Legendary investment guru Warren Buffett says the war on terrorism will probably never be won, which will have an effect on the global insurance industry.

Mr Buffett, one of the richest men in the world, used his annual letter to shareholders of Berkshire Hathaway to warn that the company’s insurance interests will continue to report lower profits. It faces claims worth about $5 billion from the September 11 disaster.

“Fear may recede with time, but the danger won’t,” he said. “The war against terrorism can never be won, and the best the nation can achieve is a long succession of stalemates.”

He said Berkshire Hathaway’s reinsurance operations will only provide limited coverage for terrorist exposures. Acknowledging the US Government’s reluctance to step in to provide liability guarantees, Mr Buffett said: “The general citizenry must bear its own risks and count on the government to come to its rescue after a disaster occurs.” The full text of Mr Buffett’s letter can be found on the company’s website, www.berkshirehathaway.com.