Berkshire Hathaway puts extra €40m into Dublin company

Warren Buffett’s Berkshire Hathaway put an additional €40 million into its Dublin-based European insurance company in February to bolster its capital levels, according to accounts just filed.

The funding was provided by way of new shares and brought its share capital to €176 million. The accounts also note that the Nebraska-based parent company put €20 million into the Irish business in 2020, also via new shares.

That funding was to “support the faster than expected growth of the business, including the associated start-up costs”, its financial statements note.

The Dublin operation was initially capitalised to the tune of €116 million as part of its authorisation process before it began trading in 2019, to meet “forecast regulatory capital requirements to December 2022, including the funding of initial net losses associated with the start-up of the new business”.

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In terms of the impact of Covid-19, all of its offices are operating on a working from home basis and the board has assessed an “exposure” of €10 million from the pandemic.

“The board have reassessed the various risks which have been increased by the pandemic and are confident that the business is sufficiently robust to withstand all impacts,” the directors’ report notes.

The company’s gross premiums written was €318.4 million, up from €72.7 million in 2019. Its average loss ratio after reinsurance was 92 per cent, which the accounts state was in line with expectations.

When investment and exchange losses are included, the company made a loss before tax of €6.3 million, up from €2.7 million in 2019. An overseas tax charge of €2.1 million brought total losses for the year to €8.4 million.

Berkshire Hathaway European Insurance obtained its regulatory approval from the Central Bank of Ireland in March 2019, and commenced trading that month. It is involved in underwriting general insurance business and operates from branch offices in the UK, Germany, Spain, France and Italy.

Wage bill

The company’s wage bill almost trebled during the year to €10.5 million. Its 62 staff earned on average just more than €169,000 last year. Remuneration for the company’s directors amounted to €524,000.

On January 1st this year the company’s employees in Ireland were transferred into a group-owned service company here, “thus enabling them to more fully support the business of the parent company”.

In April the company exercised a break clause in its Dublin office lease and was finalising a five-year lease on a different property to commence in May.

The accounts state that this year is expected to be one of “significant growth whilst embedding the underwriting, and claims disciplines within the branch network”. The majority of the growth is expected to come from the UK branch.

Based in Omaha, Nebraska, Berkshire Hathaway is a multinational conglomerate led by Warren Buffett (90),who is regarded as one of the world’s most successful investors.