Category Archives: Insurance

Berkshire’s Insurance Losses from Hurricane Season ran to $3 Billion

(BRK.A), (BRK.B)

Last fall’s spate of three mega-catastrophe hurricanes that hit the U.S. has led to billion dollar losses for Berkshire Hathaway’s insurance companies.

“We currently estimate Berkshire’s losses from the three hurricanes to be $3 billion (or about $2 billion after tax),” Warren Buffett stated in his annual letter to shareholders. “If both that estimate and my industry estimate of $100 billion are close to accurate, our share of the industry loss was about 3%. I believe that percentage is also what we may reasonably expect to be our share of losses in future American mega-cats.”

Despite the scale of the disasters, Buffett noted that the impact on Berkshire was minor, with it reducing Berkshire’s GAAP net worth by less than 1%.

He went on to note that other reinsurers “suffered losses in net worth ranging from 7% to more than 15%.”

Buffett wrote that a mega-catastrophe hurricane that caused $400 billion in damage, which the company estimates has a 2% probability annually, would see Berkshire incurring losses in the $12 billion range.

A loss of that magnitude would in no way jeopardize the conglomerate, as it is below the annual income generated by Berkshire’s non-insurance activities.

© 2018 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.

Berkshire Hathaway Specialty Insurance Opens Office in Dubai

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company has received its insurance license from the Dubai Financial Services Authority and established an office in the Dubai International Financial Centre (DIFC), while naming Alessandro Cerase as its Senior Executive Officer (SEO) and Neeraj Yadvendu as deputy SEO and Head of Third Party Lines for the Middle East.

In addition, Alessandro will be leading First Party Lines for BHSI’s broader Asia Middle East region, which includes BHSI’s other regional hubs of Hong Kong and Singapore as well as its operations in Malaysia and Macau.

“We are excited to expand BHSI’s footprint in this region which will service those markets in the Middle East and beyond who seek (re)insurance support in the DIFC. The strategic location of Dubai as well as the stability and efficiency of the DIFC make it an ideal hub for BHSI to support economic growth in the region. Our operation in the DIFC will bring BHSI’s financial strength, and underwriting and claims excellence to the region.” said Marc Breuil, President of Asia Middle East, BHSI. “We are excited to be able to serve customers and brokers in the region under the experienced leadership of Alessandro and Neeraj.”

BHSI will provide a suite of specialty and commercial (re)insurance products to its network of brokers and ceding companies with a focus on construction, energy, property, marine, casualty and executive and professional lines.

Alessandro comes to BHSI with 20 years of global experience spanning both the engineering and underwriting sides of the insurance business. He was most recently Global Head of Energy and Engineered Risk at AIG. He holds a master’s degree in Chemical Engineering from Universita’ degli Studi di Roma.

Neeraj joins BHSI after two decades in the insurance industry, most recently as Regional Head of Casualty and Financial Lines at AXA Asia. He received his master’s degree in Business Administration from India’s University of Pune, and his bachelor’s degree from City College, Calcutta University.

2018 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.

Ajit Jain Not Only Helps Run Berkshire, He Owns Berkshire

(BRK.A), (BRK.B)

Newly appointed Berkshire Hathaway vice chairman Ajit Jain not only oversees all of Berkshire’s insurance operations, he has a significant stake in the conglomerate.

Berkshire’s regulatory filing this past Thursday revealed that Jain has roughly $109 million in Berkshire stock.

Jain owns $21.7 million of Berkshire stock, and also indirectly owns $87.5 million of Berkshire stock held by his wife, a family non-profit foundation and two family trusts.

The filing makes clear that Jain needs to not only stay in Warren Buffett’s good graces, he definitely need to be good to his wife.

2018 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.

General Star Launches Online Individual Real Estate Appraisers with Norman-Spencer

(BRK.A), (BRK.B)

Berkshire Hathaway’s General Star Management Company, a wholly-owned subsidiary of General Reinsurance Corporation, has launched an online Individual Real Estate Appraisers Program. General Star will partner with Norman-Spencer Agency, Inc., the program administrator.

“In October, General Star partnered with Norman-Spencer to provide coverage for real estate agents and brokers. We are excited to expand this collaboration to include an online platform for individual real estate appraisers. General Star has a long history of insuring real estate appraisers and we are happy to continue that tradition,” said Tom Gersch, Vice President and General Star Programs Unit Manager.

In commenting further upon the program, General Star President and CEO Marty Hacala stated, “General Star is fortunate to partner with Norman-Spencer. They are an established and knowledgeable program administrator. We will be working together to address the changing and developing needs of real estate appraisers.”

The online Appraisers Program provides specialized Errors and Omission coverages designed specifically for the unique needs of individual real estate appraisers. They can choose a range of limits from $300,000/$600,000 to $1 million/$2 million. There is no deductible. Additional services include a toll-free hotline for risk management and pre-claim assistance.

The online individual Real Estate Appraisers Program will be written on an admitted basis by General Star National Insurance Company which is rated A++ (Superior) by A.M. Best Company and carries an AA+ Insurance Financial Strength Rating from Standard & Poor’s Corporation.

© 2018 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.

Greg Abel and Ajit Jain Join Berkshire Board

(BRK.A), (BRK.B)

In a move that clearly foreshadows the next generation of Berkshire Hathaway leadership, Berkshire’s Board of Directors voted to increase the number of directors comprising the entire Board of Directors from twelve to fourteen. After making that move, Gregory E. Abel and Ajit Jain were then elected to serve as Directors to fill the resulting vacancies on the Board of Directors.

In connection with their election to the Board of Directors, Warren Buffett, Berkshire Hathaway’s Chairman and CEO, appointed Mr. Abel to be Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations and Mr. Jain to be its Vice Chairman – Insurance Operations.

Mr. Abel joined Berkshire Hathaway Energy Company in 1992 and currently serves as its Chairman and CEO. Mr. Jain joined the Berkshire Hathaway Insurance Group in 1986 and currently serves as Executive Vice President of National Indemnity Company with overall responsibility for leading Berkshire’s reinsurance operations.

In March 2016, Buffett appointed Abel to the Board of Kraft Heinz, a move that showed his confidence in the 55-year-old manager.

For the time being, Buffett and Munger will continue in their existing positions, including being responsible for significant capital allocation decisions and investment activities.

© 2018 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.

Berkshire Hathaway Ranked 7th Among Global Insurers

(BRK.A), (BRK.B)

Berkshire Hathaway has been ranked as the number seven insurer among the top ten list of global insurers. Berkshire climbed three notches from last year’s ranking.

The ranking of the world’s largest global insurance companies by non-banking assets was released by A.M. Best in the Jan. 1, 2018, issue of BestWeek.

The top 10 global insurers ranked by 2016 non-banking assets are:

1. MetLife Inc., United States
2. AXA S.A., France
3. Allianz SE, Germany
4. Prudential Financial Inc., United States
5. Japan Post Insurance Co., Ltd., Japan
6. Nippon Life Insurance Company, Japan
7. Berkshire Hathaway Inc., United States
8. Prudential plc, United Kingdom
9. Legal & General Group plc, United Kingdom
10. Assicurazioni Generali S.p.A., Italy

© 2018 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.

Berkshire Hathaway Specialty Insurance Company Offers Professional First Financial Institution Professional Indemnity Insurance in Asia

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has introduced Professional First Financial Institution Professional Indemnity (FIPI) Insurance in Asia.

“Financial institutions are seeing an increase in both the frequency and severity of professional indemnity claims.” said Scotland Walsh-Riddle, Head of Executive & Professional Lines at BHSI Hong Kong. “To respond to their needs, we’re introducing comprehensive and customizable protection to address the exposures FI professionals face now.”

The new BHSI policy is designed to cover a range of claims, from allegations of failure to disclose information, to misleading financial advice and breach of contracts. It combines coverage for civil liability, pre-investigations, mitigation expenses, bail bond costs, court attendance, loss of documents, and more.

“Financial institutions deliver diverse services to their customers,” said Edwin Sim, Assistant Vice President of Executive & Professional Lines at BHSI Singapore. “Hence, we have set out to provide them with the peace of mind that comes with broad FIPI coverage. Through clearly articulated wording, BHSI Asia’s FIPI insurance policy will provide our customers with the security of coverage backed by unmatched financial strength.”

The policy is designed for medium to large financial institutions, including securities dealers, regional banks, insurance companies, reinsurance companies, diversified institutions, and financial technology (FinTech) and corporate advisory firms.

© 2017 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.

GEICO in Major Hiring Spree in Virginia Beach

(BRK.A), (BRK.B)

Insurer GEICO is adding to its staff in Virginia Beach, Virginia, and expects to fill 500 positions in claims, sales, service, auto damage and the company’s management development programs.

The Berkshire Hathaway-owned company does not require applicants to have previous experience due to GEICO’s extensive training courses.

“One reason we were again named a ‘Best of the Beach’ employer in Hampton Roads is because of our commitment to helping associates develop long-term careers,” said John Pham, vice president of GEICO’s regional operations. “Our associates know we promote from within, which gives them a lot of chances for advancement. It’s not unusual for associates to earn two promotions within the first year of employment with us.”

Mark Boggs, a claims manager, can attest to that. “I started as a claims adjuster just three years ago. GEICO gives you the tools and support to be successful, and with consistent hard work and dedication, there’s really no limit to how fast you can move.”

John Pham added, “We know that many people come to GEICO for a job. They think they’ll stay a year or so. What we do is surprise them with a career. Many of our associates have 10- , 20-, and 30-year careers with GEICO, some even longer.”

© 2017 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.

Millennials Use of Travel Insurance a Boost for Berkshire Hathaway Travel Protection

(BRK.A), (BRK.B)

Millennials are purchasing travel insurance at a dramatically higher rate than the Baby Boomer generation, according to a new report conducted by Berkshire Hathaway Travel Protection.

Berkshire Hathaway Travel Protection’s (BHTP) State of Travel Insurance report found that “Younger travelers (ages 25 to 44) indicated their purchases of travel insurance are up significantly, with 56 percent of Millennial travelers stating they purchased more travel insurance in 2017 than they did in 2016 (35 percent). For Boomers, 43 percent of travelers ages 55 to 74 said they bought less travel insurance in 2017 compared to 2016 (5 percent), and the shift in consumers’ buying behavior seems likely to continue.”

“This is our third year of conducting the State of Travel Insurance research, but this is the first time we’ve seen a noticeable shift in the purchase intents between older and young travelers,” said Dean Sivley, president of BHTP. “The full report reveals that the person long considered to be the typical travel insurance buyer, the 55-to-74-year-old Boomer, is purchasing less due to a desire to travel less frequently, which obviously reduces the need for travel insurance. Conversely, Millennial travelers are planning to buy at a much higher rate in 2018 because they state they better understand travel insurance benefits.”

The report also notes that younger travelers increasingly use comparison sites (46 percent of younger travelers vs. 14 percent of older travelers), read online reviews (46 percent vs. 10 percent) and talk to friends (32 percent vs. 17 percent) when they make their travel insurance buying decisions.

© 2017 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.

Berkshire Hathaway Specialty Insurance Adds to Marine Capabilities Coverage in Australia

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has introduced a new Contractors Plant & Equipment (CP&E) Policy for customers in Australia.

“We are pleased to bring to market a considered solution for Contractors Plant & Equipment, backed by BHSI’s financial strength and responsive service,” said Dimitry Zilberud, Head of Marine, BHSI Australasia. “With this new policy, contractors can easily and efficiently address their property damage and liability exposures, including road risk, in a single policy. This new product is an excellent complement to our existing capabilities in Property, Construction, Mining and Casualty.”

BHSI’s CP&E policy wording combines the breadth of coverage required in today’s marketplace with the flexibility to respond to the specific needs of customers across a multitude of industries. Our new single package policy includes numerous coverages including;

• Material damage (with a range of automatic benefits)
• Hired in plant
• Financial protection for plant and interruption
• Road risk
• General liability
• Replacement value for plant (up to 36 months old) after total loss

Strong property and liability cover offers far-reaching coverage for a wide range of sectors, including earthmoving and excavation contractors, road works, builders/construction, plant hire companies, farming and agriculture.

© 2017 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.