Six hours with shareholders as Buffet offers to cover flu
Insurance is a good place to be in the midst of an economic downturn, Warren Buffett told Berkshire Hathaway shareholders on Saturday, Reuters reports.
"We are lucky," said Buffett. Insurance, along with utilities, another big business for Berkshire, are sectors "relatively unaffected by the recession," he said.
"The earnings power of (Berkshire's insurance) businesses was not as good last year as normal and it won't be as good this year. But most of them will do well, and many of them will do exceptionally. Insurance gives us a lot of earnings power that we are going to increase over time."
Buffett said Berkshire's insurance businesses had a first-quarter, underwriting profit that was "a little better than last year," but the recession hurt results at many other businesses, pushing overall operating profit down about 12% from a year ago.
"The very worst case is a catastrophe" such as Hurricane Katrina or the September 11 attacks, Buffett said. He estimated that a $100bn catastrophe would cost Berkshire $3bn to $4bn in claims.
"Even then I don't think it impairs the business," Buffett said. "We have a marvelous insurance business. I wouldn't trade it for any other."
Buffett also said Berkshire would consider writing policies to insure against a potential swine flu pandemic if it got paid enough.
The Guadian reported he faced a record crowd of 35,000 shareholders and the meeting lasted six hours.
"It's been an extraordinary year," he said. "I'm not sure you'll see this again in your lifetime."
"There's always a lot of things wrong with the world," Buffett told investors. "Unfortunately, it's the only world we've got so we have to deal with it."
Losing Berkshire's blue-chip credit rating, Buffett admitted, was "disappointing", causing the firm to "lose some bragging rights around the world" in terms of the rock-solid reliability of the insurance policies it sells, The Guardian said.
