A Letter to Warren, Part 2

You might recall my letter to Warren Buffett, and his response to me.  A number of my readers made some very nice offers to help me on this project.  Many thanks to you all, but I found a way to shrink the size of the project.  Look at this table:

 

NAIC #

Assets

Liabs

Surplus

NameGroupNotes

Pct

38865

443

199

244

CALIFORNIA INSURANCE COMPANYAU

0.2%

28258

92

49

43

CONTINENTAL NATIONAL INDEMNITY COAU

0.0%

14144

347

322

25

APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY, INC.AU(2)

0.0%

35246

23

8

15

Illinois Insurance CompanyAU

0.0%

21962

11

11

Pennsylvania Insurance CompanyAU

0.0%

20044

1,083

346

737

BERKSHIRE HATHAWAY HOMESTATE INSURANCE COMPANYBHH

0.6%

11673

762

336

426

REDWOOD FIRE & CASUALTY INSURANCE COBHH

0.3%

10855

1,065

858

207

CYPRESS INSURANCE COMPANYBHH

0.2%

34630

459

321

138

OAK RIVER INSURANCE COMPANYBHH

0.1%

11014

11

4

7

BROOKWOOD INS COBHH

0.0%

35939

9

2

7

CONTINENTAL DIVIDE INSURANCE COBHH

0.0%

34274

335

50

285

CENTRAL STATES INDEMNITY CO OF OMAHACSI

0.2%

82880

18

4

14

CSI LIFE INSURANCE COMPANYCSI

0.0%

22063

19,090

11,072

8,018

GOVERNMENT EMPLOYEES INSURANCE COGEICO

6.3%

22055

6,444

3,695

2,749

GEICO INDEMNITY COMPANYGEICO

2.1%

41491

1,713

1,051

662

GEICO CASUALTY COMPANYGEICO

0.5%

14137

239

19

220

GEICO SECURE INSURANCE COMPANYGEICO

0.2%

14139

249

36

213

GEICO CHOICE INSURANCE COMPANYGEICO

0.2%

14138

249

41

208

GEICO ADVANTAGE INSURANCE COMPANYGEICO

0.2%

35882

184

70

114

GEICO GENERAL INS COGEICO

0.1%

22039

15,533

4,840

10,693

GENERAL REINSURANCE CORPGenRe

8.4%

27812

15,069

4,637

10,432

COLUMBIA INSURANCE COMPANYGenRe

8.2%

86258

3,101

2,513

588

GENERAL REINSURANCE LIFE CORPORATIONGenRe

0.5%

37362

748

182

566

GENERAL STAR INDEMNITY COGenRe

0.4%

11967

251

69

182

GENERAL STAR NATIONAL INS COGenRe

0.1%

38962

190

55

135

GENESIS INSURANCE COMPANYGenRe

0.1%

12319

176

76

100

PHILADELPHIA REINSURANCE CORPGenRe

0.1%

32280

130

61

69

Commercial Casualty Insurance CompanyGenRe

0.1%

20931

48

26

22

Atlanta InternationalGenReRunoff

0.0%

97764

20

5

15

IDEALIFE INSURANCE COMPANYGenRe

0.0%

31470

512

363

149

NORGUARD INSURANCE COMPANYGuard

0.1%

42390

416

316

100

AMGUARD INSURANCE COMPANYGuard

0.1%

14702

104

71

33

EASTGUARD INSURANCE COMPANYGuard

0.0%

11981

42

29

13

WestGUARDGuard

0.0%

11843

3,013

1,938

1,075

MEDICAL PROTECTIVE COMedPro

0.8%

42226

586

173

413

Princeton Ins CoMedPro

0.3%

13589

14

11

3

MedPro RRG Risk Retention GroupMedPro

0.0%

20087

127,340

48,479

78,861

NATIONAL INDEMNITY COMPANYNI

61.7%

20079

5,597

1,739

3,858

NATIONAL FIRE & MARINE INSURANCE CONI

3.0%

62345

10,938

8,700

2,238

BERKSHIRE HATHAWAY LIFE INSURANCE COMPANY OF NEBRASKANI

1.8%

13070

1,841

692

1,149

BERKSHIRE HATHAWAY ASSURANCE CORPORATIONNI

0.9%

39136

1,203

487

716

Finial Reinsurance CompanyNIRunoff

0.6%

20052

1,419

705

714

NATIONAL LIABILITY & FIRE INS CONI

0.6%

42137

212

70

142

NATIONAL INDEMNITY CO OF THE SOUTHNI

0.1%

20060

173

49

124

NATIONAL INDEMNITY CO OF MID-AMERICANI

0.1%

22276

90

19

71

STONEWALL INSURANCE COMPANYNI

0.1%

37923

100

55

45

SEAWORTHY INSURANCE CONI

0.0%

36048

74

42

32

UNIONE ITALIANA REINS CO OF AMERICANIRunoff

0.0%

11591

63

51

12

FIRST BERKSHIRE HATHAWAY LIFE INSURANCE COMPANYNI

0.0%

10391

43

32

11

AMERICAN CENTENNIAL INSURANCE CONI

0.0%

13795

2

2

AttPro RRG Reciprocal Risk Retention GrpNI

0.0%

25895

675

234

441

UNITED STATES LIABILITY INS COUSLI

0.3%

26522

434

160

274

MOUNT VERNON FIRE INSURANCE COUSLI

0.2%

35416

161

59

102

US UNDERWRITERS INSURANCE COUSLI

0.1%

15962

171

23

148

KANSAS BANKERS SURETY COWesco

0.1%

Total

223,315

95,444

127,871

106,000

From 10K

This table lists all of Berkshire Hathaway’s domestically domiciled insurance subsidiaries, all 55-56 of them, maybe minus a few intermediate holding companies that are just shells.  The NAIC # uniquely identifies each company for the National Association of Insurance Commissioners.  Then comes the assets, liabilities, and surplus for regulatory purposes.  Then there are the groups that each subsidiary belongs to, and what percentage  of the total statutory surplus each one represents.

The table is sorted by the major subsidiary groups, and then in declining order of surplus.   Here is the key to the groups:

  1. AU = Applied Underwriters
  2. BHH = Berkshire Hathaway Homestate
  3. CSI = Central States Indemnity
  4. GEICO (what else?)
  5. GenRe = General Reinsurance
  6. Guard = AmGuard
  7. MedPro = Medical Protective
  8. NI = National Indemnity
  9. USLI = United States Liability Insurance
  10. Wesco = Wesco Financial

A number of the companies are not writing new business; they are in what is called “runoff.”  Two companies may have the same name “APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY, INC.” but are domiciled in different states.

So, back to my challenge to understand the structure of Berkshire Hathaway.  The above table makes my life easy.  Really, I only need to get the reports of the following companies:

  • Berkshire Hathaway Homestate
  • General Reinsurance
  • GEICO
  • National Indemnity (really, the one most needed)
  • Medical Protective

Those five companies cover ~94% of the statutory surplus of  all of Berkshire’s insurance companies.  I can afford to get that data.  But how should I do it?

  1. I can buy it though the NAIC
  2. I could write Warren another letter asking for his approval to ask each company for their statutory statements.
  3. I could ask each subsidiary for their statements, and see how they react.
  4. I could troll the web, and see if they aren’t hiding out there.  One reader suggested that the Statements are out there on some state insurance department websites, but that would surprise me. That hasn’t been true in the past.

I am thinking of doing #2, but am open to advice.

As an aside, note that the sum of $128 billion of statutory surplus is far more than the $106 billion listed in the latest 10-K.  That is because of capital stacking, which is a form of double counting.  Lower lever subsidiaries surplus gets counted in their intermediate parent companies.  But if I eliminate all of the lower level companies, I only end up with $100 billion.

This is a different approach to Berkshire Hathaway, approaching it as a group of  insurance companies that owns businesses.  It is very different, yet successful.  When I get the data, I hope we all learn a lot.