Central States Indemnity

Summary

An Omaha-based insurance company that makes monthly payments for credit-card holders who become disabled or unemployed, acquired by Berkshire Hathaway in 1992.

Timeline & Role

1992: Berkshire purchases 82% of the company in a transaction Buffett describes as the "prototype" of what they look for in acquisitions. Managed by Buffett's friend of 35 years, Bill Kizer, the company generates about $10M in profits on $90M of annual premiums. The Kizer family retained 18% ownership to continue running the business. 1992 Letter

📚 Historical Mentions & Citations (1)

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1992 LetterExcerpt Available

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Last year, in December, we made an acquisition that is a prototype of what we now look for. The purchase was 82% of Central States Indemnity, an insurer that makes monthly payments for credit-card holders who are unable themselves to pay because they have become disabled or unemployed. Currently the company’s annual premiums are about $90 million and profits about $10 million. Central States is based in Omaha and managed by Bill Kizer, a friend of mine for over 35 years. The Kizer family—which includes sons Bill, Dick and John—retains 18% ownership of the business and will continue to run things just as it has in the past. We could not be associated with better people. Charlie and I continue to like the insurance business, which we expect to be our main source of earnings for decades to come. The industry is huge; in certain sectors we can compete world-wide; and Berkshire possesses an important competitive advantage. We will look for ways to expand our participation in the business, either indirectly as we have done through GEICO or directly as we did by acquiring Central States Indemnity.

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