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Berkshire Hathaway Inc. Message Board

  • bobo21029 bobo21029 Jun 21, 1998 12:47 PM Flag

    Next Level for BRK??

    Tomorrows trading promises to be keenly watched
    by those of us in the BRK Community. I would be
    interested in your views as to where the stock will close.
    I'm looking for $83,000. This train's pulling out of
    the station and I think there will be a scramble to
    get on I right or wrong? It's gonna be
    hard to sleep tonight......Tis the night before

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    • Isn't BRK sitting on a decent amount of oil futures? Does anyone know how much we are in the hole currently if BH still owns them? I would imagine this is going to be worse than US Air.

    • Great job, thanks alot!!!


    • I don't know what you mean by a hint, but I found
      this interesting too. His joking about, meant to me
      that he believes there are no concerns regarding the
      merger passing muster before the merger

      I think what WEB was implying, jokingly, is no one
      can argue Berk has market power in the reinsurance
      business (MP is thought to require around 80% market share
      in a relevant market.) I also heard him to mean he
      loves strong economics, read monopoly/market power, but
      implies they won't have that type of power as to draw
      attn from justice (eg Msft) or the ftc (eg.

      They said the regulatory processes which would take
      time were related to the states of incorporation, CT
      and DE and also the states in which GR is licensed,
      potentially all 50.


    • I am sure I have made some mistakes in the notes.
      So, please forgive me for any oversights,
      unintentional mistatements, or misquotes. I wanted my own
      transcript/notes and I thought I might save others the 1.5 hours
      on the phone. Anyone else who heard the conference
      call, please feel free to elaborate on my summary.
      Lawyers...and disclaimers, you can't have one without the

    • RF: we are licensed in US and Cologne. CT and DE
      are most immediately requ'd, we feel approvals should
      come smoothly, from financial integrity of acquirer.
      We see no antitrust (Hart-Scott Rhodino) bumps in
      WB: I wish we had an antitrust
      RF: should be smooth sailing. It takes time, go
      through the process in each state.

      Is this a HINT?
      re; MSFT, INTC


    • Q:
      WB: never talk about father on mother's
      Q:this is BH's largest acquisition, what is #2? You said
      you've seen lots of business pitches hit the outside
      corner of the plate.
      WB: this is what Ted Williams
      would call in his "happy zone". Geico is much smaller,
      premium volume of $4B.
      Geico was $2.2B for half of
      Geico. Coke is now worth billions, but we didn't buy it
      at that value of course.
      Q: at Omaha, you said
      with low interest rates and strong returns on equity,
      stocks are not overvalued
      WB: GR provides good value
      at the current price if the synergies materialize,
      and I think the chances of this are great. I am
      familiar with this business. There won't be any surprise
      factors that I believe.We should thus get our money's
      Q: any other insurers with similar features?
      no, we are looking at no others. Some don't have much
      of a future. There is a wide variation of what they
      bring to the game. We don't want a so-so company for
      what looks like a reasonable price. This is the only
      one on our dance card.
      Q: State farm recently
      announced a reinsurance transaction. do you see other
      latent demand?
      RF: yes on the capacity side of the
      business, there appears to be some.
      WB: needs for
      insurance grow in tandem, as a leverage function of
      economic growth. As economies grow, and insurance is
      needed, reinsurance is needed. Look to new and best
      growth economies for opptys.
      RF: in growing markets
      opptys are in the life reinsurance companies in
      developing countries
      Q:WB, bank execs say if they could
      underwrite insurance, they would get the reinsurance
      business. Do you see those walls breaking down anytime
      soon? would comm. banks come in if permitted?
      RF: I
      don't see banks wanting the volatility common in this
      industry. I don't buy it.
      WB: I don't worry about banks
      getting into PC , I worry more of primarys USAA,
      progressive, and others, much tougher compeititors than banks,
      and feel the same about reinsurance


      WB: I thank you all for coming.

      Sorry for
      typos, mistakes, etc. As you can see, I don't do this
      for a living. ;)

    • Attention fellow cult members: the conference
      call # for
      the General Re & Berkshire merger is
      The duration of the call is 1 1/2 hr. So grab a few
      mushrooms and your lotus glasses,and then drop into the
      steam of Oz.

      • 1 Reply to DeadElvisSociety
      • 9 advances 30 seconds,8 pauses, 7 rewinds 30

        Warren started right out with Qs and As.

        WB: we
        want to get the shareholder mtgs done and soon we'll
        be operating as one company.

        Q how long deal
        in works?
        WB: Ron is better on chronology. Spoke
        before Salomon Travelers, July September 1997 had
        spoken, but didn't look good at the time,...started again
        known each other for decades, great relationship, know
        each other well.
        Couldn't be better deal than it is
        today for both.
        Brings strengths of 2 orgs together
        that has to

        Q What happened?
        WB:1 year ago
        it couldn't, 1mo ago, I felt it could be done
        without hurting BRK SH's

        Q: synergies?
        RF: we
        feel this will create a superior business
        synergies:willingness of BH with enormous size, underwrite, stand
        behind General RE, facing demand for larger and larger
        underwriting from our clients.
        Capital efficiencies from
        having a reins. co. owned by BRK.
        Global company all
        over world
        1/2 is PC in US
        1/3 PC Global
        life health 50/50 US/Global

        Buffett is willing
        to invest in people and territories GR is

        BH generates big capital, Gen Re is permitted to
        invest in deals from this stream.

        WB has long
        followed reinsurance business, the kind of owner we want,
        takes LT view, which suits reins. business. Takes on LT

        WB: Both companies will write significantly more
        business, and retain it . Abundance of capital that BH
        brings to party permits doing anything we want, unusual
        in insurance business. Flexibility vs. strictures of
        capital common in insurance industry is great

        See no downside.

        Terrific mgmt at genre, I
        will contribute by getting out of the way.

        Strategy in Asian
        RF:We are in offices in Singapore,
        HK, Beijing, New Zealand, Australia. Strategy is put
        more people on ground.
        We can invest more,
        Reins. may require months and years to make money, now
        have oppty to expand this. In Japan, we haven't had a
        good presence.

        WB: re global, sooner rather
        than later, more rather than less.

        Q: WB's role
        in Gen Re?
        2 jobs
        1)allocate capital 2)get
        people motivated to jump out of bed.
        We will add $24B
        to investments, 20% to shares outstanding, STILL 12
        people in Omaha. All operating decisions will be made as
        they have been. Investments of domestic operation will
        be from Omaha.
        Q: advantages of stock v. cash
        WB: create insurance enterprise with more policy
        holder surplus than any in world and largest GAAP
        networth of any company in US. Using stock, not a dime of
        equity leaves the combined enterprises, big advantage to
        insurance companies.
        RF: elaborating, combined company
        has largest networth, in world, Royal Dutch
        (something to shoot for). We were very eager to have a STOCK
        deal. BofDof Gen Re almost required

        Q:1specific as to business you had to turn down before, 2
        what old exchange ratio?
        WB: 2) no ratio last year,
        couldn't make a deal at that time.first numbers were early
        1)regarding retention, gen re distribution system sees
        business, a first choice among many in world. would come to
        national indemnity, BH and ask us if we wanted some of it.
        Now they can take it all.
        BF: we didn't turn down
        as much as not be able to take as much as we'd
        WB: State farm follows same policy. BH if we want to
        do it, we will write it all. Now GR can see even
        more of this, big difference over time.
        Q: is use
        of stock signal of peak of your stock?
        WB:we have
        used stock a lot...
        We rather use cash, but
        normally sellers won't let us. It's not a market
        Q: any conflicts w/ AIG
        WB: no conflict, let's
        not talk of my portfolio.
        Q: any changes in
        employment levels?
        RF: no plans yet. we are wholesale
        financial business.w
        WB: quality over quantity is
        important in this business.

196,720.00-1,841.00(-0.93%)Oct 6 4:01 PMEDT