Berkshire Hathaway 1998 Annual Report Download - page 67

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BERKSHIRE HATHAWAY INC.
INSURANCE GROUP
Berkshire's insurance businesses are comprised of four operating groups of
subsidiaries. GEICO Corporation ("GEICO"), currently the sixth largest auto
insurer in the U.S., was merged with another Berkshire subsidiary at the
beginning of 1996. Prior to that date, Berkshire subsidiaries owned approximately
51% of the then outstanding capital stock of GEICO. GEICO, through its
subsidiaries, is a multiple line property and casualty insurer the principal business
of which is writing private passenger automobile insurance. GEICO's voluntary
auto policy count grew 21% during the twelve months ended December 31, 1998.
At the same time, outstanding underwriting results continued to be generated.
The Berkshire Hathaway Reinsurance Division provides treaty and limited
facultative reinsurance to other property/casualty insurers and reinsurers.
Berkshire is one of the world's leading providers of catastrophe excess of loss
reinsurance. Berkshire's unparalled capital strength has enabled it to offer dollar
coverages of a magnitude far in excess of its competitors.
Berkshire's third group of businesses underwrite miscellaneous forms of direct
insurance. National Indemnity Company and other affiliated entities underwrite
multiple lines of traditional insurance for primarily commercial accounts. The
"Homestate Group" companies underwrite various commercial coverages for risks
in an increasing number of selected states. Cypress Insurance Company provides
workers' compensation insurance to employers in California and other states.
Central States Indemnity Company issues credit insurance distributed through
credit card issuers nationwide and Kansas Bankers Surety Company is an insurer
for primarily small and medium sized banks located in the midwest.
On December 21, 1998, Berkshire completed its acquisition of General Re
Corporation. General Re is a holding company for global reinsurance and related
risk management operations. General Re, through its domestic subsidiaries,
General Reinsurance Corporation and National Reinsurance Corporation, is one
of the largest professional property/casualty reinsurance group domiciled in the
United States. General Re also owns a controlling interest in Cologne Re, a major
international reinsurer.
Berkshire Hathaway’s insurance businesses maintains capital strength a t
unparalleled high levels. Statutory surplus as regards policyholders of these
businesses increased to about $45 billion at December 31, 1998.
Combined financial statements of the Insurance Group — unaudited and not
fully adjusted to conform to Generally Accepted Accounting Principles — are
presented on the following page. These combined financial statements include
the assets and liabilities of General Re’s insurance operations as of December 31,
1998 but exclude the operating results of General Re from 1998's Statement of
Earnings.