Friday, February 29, 2008

Who Cares What Warren Buffett Thinks About Global Warming? (BRK.A)

Update below.
In addition to owning See's Candies, Berkshire Hathaway owns MidAmerican Energy Holdings:
...Berkshire has an 87.4% (diluted) interest in MidAmerican Energy Holdings, which owns a wide variety of utility operations. The largest of these are (1) Yorkshire Electricity and Northern Electric, whose 3.8 million electric customers make it the third largest distributor of electricity in the U.K.; (2) MidAmerican Energy, which serves 720,000 electric customers, primarily in Iowa; (3) Pacific Power and Rocky Mountain Power, serving about 1.7 million electric customers in six western states; and (4) Kern River and Northern Natural pipelines, which carry about 8% of the natural gas consumed in the U.S.
They've also got an insurance operation.

World's largest reinsurers

Ranked by 2006 net premiums written

Rank Company 2006 net premiums written
1 Munich Re Group $24,218,951,400
2 Swiss Re Group $23,202,134,100
3 Berkshire Hathaway/Gen Re Group3 $11,577,000,000
4 Hannover Re Group $8,907,121,773
5 Lloyd's of London $7,950,584,200

From Business Insurance.
From BI last month:

Big two reinsurers plot different courses

Published 02/11/2008 in Business Insurance Europe
The news that Omaha, Nebraska-based financial giant Berkshire Hathaway Inc. acquired a 3% stake in Zurich, Switzerland-based Swiss Reinsurance Co. and agreed a 20% quota share deal over five years with the reinsurance giant was greeted with enthusiasm by investors and analysts, and arguably augers......

Mr. Buffett is known in the popular media for his personal net worth. Just as mind-boggling is his company's position in both energy and insurance, at first glance on opposite sides of the green fence but actually a self contained hedge.
MidAmerican produces power with coal, natural gas and wind. The natural gas pipes* are National Critical Infrastructure.

The highest possible ratings the agencies give to the reinsurance operations (and Warren's disinclination toward silly pricing) allow them to pick and choose when they will make available their monstrous capacity. At a price. Remember why Allstate was going to raise Florida premiums 42% last month? Global Warming.

What Warren hath wrought: Heads I win, tails I win, if it lands on its edge I win, if gravity is momentarily suspended I win. Genius.

*Plus, he brought Northern Natural gas back to Omaha.

Here's the '07 annual report.
Here's the rest of Mr. Buffett's Letters to Shareholders.
Here's a bunch of our posts on Mr. Buffet.
(and a few on Charlie)

Uodate: I got an email asking "Well, what did Mr. Buffett say about global warming?"
Answer: nothing, in the 2007 annual report.
I screwed up when I put up the link to our prior Buffet posts. I should have pointed out two in particular. His comments in the 2006 letter:
SEC Pressed on Climate-Change Disclosures and When will Warren Buffett get on Board the Love Train?*

and comments at last years annual meeting:
Warren Buffet on Global Warming