looking. Developing conviction in your own research is more valuable than following the herd.