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I just have one quibble with the Oracle. I thought he could have, and should have, acted more decisively in '99 to put the new incentives in place, replace the malcontents in senior management ranks, and track more closely what General Re's rank-and-file were doing in pricing new policies. Who knows what share of General Re's 1999 losses might have been avoided, if quicker action had been taken? To me, it was distressing to learn that it took a full year after purchasing General Re (probably two years or more after WEB started due diligence) to get these measures in place, many of which BRK reinsurance managers had long since applied in their own operations. It's hard to avoid a sense that WEB and company were just unduly complacent during the critical early months after closing the deal.

I would guess that there weren't malcontents in management ranks -- but I don't deny that a merger probably caused a number of people to take stock of their situation and consider other positions in the industry. Any large life-changing situation is bound to spur such thoughts.

As for how long it took to accomplish the implementation of the new incentive system, that takes time to communicate it effectively and get people on board with it. That sort of thing is a major change in one's worldview as an underwriter, I would think. For all we know, this may have been implemented early in the year, within months after the two companies merged. In addition, I don't Buffett is one to dictate things from Omaha -- as important as incentive systems are. I think this has to come from Gen Re's management, but I am pretty certain this was a major topic of discussion between Omaha and Greenwich.

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