NATIONAL INSURES THE JACKPOT

October 16, 2000

Warren Buffett’s National Indemnity is up to the challenge of insuring a $1-billion lottery, the world’s largest ever. Experts say the chances of National having to pay out are about 2.4 billion to one. National Indemnity wrote the policy for Grab.com, a recently launched Internet lottery, covering the possibility of a $1-billion payout. The coverage cost Grab.com ‘several million dollars,’ according to Grab.com co-founder and President Andrew Warner. The insurer will pay the enormous prize if any players match seven randomly selected numbers from 1 to 77 in a drawing to be held Dec. 29. Should someone happen to win the lottery, the winner would have a cash option, receiving $175 million right away, or an installment option over 40 years. The non-interest installments would start with 20 annual payments of $5 million, followed by 10 installments of $10 million, nine payments of $20 million and a final balloon payment of $620 million in the 40th year. Berkshire Hathaway will likely make money on the deal, as Grab.com will pay National a small sum for every player who enters the contest.

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