General Re

General Re

General Reinsurance Corporation, often called General Re, is one of the world's largest reinsurance corporations. It owns a controlling interest in Kölnische Rückversicherungs-Gesellschaft AG (Cologne Re) and both companies operate together as Gen Re. As a reinsurer, it "insures insurance companies" i.e. it will pay a portion of an insurance company's claims in exchange for a portion of the premium received by the insurance company for policies that cover those claims "Gen Re" is a wholly owned subsidiary of Berkshire Hathaway, the holding company run by investor Warren Buffett. In good years, General Re is a large source of cash flow to Berkshire Hathaway and has provided much of the cash that is then used by the company to acquire additional subsidiaries. However, since General Re was acquired in December of 1998, it has run into a string of business and profitability issues. Problems have included emergence of losses on unprofitable business written in the 1990s and earlier, concentration of risk (and therefore huge claims) in reinsurance agreements covering 9/11 losses and most recently, questionable accounting practices on "finite risk" reinsurance contracts written with insurance giant American International Group in 2002.