Investor Warren Buffett said Berkshire Hathaway plans on growing its commercial lines insurance business quickly now that it has added four executives from American International Group (AIG).
“I think you will see us become a very significant factor world-wide in the commercial- insurance business. It could be a business that reaches into the billions,” Buffett said at his annual meeting for shareholders in Omaha on Saturday. He said Berkshire now has “the right people” and it’s “got capital like no one else has.”
Buffett said one of the ex-AIG executives had approached Berkshire “numerous times” before this year but the timing was not right. He said he and Ajit Jain, who runs Berkshire’s large insurance operations and is a possible successor to Buffett as CEO of Berkshire, decided the time is now right.
Buffett also said a “number of people” have contacted Berkshire since the AIG executives joined.
Buffett was asked why he would build a commercial insurance business rather than buy one.
He said Berkshire looked for commercial insurance operations to buy “at the right price” but could not find one, so decided to build its own. “It’s really better to build than buy if you can find the right people,” he said.
On April 26, news broke that four AIG executives were leaving that giant insurer for Berkshire: Peter Eastwood, CEO of AIG Property Casualty in the Americas; David Bresnahan, president of Lexington Insurance; David Fields, head of global casualty for AIG; and Sanjay Godhwani, president for Latin America and the Caribbean for AIG Property Casualty.
Berkshire’s current insurance subsidiaries include General Reinsurance, Geico, National Indemnity, U.S. Liability Insurance Co., BoatUS and Guard Insurance Group.
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