Berkshire Hathaway 2009 Annual Report Download - page 56

Notes to Consolidated Financial Statements (Continued)
(21) Contingencies and Commitments (Continued)
International Group, Inc. (“AIG”) initially effected in 2000 (the “AIG Transaction”), and General Re has paid a monetary
amount equal to $19.5 million to the United States. The Non-Prosecution Agreement provides that General Re’s agreement to
pay $60.5 million, exclusive of attorneys’ fees and expenses, through the pending civil class action settlement with AIG
shareholders more fully described below, when combined with the amounts to be paid by AIG and the other defendants, satisfies
restitution with regard to the AIG Transaction. General Re also has agreed to continue to cooperate fully with the DOJ and the
SEC in any ongoing investigations of individuals who may have been involved with the AIG Transaction. The Non-Prosecution
Agreement acknowledges that General Re has instituted a number of internal corporate remediation measures applicable to itself
and its subsidiaries and, under the terms of the Non-Prosecution Agreement, General Re has agreed to maintain such
remediation measures at least during the three-year term thereof. General Re has also agreed to toll the statute of limitations for
the term of the Non-Prosecution Agreement on crimes related to the AIG Transaction, and that neither it nor its directors,
executive officers or representatives will make, cause others to make or acknowledge as true any statements inconsistent with
the agreed statement of facts in the Non-Prosecution Agreement. The Non-Prosecution Agreement provides that if the DOJ
determines that General Re or any of its employees, officers or directors have failed to comply with or knowingly violated any
of the provisions of the Non-Prosecution Agreement, have provided deliberately false, incomplete or misleading information
thereunder, or have violated any provision of the federal securities laws during the term of the Non-Prosecution Agreement,
General Re shall thereafter be subject to prosecution for crimes committed by and through its employees related to the AIG
Transaction. The Non-Prosecution Agreement is also applicable to, and binding upon, certain subsidiaries of General Re.
In connection with the SEC settlement, which concerns the AIG transaction, as well as a separate series of interrelated
transactions with Prudential Financial, Inc. during the period 1997 through 2002, General Re is permanently enjoined from
aiding and abetting any violations of the books and records and internal controls provisions of Sections 13(b)(2)(A) and
13(b)(2)(B) of the Securities Act of 1934, as amended, and has paid $12.2 million in disgorgement and prejudgment interest (the
“SEC Amount”) to the SEC. General Re has also agreed not to take any action or make or permit any public statement denying
any allegations in the SEC’s complaint or creating the impression that the complaint is without factual basis, although this
obligation does not affect General Re’s testimonial obligations or right to take legal or factual positions in litigation or other
legal proceedings in which the SEC is not a party. If General Re breaches this agreement, the SEC may petition to vacate the
General Re judgment and restore its action against General Re. On February 8, 2010, the judge in this matter issued an order
permitting Liberty Mutual Insurance Company, which acquired Prudential Financial and claims to be entitled to the SEC
Amount as a result of its own alleged damages, to file a motion to intervene in this matter and requiring the SEC to hold the
SEC Amount separate pending a resolution. If the SEC is required to turn over the SEC Amount, or a portion thereof, to Liberty
Mutual, General Re could be subject to additional claims for relief from the SEC.
The Office of the Director of Corporate Enforcement in Ireland is conducting a preliminary evaluation in relation to Cologne
Reinsurance Company (Dublin) Limited (“CRD”), a wholly owned subsidiary of General Re, concerning, in particular, transactions
between CRD and AIG. CRD is cooperating fully with this preliminary evaluation.
Except for the ongoing investigation by the Office of the Director of Corporate Enforcement in Ireland, we are not aware of
any remaining governmental investigations of any of our subsidiaries involving non-traditional products or related transactions.
b) Civil Litigation
Litigation Related to ROA
General Reinsurance Corporation (“General Reinsurance”), a subsidiary of General Re, and several current and former
employees, along with numerous other defendants, have been sued in thirteen federal lawsuits involving Reciprocal of America
(“ROA”) and related entities. ROA was a Virginia-based reciprocal insurer and reinsurer of physician, hospital and lawyer
professional liability risks. Nine are putative class actions initiated by doctors, hospitals and lawyers that purchased insurance
through ROA or certain of its Tennessee-based risk retention groups. These complaints seek compensatory, treble, and punitive
damages in an amount plaintiffs contend is just and reasonable.
General Reinsurance is also subject to actions brought by the Virginia Commissioner of Insurance, as Deputy Receiver of
ROA, the Tennessee Commissioner of Insurance, as Receiver for purposes of liquidating three Tennessee risk retention groups, a
state lawsuit filed by a Missouri-based hospital group that was removed to federal court and another state lawsuit filed by an
Alabama doctor that was also removed to federal court. The first of these actions was filed in March 2003 and additional actions
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