National Indemnity Company
Berkshire's first major acquisition in 1967, a specialty insurer founded by Jack Ringwalt, which became the core of Berkshire's insurance operations.
National Indemnity Company
National Indemnity Company was Berkshire Hathaway's first major acquisition in 1967, purchased from founder Jack Ringwalt for approximately $8.6 million. It became the foundation of Berkshire's insurance operations and the vehicle through which Buffett built the company's legendary float machine.
Overview
| Metric | Value |
|---|---|
| Founded | 1940s by Jack Ringwalt |
| Acquired by Berkshire | 1967 |
| Purchase Price | ~$8.6 million |
| Founder | Jack Ringwalt |
| Successor CEO | Phil Liesche |
| Role | Core insurance subsidiary |
Why It Mattered
First Diversification
Before 1967, Berkshire was a failing textile company (Berkshire Fine Spinning + Hathaway Manufacturing). The acquisition of National Indemnity marked Buffett's first step toward transforming Berkshire into an insurance/financial holding company.
"In 1967, we acquired National Indemnity Company and National Fire and Marine Insurance Company... This was our first major diversification away from textiles."
Jack Ringwalt's Legacy
Jack Ringwalt built National Indemnity into a specialty insurer:
- Focused on non-standard auto insurance
- Operated with disciplined underwriting
- Cultivated a culture of integrity
He retired in 1973 after 30+ years at the company.
Business Model
Specialty Insurance
National Indemnity specialized in:
- Commercial auto insurance
- Excess and umbrella coverage
- Specialty lines
Home-State Model
National Indemnity pioneered the "home-state" insurance concept:
- Concentrated geographic focus
- Independent agents with large-company capabilities
- disciplined underwriting in select markets
Leadership Transition
Phil Liesche
Phil Liesche took over as president after Ringwalt's retirement:
- Maintained the company's underwriting discipline
- Continued building the float
- Worked closely with Buffett
Other Key Executives
| Name | Role |
|---|---|
| George Young | Reinsurance Division Manager |
| Roland Miller | Underwriting |
| Bill Lyons | Claims |
Financial Performance
Float Growth
| Year | Float | Notes |
|---|---|---|
| 1967 | ~$2M | At acquisition |
| 1970 | ~$10M | Growing |
| 1979 | ~$24M+ | Significant |
The insurance float from National Indemnity and its siblings was invested in equities, generating substantial investment income.
Why It Fits the Moat Concept
| Moat Type | National Indemnity Evidence |
|---|---|
| Underwriting Discipline | Only writes business that meets return criteria |
| Customer Relationships | Long-term agent relationships |
| Float Advantage | Float invested at high returns |
Famous Buffett Quotes
"Jack Ringwalt was a principled man who built a remarkable insurance business."
Related
- warren-buffett — Who acquired it
- berkshire-hathaway — Parent company
- insurance-float — How float was generated
- jack-ringwalt — Founder