BERKSHIRE HATHAWAY INC.
3555 FARNAM STREET
OMAHA, NEBRASKA 68131
TELEPHONE (402)346-1400
FAX (402)346-3375
June 2, 2017
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Washington, D.C. 20549
Re: | Berkshire Hathaway Inc. |
Form10-K for the Fiscal Year Ended December 31, 2016
Filed February 27, 2017
FileNo. 001-14905
Dear Ms. Blume:
The purpose of this letter is to respond to your letter dated May 12, 2017. To assist you in reviewing our response, we preceded our response with a copy (in bold type) of the point as stated in your letter.
Consolidated Balance Sheets, page 64
1. | In your response to prior comment 2 you acknowledge that your investments in U.S. Treasury Bills are short-term investments under Rule7-03(a)1(g) of RegulationS-X. We note that the classification as investments is also consistent with the definition of debt securities in ASC320-10-20. Under Rules7-03(a)1 and7-03(a)2 of RegulationS-X investments are to be presented separately from cash. Please represent to us that in future filings you will present your investments in U.S. Treasury Bills as short-term investments included with your other investments and not with your cash and cash equivalents. In this regard, you are not precluded from highlighting the nature of these short-term investments in a liquidity discussion in Management’s Discussion and Analysis. This comment also applies to the presentation in the Finance and Financial Products section of your balance sheet as Rules5-02.1 and5-02.2 of RegulationS-X do not contemplate a subtotal combining marketable securities with cash. |
We acknowledge that listing short-term investments under an investment heading in the Consolidated Balance Sheets is a strict application of RegulationS-X Rule210.7-03(a)1. As stated in our prior response dated April 14, 2017, our consolidated financial statements include significant businesses that fit into Articles 5 and 7 of RegulationS-X. We also note that, as stated at the beginning of Articles 5 and 7 of RegulationS-X, the captions described in the Rules should appear on the face of the statements or notes, except as otherwise permitted by the Commission.
Our U.S. Treasury Bill investments were not included in cash and cash equivalents. We believe that the presentation of U.S. Treasury Bills between cash and cash equivalents and other investments is logical, given their short-durations, and that they are readily convertible to known amounts of cash and possess an insignificant risk of changes in values due to changes in interest rates. We described that position as U.S. Treasury Bills to illustrate the concentration of the asset position.
We believe our presentations were clear, meaningful and relevant given the magnitude of the balances. Nevertheless, in future filings, investments in short-term U.S. Treasury Bills will not be shown under a heading with cash and cash equivalents. To illustrate, our December 31, 2016 and 2015 Consolidated Balance Sheets with the proposed presentations follow.
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 2
BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
December 31, | ||||||||
2016 | 2015 | |||||||
ASSETS | ||||||||
Insurance and Other: | ||||||||
Cash and cash equivalents | $ | 23,581 | $ | 56,612 | ||||
Short-term investments in U.S. Treasury Bills | 47,338 | 4,569 | ||||||
Investments in fixed maturity securities | 23,432 | 25,988 | ||||||
Investments in equity securities | 120,471 | 110,527 | ||||||
Other investments | 14,364 | 15,683 | ||||||
Investments in The Kraft Heinz Company (Fair Value: 2016 – $28,418, 2015 – $32,042) | 15,345 | 23,424 | ||||||
Receivables | 27,097 | 23,303 | ||||||
Inventories | 15,727 | 11,916 | ||||||
Property, plant and equipment | 19,325 | 15,540 | ||||||
Goodwill | 53,994 | 37,188 | ||||||
Other intangible assets | 33,481 | 9,148 | ||||||
Deferred charges reinsurance assumed | 8,047 | 7,687 | ||||||
Other | 7,126 | 6,697 | ||||||
|
|
|
| |||||
409,328 | 348,282 | |||||||
|
|
|
| |||||
Railroad, Utilities and Energy: | ||||||||
Cash and cash equivalents | 3,939 | 3,437 | ||||||
Property, plant and equipment | 123,759 | 120,279 | ||||||
Goodwill | 24,111 | 24,178 | ||||||
Regulatory assets | 4,457 | 4,285 | ||||||
Other | 13,550 | 12,833 | ||||||
|
|
|
| |||||
169,816 | 165,012 | |||||||
|
|
|
| |||||
Finance and Financial Products: | ||||||||
Cash and cash equivalents | 528 | 7,112 | ||||||
Short-term investments in U.S. Treasury Bills | 10,984 | — | ||||||
Investments in equity and fixed maturity securities | 408 | 411 | ||||||
Other investments | 2,892 | 5,719 | ||||||
Loans and finance receivables | 13,300 | 12,772 | ||||||
Property, plant and equipment and assets held for lease | 9,689 | 9,347 | ||||||
Goodwill | 1,381 | 1,342 | ||||||
Other | 2,528 | 2,260 | ||||||
|
|
|
| |||||
41,710 | 38,963 | |||||||
|
|
|
| |||||
$ | 620,854 | $ | 552,257 | |||||
|
|
|
|
See accompanying Notes to Consolidated Financial Statements
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 3
Notes to Consolidated Financial Statements
Note 5: Other investments, page 79
2. | We acknowledge your response to prior comment 4. Please tell us why your warrants to purchase 700 million shares of Bank of America common stock cannot effectively be net settled and therefore do not qualify for derivative accounting. In this regard, it appears from the warrant agreement included as Annex B to the Securities Purchase Agreement filed as Exhibit 1.1 to Bank of America’s Form8-K filed on August 25, 2011, that you may exercise the warrant in whole or in part. Since Bank of America common stock is exchange traded and the smallest warrant exercise amount appears to be a single share, it appears that the underlying common stock is readily convertible into cash and that the warrants meet the net settlement criterion as outlined in Case A of Example 7 at ASC815-10-55-99. |
The determination of whether the shares of common stock received upon the exercise of the warrants are readily convertible to cash under ASC815-10-15-119 requires analysis and judgment. That section provides that if the asset delivered is readily convertible to cash, then it can result in the net settlement criteria being met.ASC 815-10-15-131 also provides that “shares of stock in a publicly traded entity to be received upon the exercise of a stock purchase warrant do not meet the characteristic of being readily convertible to cash if both of the following conditions exist: (a) the stock purchase warrant is issued by an entity only for its own stock (or stock of its consolidated subsidiaries) and (b) the sale or transfer of the issued shares is restricted (other than in connection with being pledged as collateral) for a period of 32 or more days from the date the stock purchase warrant is exercised.” Based on these provisions, the ability to readily convert the instrument to cash can be precluded if there are significant restrictions to the ability to exercise, sell or dispose of the instrument.
While the warrants may be converted in whole or in part, as described in Annex B (Form of Warrant) of the Securities Purchase Agreement, we also considered Article IV of the Securities Purchase Agreement and Annex C (Form of Registration Rights Agreement) to the Securities Purchase Agreement. Article IV provides that the warrants are exercisable only into the stock of the issuer (Bank of America), and the shares received upon exercising the warrants will not be registered under the Securities Act of 1933 (“Act”) when issued, and may not be transferred, except under Rule 144 or under an exemption from registration under the Act. We believe that the sale under Rule 144 or under a registration exemption significantly restricts our ability to readily convert the shares of common stock received upon exercising of the warrants to cash.
Berkshire possesses registration rights pursuant to a Registration Rights Agreement under Annex C to the Securities Purchase Agreement. Those rights allow Berkshire to request that Bank of America register the shares issued upon exercise of the warrants on a best efforts basis. However, that request may only be made after the warrants are exercised and the common shares are issued. Also, while Bank of America is required to use its best efforts to file a registration statement for resale of shares issued upon exercise of the warrants, it has up to 45 days to file a registration statement. In addition, Berkshire is limited to three “demand registration” requests and one “shelf registration” request, which must each occur at least six months apart. The value of common shares to be registered must be in increments of at least $1 billion. Further, the issuer may further delay the registration of the shares under other conditions, as provided in the Registration Rights Agreement.
We believe the restrictions/delays under Article IV and Annex C of the Securities Purchase Agreement significantly impede Berkshire’s ability to readily convert the warrants and the common stock received upon the exercise of the warrants to cash. We, therefore, believe the warrants are not readily convertible to cash based on ASC815-10-15-119 and that the warrants do not meet the net settlement requirement in paragraphASC 815-10-15-83 c. Accordingly, we concluded that the warrants did not meet the definition of a derivative.
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 4
Note 14: Unpaid losses and loss adjustment expenses, page 86
3. | We acknowledge your response to prior comment 5. Please elaborate on your conclusion for each of your General Re, BHRG and BH Primary claims development tables that you believe that further disaggregation (either by line of business, contract type or claims settlement tail) would not be as meaningful or useful to users of your financial statements as your disclosed aggregate information in understanding potential uncertainty in the timing and amount of cash flows from claims. In your response, specifically address the following: |
• | Tell us your consideration for including the development of loss reserve estimates in your conclusion, consistent with the basic principle outlined in paragraph BC2 of ASU2015-09. |
• | Provide us the information that would be provided in the separate tables by material line of business for each of these segments, if available. |
• | Provide us the information that would be provided in the separate tables for short-tail business versus long-tail business for your BHRG segment, if available. |
• | If the information requested in the preceding two bullets is not available, demonstrate to us otherwise that material differing development trends by line of business and/or settlement tail are not obscured by aggregating differing lines of business. In other words, tell us whether material favorable development trends in some lines of business are offset by material unfavorable development trends in other lines of business within your currently presented tables. |
In determining the level of detail to include in our Consolidated Financial Statements, we considered the disclosure objectives discussed in BC2 of ASU2015-09 and ASC944-40-50-4H. As indicated in BC2, the primary objectives are to increase transparency into the estimation process, improve comparability by requiring consistent disclosure of information, and provide information on the timing, amount and uncertainty of cash flows. As further indicated in BC2, “there is no method to objectively measure the costs to implement the new guidance or the value of improved information in the financial statements.”
We operate a wide variety of property and casualty insurance and reinsurance businesses that offer a wide variety of contracts and coverages. For certain of those businesses, particularly reinsurance, the mix of contracts and coverages can vary widely from year to year and over time based upon changes in prevailing market conditions and underwriting opportunities. As a result, we believe selecting lines of business or contract types that are likely to be significant over time for purposes of these disclosures can be difficult, given the current level of diversification and business levels within General Re, BHRG and BH Primary.
As noted in BC33 of ASU 2015-09, the guidance does not prescribe any specific factor to be used as the basis for disaggregating the disclosures. Rather, it provides flexibility for preparers to consider different approaches. It also provides principal-based guidance and examples concerning approaches to disaggregation. We elected to disaggregate our consolidated loss and loss adjustment expense liabilities based upon our four reportable insurance underwriting segments consistent with one of the examples provided in ASC944-40-55-9C. As discussed inASC 944-40-55-9B and as noted in our response dated April 14, 2017, we considered how insurance liabilities for unpaid losses and loss adjustment expenses were presented for other purposes. The level of disaggregation is ultimately a matter of judgment based on the facts and circumstances. We continue to believe that the disaggregated disclosures included in our Consolidated Financial Statements were meaningful and reasonable under the circumstances.
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 5
The following table summarizes our consolidated liability for unpaid losses and loss adjustment expenses as of December 31, 2016. Dollars are in millions.
December 31, 2016 | Percentage of consolidated unpaid losses and loss adjustment expenses | |||||||
Unpaid losses and ALAE, net of reinsurance recoverable: | ||||||||
GEICO | $ | 12,981 | 16.9 | % | ||||
General Re (18.2% of consolidated liabilities): | ||||||||
Property | 1,917 | 2.5 | % | |||||
Casualty | 12,056 | 15.7 | % | |||||
BHRG (13.2% of consolidated liabilities): | ||||||||
Property | 4,555 | 5.9 | % | |||||
Casualty | 5,617 | 7.3 | % | |||||
BH Primary (13.2% of consolidated liabilities): | ||||||||
Medical professional liability | 3,713 | 4.8 | % | |||||
Workers’ compensation | 3,357 | 4.4 | % | |||||
All other property and casualty lines | 3,103 | 4.0 | % | |||||
|
|
|
| |||||
47,299 | 61.5 | % | ||||||
|
|
|
| |||||
Reinsurance recoverable: | ||||||||
GEICO | 1,084 | 1.4 | % | |||||
General Re | 611 | 0.8 | % | |||||
BHRG | 121 | 0.2 | % | |||||
BH Primary | 1,099 | 1.4 | % | |||||
|
|
|
| |||||
2,915 | 3.8 | % | ||||||
|
|
|
| |||||
Retroactive reinsurance, unpaid losses and loss adjustment expenses | 24,675 | 32.1 | % | |||||
Other short-duration insurance, unpaid losses and loss adjustment expenses | 1,390 | 1.8 | % | |||||
Discount on workers’ compensation reinsurance liabilities | (1,433 | ) | (1.9 | )% | ||||
Unpaid unallocated loss adjustment expenses | 2,072 | 2.7 | % | |||||
|
|
|
| |||||
26,704 | 34.7 | % | ||||||
|
|
|
| |||||
Unpaid losses and loss adjustment expenses | $ | 76,918 | 100.0 | % | ||||
|
|
|
|
With respect to the unpaid losses and ALAE of General Re, BHRG and BH Primary, and using 10% of consolidated unpaid losses and loss adjustment expenses as a measure of materiality, only General Re’s casualty liabilities meet that threshold. It should also be noted that while GEICO’s unpaid losses and ALAE represented 16.9% of consolidated unpaid losses and loss adjustment expenses, GEICO’s losses and loss adjustment expenses incurred in 2016, 2015 and 2014 were approximately 68%, 70% and 60%, respectively, of Berkshire’s consolidated losses and loss adjustment expenses incurred in those years. As disclosed in Note 14 to the Consolidated Financial Statements, a substantial portion of GEICO’s claims over the past several accident years were paid within five years of the occurrence.
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 6
In the pages that follow, we are providing further disaggregated net losses and ALAE data for General Re, BHRG and BH Primary in response to the Commission’s request. With respect to General Re and BHRG, the disaggregated data is based on losses that are expected to have short-tails (described as property) and those expected to have long-tails (described as casualty). The processes and methods used by BHRG and General Re in estimating losses are similar. General Re’s net unpaid property losses and ALAE were approximately 2.5% of our consolidated unpaid losses and loss adjustment expenses as of December 31, 2016. Accordingly, such liabilities could be considered immaterial for separate disclosure purposes.
As stated in our prior response dated April 14, 2017, BHRG and General Re reinsure property and casualty risks. Coverages are provided underexcess-of-loss andquota-share contracts and the risks assumed can be on a facultative or treaty basis. Under certain contracts, the coverage can apply to multiple lines of business written by the ceding company, whether property, casualty or combined, and the ceding company may not report loss data by line of business consistently, if at all. Further, line of business classifications used in non-U.S. jurisdictions may not be consistent with those in the U.S. In those instances, we allocate losses to coverage based on internal estimates, which may be broadly limited to property or casualty.
With respect to BH Primary, we are providing disaggregated data for medical professional liability and workers’ compensation lines of business. As of December 31, 2016, these were BH Primary’s two largest individual lines of business in terms of unpaid losses and ALAE. The actuarial processes and methods used in estimating medical professional liability and workers’ compensation losses are similar. BH Primary’s “all other” net unpaid losses and ALAE ($3,103 million or 4% of our consolidated unpaid losses and loss adjustment expenses) were attributable to various lines of business, including commercial auto, other liability and various other property and casualty coverages. We believe that such net unpaid losses and ALAE are immaterial for purposes of disaggregated disclosures.
In applying disclosure guidance under ASC944-40-50, we believe companies are compelled tore-evaluate disaggregated disclosures each year due to changes in facts and circumstances, which may result in changes to the disaggregated components. For instance, significant business acquisitions or reinsurance transactions during the period may result in significant changes in the composition of unpaid losses and loss adjustment expenses, which may result in new or expanded disclosures for categories that become significant or the reduction or elimination of disclosures for categories that are no longer significant. We willre-evaluate our disclosures in 2017 and consider the effects of significant business acquisitions and reinsurance transactions occurring during the year as well as other changes in our businesses and will make appropriate modifications to our disaggregated disclosures.
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 7
General Re – Property
Accident Year | Incurred Losses and ALAE through December 31, | IBNR and Case Development Liabilities | ||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 900 | $ | 938 | $ | 900 | $ | 866 | $ | 847 | $ | 836 | $ | 829 | $ | 822 | $ | 819 | $ | 821 | $ | 4 | ||||||||||||||||||||||
2008 | 1,032 | 1,075 | 1,027 | 1,007 | 974 | 958 | 942 | 935 | 934 | 7 | ||||||||||||||||||||||||||||||||||
2009 | 820 | 858 | 803 | 765 | 746 | 740 | 736 | 733 | 8 | |||||||||||||||||||||||||||||||||||
2010 | 1,015 | 1,121 | 1,065 | 1,022 | 974 | 964 | 956 | 21 | ||||||||||||||||||||||||||||||||||||
2011 | 1,228 | 1,179 | 1,070 | 1,019 | 977 | 963 | 56 | |||||||||||||||||||||||||||||||||||||
2012 | 917 | 853 | 755 | 718 | 702 | 40 | ||||||||||||||||||||||||||||||||||||||
2013 | 1,060 | 1,078 | 1,012 | 967 | 57 | |||||||||||||||||||||||||||||||||||||||
2014 | 768 | 767 | 728 | 78 | ||||||||||||||||||||||||||||||||||||||||
2015 | 870 | 875 | 141 | |||||||||||||||||||||||||||||||||||||||||
2016 | 783 | 387 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Incurred losses and ALAE | $ | 8,462 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accident Year | Cumulative Paid Losses and ALAE through December 31, | |||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 219 | $ | 627 | $ | 729 | $ | 762 | $ | 776 | $ | 783 | $ | 805 | $ | 805 | $ | 807 | $ | 811 | ||||||||||||||||||||||||
2008 | 277 | 724 | 826 | 876 | 898 | 907 | 909 | 910 | 913 | |||||||||||||||||||||||||||||||||||
2009 | 213 | 554 | 658 | 695 | 704 | 709 | 712 | 714 | ||||||||||||||||||||||||||||||||||||
2010 | 195 | 589 | 736 | 813 | 860 | 890 | 910 | |||||||||||||||||||||||||||||||||||||
2011 | 248 | 664 | 824 | 856 | 869 | 881 | ||||||||||||||||||||||||||||||||||||||
2012 | 143 | 493 | 585 | 595 | 615 | |||||||||||||||||||||||||||||||||||||||
2013 | 218 | 635 | 784 | 825 | ||||||||||||||||||||||||||||||||||||||||
2014 | 116 | 455 | 558 | |||||||||||||||||||||||||||||||||||||||||
2015 | 163 | 495 | ||||||||||||||||||||||||||||||||||||||||||
2016 | 120 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Paid losses and ALAE | 6,842 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for 2007—2016 accident years | 1,620 | |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for accident years before 2007 | 297 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE | $ | 1,917 | ||||||||||||||||||||||||||||||||||||||||||
|
|
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 8
General Re – Casualty
Accident Year | Incurred Losses and ALAE through December 31, | IBNR and Case Development Liabilities | ||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 957 | $ | 977 | $ | 952 | $ | 880 | $ | 826 | $ | 783 | $ | 745 | $ | 737 | $ | 716 | $ | 691 | $ | 69 | ||||||||||||||||||||||
2008 | 888 | 936 | 876 | 811 | 772 | 755 | 727 | 713 | 701 | 86 | ||||||||||||||||||||||||||||||||||
2009 | 883 | 932 | 901 | 836 | 777 | 750 | 735 | 698 | 117 | |||||||||||||||||||||||||||||||||||
2010 | 866 | 934 | 874 | 823 | 783 | 748 | 718 | 135 | ||||||||||||||||||||||||||||||||||||
2011 | 874 | 947 | 827 | 773 | 767 | 706 | 152 | |||||||||||||||||||||||||||||||||||||
2012 | 893 | 997 | 952 | 885 | 833 | 295 | ||||||||||||||||||||||||||||||||||||||
2013 | 885 | 1,017 | 982 | 887 | 360 | |||||||||||||||||||||||||||||||||||||||
2014 | 972 | 1,076 | 1,066 | 500 | ||||||||||||||||||||||||||||||||||||||||
2015 | 941 | 1,124 | 636 | |||||||||||||||||||||||||||||||||||||||||
2016 | 932 | 786 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Incurred losses and ALAE | $ | 8,356 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accident Year | Cumulative Paid Losses and ALAE through December 31, | |||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 63 | $ | 194 | $ | 291 | $ | 370 | $ | 419 | $ | 455 | $ | 486 | $ | 504 | $ | 515 | $ | 524 | ||||||||||||||||||||||||
2008 | 53 | 170 | 248 | 311 | 348 | 382 | 406 | 420 | 441 | |||||||||||||||||||||||||||||||||||
2009 | 51 | 180 | 239 | 299 | 361 | 406 | 433 | 447 | ||||||||||||||||||||||||||||||||||||
2010 | 52 | 193 | 261 | 334 | 383 | 414 | 449 | |||||||||||||||||||||||||||||||||||||
2011 | 54 | 177 | 262 | 334 | 390 | 436 | ||||||||||||||||||||||||||||||||||||||
2012 | 56 | 171 | 244 | 321 | 376 | |||||||||||||||||||||||||||||||||||||||
2013 | 57 | 194 | 276 | 337 | ||||||||||||||||||||||||||||||||||||||||
2014 | 55 | 211 | 306 | |||||||||||||||||||||||||||||||||||||||||
2015 | 44 | 198 | ||||||||||||||||||||||||||||||||||||||||||
2016 | 51 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Paid losses and ALAE | 3,565 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for 2007—2016 accident years | 4,791 | |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for accident years before 2007 | 7,265 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE | $ | 12,056 | ||||||||||||||||||||||||||||||||||||||||||
|
|
Supplemental average historical claims duration information based on General Re’s net losses and ALAE incurred and paid accident year data follows.
Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance | ||||||||||||||||||||
In Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||
General Re Combined | 14.8% | 31.0% | 12.2% | 6.8% | 4.6% | 3.2% | 2.6% | 1.1% | 1.2% | 0.9% | ||||||||||
General Re Property | 22.4% | 45.1% | 14.0% | 4.5% | 2.4% | 1.4% | 1.3% | 0.1% | 0.3% | 0.5% | ||||||||||
General Re Casualty | 6.7% | 16.5% | 10.3% | 9.4% | 7.1% | 5.5% | 4.2% | 2.2% | 2.3% | 1.3% |
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 9
BHRG – Property
Accident Year | Incurred Losses and ALAE through December 31, | IBNR and Case Development Liabilities | ||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 812 | $ | 748 | $ | 666 | $ | 659 | $ | 627 | $ | 602 | $ | 563 | $ | 555 | $ | 553 | $ | 551 | $ | 2 | ||||||||||||||||||||||
2008 | 1,944 | 1,592 | 1,696 | 1,427 | 1,369 | 1,429 | 1,399 | 1,373 | 1,367 | 3 | ||||||||||||||||||||||||||||||||||
2009 | 1,520 | 1,154 | 1,404 | 1,365 | 1,288 | 1,268 | 1,231 | 1,228 | 1 | |||||||||||||||||||||||||||||||||||
2010 | 1,483 | 1,568 | 1,502 | 1,404 | 1,354 | 1,328 | 1,319 | 40 | ||||||||||||||||||||||||||||||||||||
2011 | 2,712 | 2,708 | 2,544 | 2,513 | 2,554 | 2,537 | 59 | |||||||||||||||||||||||||||||||||||||
2012 | 2,190 | 1,955 | 1,851 | 1,649 | 1,612 | 93 | ||||||||||||||||||||||||||||||||||||||
2013 | 2,079 | 1,904 | 1,629 | 1,585 | 239 | |||||||||||||||||||||||||||||||||||||||
2014 | 1,828 | 1,641 | 1,570 | 321 | ||||||||||||||||||||||||||||||||||||||||
2015 | 2,343 | 2,195 | 750 | |||||||||||||||||||||||||||||||||||||||||
2016 | 2,444 | 1,355 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Incurred losses and ALAE | $ | 16,408 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accident Year | Cumulative Paid Losses and ALAE through December 31, | |||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 32 | $ | 343 | $ | 467 | $ | 512 | $ | 532 | $ | 537 | $ | 544 | $ | 545 | $ | 548 | $ | 546 | ||||||||||||||||||||||||
2008 | 182 | 692 | 958 | 1,138 | 1,219 | 1,256 | 1,290 | 1,344 | 1,353 | |||||||||||||||||||||||||||||||||||
2009 | 183 | 538 | 936 | 1,062 | 1,120 | 1,186 | 1,215 | 1,223 | ||||||||||||||||||||||||||||||||||||
2010 | 134 | 567 | 870 | 1,081 | 1,194 | 1,219 | 1,254 | |||||||||||||||||||||||||||||||||||||
2011 | 320 | 1,480 | 1,948 | 2,184 | 2,280 | 2,350 | ||||||||||||||||||||||||||||||||||||||
2012 | 111 | 713 | 1,198 | 1,325 | 1,393 | |||||||||||||||||||||||||||||||||||||||
2013 | 287 | 756 | 1,040 | 1,193 | ||||||||||||||||||||||||||||||||||||||||
2014 | 346 | 777 | 999 | |||||||||||||||||||||||||||||||||||||||||
2015 | 401 | 1,078 | ||||||||||||||||||||||||||||||||||||||||||
2016 | 579 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Paid losses and ALAE | 11,968 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for 2007—2016 accident years | 4,440 | |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for accident years before 2007 | 115 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE | $ | 4,555 | ||||||||||||||||||||||||||||||||||||||||||
|
|
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 10
BHRG – Casualty
Incurred Losses and ALAE through December 31, | IBNR and Case Development Liabilities | |||||||||||||||||||||||||||||||||||||||||||
Accident Year | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | ||||||||||||||||||||||||||||||||||
2007 | $ | 998 | $ | 1,008 | $ | 993 | $ | 999 | $ | 1,025 | $ | 988 | $ | 1,020 | $ | 1,005 | $ | 947 | $ | 920 | $ | 131 | ||||||||||||||||||||||
2008 | 1,444 | 1,538 | 1,292 | 1,476 | 1,466 | 1,319 | 1,284 | 1,232 | 1,211 | 241 | ||||||||||||||||||||||||||||||||||
2009 | 1,454 | 1,704 | 1,585 | 1,561 | 1,559 | 1,491 | 1,460 | 1,440 | 214 | |||||||||||||||||||||||||||||||||||
2010 | 1,393 | 1,406 | 1,381 | 1,367 | 1,256 | 1,247 | 1,232 | 198 | ||||||||||||||||||||||||||||||||||||
2011 | 1,706 | 1,836 | 1,814 | 1,927 | 1,835 | 1,828 | 393 | |||||||||||||||||||||||||||||||||||||
2012 | 1,864 | 1,923 | 1,797 | 1,934 | 1,919 | 601 | ||||||||||||||||||||||||||||||||||||||
2013 | 1,247 | 1,240 | 1,306 | 1,247 | 494 | |||||||||||||||||||||||||||||||||||||||
2014 | 860 | 944 | 922 | 415 | ||||||||||||||||||||||||||||||||||||||||
2015 | 864 | 875 | 363 | |||||||||||||||||||||||||||||||||||||||||
2016 | 946 | 552 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Incurred losses and ALAE | $ | 12,540 | ||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Accident Year | Cumulative Paid Losses and ALAE through December 31, | |||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||
2007 | $ | 139 | $ | 334 | $ | 424 | $ | 481 | $ | 523 | $ | 583 | $ | 626 | $ | 651 | $ | 663 | $ | 675 | ||||||||||||||||||||||||
2008 | 182 | 454 | 659 | 698 | 757 | 800 | 841 | 861 | 875 | |||||||||||||||||||||||||||||||||||
2009 | 189 | 644 | 669 | 875 | 1,027 | 1,120 | 1,121 | 1,140 | ||||||||||||||||||||||||||||||||||||
2010 | 59 | 322 | 544 | 655 | 847 | 900 | 923 | |||||||||||||||||||||||||||||||||||||
2011 | 232 | 650 | 924 | 1,131 | 1,195 | 1,250 | ||||||||||||||||||||||||||||||||||||||
2012 | 249 | 566 | 882 | 1,025 | 1,126 | |||||||||||||||||||||||||||||||||||||||
2013 | 229 | 314 | 515 | 581 | ||||||||||||||||||||||||||||||||||||||||
2014 | 91 | 254 | 320 | |||||||||||||||||||||||||||||||||||||||||
2015 | 149 | 276 | ||||||||||||||||||||||||||||||||||||||||||
2016 | 199 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Paid losses and ALAE | 7,365 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for 2007—2016 accident years | 5,175 | |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for accident years before 2007 | 442 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE | $ | 5,617 | ||||||||||||||||||||||||||||||||||||||||||
|
|
Supplemental average historical claims duration information based on BHRG’s net losses and ALAE incurred and paid accident year data follows.
Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance | ||||||||||||||||||||
In Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||
BHRG Combined | 14.7% | 28.2% | 17.2% | 9.4% | 6.3% | 3.9% | 2.4% | 1.9% | 1.0% | 0.7% | ||||||||||
BHRG Property | 14.6% | 36.3% | 22.2% | 10.6% | 5.2% | 2.7% | 2.2% | 1.6% | 0.6% | (0.4)% | ||||||||||
BHRG Casualty | 14.0% | 19.4% | 12.7% | 8.1% | 7.4% | 4.8% | 2.5% | 1.9% | 1.3% | 1.3% |
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 11
BH Primary – Medical Professional Liability
Accident Year |
Incurred Losses and ALAE through December 31, | IBNR and Case Development Liabilities | Cumulative Number of Reported Claims (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
2007 | $ | 653 | $ | 637 | $ | 617 | $ | 583 | $ | 481 | $ | 428 | $ | 394 | $ | 361 | $ | 331 | $ | 315 | $ | 16 | 15 | |||||||||||||||||||||||||
2008 | 671 | 650 | 620 | 580 | 488 | 438 | 404 | 373 | 350 | 34 | 15 | |||||||||||||||||||||||||||||||||||||
2009 | 694 | 665 | 626 | 608 | 537 | 486 | 437 | 403 | 48 | 16 | ||||||||||||||||||||||||||||||||||||||
2010 | 718 | 685 | 663 | 639 | 571 | 505 | 462 | 97 | 17 | |||||||||||||||||||||||||||||||||||||||
2011 | 693 | 675 | 647 | 617 | 553 | 538 | 147 | 16 | ||||||||||||||||||||||||||||||||||||||||
2012 | 692 | 680 | 651 | 627 | 599 | 227 | 18 | |||||||||||||||||||||||||||||||||||||||||
2013 | 735 | 713 | 694 | 669 | 312 | 18 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 793 | 791 | 769 | 481 | 16 | |||||||||||||||||||||||||||||||||||||||||||
2015 | 928 | 936 | 698 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
2016 | 963 | 886 | 11 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Incurred losses and ALAE | $ | 6,004 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | Cumulative Paid Losses and ALAE through December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
2007 | $ | 9 | $ | 47 | $ | 95 | $ | 153 | $ | 199 | $ | 237 | $ | 262 | $ | 276 | $ | 289 | $ | 294 | ||||||||||||||||||||||||||||
2008 | 10 | 31 | 91 | 148 | 200 | 249 | 279 | 297 | 307 | |||||||||||||||||||||||||||||||||||||||
2009 | (6 | ) | 42 | 106 | 178 | 238 | 294 | 322 | 339 | |||||||||||||||||||||||||||||||||||||||
2010 | 10 | 61 | 132 | 203 | 263 | 313 | 339 | |||||||||||||||||||||||||||||||||||||||||
2011 | 10 | 53 | 115 | 190 | 275 | 329 | ||||||||||||||||||||||||||||||||||||||||||
2012 | 11 | 60 | 130 | 211 | 283 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 20 | 75 | 154 | 241 | ||||||||||||||||||||||||||||||||||||||||||||
2014 | 17 | 83 | 170 | |||||||||||||||||||||||||||||||||||||||||||||
2015 | 25 | 109 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 19 | |||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Paid losses and ALAE | 2,430 | |||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for 2007—2016 accident years | 3,574 | |||||||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for accident years before 2007 | 139 | |||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE | $ | 3,713 | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 12
BH Primary – Workers’ Compensation
Accident Year |
Incurred Losses and ALAE through December 31, | IBNR and Case Development Liabilities | Cumulative Number of Reported Claims (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
2007 | $ | 332 | $ | 318 | $ | 314 | $ | 309 | $ | 313 | $ | 292 | $ | 289 | $ | 285 | $ | 287 | $ | 288 | $ | 24 | 30 | |||||||||||||||||||||||||
2008 | 365 | 380 | 372 | 370 | 357 | 354 | 347 | 350 | 344 | 36 | 27 | |||||||||||||||||||||||||||||||||||||
2009 | 386 | 359 | 360 | 335 | 334 | 328 | 327 | 328 | 42 | 19 | ||||||||||||||||||||||||||||||||||||||
2010 | 372 | 363 | 310 | 309 | 302 | 300 | 298 | 42 | 20 | |||||||||||||||||||||||||||||||||||||||
2011 | 459 | 351 | 351 | 345 | 343 | 340 | 68 | 26 | ||||||||||||||||||||||||||||||||||||||||
2012 | 731 | 729 | 711 | 694 | 675 | 157 | 48 | |||||||||||||||||||||||||||||||||||||||||
2013 | 845 | 824 | 795 | 766 | 218 | 64 | ||||||||||||||||||||||||||||||||||||||||||
2014 | 1,029 | 929 | 884 | 324 | 73 | |||||||||||||||||||||||||||||||||||||||||||
2015 | 1,153 | 1,049 | 510 | 79 | ||||||||||||||||||||||||||||||||||||||||||||
2016 | 1,296 | 895 | 69 | |||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Incurred losses and ALAE | $ | 6,268 | ||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Accident Year | Cumulative Paid Losses and ALAE through December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||||||||||||||||||||||||
2007 | $ | 46 | $ | 129 | $ | 171 | $ | 201 | $ | 220 | $ | 229 | $ | 237 | $ | 242 | $ | 245 | $ | 248 | ||||||||||||||||||||||||||||
2008 | 58 | 142 | 196 | 233 | 251 | 268 | 278 | 285 | 289 | |||||||||||||||||||||||||||||||||||||||
2009 | 59 | 137 | 191 | 212 | 235 | 247 | 257 | 265 | ||||||||||||||||||||||||||||||||||||||||
2010 | 61 | 147 | 174 | 203 | 220 | 232 | 238 | |||||||||||||||||||||||||||||||||||||||||
2011 | 67 | 115 | 173 | 205 | 229 | 242 | ||||||||||||||||||||||||||||||||||||||||||
2012 | 55 | 219 | 317 | 384 | 423 | |||||||||||||||||||||||||||||||||||||||||||
2013 | 118 | 283 | 394 | 463 | ||||||||||||||||||||||||||||||||||||||||||||
2014 | 122 | 299 | 422 | |||||||||||||||||||||||||||||||||||||||||||||
2015 | 130 | 323 | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 147 | |||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Paid losses and ALAE | 3,060 | |||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for 2007—2016 accident years | 3,208 | |||||||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE for accident years before 2007 | 149 | |||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||
Net unpaid losses and ALAE | $ | 3,357 | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
Supplemental average historical claims duration information based on BH Primary’s net losses and ALAE incurred and paid accident year data follows.
Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance | ||||||||||||||||||||
In Years | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||
BH Primary Combined | 15.4% | 17.8% | 14.5% | 11.9% | 9.2% | 6.8% | 4.3% | 2.6% | 1.9% | 1.2% | ||||||||||
BH Primary Medical Professional Liability | 2.0% | 9.2% | 13.7% | 15.5% | 14.2% | 12.2% | 7.3% | 4.6% | 3.5% | 1.6% | ||||||||||
BH Primary Workers’ Compensation | 15.2% | 22.7% | 14.5% | 9.4% | 6.2% | 3.9% | 2.7% | 2.1% | 1.1% | 1.0% |
Ms. Sharon M. Blume, Accounting Branch Chief
Office of Healthcare and Insurance
United States Securities and Exchange Commission
Page 13
Should you have any questions or further comments, please contact the undersigned at402-978-5423.
Very truly yours, |
BERKSHIRE HATHAWAY INC. |
/s/ Marc D. Hamburg |
By Marc D. Hamburg |
Senior Vice President – Chief Financial Officer |
cc: | Mark Brunhofer, Senior Staff Accountant |
Daniel J. Jaksich, Vice President-Controller