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Internal retrocession is a normal practice in insurance companies. The larger entity can pool money and absorb losses better.
by thablackbull 5y ago
Internal retrocession is a normal practice in insurance companies. The larger entity can pool money and absorb losses better.
- christophilus 5y agoBerkshire really doesn't think that way, though. Their operations are largely distinct and don't really inter-communicate or plan. Fairly recently, one of their businesses sustained a large loss, and the casualty insurer paid out a handsome sum, so the business actually came out ahead. But the downside was that the insurer was one of Berkshire's subsidiaries. This was evidently unplanned and unknown ahead of time at the top level, but shows the decentralized structure of Berkshire is not just in name only.