If battles of the business world are like title fights, Berkshire Hathaway (NYSE:BRK.A) versus American International Group, Inc. (NYSE:AIG) would be the heavyweight tilt, replete with fear and loathing. According to a Wall Street Journal report, a somewhat nasty battle is being waged between commercial insurance stalwart AIG and Warren Buffett’s Berkshire, which has a growing business in this sector. At stake are billions of dollars and the future of the industry.
The bad blood between the two companies started when four AIG executives joined Berkshire’s insurance division in the spring, which prompted polite public statements from AIG that masked what was reportedly rancor behind the scenes. Berkshire, for its part, maintained that the hiring was not meant to be a slap in the face, according to the WSJ report. The Berkshire insurance chief knew them well and considered them a perfect fit for the job.
Yet it was taken as something of an insult by AIG, which has the power to do more than say mean things in the press about its new rival. AIG had been in the habit of sending a wealth of business to Berkshire’s reinsurance division. According to the Wall Street Journal, Berkshire received more AIG reinsurance work than any other company. Effective immediately, AIG is stopping that practice.