Berkshire’s Eastwood Builds Staff, Takes On AIG
Peter Eastwood, who left American International Group Inc. (AIG) with three other executives in April to start a new insurer at Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), said he’s finding it easy to attract staff.
Berkshire Hathaway Specialty Insurance had 40 employees at the end of last week, a month and a half after it was founded, Eastwood said today in an interview. It now has people in Boston, New York, Chicago, Los Angeles and Atlanta after bringing on staff from insurers including AIG and CNA Financial Corp. (CNA), he said.
“Talent attracts talent,” Eastwood said on the sidelines of a conference hosted by Advisen in New York. “We’ll absolutely be hiring more.”
Buffett, 82, has said he’s seeking to get into commercial insurance “big time.” The new operation complements Omaha, Nebraska-based Berkshire units selling reinsurance and auto coverage and can give the billionaire investor more funds to buy stocks and fund takeovers.
Berkshire’s chairman and chief executive officer has used premiums from insurance operations over four decades to build a $280 billion holding company that hauls freight, generates electricity, manufactures chemicals and sells chocolate.
Eastwood said his unit will start by focusing primarily on excess-and-surplus lines, or coverage that isn’t available from insurers licensed by the state. The business has already written a “good amount” of property risk and is planning to provide coverage particularly in catastrophe-prone areas, he said. Berkshire Hathaway Specialty is also offering some casualty products and looking to sell professional and management liability insurance, he said.
Eastwood spent more than two decades at New York-based AIG and was CEO of the company’s property-casualty operation in the Americas. He’s president of the Berkshire unit he started with former AIG executives David Bresnahan, David Fields and Sanjay Godhwani.
The business is overseen by Buffett’s reinsurance lieutenant Ajit Jain. Berkshire’s reputation for integrity, financial-strength ratings and a “tremendous balance sheet” will help the new company compete against larger rivals including AIG, Eastwood said.
AIG had about 15,000 people in its U.S. property-casualty unit at the end of 2012, selling products from directors-and-officers’ liability policies to commercial property coverage. Berkshire’s largest insurance unit by employees is auto insurer, Geico, which had more than 27,000 employees at the end of last year. Berkshire Hathaway Reinsurance Group had about 700 people, according to the company’s annual report.
Under Jain, Berkshire has taken on risks that others shunned and often charged a premium for the service. That won’t change, Eastwood said. In addition to that business, his unit will try to put some of Berkshire’s capital to use “in a more permanent, long-term, focused way,” he said.
“Everybody in this audience who participates in the business should continue to think about Berkshire Hathaway being that market participant that you’re used to,” Eastwood said during a panel discussion at the conference.
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