Berkshire May Evade Systemically Important Tag

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), owner of the biggest U.S.-based reinsurer, may be spared designation as a systemically important financial institution, said Jay Gelb, an analyst at Barclays Plc.

Berkshire’s “superior capital position and liquidity profile” may convince U.S. regulators they don’t need to apply the heightened supervision that comes with SIFI classification, Gelb said today in a research report.

“Berkshire should ultimately be deemed exempt from SIFI oversight because it does not pose a threat to U.S. financial stability,” said Gelb. His rating of Berkshire is the equivalent of buy.

U.S. insurers and reinsurers, which are overseen by the individual states, are bracing for tighter federal scrutiny as policy makers and regulators seek to prevent a repeat of the 2008 financial crisis. The SIFI designation may be applied to MetLife Inc. (MET), the biggest U.S. life insurer, No. 2 Prudential Financial Inc. (PRU) and American International Group Inc. (AIG), Gelb said.

“For MET and PRU, we anticipate a SIFI designation would not have a meaningful impact on earning power,” Gelb said. “But we are now less confident as to whether these companies will be restrained on share buybacks.”

Photographer: Prashanth Vishwanathan/Bloomberg

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. Close

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc.

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Photographer: Prashanth Vishwanathan/Bloomberg

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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