More fallout from AIG's Greenberg's uncooperative nature and self serving ego.

Date:   8/8/2005 8:58:46 AM ( 19 y ago)

Berkshire says regulators examining its books
Sat Aug 6, 2005 7:11 PM ET

By Jonathan Stempel
NEW YORK, Aug 6 (Reuters) - Warren Buffett's Berkshire Hathaway Inc. (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research), whose General Re Corp. unit has been investigated over its role in helping insurer American International Group Inc. misstate results, said governmental authorities were inquiring about some of its own accounting.

In its quarterly report filed on Friday with the U.S. Securities and Exchange Commission, Berkshire said the authorities were looking into the accounting by some of its insurance subsidiaries for finite reinsurance.

Investigators have for several months in an industrywide probe been questioning whether such nontraditional reinsurance products can be used to mask losses or smooth earnings.

Berkshire, based in Omaha, Nebraska, also said the governmental authorities are questioning whether General Re or its subsidiaries "conspired with others" to misstate financial statements.

The disclosures suggest that investigators may be widening their probe beyond General Re's role in a 2000 reinsurance contract that helped AIG (AIG.N: Quote, Profile, Research) improperly increase reserves by $500 million. Two former General Re executives in June pleaded guilty to conspiracy charges in the matter.

"I suppose regulators are simply being thorough, and seeing if Berkshire accounted for something different from how its counterparties did," said Steven Check, who oversees $470 million at Check Capital Management Inc. in Costa Mesa, California, including $45 million in Berkshire shares. "Warren Buffett has done things right for decades, so for me the benefit of the doubt should go to him."

Berkshire was not immediately available for comment.

FIRED EXECUTIVE

The company also disclosed that Milan Vukelic, the chief executive of Faraday Group, a British unit of General Re, was fired in July, two months after being placed on leave.

British regulators have investigated Vukelic over transactions in 1998 between General Reinsurance Australia Ltd. and affiliates of FAI Insurance Ltd. FAI was acquired the following year by HIH Insurance Ltd., Australia's No. 2 general insurer, which became insolvent in 2001. Vukelic once ran General Re's international finite reinsurance business unit.

Among other regulators examining activities involving Berkshire units are federal prosecutors, the SEC, New York Attorney General Eliot Spitzer, and regulators in Australia, Canada, Germany and Ireland.
Berkshire also said Friday that second-quarter profit rose 13 percent to $1.45 billion, or $941 per Class A share, as higher investment income and fewer losses from insurance units helped offset a $619 million pretax loss from betting the U.S. dollar would fall. Buffett has wagered against the U.S. dollar since 2002 amid concern about high U.S. trade and budget deficits.

According to Forbes magazine, Buffett is the world's second richest person, after Microsoft Corp. (MSFT.O: Quote, Profile, Research) Chairman and Berkshire director Bill Gates.

Berkshire Class A shares closed Friday at $83,500, and its Class B shares closed at $2,787. Both have fallen 5 percent this year.

9th- This is what happens when your reinsurance company plays with AIG and Greenberg...Yes, this is not a pleasant place to be..Spitzer saw enough to "investigate"....hummmmm...see the next article....




 

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