Berkshire Hathaway's Buffett Responds to Press|
Reports Over General Re and Other Probes
The Insurance Journal
March 30, 2005
Berkshire Hathaway Inc. Chief Executive Officer Warren Buffett has acknowledged that he will voluntarily speak with investigators next month while also moving to correct several press reports concerning the ongoing investigation of certain reinsurance transactions involving his firm's General Reinsurance and the insurer, American International Group.
In a statement, Buffett denied reports that he had been briefed on the "nature" and "structure" of the 2000-2001 reserve transactions between Gen Re and AIG. To the contrary, Buffett said he was not briefed on how the transactions were to be structured or on any improper use or purpose of the transactions.
He said that Berkshire Hathaway does not expect any restatement of its financial reports as a result of the Gen Re investigations and that Berkshire Hathaway and Gen Re "have been actively cooperating" with investigators. "In connection therewith, a number of Berkshire/Gen Re representatives have voluntarily given interviews to the investigating authorities, and Mr. Buffett will shortly do so as well," the company said.
The statement claimed that the press has inaccurately reported that National Indemnity, a subsidiary of Berkshire Hathaway headed by Ajit Jain, used a "side letter" to document a transaction with a to-be-acquired subsidiary of Australian insurer H.I.H. "No such side letter existed or was used. Gen Re, a Berkshire Hathaway subsidiary since December 1998, did use a side letter in its transaction with H.I.H., a transaction entered into well before Gen Re was acquired by Berkshire Hathaway," according to Buffett.
Buffett also denied claims that he typically speaks with the executives at his various companies late each afternoon. " With the exception of Mr. Jain, Mr. Buffett speaks infrequently with the Berkshire Hathaway business unit managers and leaves operating decisions for the business units to the individual managers, a policy publicly reported regularly since 1984," he explained.
Berkshire Hathaway and its subsidiaries engage in a number of diverse business activities, with its property and casualty insurance and reinsurance businesses being among the most important.