Buffett Bets on Business Insurance ‘Big Time’
“We would like to get into the commercial-insurance business very big time,” Buffett, 82, said yesterday in an interview with Bloomberg Television’s Betty Liu, before the company’s annual meeting this weekend in Omaha, Nebraska. “We hired them because they’re very good at the commercial insurance business.”
Peter Eastwood, chief executive officer of AIG’s property-casualty operation in the Americas, was among executives joining Berkshire, along with other managers with commercial-insurance experience. AIG named executives this week to fill some posts after the insurer’s shares dropped 3.3 percent on April 26, as the departures were reported.
Berkshire has units that provide auto coverage and reinsurance and hasn’t played a big role in providing business policies, Buffett said. Buffett, who’s also Berkshire’s CEO, said he didn’t poach the executives from New York-based AIG.
“They came to us, they’ve called us,” Buffett said. “In fact some of them have called for a long time, so we did not initiate any of that.”
Robert Schimek was promoted by AIG to lead the Americas property-casualty unit, the company said in an April 29 statement. Alexander Baugh took over the global casualty business, replacing David Fields, who left with Eastwood.
AIG has been scaling back from some capital-intensive coverage, as CEO Robert Benmosche seeks to boost profits after repaying a U.S. bailout. AIG agreed to pay Omaha-based Berkshire $1.65 billion in 2011 to assume risks tied to asbestos policies, in a deal that gave Buffett funds to invest.
AIG has “a strong bench of seasoned property-casualty experts with deep product and global expertise,” Peter Hancock, CEO of AIG’s property-casualty business, said in the statement. The insurer “will continue to win on the merits in every market where we choose to compete.”
The executive defections prompted the first question on a conference call AIG held today to discuss first-quarter results. Benmosche responded that AIG retained 94 percent of the top performers among the insurer’s senior management last year.
“I know you want to focus on four people in the property-casualty business,” Benmosche said. “We’re going to lose people to competitors from time to time.”
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