2020: Will Berkshire offer pandemic insurance in the future?

Becky Quick: Steven Tedder from Atlanta who says he’s a tenured Berkshire shareholder writes in and he says, do you see Berkshire offering pandemic coverage in future insurance policies?

Warren Buffett: Well the answer is, we ensure a lot of things. Sure. We had somebody come to us the other day wanting insurance involving a $10 billion protection on something very unusual. We’re not going to make that deal in all probability. In fact, I would say it’s dead. But we would have written pandemic insurance if people had come to us and offered us what we thought was the right price. We would have been wrong, probably in doing it. But, we have no reluctance to quote on very unusual things and very big limits. We’re famous for it. We haven’t done that much of it in certain periods because the prices aren’t right. But if you want to come and insure almost anything, and we don’t want you to insure against fire if you happen to be a known arsonist or something. But, if you come to us with any unusual coverages, either in size or in the nature of what’s covered, Berkshire is a very good place to stop. And so, somebody wants to buy, they can dream up the coverage and they can tell us the price they’ll pay, and we’ll consider writing it.

We wrote a lot of business after 9/11 for example. And there were really only a couple companies in the world that were willing to write the business. And Berkshire and AIG wrote a lot of business and we thought we knew what we were doing but we could have been surprised. I mean there could have been some follow on incidents from 9/11 that we wouldn’t have known about. You don’t know for sure the answer. That’s why people are buying insurance. But, we would be willing to write pandemic coverage at the right price.

This next question is for Greg and it comes from a shareholder named [Todd Flaska 02:54:47]. He says, “I don’t expect Berkshire to outperform the S&P500 during good times. However, I remain a longterm investor because of the huge war chest that can be deployed during the downturns in the market, like we’re seeing right now. Warren has been brilliant at negotiating mutually favorable deals with companies that have somewhat urgent capital needs during these down-times. These opportunities may only come about once a decade. There’s a small window of time for these deals. They all come at once and you don’t really know if you’re at the bottom of the market when the deals start coming. Will Berkshire be able to continue this approach when Warren and Charlie are no longer at the helm?”

I fundamentally, without Warren and Charlie at the helm, I don’t see the culture of Berkshire changing. I don’t see our billet, which a large part of that is having the business acumen to understand, the transaction, the economic prospects and then, the ability to act quickly. I really don’t see that changing as we… Well listen, there’s no one better than Warren and Charlie, but equally we’ve got a talented team in Berkshire both at the Berkshire level, and within our managers that can obviously look at opportunities too, very quickly. But, the reality is it’s a huge advantage we have right now, and we would clearly want to be in a position to maintain that position of strength. Warren?

Yeah, we will maintain it. And, we not only have it when the managers of the… In some cases, not all cases by a long shot, but in some cases we have managers that will occasionally come up with something that can be quite attractive. But between Greg and Todd and Ted, we’ve got three extraordinarily good buyers in terms of allocating capital and, I and Charlie may get an occasional call because of someone we knew 20 years ago or something. But they know a lot more people. They’ve got a lot more energy and their minds work the same way as ours have in the past. So I think it could very well be a significant improvement when the three of them are thinking about capital allocation, than when Charlie and I are now. Particularly now that he’s found zoom.