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Berkshire Hathaway Inc. Message Board

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  • DeadElvisSociety DeadElvisSociety Jun 21, 1998 1:48 PM Flag

    Next Level for BRK??

    Attention fellow cult members: the conference
    call # for
    the General Re & Berkshire merger is
    1-800-839-4350.
    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.

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    • 9 advances 30 seconds,8 pauses, 7 rewinds 30
      seconds.

      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
      later.
      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
      model.
      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
      1/3
      life health 50/50 US/Global

      Buffett is willing
      to invest in people and territories GR is
      in.

      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
      liability.

      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
      benefit.

      See no downside.

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

      Q:
      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,
      LT.
      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
      deal?
      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
      it.

      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
      may
      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
      like.
      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
      call.
      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.
      Q

      • 1 Reply to gmulaw
      • Q?
        RF: conceived and evaluated totally on
        strategic values.
        WB: let's go to phone
        Q:congrats,
        fantastic deal, at 14 times cash flow, great deal
        are
        there internal synergies, current reinsurance
        treaties?
        WB: there are treaties, we buy GR business. We would
        rather reinsure ourselves. GR will benefit from
        it.
        RF: story is about demand synergies, not cost
        synergies
        Q:1put companies in perspective 2)why like
        reinsur.
        WB: GR does $6B BH $150M for CA, some big ones. We
        expect volume to fall off. GR has thousands of treaties,
        100s of clients, different business, our volume will
        fall off, theirs won't. I like reins. a lot. It is our
        kind of business. BH doesn't have the worldwide
        reputation they have. GR has the skills. I did some 20 years
        ago, and still have the scars.
        RF:in reins. for
        long time, since 1846 through Cologne Germany, under
        BH even better.
        Q: Is HK a market of plan?
        RF:
        HK is important office, full service, serve clients
        there and in surrounding areas. The economic problems
        in Asia have not had big effects on Property
        Casualty PC business. We are bullish on the region.
        WB:
        we won't let current economic business slow us down
        anywhere. See's doesn't sell much candy in July, but we
        stay inbusiness for other months. if you want to be
        there 10 years from now, the time to get there is now,
        and with the best people you can find.
        Q: adding
        $24B in investments from GR portfolio, what is mix of
        equ & bond?
        WB: $5B in common and balance in
        fixed, biggest category in municipal bonds. We will make
        changes. Whatever strategy of Nat'l Ind and BH will be the
        strategy of domestic, but Cologne will do its own thing
        for at least considerable time (GR doesn't fully own
        Cologne).
        about $80B, in fact sheet, not in my mind. We hope it
        gets bigger.
        Q: How does this effect Ajit?
        WB:
        Ajit has run SCat and others and participates with GR,
        he knows about this deal and is excited about it.
        Each of our companies go their own way, Ajit will
        continue to do his own business, in his own area, there is
        little overlap, and he is a fantastic asset to
        BH.
        Qwill this be the largest reinsur. in world?
        RF: GR
        is largest in US, 3rd in world, adding BH, won't
        materially change this as to REVENUE
        WB: as to insurance
        capital, it WILL be the largest.
        Q:congrats. 1) what %
        of BH will GR own? WB: 18%
        2)are you looking at
        American Re
        WB: we have not looked at any of them. GR
        is the one to do. We never contemplated any other.

 
BRK-A
214,000.00-745.00(-0.35%)Jul 31 4:02 PMEDT