Warren Buffett’s Berkshire Hathaway Inc. has poached four senior executives from American International Group Inc., grabbing people with experience insuring large and unusual risks.
Just as rates begin to harden, Berkshire indicates its intent to enter Commercial Insurance market. The shadow of additional capacity may temper some of the hardening while the market share of the current leaders diminishing somewhat.
In the E&S space, it is likely that Lloyd’s and AIG (through its Lexington subsidiary) will loose marketshare. In addition, market entry in the E&S space is a lot easier than the admitted market - from an operations and technology perspective. It will not be surprising to see products with a modicum of distribution to be in place as early as 2014.
Admitted market is going to be more challenging given the average premium size is much smaller and the regulatory oversight slowing launch of products. Nonetheless, it is clear that Insurance continues to be a focus of Berkshire and one where it seeks to replicate its reinsurance underwriting success.