Buffett says life insurers took “crazy” bets
Posted on 15. May, 2009 by Admin in Warren Buffett News
Via: Reuters
Billionaire Warren Buffett on Sunday criticized some life insurers for taking on “crazy” financial risks by selling variable annuities, or retirement products that promised unrealistic guarantees to buyers.
“I always thought they were crazy when they were doing it,” said Buffett, at a press conference in Omaha, his hometown, because of the financial risks to the insurer. Insurance makes up about half of Berkshire’s operations, including auto insurer Geico, property-catastrophe units and a bond insurer formed a little over a year ago. Life insurance is not a major component of the business.
Of the guaranteed variable annuities, Buffett said: “If you buy a policy, you the policyholder get some of the upside, and they guarantee you always get your premium back.” From a company’s perspective, “that’s poison.”
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