Author Topic: Buffett/Berkshire - general news  (Read 670644 times)

gfp

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Re: Buffett/Berkshire - general news
« Reply #1720 on: July 19, 2020, 04:33:23 AM »
I don't have more information than this on Ajit's first federal lawsuit testing Berkshire's virus exclusions in federal court - but Insurance Insider's Sunday Recap had this blurb so somebody may be able to find the case in PA federal court.  I don't know what district or who is suing.

"Turning to the legal disputes over claims arising from the Covid-19 outbreak, Berkshire Hathaway subsidiary National Fire & Marine Insurance Company has stressed to the judge in a Pennsylvania-based business interruption case the importance of his decision as it may be the first to address the enforcement of a virus exclusion for Covid-19 in federal court."


Cigarbutt

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Re: Buffett/Berkshire - general news
« Reply #1721 on: July 19, 2020, 07:11:34 AM »
I don't have more information than this on Ajit's first federal lawsuit testing Berkshire's virus exclusions in federal court - but Insurance Insider's Sunday Recap had this blurb so somebody may be able to find the case in PA federal court.  I don't know what district or who is suing.

"Turning to the legal disputes over claims arising from the Covid-19 outbreak, Berkshire Hathaway subsidiary National Fire & Marine Insurance Company has stressed to the judge in a Pennsylvania-based business interruption case the importance of his decision as it may be the first to address the enforcement of a virus exclusion for Covid-19 in federal court."
https://www.law360.com/articles/1291693/attachments/1
The legal strategy here seems to be based on a two-step process: the virus exclusion clause and then the business interruption from physical damage does not apply aspect.
The case they refer to which arose from a State Circuit Court:
https://www.natlawreview.com/article/first-covid-19-business-interruption-decision-sides-favor-insurers
This is very recent and quite relevant. The judgment, primarily, uses a federal law lens (contracts) and concludes that physical damage has not occurred. The exclusion issue seems to be peripheral.
Edit: In a parallel fashion (turning every stone strategy), they are also trying to suggest that the case, if relevant, should be handled elsewhere.
« Last Edit: July 19, 2020, 07:13:18 AM by Cigarbutt »

gfp

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Re: Buffett/Berkshire - general news
« Reply #1722 on: July 19, 2020, 07:59:18 AM »
Thanks for tracking that down.  It is no wonder that Warren was so confident that his reserving was still accurate and conservative when speaking at the annual meeting.  Warren and Ajit (and Gates) have been thinking about this possibility for many years and made sure they were not covering that risk without being separately compensated for it.  It is likely that even the insurers without the virus exclusions will come out OK on the 'no physical damage to property' bit, but Berkshire's subsidiaries seem to have a belt and suspenders situation built into their contracts.

I would expect event cancellation type policies to pay out for the most part.  And workers compensation could get tricky as people are asked to return to work and feel their employer has not done enough to make it safe for employees.
« Last Edit: July 19, 2020, 08:01:05 AM by gfp »

Cigarbutt

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Re: Buffett/Berkshire - general news
« Reply #1723 on: July 19, 2020, 10:55:28 AM »
^Event cancellation insurance is indeed more straightforward and may be a somewhat profitable line of business going forward. Return to work guidelines are likely to come from the various states' levels and this will come with some uncertainty and an evolving agenda.

For the BI insurance, the present legal landscape looks relatively secure but there's the residual legislative risk. Various states have introduced different types of bills which would tend to shift the burden of proof in favor of claimants. The most aggressive form of this phenomenon seems to be coming from California with the use of the "rebuttable presumption" doctrine. For the workers compensation lines in California, the aggressive nature of this legislation is tempered by administrative criteria with the end result that it's a satisfactory compromise in that specific line of business. However (IMO), the introduction of the rebuttable presumption for business interruption insurance (the insurer would sort of need to prove that the virus was not present on premises (as a "contaminant" that triggered) at the time of the public authority announcement of forced closures) would make it much easier for claimants to "win" in lower courts. Still, at some higher levels, it would be established that this new legislation caused unconstitutional impairment of contracts. So, in the end, not much in terms of actual insurance costs but the legal bill will go up.
https://www.natlawreview.com/article/it-s-covid-19-pandemic-it-s-everywhere-new-cal-bill-to-make-insurers-prove-otherwise

spartansaver

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Re: Buffett/Berkshire - general news
« Reply #1724 on: July 19, 2020, 05:28:16 PM »
FT has a good article on the Dominion deal / Berkshire / leveraged buyers, etc.  Plus I hadn't seen that Brookfield had paid $2B for a 25% stake in the same LNG project Berkshire will now run

https://www.ft.com/content/aa05c8fb-7daf-46f1-bfff-fce58cf5c77f

Thanks, couldn't get past the paywall but this SA page provided insights in the comments section.

https://seekingalpha.com/news/3507213-brookfield-to-take-25-stake-in-dominions-cove-point-in-2b-deal

I would love to be a fly on the wall in the meetings where Brookfield determines their fair value marks. Between this, the overpriced Railroad they bought, the  GCP shopping malls, the Forest REIT projects etc. The mental gymnastics will sure make the flys head spin. It would probably kamikaze into cow poop to feel better afterwards.

I started wondering today if any of these public private equity firms are good short/put option candidates. Some are levered at the parent level, and generate are likely coming from highly indebted investments. If investments start turning sour, fees could dry up.

Spekulatius

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Re: Buffett/Berkshire - general news
« Reply #1725 on: July 20, 2020, 04:25:04 PM »
FT has a good article on the Dominion deal / Berkshire / leveraged buyers, etc.  Plus I hadn't seen that Brookfield had paid $2B for a 25% stake in the same LNG project Berkshire will now run

https://www.ft.com/content/aa05c8fb-7daf-46f1-bfff-fce58cf5c77f

Thanks, couldn't get past the paywall but this SA page provided insights in the comments section.

https://seekingalpha.com/news/3507213-brookfield-to-take-25-stake-in-dominions-cove-point-in-2b-deal

I would love to be a fly on the wall in the meetings where Brookfield determines their fair value marks. Between this, the overpriced Railroad they bought, the  GCP shopping malls, the Forest REIT projects etc. The mental gymnastics will sure make the flys head spin. It would probably kamikaze into cow poop to feel better afterwards.

I started wondering today if any of these public private equity firms are good short/put option candidates. Some are levered at the parent level, and generate are likely coming from highly indebted investments. If investments start turning sour, fees could dry up.

Without deeper insight I would tend to own the parent and short the stepchildren. The reason is simple - the debt is with the subs  and BAM will dilute theit equity if they have to and even benefit at this point if they can.
Life is too short for cheap beer and wine.

gfp

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« Last Edit: July 21, 2020, 08:46:09 AM by gfp »

ValueMaven

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Re: Buffett/Berkshire - general news
« Reply #1727 on: July 23, 2020, 07:12:05 AM »
I thought Berkshire cant own more then 10% of a bank - without Berkshire being classified as a bank holding company from the FED.  News out this morning that Berkshire boosted its stake in BofA to over 11%.  Thoughts??

gfp

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Re: Buffett/Berkshire - general news
« Reply #1728 on: July 23, 2020, 07:16:29 AM »
Berkshire has been over 10% on BAC for a while now.  These buys put them at 11.3%.  They have been given permission by the Fed.  It is possible that later this year they will be given permission to go as high as 25% under certain conditions.  The decision to further loosen bank holdings company rules was delayed to the fall or winter sometime.  May be further delayed.

Remember when Buffett buying $800 million worth of stock in the open market used to get reported on by the press?  Sign of the times

navmehta

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Re: Buffett/Berkshire - general news
« Reply #1729 on: July 23, 2020, 08:56:21 AM »
Remember when Buffett buying $800 million worth of stock in the open market used to get reported on by the press?  Sign of the times

gfp, sorry, trying to parse your sarcasm. Which one of these did you mean?
  • (a) $800 million purchase is such a big news that Mainstream press should be making a bigger deal about it. In current times, only some of the press is reporting it and not making a huge deal they would have been making in the past.
  • (b) $800 million is such a tiny amount given Buffett's portfolio.  Sign of times that press has to even report it.
« Last Edit: July 23, 2020, 08:58:37 AM by navmehta »