The invasion of Ukraine by Russia and threats of a possible nuclear warfare between a number of nations was was a subject of debate on the annual Berkshire Hathaway Inc (NYSE: BRK-A)(NYSE: BRK-B) shareholder assembly. Right here’s what Warren Buffett needed to say concerning the dangers of nuclear warfare and what it could imply for insurance coverage firms.
What Occurred: Buffett advised Berkshire Hathaway shareholders that the danger of nuclear warfare is actual and a significant concern. Buffett additionally stated it was lucky that in World Battle II, the U.S. invented the atomic bomb earlier than different nations.
“It’s a really, very, very, very harmful world,” Buffett stated, citing the massive stockpiles of nuclear weapons that nations have.
A query from the viewers prompted a debate on what position a nuclear catastrophe might have on insurance coverage firms, a sector that Berkshire Hathaway has heavy publicity to.
Buffett stated there may be little that Berkshire Hathaway can do when it comes to threat of nuclear warfare. Buffett additionally stated that nuclear warfare would impression different insurance coverage industries and make it extra expensive for Berkshire to underwrite insurance coverage.
“For sure issues, we don’t write insurance policies on as a result of we wouldn’t have the ability to make good on them anyway,” Buffett stated.
Berkshire Hathaway Vice Chairman Ajit Jain, who heads the insurance coverage sector, provided his tackle the potential on an incident involving nuclear weapons.
“It’s very troublesome for us to estimate how dangerous it may be,” Jain stated.
Jain stated he was “pretty constructive” that insurance coverage firms may very well be on the road to pay out damages from nuclear warfare by regulators and the courts.
In contrast to earthquakes and hurricanes, that are dangers that may be estimated by insurance coverage firms, Jain stated the price of nuclear occasions is difficult to foretell and to estimate how dangerous it may very well be.
Why It’s Essential: Together with discussing the dangers of nuclear warfare, Jain additionally mentioned the truth that Geico has fallen behind rival Progressive Corp (NYSE: PGR) within the automotive insurance coverage sector.
“Every one have their pluses and minuses, however having stated that, there’s no query that not too long ago Progressive has executed a a lot better job than Geico,” Jain stated.
Jain credited Progressive with being early on telematics, which entails placing a tool in a car that tracks driving patterns after which providing decrease charges for safer driving habits.
“It can take some time, however my hope is that within the subsequent yr or two, Geico can be positioned to meet up with Progressive,” he added.
Picture: Courtesy of Fortune Dwell Media on Flickr
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