If there is one thing Warren Buffett likes more than anything else it’s probably insurance float, and Berkshire Hathaway just acquired billions more of it.
Berkshire has announced that Medical Liability Mutual Insurance Company (“MLMIC”), the largest underwriter of medical professional liability insurance in New York, has entered into a definitive agreement, pending regulatory and policyholder approval, to be acquired by Berkshire’s National Indemnity Company, following the completion of the conversion of MLMIC to a stock company from a mutual company.
National Indemnity Company is a subsidiary of Berkshire Hathaway Inc., one of the world’s leading insurance organizations.
The transaction is expected to close in the third quarter of 2017, subject to customary closing conditions and regulatory approvals.
“Good things are worth waiting for,” said Berkshire Hathaway CEO Warren Buffett. “MLMIC is a gem of a company that has protected New York’s physicians, mid-level providers, hospitals and dentists like no other for over 40 years. We welcome the chance to add them to the Berkshire Hathaway family and enhance their capacity to serve these and other policyholders for many years to come.”
“We are delighted to partner with such a fine organization. MLMIC has always had strong standing and stability within the challenging New York insurance market, and the arrangement with Berkshire Hathaway will bring policyholders further peace of mind, knowing MLMIC will be able to offer an even higher level of financial security. In addition, MLMIC will be able to expand its offerings, with more customized policy limits, risk-sharing features and services to groups, facilities and other large accounts,” said MLMIC President Robert Menotti, MD.
In a letter to policyholders, Menotti said, “Berkshire Hathaway values our operations, board, staff and endorsed partners. Most importantly, Berkshire Hathaway is committed to MLMIC’s future success and its ongoing dedication to serving policyholders.”
More Float for Berkshire
As of Dec. 31, 2015, MLMIC had a policyholder surplus of $1.8 billion giving Berkshire more of the insurance float that has played a key part in the conglomerate’s growth.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.