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George Young

Origin of Relationship

George Young joined Berkshire Hathaway in late 1969 to establish and manage the newly formed Reinsurance Division within National Indemnity Company.

Major Milestones

  • 1969: Launched the Reinsurance Division at NICO, capitalising on a tight reinsurance market and high rates.
  • 1971: Built the division into a substantial operation and a major profit producer for the company in just two years.
  • 1974: Navigated intense competition and pricing collapse, choosing to cancel contracts and shrink volume rather than underwriting underpriced risks.
  • 1976: Worked tirelessly to restore profitability, cancelling a great many casualty contracts where rate adjustments were not obtainable.
  • 1977: Guided the reinsurance department to improved performance, lowering the combined ratio and generating significant float.
  • 1978: Succeeded in producing large sums for investment relative to premium volume, while warning against industry-wide self-delusion in loss reserves.
  • 1979: Adhered strictly to pricing discipline during a period of massive industry rate-cutting, allowing reinsurance activity to decline rather than taking on underpriced liabilities.

Strategic Importance

George Young proved that Berkshire could successfully enter and dominate the highly complex, long-tailed reinsurance business. Reinsurance is particularly susceptible to Underreserving because claims can take a decade to settle. Young’s operational strategy was built on the principle that “virtually any volume can be achieved if profitability standards are ignored.”

By maintaining strict pricing standards and canceling contracts that failed to account for inflation, Young protected Berkshire's balance sheet from catastrophic tail-risk. His division established Berkshire's reputation as a disciplined, capital-rich reinsurer of last resort, setting the stage for the massive reinsurance expansion under Ajit Jain in the mid-1985s.

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