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Berkshire Hathaway Inc. Message Board

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  • bobo21029 bobo21029 Jul 7, 1998 2:58 PM Flag

    GEICO Exposure from super cat insurance

    The Florida fire reports that I see are in the
    $300 million range. Somebody's going to have to pay.
    And the action is just beginning with Miami calling
    for a long hurricane season. Where does Gieco figure
    in all this?? Anybody out there with insurance
    experiance that can shed light??

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    • Let me tell you how I spent my holiday weekend -
      not like BrkRules in the Keys, but part of a 45,000
      evacuation from Palm Coast (Flagler county), Florida. We had
      several homes destroyed (could have been a lot worse),
      but the main damage here and in the fires up and down
      the coast is the destruction of timber. Unlike
      Hurricane Andrew which came onshore and took out hundreds
      of homes, damage to homes represents a small amount
      of the total damage.

      I believe (and just
      doubled checked) that BRK's cat insurance is for
      hurricane damage. I don't think that the 400,000 or so
      acres would be insured as it is mainly logging. The
      expenses have been in fighting the fires - and believe me,
      those dudes a doing a SUPERB job. The outpouring of
      help from across the country is unbelievable - last
      week I saw trucks from Wyoming, a dozen or so from N
      Carolina, several from S Florida... The problem in this
      area was that the fires literally erupted and there
      was NO ONE TO FIGHT THEM. The federal govt didn't get
      off their duff until Saturday to send in the BIG
      equipment and the personnel. Thats why we all had to leave
      (IMO) - they are here now and I see the big helicopters
      dumping water. The fire got as close as 2 miles from my
      house; however, it is only 35% contained and is nowhere
      near being under control. Thursday night the sky
      looked like a night launch at the Cape - a red glow
      filled the sky.

      Anyway, our house is fine - we
      evacuated by water and spent the weekend on the boat.
      Started reading Graham's Intelligent Investor, but
      couldn't focus my mind on much of anything.

      And
      here we moved up from S Florida to get away from the
      hurricanes!

      Does everyone have a DISASTER PLAN?? You never know
      when you'll need it.......

      Anyway, I don't
      think BRK is going to be paying out any big
      $$$.

      Thanks for listening,

      • 3 Replies to Another_Observer
      • Another Observer...........Thanks for the
        Eyewitness post. Hope you're right about minimal BRK
        exposure. I have no proof, but my sense of things gives me
        the feeling that the super cat industry is in for
        years of excitement. From an East Coast perspective,
        we've had lots of waterfront building since the 50's...
        expensive homes too!! There's just so many more folks that
        want to live on the water. My wife and I just took a
        month at Sunset Beach, N.C. In 1955 Hurricane Hazel
        flattened that island and it's been completely rebuilt!!
        Eventually the government and insurance companies are going
        to have to tell people that if they live in harms
        way they do so at their own risk.

      • Maybe Pat Robertson was RIGHT... Too many fags in Florida and the state BURNS...

        Greg

    • GEICO does not underwrite reinsurance
      policies.

      It is a car insurance outfit.

      It does have
      some exposure to catastrophes through its car
      insurance policies -- if their insureds have comprehensive
      coverage and their cars are destroyed by hurricanes it
      reimburses the losses.

      I would think though that
      their exposure is small.

      Berkshire Hathaway
      underwrites supercat contracts for other insurance companies
      through its another subsidiary, National
      Indemnity.

      Warren Buffett said recently that his worst case
      estimate for a loss on an event was around 600 million
      dollars. Look at his letter to shareholders. Something
      could have changed since his letter, but I would not
      expect him to do something too imprudent.

 
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