SEC widens insurance prodcuts probe
Berkshire Hathaway, the US conglomerate run by Warren Buffett, has been caught up in a widening investigation into alleged misuse of insurance products to manipulate company earnings.
Regulators at the Securities and Exchange Commission have requested documents and other information from General Re, Berkshire's reinsurance subsidiary, relating to the sale of so-called “loss-mitigation”products.
Though there is no allegation of wrongdoing at this stage, the document request forms part of a wider SEC probe into the legality of such products.
In some cases, companies buying these financial products have been accused of wrongly treating them as insurance when they are more like loans.
This could have the effect of hiding losses from investors, although the accounting rules in this area remain in dispute. Several other insurance providers have been asked to hand over documents relating to the sale of these products, also known as “non-traditional”, “retroactive” or “finite” insurance. They include ACE, a Bermuda-based insurer, Chubb, Swiss Re and Zurich Financial.
As one of the largest reinsurers, Berkshire's General Re was expected to be quizzed about its involvement. Nevertheless, yesterday's admission from the company that the SEC has requested information demonstrates the widening scope of the investigation.
Mr Buffett has been a leading critic of financial scandals elsewhere in the US, but has so far managed to keep his group clear of any involvement.
Berkshire Hathaway declined to comment further but said it and General Re would co-operate fully with the SEC's request.
The sale of these products makes up a fraction of Berkshire's insurance business.
All types of retroactive reinsurance and finite-risk reinsurance provide less than 1 per cent of net income at Berkshire Hathaway, while retroactive reinsurance made up 4.3 per cent of the premiums earned by General Re in the first nine months of 2004.
Analysts also point out that not all finite reinsurance is bad, although Vinay Saqi, who covers Berkshire for Morgan Stanley, said his team was “not huge fans of the use of the product because it sometimes clouds the numbers (of the buyers), making it difficult to analyse results”. The products have been sold for decades and are often tailor-made to fit specific circumstances, but regulators are only interested in cases where there is not a clear transfer of risk from the company purchasing the product to the insurance provider.
Shares in Berkshire Hathaway fell nearly 1 per cent yesterday morning after it announced the SEC request for information.
美证交会调查股神巴菲特
由沃伦?巴菲特管理的美国企业集团伯克夏哈撒韦(Berkshire Hathaway)被调查，该公司涉嫌滥用保险产品操纵公司收益。
美国证券交易委员会(SEC)的监管人员已要求通用再保险公司(General Re)提交文件和其它信息，这些资料与所谓的“减轻亏损”产品的销售相关。通用再保险是伯克夏哈撒韦的保险子公司。
尽管现阶段没有指控公司有不正当行为，但证交会要求其提交文件表明，证交会在对此类产品合法性作进一步的调查。
在某些情况下，购买这些金融产品的公司已遭到指控，称这些产品更像贷款，而这些公司却把它们作为保险处理。
这可能有掩盖投资人损失的效果，尽管该领域的会计规则依然存在争议。其它几家保险提供商也被要求提交有关销售这些产品的文件，这些产品也被称为“非传统”、“追溯”或“有限”保险。被要求提供文件的公司包括总部位于百慕大的保险商ACE、丘博(Chubb)、瑞士再保险(Swiss Re)和苏黎士金融集团(Zurich Financial)。
伯克夏哈撒韦的通用再保险是最大的再保险商之一，预计该公司将就其卷入情况接受质询。但公司昨天承认美国证交会已要求公司提供信息，此事说明调查范围已经扩大。
巴菲特先生一直是美国其它领域金融丑闻的重要批评人士，他迄今还没有让集团卷入任何丑闻。
伯克夏哈撒韦拒绝做进一步评论，但表示，公司和通用再保险将与证交会完全合作。
这些产品的销售额在伯克夏哈撒韦保险业务中只占一小部分。
所有类型的追索再保险和有限风险再保险为伯克夏哈撒韦提供的净收入不到1%，而在2004年的头9个月里，追索再保险却占了通用再保险所获保费收入的4.3%。
伯克夏哈撒韦宣布证交会要求公司提供信息后，公司股价昨天上午下跌近1%。
