Berkshire News Briefs - 12/27/13

GEICO Passes Allstate to Become 2d Largest U.S. Auto Insurer (Insurance Journal)

Based on third quarter reports, GEICO Corp. has surpassed Allstate Corp. to become the nation’s second-largest private auto insurer. According to data compiled by SNL, GEICO logged $4.89 billion in direct premiums written during the third quarter of 2013, while Allstate recorded $4.65 billion in premiums. State Farm remained firmly in the number one position with $8.7 billion.

More GEICO news at the bottom of this post...

Berkshire grew E&S premiums by 27.6% in third quarter (Business Insurance)

Berkshire Hathaway Inc. grew its U.S. excess and surplus premiums by about 27.6% year over year in the third quarter, which was higher than the property/casualty insurance industry's overall 5.29% increase, according to an analysis released Tuesday by Charlottesville, Va.-based SNL Financial L.C. “Industry watchers have been keeping a close eye on Berkshire following the company's announcement in June that it was forming a new division devoted specifically to U.S. E&S business,” said SNL in its analysis. SNL noted that Berkshire ranked within the top 15 in the third quarter, “although its direct premiums written are still a long way from companies like American International Group Inc., Nationwide Mutual Insurance Co. and W. R. Berkley Corp.” Berkshire ranked 13th on SNL's list of third-quarter 2013 market share of U.S. E&S insurers, up from 15th spot in third-quarter 2012.

Fitch: E&S Market Will Feel Impact of Berkshire's Entrance in Coming Quarters (Property Casualty 360)

While Berkshire’s aggressive entrance into the excess and surplus lines space earlier this year through the hiring of top American International Group employees didn’t “significantly alter” the market through the third quarter of 2013, ratings agency Fitch says it expects pricing implications related to this expansion “to materialize in coming quarters.” [...] The report said the formation of Berkshire Hathaway Specialty Insurance in the second quarter of 2013 “adds tremendous capacity to an already overcapitalized market, which will likely limit rate hikes and lead to more intense competition in 2014.”

'Buffett's Alpha' Misses The Real Source Of Growth In The New Berkshire Hathaway (Seeking Alpha)

Like many other value investors and Buffett followers I paid passing attention to the headlines and summary articles on "Buffett's Alpha" by Andrea Frazzini, David Kabiller, and Lasse H. Pederson. The summaries were all roughly the same: Buffett achieved smashing success, trouncing the market, but he did so by a simple strategy of buying cheap, low-beta, high-quality stocks and levering his portfolio up by a 1.6 ratio. A secondary observation was that the public holdings of Berkshire Hathaway had outperformed its private holdings (companies owned outright). [...] When glancing at public articles on the "Buffett's Alpha" paper I had lazily let the public-versus-private-holdings assertion pass unexamined until a comment by X.L on my recent article "The Big Five: Which Would You Be Willing to Own If They Closed The Market for 20 Years" raised the question.

Warren Buffett's Biggest Winners (Fool)

It's been almost exactly one month since Warren Buffett's Berkshire Hathaway announced its latest stock holdings -- and The Motley Fool decided to check in on how the portfolio of the Oracle of Omaha's company is doing. Buffett has had a solid run since the end of September, and based on the roughly $92 billion that Berkshire held, the company has seen the value of its holdings grow by a little more than $4.5 billion, a return of almost 5%. That narrowly trails the S&P 500's return of 5.5% over that same time period. Of course, Buffett's investing ability isn't characterized by 55 days of returns, but Berkshire Hathaway has had a number of remarkable performers since September.

Wind Power Rivals Coal With $1 Billion Order From Buffett (Bloomberg)

The decision by Warren Buffett’s utility company to order about $1 billion of wind turbines for projects in Iowa shows how a drop in equipment costs is making renewable energy more competitive with power from fossil fuels. Turbine prices have fallen 26 percent worldwide since the first half of 2009, bringing wind power within 5.5 percent of the cost of electricity from coal, according to data compiled by Bloomberg. MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., yesterday announced an order for 1,050 megawatts of Siemens AG wind turbines in the industry’s largest order to date for land-based gear.

Berkshire’s MidAmerican Names Caudill NV Energy President (Bloomberg)

Berkshire Hathaway Inc.’s MidAmerican Energy Holdings Co. named Paul Caudill president of NV Energy after completing its purchase of the Nevada utility whose chief executive officer will step down next year. Caudill, 59, had been president of MidAmerican Solar. He'll work with NV Energy CEO Michael Yackira, who plans to retire in June from the Las Vegas-based provider of electricity and natural gas, the companies said today in a statement. NV’s solar projects include facilities near Primm, Nevada and in North Las Vegas.

20-something Buffett protégé freezes paint firm pensions (NY Post)

It’s not just the temperatures that have dipped below freezing at Benjamin Moore headquarters. The 130-year-old paint brand, struggling under the ownership of billionaire Warren Buffett, told employees at its Montvale, NJ, offices last week it has frozen their pension plans, even as it continues to fire workers, as first reported on nypost.com. The lumps of holiday coal come courtesy of Buffett’s 29-year-old financial assistant, Tracy Britt Cool, whom he installed last year as chairman of Benjamin Moore after taking the rare step of firing a former CEO.

Johns Manville Adds Commercial and Residential Mineral Wool Insulation to Product Offering (Business Wire)

Johns Manville, a Berkshire Hathaway company and leading building products manufacturer, has added commercial and residential mineral wool to its full spectrum of insulation products, allowing customers to meet an even broader range of project demands. JM mineral wool insulation offers a variety of performance benefits in both commercial and residential construction. With a high melting point in excess of 2000°F, mineral wool can help delay fire spread, create quieter buildings and homes, increase privacy between rooms and reduce heating and cooling costs by keeping structures warm in winter and cool in summer.

MiTek Announces SAPPHIRE™ Build, Software Suite for Production Home Builders (Business Wire / Vancouver Sun)

MiTek Industries, Inc. (MiTek), a Berkshire Hathaway company, and the world’s leading supplier of advanced engineered structural connector systems, software, equipment and services for the building components industry announced today the introduction of SAPPHIRE Build, a suite of business and workflow management software tools for production home builders. MiTek’s recent acquisition, Kova Solutions, LLC, provides the functional core and framework for SAPPHIRE Build, which is now an end-to-end integrated solution. [...] The introduction of SAPPHIRE Build is the integration of two MiTek solutions that are already in the market: MiTek Blackpoint™ software and Kova. Now they are integrated into a single, re-branded platform.

Warren Buffett donates $10m to Rambam Hospital (Globes)

US billionaire Warren Buffet has donated $10 million to Rambam Hospital in Haifa. The contribution was announced by his close friend Eitan Wertheimer at an event last weekend to celebrate 75 years since the hospital's establishment. Wertheimer has been a close friend of Buffett since the sale of the family's precision tool developer and manufacturer Iscar Ltd. to the American's company Berkshire Hathaway. In May 2006, Berkshire Hathaway bought 80% of Iscar for $4 billion, and in May this year it exercised an option to buy the remaining 20% for $2.05 billion.

Hot Doughboy: Pillsbury Mascot Crashes Geico Commercial (ABC News)

Move over, gecko. A new commercial for Geico stars not the insurer's famous lizard but the Pillsbury Doughboy. Huh? How can that pairing possibly make sense? [...] The TV spot, by the Martin Agency of Richmond, Va., is the most recent in Geico's "Happier Than ..." series of commercials, each of which asks "How happy are people who switch to Geico?" In this case, the answer is: "Happier than the Pillsbury Doughboy on his way to a baking convention."

The commercial is here on YouTube, with nearly 1.9 million views.