Berkshire Hathaway to manage SA CTP claims book
Berkshire Hathaway will take over management of the SA Motor Accident Commission (MAC) claims back book after making an unsolicited offer to the Government.
“We are thrilled to have agreed terms with SA to reinsure its auto liabilities, and we would love to find more opportunities to do business there,” Chairman and CEO Warren Buffett said.
SA said in October it would wind down the MAC as a “natural consequence” of the former Labor government’s decision in 2014 to privatise compulsory third party cover in the state.
Berkshire Hathaway submitted its proposal before the state election in March.
“Put simply, assets and liabilities from MAC will be transferred to Berkshire Hathaway’s National Indemnity Company, so that all the risks of managing MAC’s liabilities will be transferred to Berkshire Hathaway,” Treasurer Rob Lucas said.
“Part of the arrangement will see $300 million of the reinsurance premium retained in SA, with at least $100 million retained for five years, for local funds management.”
The Allianz claims management contract will remain in place at least until its expiry on June 30 next year. Berkshire Hathaway will explore long-term arrangements with Allianz.
After the deal is concluded, returns from MAC to the SA budget will reduce by up to about $68 million over three years from this financial year.
Mr Lucas says Berkshire Hathaway will establish operations in Adelaide under the new arrangements, which take effect next month.