Buffett's Berkshire Hathaway Inc. of Omaha, Neb., has become one of the most powerful forces in asbestos and pollution litigation in the world. Insurers such as American Insurance Group, CNA Financial Corp. and Lloyd's of London have paid Berkshire to assume their risk for tens of billions of dollars in future asbestos and pollution claims. That money, known as "float," has proven to be a great source of investment income for Berkshire. But instead of paying people like Charles Lute, Berkshire subsidiaries are accused in lawsuits across the country of delaying or denying payments. Rather than paying victims, the suits claim, Berkshire is holding onto the cash, the float, to keep its money invested. "They wanted to hit the projected numbers in the books of business so they could maximize their return on investment," said one former claims executive under oath.
Here's the full Scripps report, including Berkshire's response.
Ford, Berkshire Hathaway subsidiary settle insurance dispute (Cleveland News 5)
(There's a 1:30 video version of the story here too, if you want a summary.)
The Ford Motor Co. announced Monday it settled a lawsuit with Berkshire Hathaway Inc. subsidiary National Indemnity Co. for $22.1 million -- $2 million more than the automaker sued for in the dispute related to unpaid claims from rollover deaths. [...] “We filed the complaint because we were experiencing no pay and slow pay,” Oostdyk said, claiming National Indemnity intentionally delayed paying Ford’s claims as part of a larger pattern of wrongful conduct. [...] In this instance, Oostdyk said, Ford wanted to send a message, and refused in negotiations to settle the claim until National Indemnity agreed to let it announce the amount of the settlement. New York asbestos attorney Joe Belluck said the scrutiny of Berkshire’s business practices leading up to the publication of the Scripps investigation “likely played a part” in the Ford settlement before a public trial.
Moving on to better news...
Buffett Makes Sweet Profit Off Mars Investment (Wall St. Cheat Sheet)
Berkshire Hathaway Chairman and CEO Warren Buffett has logged a lot of wins in the wake of the late-2000s crisis. During the crisis itself, the firm served as a white knight investor to major companies with a need for a huge amount of cash, and fast. [...] One of the companies that Berkshire lent money to was Mars Inc., which in 2008 needed to finance the $23 billion purchase of Wm. Wrigley Jr. Co. Buffett loaned Mars $4.4 billion and purchased a minority interest in Wrigley for $2.1 billion at a discount to the buyout price. [...] The Wall Street Journal reports that Berkshire is set to bank a profit of at least $680 million from the deal. Berkshire sold the notes back to Mars at about 115 percent of face value plus interest.
Buffett's $2.15 Billion Payday (Fool)
On Tuesday, Warren Buffett's Berkshire Hathaway was set to become the sixth-largest external investor in Goldman Sachs by grabbing a stake in the banking giant worth around $2.15 billion. Oh, and did I mention Buffett scored the position for free? You read that correctly. That's right. For his mammoth stake in Goldman Sachs, Buffett paid absolutely nothing.Warren Buffett protégé in trouble at Benjamin Moore (NY Post)
Tracy Britt, a handpicked favorite of Buffett who has an office down the hall to his at Berkshire’s Omaha headquarters, was tapped last year to tackle Benjamin Moore’s sliding market share and serves as the company’s chairman. Late last month, sources said, Britt led a Friday afternoon conference call with Benjamin Moore employees, surprising them with the news that CEO Bob Merritt had abruptly left the company after just 14 months on the job. [...] The bombshell exit of Merritt, a former restaurant exec tapped last year to reverse a tailspin at Benjamin Moore, is a rare embarrassment for Buffett, who had fired Merritt’s predecessor, Denis Abrams, just 15 months earlier. The reason for 61-year-old Merritt’s departure couldn’t be confirmed, but some insiders say he appears to have clashed with Britt.Berkshire Hathaway unit TTI buys Lod-based Ray-Q (Globes)
On Friday, TTI, Inc. an indirect, wholly owned subsidiary of Berkshire Hathaway, announced the acquisition of Lod-based Ray-Q Interconnect. Financial details of the deal were not disclosed. Ray-Q was founded in 1969 as a Raychem subsidiary based in Israel with offices in Turkey and India. It provides high quality electrical interconnect solutions to military, aerospace and other high-reliability product industries. TTI is a specialty distributor of passive, interconnect, electromechanical and discrete semiconductor components. [...] Ray-Q employs approximately 70 associates and counts among their customers virtually every major defense contractor.Warren Buffett's pick for Borsheims CEO took six-year break on rise to the top (Omaha World-Herald)
In fall 2004, Susan Jacques, president and chief executive of Borsheims Fine Jewelry, ran into Karen Goracke at a soccer game. Goracke had been a watch buyer at Borsheims until leaving in 1998 to tend to her growing family. “I said, 'Why don't you come back and work part time?' ” Jacques recalled. [...] Now Goracke has been chosen by Warren Buffett to be the Berkshire Hathaway-owned retailer's president and chief executive starting Dec. 31. [...] Jacques is leaving Borsheims after 31 years, including 20 years as president and CEO, to head the Gemological Institute of America, a Carlsbad, Calif.-based nonprofit organization that offers gem and jewelry education and oversees industry standards.
