Arrangement will ‘end in tears’, says Lancashire’s Richard Brindle
A deal between Warren Buffett’s multinational conglomerate Berkshire Hathaway and Aon has been described as ‘foolish’ by Lancashire founder and chief executive Richard Brindle, the Financial Times reports.
The arrangement, under which Aon has begun to automatically allocate a chunk of all business it places at Lloyd’s to Berkshire Hathaway, has already drawn criticism from the market’s officials, with Lloyd’s finance director Luke Savage warning that the deal exploits the London market and risks working against the interests of policyholders.
The deal involves Aon allocating $7.50 of every $100 worth of premiums it places at Lloyd’s to Berkshire Hathaway.
Brindle has warned that it is likely to “end in tears” and could result in risks to Berkshire Hathaway.
“They’re smart guys, Berkshire,” Brindle is quoted as saying. “A lot of us were scratching our heads asking why on earth they had done that.
“You’ve got to be able to select risks in our business. I’ve been in this business a long time and I’ve never known a full-follow facility like that to work.”
He added: “I’m not a Lloyd’s insider, but I suspect there’s been a lot of talk behind the scenes, and the kibosh has been put on any further such deals.”
Brindle was speaking as Lancashire reported a combined operating ratio for H1 of 58.8%.
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