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Good afternoon,

I was fortunate enough to attend the meeting.  I came away with a very positive
feeling about General Re, the insurance business, and the honesty and integrity
of Buffett and Munger.
 
Many of the comments posted here about Berkshire's reinsurance
business not performing well contain gross errors, in my opinion.

Just for starters, the other international reinsurers, such as Swiss Re and
Munich Re, have not posted Q1 results.  The 2001 results for these folks are
sketchy and are still being revised.

Companies such as Renaissance Re aren't really comparable. For example,
Berkshire writes policies with a $1 billion face value.  RNR writes a
few policies with $60 million face value and mostly smaller than $10 million.
Also, RNR is expanding rapidly, by selling stock and bonds to raise funds.
Its premiums in 2001 were $501 million, of which $162 million were reinsured
(possibly retroceded to Gen Re). Gross premiums in 1998 were only $270 million. 
That means that the premiums are disproportionate to the 
"tail" of liabilities, which take 2 to 4 years to accrue.
 
My summary notes follow. [Caution! I may have committed numerous errors in transcription}:

                      Annual Meeting 2002

Buffett:  You'll see "terrific" results coming out of our insurance companies.
General Re is stronger than ever.  For a while it had "cultural drift" but
that problem has reversed.
[Praised new management team and Joe Brandon.]  
Insurance is our main business and always shall be. General Re will be our #1 asset.  
We have $35.7 billion in "float" in our P/C business.  Last year it cost us
12.8%, it was very costly.  Barring a real megacat, we'll do really well.
                                   ===

             *Underwriting Results First Quarter 2002 ($millions)

         Underwriting gain   Quarter-end float    3-month float change
BRK Re       (8)                 12,587               1,325
Gen Re      (88)                 19,633                 323
GEICO       109                   4,319                  68
Other         7                     803                 118
----------------------------------------------------------------------
             20                  37,342                1,834

*(Includes amortization of deferred charges of $109 million for BRK Re and
  $3 million of Gen Re)

                                      ====

Amortization charges will be $432 million in 2002 against underwriting income.
We must earn this amount to have float "cost-free" as we did in the first quarter.

                              =====
                   Annual Amortization Charges
      2002--$432 million
      2003-- 383   "
       ...
       ...
       ...   
      2011-- 142   "

                              ====

               2002 GEICO Policies in Force
      
                No. of Policyholders Monthly change  No. at end of month
      January     4.65 million           7,817          4,665,000
      February    4.66   "              38,275            
      March       4.70   "              45,784 
      April       4.75                  30,688          4,780,000

                          ====-=

 Float:  We have a longer duration to our float than any other insurance company.
The float will be higher in 3 years than now. Growth of float is important
but its cost must be low.  Float did us no good last year at a 12.8% cost.
The float of the American P/C business is >$400 billion and we are 8% to 9% of the business. 
Low cost float is more valuable than growth, but we seek growth too.

 Asbestos:  Not concerned about P/C company liability. Concerned about operating company liability. 
 Some companies will be dragged in who appear to have no exposure.
 
 Terror insurance: We have sold a lot of terror reinsurance that excludes nuclear, chemical,
biological, and fire following a nuclear explosion.  

 WTC: was a huge workers compensation loss, the largest in history by a huge margin.  
Implied that insuring workman's compensation was very risky business that BRK would avoid.
 California: (Charlie)--"Workmen's compensation in California is so unfair
and so crazy I'm going to leave it alone." 


 BRK now owns the Faraday syndicate at Lloyds'.  The domicile is not important.  
Being in the Lloyds' market allows us to "see" a lot of things.

Charlie: If you have a vast (insurance underwriting) exposure, and a vast
"decline rate", you have an opportunity to do very well.

  
FINOVA: We guaranteed loan of $5.6 billion, with a 2% override. Now the loan is down
to $3.2 billion, which is close to 100% OK. After 911 Finova's aircraft assets were
hit hard but we had a significant margin of safety. We'll probably make hundreds of
millions over many years on this transaction.  
 
Investing: Much of being a successful investor is not allowing oneself
to be defrauded.
Many transfers of capital occur by fraud (e.g. the dot-com bubble). 

Charlie: We have rarely been defrauded.

END OF NOTES

Regards,

puzzled
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