After adding four key industry players to his team, Warren Buffett is looking to go big in the insurance game. The chief executive of Berkshire Hathaway (NYSE:BRK.A) denied he lured the insurance executives to his team but confirmed they would be instrumental in his company’s growing commercial insurance business.
Buffett told Bloomberg that he was fortunate to land Peter Eastwood and three other top executives from AIG (NYSE:AIG) as Berkshire tries to make a very successful arm of the business even more profitable. Berkshire Hathaway’s annual shareholders meeting is taking place this weekend in Omaha and Buffett is planning to speak in front of receptive crowd of 30,000 people. Buffett noted that the AIG employees came to him and not vice versa.
Why are Berkshire Hathaway shareholders so happy? The latest earnings report showed dramatic increases from the previous year. Operating earnings jumped to $3.8 billion (up 42 percent), while the company’s net income skyrocketed 51 percent in total. Among the most profitable areas of the business was in the insurance underwriting department. That division starred with $901 million in profits, a remarkable feat for a wing that only cleared $54 million in Q1 2012. With numbers like these, it’s no surprise Buffett is thinking big with insurance…
The 82-year-old Buffett showed no signs of slowing down his investments and has only increased holdings in companies like IBM (NYSE:IBM) and DirecTV (NASDAQ:DTV), according to analysts. Buffett also addressed the issue of succession recently, as many are wondering when he will step down from his positions of chairman and chief executive. Buffett noted that, while successors are in place, they wouldn’t be announced in case they change.
In the meantime, an already rich company got considerably richer with the addition of the AIG insurance execs. Eastwood was chief executive of the property-casualty department for AIG and brings a proven track record with him. In fact, news of the exodus caused AIG shares to tumble at the close of last week’s trading. Berkshire Hathaway — on the other hand — has continued the steady ascent that never seems to end.
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