What is it about insurance companies that gets Warren Buffett drooling?
Surely it is his experience with Geico, the car insurer he spotted early on in his investment career (and now an integral part of Berkshire Hathaway), or perhaps it is National Indemnity, bought for a few million dollars 40 years or so ago, and now worth tens of billions (with the capital gain nowhere to be seen in Berkshire Hathaway’s accounts),or the giant General Re.
Of course he snapped up around 4% of IAG in Australia, and will build that stake to 14.9% (and effectively taking the company off the takeover list) in a 10-year, 20% quota share deal.
Whatever the reason, insurance is still top of the list for Buffett and that was again shown overnight when Berkshire Hathaway snapped up a New York-based medical insurer for an unknown amount. But it bought a company with a $US1.8 billion ($A2.36 billion) policy surplus (https://www.mlmic.com/blog/physicians/mlmic-agrees-join-berkshire-hathaway-family-companies/).
Berkshire Hathaway is now America’s largest medical insurer and the acquisition of Medical Liability Mutual Insurance Co, will extend this dominance. It is the largest underwriter of medical professional liability insurance in New York according to Berkshire’s National Indemnity which is the buyer.
In a statement, Mr. Buffett said, “MLMIC is a gem of a company that has protected New York’s physicians, mid-level providers, hospitals and dentists like no other for over 40 years. We welcome the chance to add them to the Berkshire Hathaway family and enhance their capacity to serve these and other policyholders for many years to come.”
In 2005 Berkshire bought Medical Protective Co., which has been operating for more than a century. It in turn bought Princeton Insurance Co. in 2011.
