Warren Buffett’s Top Plays: #13 Gen Re

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      Lesson summary:

      Berkshire Hathaway acquired General Re, a reinsurance business, in 1998 for $22 billion. The deal was financed using Berkshire stock, diluting shareholders by issuing 22% additional shares. Float, which is money an insurance company holds but can invest, was an important factor in the purchase, as insurance premiums can be used as capital and earn investment returns. However, the results from the investment have been mediocre and in his 2016 annual letter to shareholders, Buffett admitted that issuing the additional shares was a mistake as it caused Berkshire shareholders to give far more than they received.

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