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Phil Liesche

Origin of Relationship

Phil Liesche was a key underwriter at National Indemnity Company under founder Jack Ringwalt. When Berkshire acquired NICO in 1967, Liesche continued to run the underwriting operations. He succeeded Ringwalt as President of National Indemnity in 1973.

Major Milestones

  • 1970: Guided the traditional auto insurance operations alongside Jack Ringwalt through a period of market tightening.
  • 1973: Promoted to President of National Indemnity Company upon Jack Ringwalt's retirement.
  • 1974: Managed NICO through a severe industry price war and high inflation, choosing to drop volume and accept underwriting losses rather than matching competitor rate-cutting.
  • 1976: Led a dramatic recovery at NICO as competitors withdrew, expanding premium volume rapidly and achieving an outstanding combined ratio of 98.7% (beating the industry average of 103.0%).
  • 1977: Achieved record underwriting profits on large volume gains, aided by Roland Miller in Underwriting and Bill Lyons in Claims.
  • 1978: Delivered $11 million in underwriting profit on $90 million of earned premium. Buffett named Liesche's division the "number one contributor to Berkshire's overall excellent results in 1978."
  • 1979: Successfully contracted NICO's volume as the underwriting cycle turned soft, refusing to write policies at inadequate rates.

Strategic Importance

Phil Liesche represents the operational execution of Insurance Underwriting Discipline. Succeeding a founder like Jack Ringwalt is notoriously difficult, but Liesche maintained the exact same pricing discipline, showing no fear of declining volume. His ability to double premium volume during hard markets and contract it during soft markets validated Buffett's theories on the Underwriting Cycle. Liesche proved that under disciplined management, Insurance Float is not a liability, but a highly profitable asset generated at a cost far below the risk-free rate of borrowing.

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