Insurers American International Group Inc. and Berkshire Hathaway Inc. BRKB are in contravene for talent as Warren Buffett’s company pushes into a profitable corner of the commercial market dominated by AIG.
The “war,” broke out in April when Berkshire hired four senior AIG executives to start a new commercial-insurance unit that now competes with one of AIG’s most-profitable businesses. Berkshire’s new operation has expanded to 62 employees, including about 15 additional hires from AIG.
The illegal hunt irritated AIG’s top executives and the company threatened to sue Berkshire. After Berkshire agreed not to hire any more AIG employees for a year, according to people familiar with the matter, both the companies reached a break.
A leading newspaper also said that the companies also agreed not to criticize each other. Both the companies continued to compete for business. An area that the regulators keep a close eye on is when companies occasionally implement no-hire agreements for certain period of time.
On the other hand the fight between the insurers was strangely tetchy, in parts because of the reason that it involves the insurance industry has been lucrative for AIG over the years.
The insurance named “excess-and-surplus” is roughly $25 billion U.S. market involves selling often-large amounts of coverage to businesses in contracts tailored to specific risks such as policies to protect against hurricane damage. AIG’s excess-and-surplus business is called Lexington Insurance Co.
Warren Buffett has been fervent about wanting to grow his company’s insurance business in the years to come, and as of now it has the staff to do it. With the recent narration of events, his team simply can’t expect to get any more assists from AIG, unless more ex-employees start looking for work in Berkshire.