Berkshire Hathaway Affirms Triple-'A' Financial Strength Ratings for Insurance Group

Strategic Insights -

Standard & Poor's, a renowned credit rating agency, has reaffirmed the triple-'A' financial strength ratings for the members of the Berkshire Hathaway Insurance Group, following the company's decision to acquire General Reinsurance Corp. (Gen Re) for $22 billion. This significant acquisition creates the world's largest reinsurance group in terms of capital, with nearly $40 billion in GAAP capital and $11.4 billion in net premiums written as of Dec. 31, 1997. The combination of Berkshire Hathaway and Gen Re is expected to result in greater risk retention by Gen Re and a more aggressive investment policy.

Key Takeaways:

  • Standard & Poor's affirmed the triple-'A' financial strength ratings for the members of the Berkshire Hathaway Insurance Group, including Berkshire Hathaway Inc., Gen Re, and Cologne Reinsurance Co.
  • The acquisition of Gen Re by Berkshire Hathaway is valued at $22 billion, significantly larger than historical standards would indicate for the company.
  • The combined company has nearly $40 billion in GAAP capital and $11.4 billion in net premiums written as of Dec. 31, 1997.
  • The acquisition creates the world's largest reinsurance group in terms of capital and the second largest in terms of net premiums written.
  • Gen Re and National Indemnity will continue to operate on a parallel basis within the Berkshire Family.
  • Going forward, Standard & Poor's expects National Indemnity to continue to be opportunistic while Gen Re uses its strong production capabilities and brand name to aggressively expand overseas.
  • GRFP, a subsidiary of Gen Re established in 1990, will also benefit from the increased capital base and financial flexibility this acquisition will provide.

Statistics:

  • The acquisition of Gen Re is valued at $22 billion.
  • The combined company has nearly $40 billion in GAAP capital.
  • The company has $11.4 billion in net premiums written as of Dec. 31, 1997.
  • Gen Re has a strong production capabilities and brand name, which will be used to aggressively expand overseas.
  • GRFP, a subsidiary of Gen Re, was established in 1990.

Sources:

  • Standard & Poor's Rating Services, Business Wire, June 23, 1998
  • Vandana Sharma, (1) 212-208-8924
  • Donald S. Watson, (1) 212-208-8446
  • Patricia E. McWeeney, (1) 212-208-1981
  • http://www.ratings.standardpoor.com