Gen Re, one of the giant reinsurance businesses at Warren Buffett’s Berkshire Hathaway Inc., said it’s exiting property-casualty operations at six smaller locations amid a global reorganization.
The reinsurer said Thursday that it plans to shutter operations in Hong Kong; Melbourne; Riga, Latvia; Seattle; St. Paul, Minnesota; and Charlotte, North Carolina. The company will continue to serve those markets out of larger offices.
“We have reviewed our entire global footprint, and with this change, we are positioning Gen Re’s property and casualty operation to address the realities of today’s markets,” Bob Jones, a president at the reinsurer, said in a statement. “We need to deliver underwriting and claims expertise in the most effective manner, while not compromising the quality of our products and promises.”
Buffett has soured some on the prospects for reinsurers, which help primary carriers spread out risk and shoulder the costliest claims. The price of coverage has slumped amid a glut of capital in the industry, and as Wall Street dreamed up other ways to provide the protection.
As a result, Omaha, Nebraska-based Berkshire has increasingly focused on building primary insurance operations. One of those businesses announced an expansion into Europe Thursday.
While Gen Re has managed to boost sales in its international life operation in recent years, property and casualty has turned down business because rates are too low to compensate for the risk assumed. Policy sales in that segment slipped 9 percent to $2.7 billion in 2015 from a year earlier, after adjusting for foreign currency exchange rates. Pretax underwriting profit fell 26 percent to $150 million.
In addition to the office closures, Gen Re said it would organize its European Treaty operation around five types of business. Teams representing those areas will now serve the entire region, according to the statement.