New York - Berkshire Hathaway agreed to buy Medical Liability Mutual Insurance Company, extending Chairman Warren Buffett’s leadership in the business of protecting doctors against lawsuits.
The target company is the largest underwriter of medical professional liability insurance in New York and will convert from a policyholder-owned to a stock business, Omaha, Nebraska-based Berkshire’s National Indemnity unit said on Monday in a statement that didn’t disclose terms. Policyholder surplus, a measure of assets minus liabilities, was $1.8 billion as of December 31, according to the statement. The deal is expected to be completed in the third quarter of 2017, pending regulatory and customer approvals.
“MLMIC is a gem of a company that has protected New York’s physicians, mid-level providers, hospitals and dentists like no other for over 40 years,” Buffett said in the statement. “Good things are worth waiting for.”
Insurance has long been a centrepiece of Berkshire, as the operations generate premiums that Buffett can reinvest before paying claims. While the company counts more on giant subsidiaries like auto insurer Geico and Gen Re, Buffett periodically adds companies in niche markets.
Berkshire in 2005 acquired Medical Protective Company, which has been operating for more than a century. That Fort Wayne, Indiana-based business reached a deal in 2011 to buy Princeton Insurance from MLMIC to expand in New Jersey. MLMIC policyholders will be entitled to a payout, based on the amount of premiums they paid, when Monday’s deal is completed, according to a fact sheet on the company’s website.
The seller was advised by Keefe Bruyette & Woods and Willkie Farr & Gallagher LLP, according to the statement. Buffett didn’t immediately return a message seeking comment.
Berkshire is the largest provider of medical professional liability insurance in the US, according to data from the National Association of Insurance Commissioners. It competes with physician-led groups such as The Doctors and other publicly traded insurers like CNA Financial and American International Group.
* With assistance from Katherine Chiglinsky
BLOOMBERG