No, it probably doesn’t mean Berkshire Hathaway is going to sponsor a catastrophe bond anytime soon, but the news that ILS legal expert Robert Underhill has been hired to the firm could certainly provide Warren Buffett’s insurance and reinsurance unit with interesting options.
Underhill has joined Berkshire Hathaway Specialty Insurance (BHSI) in a newly established unit focused on Transactional Liability Insurance in the U.S. and Canada.
Underhill, now Senior Vice President, Head of Transactional Liability at BHSI, joins the Buffett owned insurance group with over 15 years of experience in law firms where he has focused on reinsurance, insurance linked securities, and transactional or regulatory matters in re/insurance.
Underhill joined insurance, reinsurance and insurance-linked securities (ILS) focused lawfirm Edwards Wildman Palmer LLP in 2014, remaining with that company as it merged into and became Locke Lord.
Before that, Underhill was with Fortress Investment Group, where he was responsible for the legal, regulatory and compliance matters for the life insurance investments of various Fortress affiliated funds. Prior to which, Underhill was legal head of the unit responsible for the insurance related businesses at Credit Suisse and had also held positions at Citigroup and American International Group as well as in private practice.
So Underhill is really joining Berkshire to run its transactional risk insurance unit, a new foray for the company, but brings interesting capital markets and reinsurance convergence experience to the group and it’s certain the experience will help in the role.
We’d love to say this could result in a Berkshire Hathaway catastrophe bond in years to come, but that’s unlikely given the risk appetite and balance-sheet of the reinsurance group. But the idea of Berkshire tapping the capital markets and ILS is a compelling one, given its reach and access to business that ILS investors would find attractive.
However, as the market remains competitive and challenging, in time even Berkshire Hathaway might look to capital market investors as a way to share risk and augment capacity. At that time Underhill’s experience could be very useful.