General Re
A global reinsurance company acquired by Berkshire Hathaway in 1998 for $16 billion in stock, one of Berkshire's core insurance operations.
General Re
General Re Corporation is a major global reinsurance company, providing property and casualty reinsurance to insurance companies worldwide. Berkshire Hathaway acquired General Re in 1998 in a $16 billion stock-for-stock transaction, making it one of Berkshire's foundational insurance operations.
Overview
General Re operates globally as a reinsurer:
| Segment | Coverage |
|---|---|
| Property Reinsurance | Catastrophes, large losses |
| Casualty Reinsurance | Liability, professional lines |
| Life Reinsurance | Mortality, health |
| Financial Products | Structured risk solutions |
| Metric | Value |
|---|---|
| Acquired | December 1998 |
| Purchase Price | ~$16 billion in stock |
| CEO (at acquisition) | Joe Brandon |
| CEO (2008-2016) | Tad Montross |
| CEO (2016+) | Kara Raiguel |
Why Berkshire Acquired General Re
Reinsurance Moat
Reinsurance provides critical risk management for primary insurers:
- Spreads risk across the industry
- Provides capacity for large coverages
- Enables primary insurers to write more business
Berkshire's Insurance Strategy
General Re joined Berkshire's insurance group:
- GEICO — Direct auto insurance
- BH Reinsurance (Ajit Jain) — Large casualty risks
- General Re — Global reinsurance platform
Together, these generate massive float for Berkshire's investment operations.
History of Challenges
Initial Problems
Buffett acknowledged acquiring General Re was problematic:
- Cultural issues existed before acquisition
- Underwriting discipline had deteriorated
- Reserves were potentially inadequate
The Turnaround
Under Joe Brandon and Tad Montross, General Re was restored to health:
- Tightened underwriting standards
- Strengthened reserve adequacy
- Improved expense discipline
"Today General Re has regained its luster."
Leadership Transitions
| Period | CEO | Notes |
|---|---|---|
| 1998-2001 | Ronald Pressman | Initial post-acquisition |
| 2001-2008 | Joe Brandon | Led turnaround with Tad Montross |
| 2008-2016 | Tad Montross | Stabilized and grew |
| 2016+ | Kara Raiguel | Current leadership |
Business Performance
Float Generation
General Re is a major contributor to Berkshire's insurance float:
| Year | Float | Notes |
|---|---|---|
| 1998 | ~$15B | At acquisition |
| 2007 | ~$23B | Pre-crisis |
| 2008 | ~$21B | Improved underwriting |
Underwriting Results
| Year | Underwriting Profit |
|---|---|
| 2007 | $555M |
| 2008 | $342M |
General Re has been profitable in most years since the turnaround.
The AAA Rating
Competitive Advantage
General Re is the only reinsurer with a AAA credit rating from Berkshire Hathaway:
"General Re is the only reinsurer that is backed by an AAA corporation."
This provides:
- Confidence in long-term commitments
- Ability to write multi-decade policies
- Competitive advantage in client selection
The 50-Year Promise
Reinsurance policies can extend 50+ years:
- Old environmental liability claims
- Asbestos exposures
- Long-tail casualty risks
Clients prefer the certainty of Berkshire's backing.
Why It Fits the Moat Concept
| Moat Type | General Re Evidence |
|---|---|
| Financial Strength | Berkshire AAA backing |
| Relationships | Long-term client partnerships |
| Scale | Global presence, multiple segments |
| Underwriting Expertise | Deep risk assessment capabilities |
Famous Buffett Quotes
"General Re is the only reinsurer that is backed by an AAA corporation. Ben Franklin once said, 'It's difficult for an empty sack to stand upright.' That's no worry for General Re clients."
"Reinsurance is a business of long-term promises, sometimes extending for fifty years or more."
Related
- warren-buffett — Who acquired it
- berkshire-hathaway — Parent company
- ajit-jain — Berkshire Reinsurance leader
- insurance-float — How float is generated