Berkshire Hathaway Inc. – led by Chairman and CEO Warren Buffett – is investing in South Australia.
Treasurer Rob Lucas said the company would establish operations in Adelaide as its Reinsurance Division takes over management of the Motor Accident Commission’s ‘back book’ of Compulsory Third Party (CTP) vehicle insurance claims. Lucas described this as a “significant coup for South Australia’’.
“Berkshire Hathaway’s reinsurance arm, National Indemnity Company, is the only reinsurance company in the world with the same AA+ credit rating as South Australia, offering SA policy claimants security over future claims, as well as excellent value for taxpayers who no longer bear the risk of movements in investments and claims outcomes. For example, this year’s Mid-Year Budget Review will include a significant reduction in returns to the budget from MAC. Put simply, assets and liabilities from MAC will be transferred to Berkshire Hathaway’s National Indemnity Company, so that all the risks of managing MAC’s liabilities will be transferred to Berkshire Hathaway.
“Part of the arrangement will see $300 million of the reinsurance premium retained in South Australia – with at least $100 million retained for five years – for local funds management.
Berkshire Hathaway CEO and Chairman Warren Buffett said he looked forward to the potential of growing his business in South Australia. “We are thrilled to have agreed terms with South Australia to reinsure their auto liabilities, and we would love to find more opportunities to do business there,’’ said Buffett.