Berkshire Hathaway Inc. is a multinational conglomerate holding company, run by the “Oracle of Omaha,” Warren Buffett.
The Omaha-domiciled holding company owns more than 60 subsidiaries, including leading insurer GEICO, battery maker Duracell and food giant Kraft Heinz. Insurance subsidiaries make up a significant part of the Buffett empire.
A brief history of Berkshire Hathaway
Berkshire Hathaway’s roots trace back to 1839, when Oliver Chace established a successful textile manufacturing company called the Valley Falls Company in Valley Falls, Rhode Island. In 1929, the Valley Falls Company merged with the Berkshire Cotton Manufacturing Company in Adams, Massachusetts. After the merger, they became known as Berkshire Fine Spinning Associates.
In 1955, Berkshire Fine Spinning Associates merged with the Hathaway Manufacturing Company, and the name of Berkshire Hathaway was born. Warren Buffett began buying stock in the textile company in 1962, and by 1964 he became a majority owner. However, the Berkshire Hathaway textile business was slowly failing, so Buffett decided to branch out in 1967 and venture into the insurance business with the purchase of National Indemnity Company. In the late 1970s, Berkshire bought an equity stake in GEICO, which now forms the core of the conglomerate’s insurance operations in the US today.
In 2017, Berkshire Hathaway had a market capitalization of close to $488 billion. It’s one of the top five largest publicly traded companies worldwide.
A bit about Warren Buffett
Warren Edward Buffett is a self-made billionaire. He was born on August 30, 1930 in Omaha, Nebraska, to Howard, a stockbroker and future congressman, and Leila (Stahl) Buffettt. Following in the footsteps of his father, young Buffett first bought stock at the age of 11 (three shares of oil and gas company Cities Service Preferred for himself and three for his sister Doris) and he first filed taxes when he was 13 years old.
As quite the young entrepreneur – he delivered newspapers, sold stamps, Coca-Cola beverages, golf balls and magazines door-to-door – Buffett amassed $2,000 by the time he was 15. He used that money to buy a 40-acre farm in Nebraska and used the farm profits to pay his way through university. Buffett graduated with a Bachelor of Science degree from the University of Nebraska, Lincoln, and later with a Master of Science in Economics from Columbia Business School.
In the early 1950s, Buffett worked as an investment salesman and securities analyst. He was very successful but realized that his goal of becoming a millionaire by the age of 35 would require more action, so he started the Buffett Partnership Ltd. in 1956. He acquired Berkshire Hathaway in 1964, and the rest is history.
As of October 11, 2018, Buffett’s real time net worth was $90.5 billion, according to Forbes.
What insurance subsidiaries does Berkshire Hathaway own?
- Berkshire Hathaway GUARD Insurance Companies
- Berkshire Hathaway Specialty Insurance
- Applied Underwriters
- Gateway Underwriters Agency
- General RE
- MedPro Group
- National Indemnity Company
- United States Liability Insurance Group
Berkshire Hathaway GUARD Insurance Companies
Berkshire Hathaway GUARD was established in 1983. It specializes in commercial property and casualty accounts. Its products include: workers’ compensation, businessowner’s policy, commercial umbrella, commercial auto, professional liability, disability, homeowners, and personal umbrella. Berkshire Hathaway GUARD distributes through a nationwide network of selected independent insurance agents.
Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance provides commercial property, casualty, healthcare
professional liability, executive and professional lines, surety, travel, programs, medical stop loss, accident and health, and homeowners’ insurance to customers worldwide. The firm provides multinational solutions to customers in nearly 170 countries.
Applied Underwriters provides workers’ compensation insurance solutions for small and mid-sized businesses in America. The innovative company has doubled in customers and revenue since its inception in the early 1990s, and claims to have one of the highest customer retention rates in the industry – over 90%.
Gateway Underwriters Agency
Gateway Underwriters Agency was founded in 1954. It’s a professional wholesale insurance agency, which operates with binding authority and brokerage agreements with affiliated and non-affiliated company partners. Gateway specializes in several areas of insurance, including commercial, professional, personal, commercial auto and automobile.
GEICO is arguably the most well-known of the Berkshire Hathaway insurance subsidiaries. The firm insures more than 27 million vehicles and has more than 16 million auto policies in force. It’s the second largest private passenger auto insurer in the US, but provides many insurance lines beyond auto, including homeowners’, business owner’s, professional liability, general liability and so on.
GenRe is an American multinational P&C and life & health reinsurance company. The reinsurer is represented in all major reinsurance markets through a network of more than 40 offices worldwide. It currently has $14 billion in capital and $6 billion in premiums.
MedPro Group has been protecting the assets and reputations of the healthcare community with healthcare liability insurance since 1899. With over $1 billion in annual premium and more than 200,000 clients, MedPro Group is a recognized leader in customized insurance, claims and patient safety & risk solutions for physicians, surgeons, dentists and other healthcare professionals, as well as hospitals, senior care and other healthcare facilities.
National Indemnity Company
National Indemnity Company is the head of the National Indemnity group of insurance companies, which includes: National Indemnity Company, National Liability & Fire Insurance Company, National Fire & Marine Insurance Company, National Indemnity Company of the South, National Indemnity Company of Mid-America, and Columbia Insurance Company. It is one of the leading P&C insurance members of the Berkshire Hathaway family, and conducts its business primarily through general agents.
United States Liability Insurance Group
The United States Liability Insurance Group focuses primarily on delivery of specialized insurance solutions for small businesses. The Group consists of three insurance companies: United States Liability Insurance Company, Mount Vernon Fire and U.S. Underwriters Insurance Company, which allows it to offer admitted or non-admitted insurance policies in all 50 states and the District of Columbia.