Berkshire Hathaway in $9.8bn deal to assume risks on AIG ‘long-tail policies’
New York — Insurer American International Group is to pay Warren Buffett’s Berkshire Hathaway $9.8bn to take on long-term risks of old commercial policies. The reinsurance deal covers 80% of the risks on US policies from 2015 and earlier representing reserves of about $34bn at January 1 2016, New York-based AIG said on Friday. The coverage involves what are known as long-tail policies, in which claims can emerge long after issue. AIG has struggled for years with higher-than-expected losses tied to worker-compensation and environment claims. AIG CEO Peter Hancock has been selling units and pursuing risk-transfer deals to free up capital for share buybacks and reduce volatility from contracts that the insurer entered before he took over. Last January, he disclosed plans to return $25bn to shareholders over two years and appointed Charlie Shamieh to lead a legacy unit for businesses AIG plans to sell or wind down. "This decisive step enables us to focus firmly on the future," said Hanc...
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