Berkshire Hathaway 2018 Annual Meeting Audience Question # 32

Anything associated with Ajit has underwriting discipline attached to it

Warren Buffett:

OK. Gary.

Gary Ransom:

Yes, on reinsurance. I know we’ve talked in the past about reinsurance not really being as attractive an industry in, say, the next ten years as the last ten. But I don’t think we’ve talked specifically about General Re.

And I looked this morning at the 10-Q and I see General Re has grown nicely. I know there’s been some changes in the management.

And I wondered if you could just give us a sense of what’s going on at the company to bring about some of that growth and what looks like improvement.

Warren Buffett:

Yeah. Well, the reinsurance business… I don’t think I’d say that it’s tougher than it was ten years ago. But you go to 40 or 50 years ago, it was not brutally competitive, I’ll put it that way.

And at Gen Re… Tad Montross, who did a fantastic job for us at Gen Re, retired. And we have under Ajit… and then Kara in addition… but under Ajit, the focus of the place has changed somewhat.

And it probably is more growth oriented than before. But I can assure you that anything associated with Ajit is… also has underwriting discipline attached to it.

But, I… there has, as you’ve correctly noticed, there’s been some pick-up. And I think you actually will see the property-casualty reinsurance business grow a fair amount.

And the life business… reinsurance business… and this is really the only place we do much in life… but that has grown very substantially ever since we took it over, particularly internationally.

And so that part, I like.

And we will have a somewhat… I think we’ll have a somewhat larger operation at Gen Re.

But we have various methods, as you know, of being in reinsurance. We do these huge bulk deals. That’s why our net revenues are down this year. We did that $10 billion deal with AIG, which was the biggest deal in history, last year. And we don’t have a repeat of it this year.

We will be in the reinsurance business five years from now, 10 years from now, 20 years from now, and 50 years from now, in my view. And we will have some unusual advantages that stem both from our capital position, our attitude toward the business, and the talent that we have.

We have an… we have a way better than average insurance business, generally. We have some real gems that nobody really knows much about.

And we have a very, very good reinsurance business that will be subject to more ups and downs than something like GEICO will be, which just moves ahead every year. But it will be an important part of Berkshire.

Charlie?

Charlie Munger:

Yeah. I would argue the part that any idiot financier can easily get into has gotten way tougher. And why wouldn’t it?

Warren Buffett:

Charlie is my substitute for my father-in-law that was…

Click here to return to the Q&A topic list. Alternatively, you can proceed to the next or go back to the previous question.

Don`t copy text!