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ENTITY
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Frank DeNardo

1. Origin of Relationship

Frank DeNardo was hired by Warren Buffett and Phil Liesche in the spring of 1978 to restructure and clean up National Indemnity's California Workers' Compensation operations (specifically the Los Angeles office), which had been suffering severe underwriting losses.

2. Major Milestones

  • 1978: Hired to address the California Workers' Comp division. He aggressively slashed premium volume to 25% of its prior levels to prune unprofitable business and restore underwriting discipline.
  • 1979: Straightened out the troubled Los Angeles operations, delivering seven-figure savings far exceeding expectations and establishing a sound base for future growth.

3. Strategic Importance

Frank DeNardo's work is a classic illustration of Berkshire's approach to troubleshooting operational disasters. Rather than trying to grow or "work out" of a bad underwriting situation, DeNardo was authorized to ruthlessly shrink the business by 75% to eliminate mispriced policies and rebuild the division from scratch. This validated Buffett's core principle that underwriting volume must always be sacrificed in favor of profitability.

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