General Re ?not a target? of probe
OMAHA, Nebraska (AP) ? General Reinsurance Corporation, the reinsurance giant owned by Warren Buffett?s Berkshire Hathaway Inc., learned last week that the company is not a target of the federal investigation into the collapse of insurer Reciprocal of America.
Officials at General Reinsurance received a letter from the US Attorney for the Eastern District of Virginia on Tuesday stating that the Berkshire subsidiary is not considered a target or subject of the investigation into the collapse of Reciprocal, according a filing with the Securities and Exchange Commission.
Four current or former General Re employees had previously received subpoenas as part of the Reciprocal investigation, and one of the four had been identified as a target of the investigation. The US Attorney?s letter on Tuesday said none of those four current or former employees are currently targets of the investigation, according to Berkshire?s filing.
Officials at Berkshire?s Omaha headquarters and General Re?s Stamford, Connecticut, headquarters did not immediately return calls for comment.
Reinsurance policies, such as those General Re offers, are policies that insurance companies buy from another reinsurance company to cover all or part of their risk.
Tens of thousands of doctors, lawyers and hospitals in the South and Midwest were insured by Reciprocal and its affiliates before its demise in 2003. That led to investigations that shed light on troubling industry practices and sent tremors through Wall Street.
Virginia and Tennessee regulators accused the company and its business partners, including General Re, of hiding Reciprocal?s deteriorating finances through sham transactions. Regulators had alleged that General Re helped Reciprocal evade regulatory scrutiny through loans disguised as reinsurance.
General Re has also been under investigation over some reinsurance transactions with the insurer American International Group Inc.
AIG has acknowledged that its accounting for a General Re deal was improper.
Four former General Re executives and a former executive of American International Group have been indicted on charges they participated in a scheme to manipulate AIG?s financial statements.
