Gen Re Ex-CEO May Face SEC Suit

October 7, 2005

Berkshire Hathaway Inc. announced on Friday that Ronald E. Ferguson, the former chief executive officer of General Re Corporation, received a “Wells notice” from the staff of the Securities and Exchange Commission (the “Commission”) in connection with its ongoing investigation of non-traditional insurance products.

Ferguson stepped down as CEO of General Re Corporation on Oct. 1, 2001. He had been providing consulting services to General Re and certain of its affiliates until May 20, 2005, when General Re terminated his consulting services.

Under the Commission’s procedures, the recipient of a Wells notice has the opportunity to respond to the staff before the staff makes its formal recommendation on whether any civil action should be brought by the Commission.

In September Berkshire Hathaway said securities regulators may also sue the current chief executive of its General Re Corp. unit, and former and current subordinates, over their roles in a 2000 transaction that helped American International Group Inc. inflate its reserves.

Berkshire said General Re CEO Joseph Brandon received a Wells notice from the U.S. Securities and Exchange Commission, indicating the SEC may file a civil suit against him alleging violations of securities laws.

Christopher Garand, a former senior vice president at General Re, and Robert Graham, a current senior vice president and assistant general counsel, also received notices, Berkshire said.

The U.S. Justice Department and the SEC have been examining a transaction between General Re and AIG that helped the world’s largest insurer improperly increase its reserves by $500 million, according to regulators.

In June, two former General Re executives, John Houldsworth and Richard Napier, pleaded guilty to charges that they helped AIG misstate financial results. They were fired.

Regulators want to determine whether General Re helped AIG inflate its financial condition.

The sweeping probe ultimately uncovered a host of wrongdoing at AIG that prompted the ouster of long-time CEO Maurice “Hank” Greenberg and forced the insurer to restate $3.5 billion of earnings over the past five years.

Berkshire Hathaway and its subsidiaries engage in a number of diverse business activities among which the most important is the property and casualty insurance business conducted on both a direct and reinsurance basis.

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