Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Berkshire Hathaway Inc. (BRK.A): Why American International Group Inc (AIG) Is Furious With Warren Buffett

As the old saying goes, “You don’t get rich without making a few enemies along the way.”

According to a recent report from The Wall Street Journal, the typically amiable Warren Buffett has been busy doing both of late. Specifically, people familiar with the situation say the folks at American International Group Inc (NYSE:AIG) were simply fuming when Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) poached four top AIG executives back in April.

Of course, American International Group Inc (NYSE:AIG) predictably spoke up to highlight its remaining self-described “seasoned and very deep bench,” but as I noted at the time, you can bet they would have rather not had to worry about replacing their best executives in the first place.

American International Group Inc (NYSE:AIG)

Buffett wasn’t done yet

Then in June, whether intentional or not, Buffett took another jab at American International Group Inc (NYSE:AIG) by stating in an official Berkshire Hathaway Inc. (NYSE:BRK.A) press release: “It’s official: We are moving into commercial insurance in a substantial way, and we are here to stay.”

He then went on to tout the strengths of his newly formed Berkshire Hathaway Specialty Insurance segment, including its “proven underwriting discipline and financial strength, along with a stellar management team” (emphasis mine), a list that consisted of five ex-AIG employees.

Worse yet for American International Group Inc (NYSE:AIG), the WSJ report says Berkshire Hathaway Inc. (NYSE:BRK.A)’s new business has quickly expanded to 62 total employees, including around 15 additional hires from AIG.

As noted by fellow Fool Matt Koppenheffer, the author of The Motley Fool’s free special report “Warren Buffett’s Greatest Wisdom“: “For skeptics of the quality of American International Group Inc (NYSE:AIG)’s core insurance business, I think this goes a long way to show just how good it is. But I also know this: Berkshire Hathaway Inc. (NYSE:BRK.A) is not poaching the underperformers at AIG.”

And that’s exactly why AIG finally decided it had had enough, ultimately threatening to sue Berkshire Hathaway Inc. (NYSE:BRK.A) earlier this summer. That was, at least, until the two companies reached a truce that involved having Berkshire agree not to hire any more AIG employees for one year.

Even so, given the new direct rivalry, it’s worth noting AIG also recently decided it will no longer send any of its reinsurance business to Berkshire going forward.

Here’s what’s at stake

If you’re wondering why AIG is so frustrated at this point, consider that back in June, AIG controlled a solid 20% of the $25 billion U.S. excess and surplus market. Berkshire, by contrast, held only around 1.6%.

While we haven’t received any specific updates from Buffett regarding how Berkshire’s specialty insurance business has progressed since then, David Bidmead, the CEO of Marsh & McLennan Companies, Inc. (NYSE:MMC)‘s  U.S. insurance operations, says Berkshire has been “successful in acquiring a good amount of business” of late, showing AIG certainly isn’t the only company worried about Buffett’s expanding reach.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.