2020: How will COVID-19 affect Berkshire's insurance claims?

BECKY QUICK: This follow up question is from Martin Devine. And he asked both Agit and Warren, what’s your best estimate of Berkshire’s insurance claim exposure from the COVID-19 pandemic?

AJIT JAIN: Well, in terms of reserves starting from last year to the end of the first quarter of this year, we have put up a $1.6 billion and change in terms of reserves. Now, what that doesn’t take into account is some of the frequency benefit because of COVID-19 that results because of fewer accidents and Geico has had a huge tailwind because of that. But in terms of what the insurance operations collectively are going to be writing checks for that number as of now is about $1.6 Billion. And my guess is that will probably grow because if you look upon it, the industry as a whole has reserved, we reserved $1.6, as I mentioned, the industry as a whole is reserved about 25 to $30 billion for COVID-19. As of now, if you believe the pundits in the industry, they will tell you that number is probably going to be closer to a hundred billion. So there’s another about 70, $75 billion of COVID-19 losses.

… there’s another about 70, $75 billion of COVID-19 losses that need to flow through insurance industry’s balance sheet and income statement. Our number, therefore, of 1.6 that we have as of now is going to be a lot, lot higher, but it’s not something that we cannot manage completely.

WARREN BUFFETT: Yeah, we will not be it in this top five payers, my guess, of insurance claims, even though we’re… We write a much smaller amount of both life insurance and annuities, actually. In the end, we have more life insurance claims, but the annuities are not going to last. More people will have died that would have otherwise got payments under annuities. It cuts a lot of ways. It’s one of the great human catastrophes of all time, but it was not that big in insurance. I would say this, if the insurance industry thinks they’re going to lose a hundred billion dollars, the hundred billion ought to be up on their books. The idea of feeding in losses… You’ve got a liability. Our goal is to put up the liability when we think it’s happened. We should not be at 1,000,000,006. I would say this. If we really think we’re going to have some proportional share of a hundred billion of it, but that’s enough said on that.