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Warren Buffet’s Berkshire Hathaway Companies Accused of Profiting By Denying, Delaying Asbestos Victims’ Payments

Warren BuffettAsbestos victims were in the news this week when major media sources reported that there are dozens of lawsuits claiming that subsidiaries of the company Berkshire Hathaway are further victimizing them by intentionally withholding their payments.  Why?  To boost the company’s bottom line by denying and delaying claims owed to those dying from the asbestos-caused lung cancer.

Berkshire Hathaway Inc, headquartered in Omaha, Neb., is the company owned by Warren Buffet, considered the most successful investor of the 20th century.  As the chairman, CEO and largest shareholder of Berkshire Hathaway, he is consistently ranked among the world’s wealthiest people.

An investigation by Scripps News, a syndicated media service, stated in a report carried by many media outlets including The Wall Street Journal and ABC News,  that Berkshire Hathaway has become “one of the most powerful forces in asbestos and pollution litigation in the world.” And not in a good way.

Apparently, through 25 known deals, Berkshire’s Reinsurance Division took over the insurance risk for asbestos claims from major insurance firms. American Insurance Group (AIG), CNA Financial Group and Lloyd’s of London are among those who paid Berkshire to take on tens of billions of dollars in future asbestos and pollution claims that they had been holding.

Berkshire allegedly invested the money, known as “float” for a very profitable income.  And supposedly, the company did not want the bonanza to end even if it was at the expense of the sick and dying asbestos victims who are suffering because of asbestos exposure in their workplace.

Buffett is quoted as celebrating this strategy in his well-known annual letters to shareholders. In his 2009 message he wrote, “Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009.” By 2012, that number had grown to $73 billion.

According to media reports, major companies with outstanding asbestos claims such as Ford Motor Co. and Estee Lauder Inc. sued alongside asbestos victims to get claims paid so they can be reimbursed for fines, legal fees and payments of injury claims.

Berkshire officials refused to reveal to Scripps how many bad-faith allegations against its subsidiaries have been lodged or settled.  Berkshire executive Ajit Jain said his division pays $1.4 billion annually for asbestos claims and expenses. And “as is the case with any insurance company, the vast majority of claims are settled without trials,” he said.

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