Buffett Likes Insurance Cos.
Warren Buffett Likes Insurance
Warren Buffett is apparently planning to set up a wholly-owned subsidiary in India to acquire a corporate agency licence to sell auto insurance through local company Bajaj Allianz.
The aim is to sell motor insurance online, with an investment in the region of $10.9 million, pretty small by Berkshire Hathaway standards, to set up a support structure, including a call centre.
This strategy was thought up by Anit Jain, of Berkshire Hathaway’s reinsurance business in the Asian sub-continent. Berkshire Hathaway operates as a direct insurer in the USA via its Geico operation. In India, direct investment in reinsurance, insurance, or insurance broking by foreign companies, is limited to a 26% stake.
A corporate agency on the other hand can be wholly foreign-owned. The downside is that each individual in such an agency will need training, and the agency can only promote the products of a single company. In addition, it does not underwrite its own business, but instead makes profits on commission payments.
Elsewhere Warren Buffett and Bill Gates have launched a campaign to get other billionaires to give away most of their money. They want America’s 400 or so billionaires to sign a Giving Pledge promising to donate at least half of their fortunes to charity. If thy do then this would triple the USA’s total amount of charitable giving. The Giving Pledge is not legally binding but Buffett has decided to set an example by promising to give away 99% of his money. Charities are delighted of course, but so far there has been no word from the children might expect to inherit the billions.
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