Author Topic: Buffett/Berkshire - general news  (Read 524104 times)

tede02

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Re: Buffett/Berkshire - general news
« Reply #390 on: January 05, 2017, 06:18:36 PM »
To the corporate finance experts out there, help a novice understand what a US based company does with proceeds from a Euro debt offering?  Obviously Berkshire has some European holdings, would they raise capital to use in those subsidiaries or would these borrowings be used for the parent (and therefore have to be converted to dollars).  This is definitely an area I don't know much about, not that I know much about anything, LOL.  Thanks in advance for the foreign borrowing lesson. 


rb

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Re: Buffett/Berkshire - general news
« Reply #391 on: January 05, 2017, 06:26:16 PM »
They can do a lot of things. Convert to other currency and invest/finance ops. Make EUR denominated investments. Finance European operations. While on the surface BRK doesn't have a lot of European business. The subs do a lot of business in Europe. The insurance subs and PCP quickly spring to mind.

Warren also has a history of taking debt when it's cheap. I think sometimes is just for shit and giggles, just for fun cause he can do it. The issuance is quite small and fairly short term for BRK so I think this may be the case here.

scorpioncapital

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Re: Buffett/Berkshire - general news
« Reply #392 on: January 05, 2017, 08:21:42 PM »
If he thinks underwriting profits are approaching break-even and cost of float is approaching zero to slightly positive then borrowing for a few years at a few % points above zero is the same thing but without having to take on any underwriting risk or do any business at all.


gfp

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« Last Edit: January 12, 2017, 03:46:34 PM by globalfinancepartners »

fareastwarriors

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Re: Buffett/Berkshire - general news
« Reply #394 on: January 19, 2017, 08:08:17 AM »
Will Donald Trump Blow Warren Buffett’s Clean-Energy Bet Off Course?

Berkshire Hathaway is one of the biggest players in wind power, but the president-elect may strip away some of the company’s financial advantages.

http://fortune.com/warren-buffett-wind-power-berkshire-hathaway-energy/
« Last Edit: January 19, 2017, 08:38:13 AM by fareastwarriors »

John Hjorth

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gfp

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Re: Buffett/Berkshire - general news
« Reply #396 on: January 20, 2017, 05:49:45 AM »
AIG strikes $34bn legacy deal with Berkshire Hathaway
Matthew Neill

AIG has agreed the biggest legacy deal in the history of the P&C insurance market, with Berkshire Hathaway set to take on 80 percent of the risk on $34bn of the insurer's US commercial reserves.

Ajit Jain's National Indemnity Company (Nico) will assume 80 percent of the net losses and net allocated loss adjustment expenses on the reserves of the first $25bn for the 2015 accident year and prior. Nico's liability is capped at $20bn.

The $9.8bn consideration is payable in full by 30 June with interest at 4 percent per annum from the 1 January 2016 inception date until the payment date.

The payment will be placed into a collateral trust account as security for Nico's payment obligations to the AIG operating subsidiaries.

AIG will retain sole claims handling and resolution authority, while Nico will be granted various access, association and consultation rights.

AIG said the agreement will be accounted for in the first quarter of this year as a retroactive reinsurance agreement.

The carrier said if the agreement had been entered into on 1 January 2016 it would have recognised a loss of approximately $2.9bn based on carrier reserves of $34bn.

AIG president and CEO Peter Hancock commented: "This decisive step enables us to focus firmly on the future and build on the progress we've made in transforming AIG.

"The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders."

AIG has targeted $25bn of capital return in 2016 and 2017 as part of a broader plan to turn the business around.

The New York-listed insurance giant said that it expected to disclose a material reserve charge in its forthcoming fourth quarter results.

AIG said that it had signed a binding term sheet related to the adverse development cover, but that closing was subject to receipt of regulatory approvals, execution of definitive transactions documentation and other conditions.

TigerRisk is understood to have advised on the deal.

longinvestor

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Re: Buffett/Berkshire - general news
« Reply #397 on: January 20, 2017, 09:02:40 AM »
AIG strikes $34bn legacy deal with Berkshire Hathaway
Matthew Neill

AIG has agreed the biggest legacy deal in the history of the P&C insurance market, with Berkshire Hathaway set to take on 80 percent of the risk on $34bn of the insurer's US commercial reserves.

Ajit Jain's National Indemnity Company (Nico) will assume 80 percent of the net losses and net allocated loss adjustment expenses on the reserves of the first $25bn for the 2015 accident year and prior. Nico's liability is capped at $20bn.

The $9.8bn consideration is payable in full by 30 June with interest at 4 percent per annum from the 1 January 2016 inception date until the payment date.

The payment will be placed into a collateral trust account as security for Nico's payment obligations to the AIG operating subsidiaries.

AIG will retain sole claims handling and resolution authority, while Nico will be granted various access, association and consultation rights.

AIG said the agreement will be accounted for in the first quarter of this year as a retroactive reinsurance agreement.

The carrier said if the agreement had been entered into on 1 January 2016 it would have recognised a loss of approximately $2.9bn based on carrier reserves of $34bn.

AIG president and CEO Peter Hancock commented: "This decisive step enables us to focus firmly on the future and build on the progress we've made in transforming AIG.

"The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders."

AIG has targeted $25bn of capital return in 2016 and 2017 as part of a broader plan to turn the business around.

The New York-listed insurance giant said that it expected to disclose a material reserve charge in its forthcoming fourth quarter results.

AIG said that it had signed a binding term sheet related to the adverse development cover, but that closing was subject to receipt of regulatory approvals, execution of definitive transactions documentation and other conditions.

TigerRisk is understood to have advised on the deal.

Accounting ?

Is the acquired float on BRK books $9.8 Billion or $25Billion? Tia

gfp

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Re: Buffett/Berkshire - general news
« Reply #398 on: January 20, 2017, 09:19:59 AM »
The float will be in the $9.x Billion area.  Not sure how the structure of the collateral trust account influences the accounting, but the premium is upfront and the capital is being transferred to Berkshire.  Ajit hung out with Warren last night in NYC for his movie premier - I'm sure they were quite pleased to announce such a huge deal together.  AIG had to start playing nice with BRK after their employee poaching dust-up because they realized they needed BRK to do these legacy deals with

longinvestor

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Re: Buffett/Berkshire - general news
« Reply #399 on: January 20, 2017, 10:35:29 AM »
The float will be in the $9.x Billion area.  Not sure how the structure of the collateral trust account influences the accounting, but the premium is upfront and the capital is being transferred to Berkshire.  Ajit hung out with Warren last night in NYC for his movie premier - I'm sure they were quite pleased to announce such a huge deal together.  AIG had to start playing nice with BRK after their employee poaching dust-up because they realized they needed BRK to do these legacy deals with

Thanks for the color. So decades of poor underwriting at AIG huh? The supply of idiot behavior never short. Wonder how much reinsurance business that's being written as we speak will turn into float in Ajit's hands after this decade?