Tag: Insurance

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Berkshire Hathaway now has another $70 million that it needs to invest.

Seritage Growth Properties, a national owner and developer of 150 retail, residential and mixed-use properties, has announced that on September 30, 2022, it made a voluntary prepayment of $70 million toward its $1.6 billion term loan facility provided by Berkshire Hathaway Life Insurance Company of Nebraska.

With the prepayment, $1.27 billion of the term loan facility remains outstanding. The prepayment will also reduce Seritage’s total annual interest expense related to the term loan facility by approximately $4.9 million.

© 2022 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 a 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.

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Berkshire Hathaway’s GenStar’s Delegated Programs Unit announces the launch of its Real Estate Professionals E&O program with RPS Signature Programs, the program administration division of specialty insurance distributor Risk Placement Services.

GenStar President and CEO Marty Hacala commented, “GenStar has been in the business of insuring real estate companies for the past 20 years. Our longevity in this class of business demonstrates our commitment to supporting the insurance needs of real estate professionals by offering broad coverage including for services as a real estate agent/broker, property manager, auctioneer, short-term escrow agent, and real estate consultant.”

Adrienne Woodhull, RPS Area President, said, “We are pleased to expand our relationship with GenStar through this new E&O program, building upon the success of our E&O appraisers’ program, which we launched earlier this year.”

The Real Estate Professionals E&O coverage includes:

• Limits of up to $2 million
• Contingent Bodily Injury and Property Damage coverage
• Open House and Failure to Disclose Pollution/Environmental Hazards subject to policy limits, Fair Housing coverage
• Free Extended Reporting Period may be available
• Defense costs outside the limits of liability available
• Prior Acts coverage with proof of continuous coverage
• Free risk management assistance hotline for all insureds
• Broad definition of professional real estate business including: Real estate agent/broker, property manager, auctioneer, short-term escrow agent, and real estate consultant

The program is available in the District of Columbia and all states except AK, LA, NY and WV. The District of Columbia and all eligible states will be written on an admitted basis except for the State of California where it will be offered on a non-admitted basis.

Matt Brown, GenStar Senior VP, Delegated Division Manager, noted, “We are excited to build the Real Estate Professional business with RPS. Both organizations have expertise in this line of business. We believe GenStar can deliver a competitive solution that will provide broad insurance protection for real estate professionals.”

© 2022 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 a 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.

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The Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) took action to end Berkshire Hathaway’s Trident Mortgage Company’s intentional discrimination against families living in majority-minority neighborhoods in the greater Philadelphia area.

The CFPB and DOJ allege Trident redlined majority-minority neighborhoods through its marketing, sales, and hiring actions. Specifically, Trident’s actions discouraged prospective applicants from applying for mortgage and refinance loans in the greater Philadelphia area’s majority-minority neighborhoods. If entered by the court, the settlement, among other things, would require Trident to pay a $4 million civil penalty to the CFPB to use for the CFPB’s victims’ relief fund. The Attorneys General of Pennsylvania, New Jersey, and Delaware also finalized concurrent actions.

“Trident illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home,” said CFPB Director Rohit Chopra. “With housing costs so high, it is critical that illegal discrimination does not put homeownership even further out of reach.”

“Last fall, I announced the Department’s Combatting Redlining Initiative and promised that we would mobilize resources to make fair access to credit a reality in underserved neighborhoods across our country,” said Attorney General Merrick B. Garland. “As demonstrated by today’s historic announcement, we are increasing our coordination with federal financial regulatory agencies and state Attorneys General to combat the modern-day redlining that has unlawfully plagued communities of color.”

“This settlement is a stark reminder that redlining is not a problem from a bygone era. Trident’s unlawful redlining activity denied communities of color equal access to residential mortgages, stripped them of the opportunity to build wealth and devalued properties in their neighborhoods,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This settlement ensures that significant lending resources will be infused into neighborhoods of color in and around Philadelphia that have historically experienced racial discrimination. Along with our federal and state law enforcement partners, we are sending a powerful message to lenders that they will be held accountable when they run afoul of our fair lending laws.”

Trident Mortgage Company is a limited partnership incorporated in Delaware. Trident is a wholly owned subsidiary of Fox & Roach LP, which is owned by Home Services of America, Inc. The ultimate holding company of Trident is Berkshire Hathaway, Inc.

Until it stopped accepting mortgage loan applications in 2021, Trident was a non-depository mortgage company operating in Delaware, Maryland, New Jersey, and Pennsylvania. Trident’s lending focus was first mortgage loans and refinancing home loans. Between 2015 and 2017, about 80% of Trident’s mortgage applications came from the Philadelphia Metropolitan Statistical Area (referred to as the Philadelphia MSA.) The Philadelphia MSA includes the cities of Philadelphia, PA, Camden, NJ, and Wilmington, DE, as well as Cecil County, MD.

The complaint describes how Trident redlined majority-minority neighborhoods in the Philadelphia MSA and actively discouraged applications from the people living in those neighborhoods. Trident’s self-defined market areas included majority-minority neighborhoods. However, Trident’s application data show it did not serve neighborhoods within its market areas equally. Only 12% of its mortgage loan applications came from majority-minority neighborhoods, even though more than a quarter of neighborhoods in the Philadelphia MSA are majority-minority. Of the mortgage loan applications Trident did receive from applicants in majority-minority neighborhoods, most of the applicants were white. For example, in Philadelphia MSA neighborhoods that were more than 80% minority, more than half of the applications Trident generated were from white applicants.

Trident’s discriminatory actions, alleged by the CFPB and the DOJ, violated the Equal Credit Opportunity Act and the Consumer Financial Protection Act. The DOJ also alleged a violation of the Fair Housing Act. Specifically, the government’s investigation uncovered a wide range of problematic conduct by Trident, such as:

• Distributing racist language and messages about certain neighborhoods: Trident’s loan officers, assistants, and other employees received and distributed e-mails containing racial slurs and racist content. In addition to using racist tropes and terms, communications sent on work e-mails included pejorative content specifically related to real estate properties’ locations and appraisals. The racist content also targeted the people living in majority-minority neighborhoods.
• Avoiding sending its loan officers to market to majority-minority neighborhoods: Trident’s loan officers worked out of 53 different offices in the Philadelphia MSA, the locations of which were displayed on Trident’s website. Fifty-one of those offices were in majority-white neighborhoods. The other two offices were in neighborhoods with minority groups representing roughly 50% of the population. All 23 offices within the Philadelphia and Camden metropolitan areas that were within Trident’s lending area were in majority-white neighborhoods.
• Developing marketing campaigns and advertisements that discouraged and ignored minority mortgage loan applicants: For example, between 2015 and May 2018, Trident conducted 15 direct mail marketing campaigns. All the individuals pictured in the campaigns’ marketing materials—both models and Trident employees—appeared to be white. These direct mail marketing campaigns would have discouraged applicants from majority-minority neighborhoods. Additionally, Trident targeted its marketing materials to majority-white neighborhoods. Trident’s open house flyers, for instance, were overwhelmingly concentrated in majority-white neighborhoods, and its online advertisements appeared for home listings overwhelmingly located in majority-white neighborhoods.

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 a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of

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Berkshire Hathaway’s Gen Re has looked to Suffolk University professors for their expertise in behavioral economics in a unique business relationship designed to benefit the reinsurer’s clients in the areas of underwriting, marketing, client engagement, customer service and more.

Behavioral economics draws from the fields of psychology and economics to better understand human behavior and decision-making when they deviate from strict rationality.

Over the past several years, Gen Re has conducted and shared results of several in-house behavioral economics studies focusing on key areas of interest to insurers. This research helped Gen Re’s reinsurance clients improve disclosure on insurance applications and personal history interviews, as well as explore other areas of interest such as policyholder communication, financial planning presentations, marketing materials and website design.

Expanding upon the Gen Re Research team’s existing efforts, the relationship with Suffolk University will provide:

• The ability for Gen Re clients to complete professor-developed and led behavioral economics training modules, extending from basic to advanced courses
• Broader outreach on the topic of behavioral economics and related applications in the insurance industry
• Speaking engagements with Suffolk University professors at Gen Re sponsored events

“Traditional economics is all about rational individuals, how they respond to prices, etc.,” explains Jonathan Haughton, professor of Economics at Suffolk University in Boston. “However, there are all sorts of cases where we don’t behave quite so rationally.”

Haughton and Suffolk Assistant Professor Lawrence De Geest both teach in the field of behavioral economics and are sharing their knowledge with Gen Re’s Research team. De Geest’s research examines the emergence of social norms and the effect of information on decision-making.

“All kinds of psychological factors outside of traditional economics play into people’s decision-making,” Haughton says. “For example, when it comes to health and medical disclosure, the way a question is framed in a questionnaire can make a big difference to what people choose to disclose. Loss aversion is another psychological factor that can affect economic decision-making. People are very averse to losing things to which they have become attached, so instead of saying, ‘Save $50 a month,’ you might say ‘Stop losing $50 a month. Don’t lose your ability to support your household.’”

Keith Brown, Senior Vice President and Head of Individual Life at Gen Re, says it’s important for insurers to pay attention to these important behavioral factors: “At a time of rapidly evolving underwriting approaches, uncertainty about future morbidity and mortality improvement, and increased insurer focus on client engagement, the behavioral economics training is being made available to Gen Re clients at an important industry inflection point.”

Suffolk University, located in the heart of downtown Boston, has a long history of partnering with industry to share relevant academic and business knowledge, research, and expertise.

“I am a big believer in faculty doing work with business, government and the non-profit sector outside of the academy,” Haughton says. “I think in the right proportion, it hugely benefits teaching and research.”

© 2022 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 a 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.

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Berkshire Hathaway GUARD Insurance Companies recently announced it added Illinois to the list of states where the insurer offers its Commercial Package Policy.

The product includes Commercial Property featuring limits up to $120 million per location (higher limits considered), with an enhanced causes of loss form, including built-in equipment breakdown, crime coverages as well as broad inland marine coverages; General Liability with aggregate limits up to $6 million; and Commercial Umbrella for added protection.

“As we continue to expand our portfolio, our goal is to be the preferred insurance carrier our agents turn to for their insureds. We continue to supply our network of independent agents with quality products that enable them to grow,” said Sy Foguel, Berkshire Hathaway GUARD CEO. “Geared toward larger insureds, our CPP product complements our Businessowner’s Policy offering.”

Illinois is the fourth state where GUARD’s Commercial Package is available, after rollouts in Pennsylvania and New Jersey in 2019 and Michigan earlier this year. Availability in more states is expected soon.

“What sets our Commercial Package apart, among other things, is how we enhance our base coverages with a wide range of add-ons, limit options and access to both proprietary and industry specific endorsements,” says Lyle Hitt, Chief Insurance Officer of Property and Casualty Insurance. “We take a customized approach to expanding the limits and scope of traditional property and casualty insurance.”

Berkshire Hathaway GUARD’s Commercial Package product is designed to address the insurance needs of larger, more complex operations with multiple exposures. Initial target markets include light-to-medium manufacturing, wholesalers and distributors, large offices/habitational buildings, truck stops/travel plazas, resort hotels, and country clubs/golf courses.

Discounts are available when seeking quotes for two or more additional applicable lines, like Worker’s Compensation or Commercial Auto.

Berkshire Hathaway GUARD Insurance Companies is a property and casualty insurance specialist writing $2 billion in premium nationwide. GUARD offers a variety of products for both commercial and personal lines of insurance. Berkshire Hathaway GUARD Insurance Companies maintains a total of eight offices throughout the country.

© 2020 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.