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Guest longinvestor

2016 gain for BRK-A= 26%; 193k to 244k

 

Still selling at a nice discount to IV. Will wait for the annual letter to confirm my numbers.

 

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Ajit made a deal for a reinsurance policy with a $650m single premium -

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(from insurance insider)

 

The Hartford buys $1.5bn adverse development cover

Catrin Shi

 

The Hartford has struck a $1.5bn reinsurance agreement with Berkshire Hathaway unit National Indemnity Company (Nico) to cover certain legacy asbestos and environmental liability exposures, it announced today.

 

The aggregate excess-of-loss cover provides up to $1.5bn of reinsurance for adverse net loss reserve development above estimated net loss reserves of $1.7bn as of 31 December, when the cover took effect. The reinsurance premium was $650mn.

 

The cover excludes the £477mn ($588mn) of legacy exposures held by The Hartford's UK P&C run-off subsidiaries. Legacy acquirer Catalina agreed to buy those subsidiaries in July and the deal is expected to complete in the first quarter.

 

The Hartford will take a charge of about $423mn, after tax, against fourth quarter net income as a result of the Nico arrangement. It will continue to handle claims and retain the risk of recoveries under third party reinsurance contracts for the exposures.

 

"Our asbestos and environmental exposures have generated adverse loss reserve development over time, creating uncertainty for investors and others about the ultimate cost of these policy liabilities, most of which were underwritten prior to 1985," said The Hartford CFO Beth Bombara.

 

The reinsurance premium is expected to have a "slightly negative" impact on 2017 P&C net investment income. The Hartford said its previously announced 2017 capital management plan, including share buybacks of $1.3bn, should be unaffected by the Nico deal.

 

Mayer Brown represented The Hartford on the reinsurance agreement.

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i didn't know that HBO had made a new Warren Buffett documentary - release date set:

http://www.thewrap.com/becoming-warren-buffett-hbo-premiere-date/

 

Looks like it is with his cooperation and he will be largely narrating the film -

http://www.thisisinsider.com/hbo-documentary-on-warren-buffett-becoming-warren-buffett-2016-12

 

Here's a 1-minute trailer for the HBO doc:

 

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Not the first time, Warren has become fond of mixing in EUR notes with his US borrowings, especially at recent rates.  March 2015 was one of the first if not the first time he sold debt in Euros.

 

 

Isen't this the first time BHF is issuing notes in EUR? Ballinvarosig Investors, if you are in Rome right now, enjoy!

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To the corporate finance experts out there, help a novice understand what a US based company does with proceeds from a Euro debt offering?  Obviously Berkshire has some European holdings, would they raise capital to use in those subsidiaries or would these borrowings be used for the parent (and therefore have to be converted to dollars).  This is definitely an area I don't know much about, not that I know much about anything, LOL.  Thanks in advance for the foreign borrowing lesson. 

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They can do a lot of things. Convert to other currency and invest/finance ops. Make EUR denominated investments. Finance European operations. While on the surface BRK doesn't have a lot of European business. The subs do a lot of business in Europe. The insurance subs and PCP quickly spring to mind.

 

Warren also has a history of taking debt when it's cheap. I think sometimes is just for shit and giggles, just for fun cause he can do it. The issuance is quite small and fairly short term for BRK so I think this may be the case here.

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AIG strikes $34bn legacy deal with Berkshire Hathaway

Matthew Neill

 

AIG has agreed the biggest legacy deal in the history of the P&C insurance market, with Berkshire Hathaway set to take on 80 percent of the risk on $34bn of the insurer's US commercial reserves.

 

Ajit Jain's National Indemnity Company (Nico) will assume 80 percent of the net losses and net allocated loss adjustment expenses on the reserves of the first $25bn for the 2015 accident year and prior. Nico's liability is capped at $20bn.

 

The $9.8bn consideration is payable in full by 30 June with interest at 4 percent per annum from the 1 January 2016 inception date until the payment date.

 

The payment will be placed into a collateral trust account as security for Nico's payment obligations to the AIG operating subsidiaries.

 

AIG will retain sole claims handling and resolution authority, while Nico will be granted various access, association and consultation rights.

 

AIG said the agreement will be accounted for in the first quarter of this year as a retroactive reinsurance agreement.

 

The carrier said if the agreement had been entered into on 1 January 2016 it would have recognised a loss of approximately $2.9bn based on carrier reserves of $34bn.

 

AIG president and CEO Peter Hancock commented: "This decisive step enables us to focus firmly on the future and build on the progress we've made in transforming AIG.

 

"The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders."

 

AIG has targeted $25bn of capital return in 2016 and 2017 as part of a broader plan to turn the business around.

 

The New York-listed insurance giant said that it expected to disclose a material reserve charge in its forthcoming fourth quarter results.

 

AIG said that it had signed a binding term sheet related to the adverse development cover, but that closing was subject to receipt of regulatory approvals, execution of definitive transactions documentation and other conditions.

 

TigerRisk is understood to have advised on the deal.

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Guest longinvestor

AIG strikes $34bn legacy deal with Berkshire Hathaway

Matthew Neill

 

AIG has agreed the biggest legacy deal in the history of the P&C insurance market, with Berkshire Hathaway set to take on 80 percent of the risk on $34bn of the insurer's US commercial reserves.

 

Ajit Jain's National Indemnity Company (Nico) will assume 80 percent of the net losses and net allocated loss adjustment expenses on the reserves of the first $25bn for the 2015 accident year and prior. Nico's liability is capped at $20bn.

 

The $9.8bn consideration is payable in full by 30 June with interest at 4 percent per annum from the 1 January 2016 inception date until the payment date.

 

The payment will be placed into a collateral trust account as security for Nico's payment obligations to the AIG operating subsidiaries.

 

AIG will retain sole claims handling and resolution authority, while Nico will be granted various access, association and consultation rights.

 

AIG said the agreement will be accounted for in the first quarter of this year as a retroactive reinsurance agreement.

 

The carrier said if the agreement had been entered into on 1 January 2016 it would have recognised a loss of approximately $2.9bn based on carrier reserves of $34bn.

 

AIG president and CEO Peter Hancock commented: "This decisive step enables us to focus firmly on the future and build on the progress we've made in transforming AIG.

 

"The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders."

 

AIG has targeted $25bn of capital return in 2016 and 2017 as part of a broader plan to turn the business around.

 

The New York-listed insurance giant said that it expected to disclose a material reserve charge in its forthcoming fourth quarter results.

 

AIG said that it had signed a binding term sheet related to the adverse development cover, but that closing was subject to receipt of regulatory approvals, execution of definitive transactions documentation and other conditions.

 

TigerRisk is understood to have advised on the deal.

 

Accounting ?

 

Is the acquired float on BRK books $9.8 Billion or $25Billion? Tia

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The float will be in the $9.x Billion area.  Not sure how the structure of the collateral trust account influences the accounting, but the premium is upfront and the capital is being transferred to Berkshire.  Ajit hung out with Warren last night in NYC for his movie premier - I'm sure they were quite pleased to announce such a huge deal together.  AIG had to start playing nice with BRK after their employee poaching dust-up because they realized they needed BRK to do these legacy deals with

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Guest longinvestor

The float will be in the $9.x Billion area.  Not sure how the structure of the collateral trust account influences the accounting, but the premium is upfront and the capital is being transferred to Berkshire.  Ajit hung out with Warren last night in NYC for his movie premier - I'm sure they were quite pleased to announce such a huge deal together.  AIG had to start playing nice with BRK after their employee poaching dust-up because they realized they needed BRK to do these legacy deals with

 

Thanks for the color. So decades of poor underwriting at AIG huh? The supply of idiot behavior never short. Wonder how much reinsurance business that's being written as we speak will turn into float in Ajit's hands after this decade?

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CEO of PCP putting capital to work...

 

 

https://www.bloomberg.com/news/articles/2017-01-22/buffett-s-berkshire-buys-german-pipe-company-handelsblatt-says

Buffett’s Berkshire Buys German Pipe Company,

Mark Donegan, chief executive officer of Berkshire’s Precision Castparts unit, confirmed it’s buying Wilhelm Schulz but declined to elaborate on terms

 

 

 

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