2013: Why doesn't Berkshire make a commercial insurance acquisition?

CLIFF GALLANT: Thank you.

WARREN BUFFETT: Cliff, incidentally, you ran a 2:40 last year, didn’t you, in the marathon at Lincoln?

CLIFF GALLANT: I ran the Lincoln marathon after the shareholder meeting.

WARREN BUFFETT: OK. We’ve got incredible talent on this thing. (Laughter)

CLIFF GALLANT: I wanted to ask you more about the commercial insurance business and Berkshire’s interest.

WARREN BUFFETT: Right.

CLIFF GALLANT: If the business is attractive, why not make an acquisition? Do you think that public company valuations are too high today?

WARREN BUFFETT: Yeah. There aren’t too many commercial operations that we would want to acquire, big ones.

It wouldn’t do much — I mean, we’re acquired — when we acquired GUARD Insurance, it’s workers’ compensation, but it’s just — it’s a small acquisition. It’s a good acquisition, but that is a commercial, in effect, underwriter that we acquired late last year.

But, if you look at the big ones, some of them we wouldn’t want. There’s a couple that we would. But the prices would be probably far higher than what we think we might be able to develop a comparable operation for.

I mean, we — in effect — I think we’re going to build a very large commercial operation, and essentially we’ve built it at book value. And we pick up no bad habits of other companies, at least we hope we don’t.

And so, it’s really better to build than buy, if you can find the right people with the right mind-set, and everything, in the business.

And you know, we’ve got a terrific manager, obviously, in Ajit, and these other people have sought him out, so I think — if there were certain commercial operations, and we could’ve bought them at the right price, we’d have done it.

But we have not been able to do that so we will build our own. And I predict that we will have a good and significant commercial insurance operation in a relatively short time.