Berkshire Hathaway Inc, the largest reinsurer in the US, could be about to be embroiled, through its subsidiary, in the downfall of HIH, which until 2001 was one of the two largest insurance houses in Australia.
In a surprise move, Berkshire, run by high profile billionaire Warren Buffett, revealed the possibility in its annual report that its reinsurance subsidiary General Re will be implemented as contributing to the 2001 collapse of HIH Insurance Ltd, by the Australian insurer’s liquidators.
Specifically, the assertion will claim that General Re helped HIH engage in deceptive activities relating to transactions carried out in May and June of 1998 with FAI Insurance Ltd, which was later bought by HIH.
The latest revelations from Australia add to other recent woes for Berkshire, which has received subpoenas from New York Attorney General Eliot Spitzer and the US Securities and Exchange Commission relating to similar inappropriate activities in the US.
HIH Insurance Ltd has gone down in Australian history as arguably the biggest and most embarrassing corporate downfall. The insurance titan collapsed with A$5.3 billion losses in 2001.