8-KOther Events

BERKSHIRE HATHAWAY INC 8-K Report, Corporate Update (May 13, 2005)

Filed May 13, 2005For Securities:BRK-BBRK-A

Summary

This 8-K filing from Berkshire Hathaway Inc. (BRK-B) on May 13, 2005, primarily discloses ongoing investigations related to its subsidiary, General Re Corporation. Specifically, an employee of a General Re subsidiary has been informed they are a target of the U.S. Department of Justice and has received a Wells notice from the SEC. This employee, along with the Chief Executive Officer of General Re's subsidiary Faraday Group, has been placed on administrative leave with pay, pending their cooperation with governmental investigations. Furthermore, the filing updates on previous disclosures, noting that a former officer of General Re has also received a Wells notice from the SEC. The company also confirms cooperation with inquiries from Irish and German regulatory authorities concerning the activities of its subsidiaries Cologne Reinsurance Company (Dublin) Limited and Kolnische Ruckversicherungs-Gesellschaft AG, respectively, particularly regarding finite reinsurance and transactions with American International Group. Investors should monitor these developments as they could potentially impact General Re's operations and reputation.

Key Highlights

  • 1An employee of a General Re subsidiary is a target of a U.S. Department of Justice investigation and has received a Wells notice from the SEC.
  • 2This employee has been placed on administrative leave with pay, effective May 16, 2005, pending cooperation with investigations.
  • 3The CEO of General Re's subsidiary, Faraday Group, has also been placed on administrative leave with pay, effective May 16, 2005.
  • 4A former officer of General Re has also received a Wells notice from the SEC.
  • 5General Re is cooperating with inquiries from the Irish Financial Services Regulatory Authority regarding Cologne Reinsurance Company (Dublin) Limited.
  • 6General Re is also cooperating with the German Federal Financial Supervisory Authority regarding Kolnische Ruckversicherungs-Gesellschaft AG and finite reinsurance activities, including transactions with AIG.

Frequently Asked Questions

The main reason for this filing is to update investors on ongoing governmental investigations and related actions concerning Berkshire Hathaway's subsidiary, General Re Corporation, and its employees.

A Wells notice is a formal communication from the SEC staff to a person or entity indicating that the staff intends to recommend to the Commission that an enforcement action be taken against them.

Finite reinsurance is a type of insurance contract that allows the reinsurer and the ceding company to share in the underwriting profit and investment income, often designed to provide coverage for risks that are difficult to insure in the traditional markets. The filing indicates regulatory interest in these activities.

While the filing states that General Re is cooperating fully with the authorities, significant fines, penalties, or reputational damage stemming from these investigations could potentially impact General Re's financial results and, consequently, Berkshire Hathaway's overall performance. The extent of the impact remains to be seen.