A unit of Warren Buffett’s Berkshire Hathaway Inc. has agreed to provide guarantees on XL Capital Ltd directors and officers (D&O) liability insurance policies that protect corporate boards and executives against lawsuits.
In a regulatory filing, XL said Berkshire’s National Indemnity unit will receive as much as $250 million to support claims under the 10-year agreement.
“Given today’s business climate,” the agreement provides necessary protection “in the event that the client’s indemnity coverage fails to respond,” said David Duclos, chief executive of XL Insurance, a unit of Bermuda-based XL Capital.
Omaha, Nebraska-based Berkshire and other firms are taking on more insurance risk as many rivals struggle with falling credit ratings and increased investment losses, which can reduce their capacity to take on business.
The policies that Berkshire is backing provide “Side A” coverage, which helps shield the personal assets of directors and officers from claims.
Berkshire has close to 80 units, but typically generates about half its results from insurance-related operations.
(Reporting by Jonathan Stempel, Editing by Maureen Bavdek)
Topics Directors Officers
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