Professor Glen Arnold

Once inside the Berkshire fold insurance giant General Re’s executives were encouraged to feel free of the previous constraints that limited growth. This helped to lift annual premiums from $6bn in the year it was bought, 1998, to $8.7bn in 2000 – see Figure 10.1. Buffett wanted them to continue “increasing the proportion of its […]

Yesterday’s newsletter showed that showed that in the eleven years before Warren Buffett purchased it General Re was firing on all four cylinders, in the later years making almost £1bn in profits. It also held $14.9bn of float, which was available at apparently no cost because underwriting pricing was so good. But would you pay […]

For nineteen years Berkshire had enjoyed dividends flowing from its 51% stake in GEICO when it bought the remaining shares in 1996 for $2.3bn. GEICO was an exceptionally well-run primary insurer with a focus on auto policies (see earlier newsletters on GEICO). Its two key managers continued to run the business: Tony Nicely managing underwriting (until […]

Insurance float comes in different qualities. Insurance against hail damage to crops over a few days or weeks does not produce much float at all because premiums are paid shortly before the threat and claims are paid shortly afterwards. This means that combined ratio of 100 is of no value to the insurer because it […]

Berkshire Hathaway insurance business has always been run with an iron discipline approach. Warren Buffett and Charlie Munger would rather shrink the business than take on poorly priced insurance risk. Thus, in the years preceding 1985 Berkshire was the slowest-growing large US insurer. In fact, it shrank. It wasn’t that it withdrew from the market. […]

Until 1982 Buffett took on personal responsibility for Berkshire’s  insurance business strategy, senior appointments, and monitoring. As the business grew he realised the need to take more of a back seat, freeing time to concentrate on investments. He looked around for a talented manager to take over as head of all Berkshire’s insurance operations, and […]

Insurance is at the heart of Berkshire Hathaway. The first significant act after Warren Buffett took control of Berkshire was the 1967 purchase of National Indemnity for £8.6m. There are two main attractions to holding a well-run insurance company within the Berkshire fold. First, it might – although most insurance firms don’t – make a […]

Wynnstay (LSE:WYN) has shown average conventional earnings of 29.3p per share over twelve years. With the 19.9m shares it has in issue today if it earned 29.3p per share then that would be a total of £5.83m. If I was to assume that this will be the earnings attributable to shareholders and, importantly, available to shareholders to […]

Wynnstay (LSE:WYN) has stuck to the same areas of business for decades. This is its strategy, as set out in the 2004 AIM Admission Document: “The Group intends to continue to develop its three trading divisions [Arable, Feeds, Stores (it had 24 stores then, 54 now)]. As part of its five year corporate plan, it intends […]

My last two newsletters discussed the steady profitability of Wynnstay (LSE:WYN) through good times and hard times. When I recently bought at £3.405 I judged there to be a good margin of safety between its intrinsic value and what Mr Market was asking for it.  Since then Wynnstay has reported good profits for the year […]