real-time news and commentary for investors
Friday, Sep 13
"War" breaks out between AIG and Berkshire
- It's a "war" says one person close to the issue as Berkshire Hathaway (BRK.A, BRK.B) pushes into the commercial insurance market dominated by AIG. The initial bomb was dropped with Berkshire's April poaching of four senior AIG executives to start a new commercial insurance unit.
- Berkshire has since hired about 15 more from AIG, but agreed not to hire any more for a year, and the companies have also agreed not to disparage one another.
- Buffett has made no secret of his ambitions: "I think you will see us become a very significant factor world-wide in the commercial insurance business. It could be a business that reaches into the billions ... We've got the right people. We've got capital like no one else has."
- AIG publicly brushed off the initial poachings, but privately seethed, with some executives wanting to sue. Ultimately, the two companies reached an agreement outside of the courts. AIG is also taking its reinsurance business elsewhere.
- Marsh & McLennan (MMC) U.S. insurance chief David Bidmead says the new Berkshire unit has been winning plenty of business, but doesn't see it as "uniquely troublesome to AIG."