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Berkshire prepared for $400B cat; D&O liability insurers to face challenges

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Berkshire prepared for $400B cat; D&O liability insurers to face challenges

Berkshire Hathaway Inc. Chairman, President and CEO Warren Buffett, in his annual letter to shareholders, said "no company comes close to Berkshire in being financially prepared for a $400 billion mega-cat." He reiterated Berkshire's disciplined acquisition strategy, writing that he and his longtime business partner, Berkshire Vice Chairman Charlie Munger, will have "opportunities to make very large purchases," from time to time. Buffett attributed the buying furor to eager Wall Street chief executives, encouraged by their company board members and subordinates to justify deals.

Berkshire reported year-over-year fourth-quarter and full-year 2017 results showing a benefit of about $29.1 million related to tax reform. Fourth-quarter operating earnings were $3.34 billion, compared with $4.38 billion in the year-ago period.

James River Group Holdings Ltd.'s stock fell 10.61% to close at $34.45 on Feb. 23, a day after it reported its fourth-quarter 2017 earnings. The company booked $29.8 million of unfavorable development in the excess and surplus lines segment during the quarter.

Property and casualty insurers operating in the directors and officers liability insurance market will face "meaningful challenges ahead" as pricing remains "highly competitive" and market capacity is "relatively unchanged," Fitch Ratings said. The agency said there is potential for larger cost settlements in the future, considering the high number of pending outstanding federal class actions.

At the National Governors Association meeting, Health and Human Services Secretary Alex Azar had one-to-one chat with Idaho Gov. Butch Otter, who ordered his insurance commissioner last month to find a way to let insurers sell plans that escape meeting all of the requirements of the Affordable Care Act, or ACA, like its essential health benefits.

American International Group Inc. and Hong Kong's AIA Group Ltd. are believed to be considering buying AMP Ltd.'s assets, including its life insurance, wealth management and New Zealand operations, The Australian reported.

Featured news

US to relax opioid treatment rules; Allergan's Restasis open to patent challenge: The U.S. Food and Drug Administration will release guidance on expanding options for people addicted to opioids; and the U.S. Patent Trial and Appeal Board ruled that patents related to Allergan's eye drug Restasis can be challenged.

Financial news in other parts of the world

Asia-Pacific: QBE to divest LatAm ops; Indonesian president nominates new central bank chief

Europe: Deutsche Bank to float DWS unit; NIBC confirms IPO plans; SEB CFO to leave

Middle East & Africa: First Abu Dhabi Bank eyes Saudi branch; Kenyan rate cap law set for reform

Latin America: Banco Inter files for IPO; QBE selling LatAm ops; Fitch downgrades Brazil

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng was up 0.74% to 31498.6. The Nikkei 225 climbed 1.19% to 22,153.63.

In Europe as of midday, the FTSE 100 rose 0.51% to 7,281.51, and the Euronext 100 added 0.67% to 1,033.57.

On the macro front

The Chicago Fed national activity index, the Dallas Fed manufacturing survey and the new home sales report are due out today.