Berkshire News Briefs - 6/14/13

Berkshire Hathaway Specialty Insurer Open for Business (Insurance Networking)

Berkshire Hathaway announced today that Berkshire Hathaway Specialty Insurance, its recently formed commercial P&C insurance group, has commenced operations, underwriting property, casualty, professional and executive liability insurance and programs for customers in the United States. [...] The new Berkshire venture is focused primarily on U.S. excess and surplus lines insurance, according to the insurer, due to the growing importance of this market segment in providing tailored solutions to customers.

Warren Buffett Embraces an Old Love (Fool)

It didn't take long after Warren Buffett's Berkshire Hathaway welcomed four former AIG executives into the fold that it introduced a new, specialty insurance arm to the world. Based in Boston, Mass., the new entity will sell commercial insurance products encompassing property & casualty, as well as professional liability insurance. [...]

Peter Eastwood, president of the new insurance arm, has hired 40 people in just six weeks, with staff housed not only in Boston, but also New York, Los Angeles, Chicago, and Atlanta. Some of those employees include former workers at both AIG and CNA Financial. Eastwood says the new company will focus first on areas of coverage that current providers aren't supplying, adding that much work has been done in writing property and casualty policies, and that the insurer will be wading into high-risk areas, as well.

Eastwood: Despite New Market Dynamics, More 'Float' for Buffett is Possible (Property Casualty 360)

Peter Eastwood, president of Berkshire Hathaway Specialty Insurance, says the influx of alternative capital in the form of catastrophe bonds and sidecars, as examples, has a “market cycle-dampening effect,” and he doesn’t expect the types of dips and spikes in rates associated with prior market cycles. [...]

Eastwood is part of the new capacity into the marketplace, having left AIG with executives David Bresnahan, Sanjay Godhwani and David Fields to join Berkshire. He says it was Godhwani who “convinced” Buffett’s insurance lieutenant, Ajit Jain, that despite the above dynamic, the executives could lead an operation to take advantage of Berkshire’s “tremendous balance sheet” in a more “permanent, long-term-focused way”—providing underwriting returns, and investment returns on what Buffett terms “float”—the pool of premiums held before paying claims.

Berkshire Disclose More Details On Insurance Losses After SEC Pressure (ValueWalk)

Warren Buffet’s Berkshire Hathaway Inc. said in its letter to the Securities and Exchange Commission that the insurance major agree to provide disclosures in future filings of the significant catastrophe losses for their insurance group as a whole. The company would also provide such disclosures for each of its underwriting units to the extent that such losses are significant. [...] Considering the magnitude of catastrophe losses to Berkshire Hathaway Inc.’s underwriting results, the Securities and Exchange Commission asked the company to provide additional information on the amount it spends on disaster claims.

A Rising Star Emerges at Berkshire (WSJ)

When Tracy Britt arrived in Omaha, Neb., in 2009 to meet with Warren Buffett, she brought a Harvard M.B.A., a glittering resume and a boatload of ambition. But she also brought the famed investor a gift to highlight their shared Midwestern roots: a bushel of corn and a batch of tomatoes. [...] The seed Ms. Britt planted that day yielded quick results: a job for Ms. Britt as Mr. Buffett's financial assistant at Berkshire Hathaway Inc. Almost four years later, it has blossomed further, with Ms. Britt emerging as one of Mr. Buffett's top lieutenants and even serving as chairman of four companies within his $284 billion conglomerate.

Charlie Munger's 18 Biases That Cause You to Fool Yourself and Make Bad Decisions (Fool)

Almost 20 years ago, Berkshire Hathaway vice-chairman Charlie Munger gave a talk called "The psychology of human misjudgment" at Harvard. He's given dozens of talks since, but I don't think any match its wisdom and usefulness. [...] For the impatient, the talk discusses about 18 separate biases that cause people to fool themselves make bad decisions. I've summarized them here, along with a few comments from Munger.

Ex-billionaire Charlie Munger on recent donations: 'I won't need it where I'm going' (Omaha World-Herald)

Charlie Munger has taken himself out of billionaire status. “I'm deliberately taking my net worth down,” the vice chairman of Berkshire Hathaway Inc. told The World-Herald. “If it's not below a billion, it soon will be.” Actually, his two latest donations, a total of 200 shares of Class A Berkshire stock worth $34.6 million, leave him with 5,674 shares worth about $980 million. [...] Last month, the Henry E. Huntington Library and Art Gallery in San Marino, Calif., received $32.7 million worth of his stock to help fund its new education and visitors center. Munger said the Huntington's goal is to build the best museum store in the world. He has been a supporter for several years and values the library's humanities collection and research. He also gave $1.9 million of his Berkshire stock to the Marlborough School, a college preparatory school for girls in Los Angeles.

Three Things I’ve Learned From Warren Buffett (LinkedIn)

The first thing people learn from Warren, of course, is how to think about investing. That’s natural, given his amazing track record. Unfortunately, that’s where a lot of people stop, and they miss out on the fact that he has a whole framework for business thinking that is very powerful. For example, he talks about looking for a company’s moat—its competitive advantage—and whether the moat is shrinking or growing. He says a shareholder has to act as if he owns the entire business, looking at the future profit stream and deciding what it’s worth. And you have to be willing to ignore the market rather than follow it, because you want to take advantage of the market’s mistakes—the companies that have been underpriced.