BUFFETT TO BUY A SLICE OF SA
THE “Oracle of Omaha”, Warren Buffett, is looking for more business opportunities in South Australia after swooping in to acquire the insurance book of the Motor Accident Commission.
Mr Buffett’s company, the famed Berkshire Hathaway, made an unsolicited, and successful, bid to the Government to take over management of the “back book” of compulsory third-party vehicle insurance claims. The deal removes a potential liability from the “tail” of insurance claims left over as the MAC is wound down.
And budgeted, but not guaranteed, returns from the MAC to the State Government of $68 million over three years from 2019-20 will now not eventuate.
Mr Buffett, pictured, is a celebrity in investment circles for his long-term, value approach to investing that has delivered shareholders strong returns.
An article on investing website The Motley Fool in April this year calculated that over 50 years, Berkshire Hathaway had delivered a compound annual return of more than 20 per cent, or a total gain of more than two million per cent. Mr Buffett’s personal wealth is estimated at $US86.5 billion and one Berkshire Hathaway Class A Share is valued at $US311,999.
Treasurer Rob Lucas said it was a “significant coup” for the state, and the Government intended to release most of the contractual documentation early next year, with some commercial details struck out.
Mr Lucas said after receiving the bid, the Government engaged financial advisory firm Moelis to look at it, and it concluded it was “unique and presented as value for money’’.
The MAC is being wound down, a process started by the previous government, which began privatising the insurance arm of the MAC in 2014, then announced it would sell its assets then estimated to be worth as much as $2 billion, three years ago. Mr Lucas said Berkshire Hathaway would set up an office in SA and, as it had vast investments in areas such as energy and infrastructure, there would be the possibility to work together more.