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Berkshire Hathaway Specialty Insurance.


boilermaker75
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  • 1 month later...

Hey Boilermaker - I put it up on the old chuck's angels board --

 

"Berkshire already making inroads in Lloyd's E&S business

-------------------------------------------------

 

Berkshire Hathaway's bold new drive into the US specialty markets is already

being felt on Lime Street, Tom Bolt warned yesterday (16 July).

 

The Lloyd's performance director, himself a former Berkshire Hathaway executive,

was speaking in the wake of the recent launch of Berkshire Hathaway Specialty

Insurance (BHSI), the firm's nascent excess and surplus (E&S) lines business.

 

BHSI is staffed primarily by former American International Group (AIG)

employees, led by ex-US P&C chief Peter Eastwood.

 

"My first supposition might have been they would go after the AIG business they

were most familiar with," he told the Association of Lloyd's Members conference.

 

"But I've already seen evidence talking with managing agents in Lloyd's in the

property excess area in the States and they seem to be targeting that business

too, where we have a much bigger share of that than AIG does," he added.

 

He said there would be a "real sea-change", adding that the recent development

was a reminder that underwriters could no longer sit at their boxes and let

brokers come to them.

 

Bolt's comments also came just months after the Warren Buffett-led leviathan

agreed to write a controversial 7.5 percent line across Aon's subscription

market portfolio.

 

But Bolt said that he assumed the Aon-Berkshire quota share deal - which is

estimated to affect around $2.5bn of business with a Lloyd's component - would

eventually "go the way of all flesh", adding that there was no history of any

underwriter doing well out of a "blind broker" quota share in the long run.

 

"What doesn't go the way of all flesh is smart guys who used to work at AIG, who

now have a great credit rating and a fair bit of capital behind their efforts -

and marching orders to go build a proper business," he told Lloyd's Names and

other investors in the market gathered at the London conference.

 

However, he did predict that BHSI would not be too aggressive on pricing as it

makes inroads into the E&S markets.

 

"Intermediaries tend to travel through fear," he noted, and Berkshire would tell

underwriters not to change price or terms of a policy, even though it had "no

intention of writing those terms of the business - that's the way they market".

 

He said that one thing people forget about Berkshire Hathaway is its long

history in writing quota shares.

 

"If you go back to 1989 I believe he did a four-year quota share of a Firemans'

Fund for 7 percent of everything they wrote.

 

"If you look at Swiss Re, when they were having a bit of trouble, he wrote a

pretty decent size quota share of them - and a few other quota shares," he said.

 

Berkshire was essentially writing quota shares of the business where its

reinsurance head Ajit Jain felt that he had a bit of expense to manage, he

concluded.

 

Lloyd's and AIG are the two largest writers of US E&S business."

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Thanks for the post.

 

Does anyone know if BHSI will be targeting the same classes of business as Markel?

 

Yes, and no.  BHSI will be levering their financial stability rather than undercutting prices, and they will be going after the big game.  :)

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