I first met Tom Gaynor, and Steve Markel, at a Berkshire annual in the early ‘90s. They became regulars—and were attentive students. As Tom said to me once, Berkshire had the kind of shareholder that Markel aspired to attract; so, they decided to buy us Sunday brunch.
I think one of Tom’s long-term objectives is to qualify, as Berkshire was able to in the mid ‘80s, to invest its insurance float in concentrated equities and minimum fixed income. Its Markel Ventures might help in that direction. But Markel has been an insurance company from the beginning, while Berkshire evolved from a waining textile business turned portfolio company. The purchase of National Indemnity enabled it to expand without being forced to report as a trust company. The combination of being an over-capitalized insurance company coupled to wholly owned companies—See’s to BNSF—was enough for its insurance commissioner to free Berkshire from the normal constraints on investing insurance ‘float’.
Katrina resulted in nearly $3 billion in losses. Berkshire had already made quarterly tax payments of $750 million in the first nine months of the year. Berkshire’s operating companies serve as a form of reinsurance. And that reinsurance is paid on the recording of the loss, not only at payment of the loss.
Thanks, Kevin, for keeping us informed. You—and Becky—confirm that Berkshire will not react to the Union Pacific deal as the investment bankers would hope.
I first met Tom Gaynor, and Steve Markel, at a Berkshire annual in the early ‘90s. They became regulars—and were attentive students. As Tom said to me once, Berkshire had the kind of shareholder that Markel aspired to attract; so, they decided to buy us Sunday brunch.
I think one of Tom’s long-term objectives is to qualify, as Berkshire was able to in the mid ‘80s, to invest its insurance float in concentrated equities and minimum fixed income. Its Markel Ventures might help in that direction. But Markel has been an insurance company from the beginning, while Berkshire evolved from a waining textile business turned portfolio company. The purchase of National Indemnity enabled it to expand without being forced to report as a trust company. The combination of being an over-capitalized insurance company coupled to wholly owned companies—See’s to BNSF—was enough for its insurance commissioner to free Berkshire from the normal constraints on investing insurance ‘float’.
Katrina resulted in nearly $3 billion in losses. Berkshire had already made quarterly tax payments of $750 million in the first nine months of the year. Berkshire’s operating companies serve as a form of reinsurance. And that reinsurance is paid on the recording of the loss, not only at payment of the loss.
Thanks, Kevin, for keeping us informed. You—and Becky—confirm that Berkshire will not react to the Union Pacific deal as the investment bankers would hope.