National Indemnity Company

Employees who fear that large layoffs will accompany sizable reductions in premium volume will understandably produce scads of business through thick and thin, mostly thin.

The trends in National Indemnity's traditional business, the writing of commercial auto and general liability policies through general agents, suggest how gun-shy other insurers became for a while and how brave they are now getting.

In the last quarter of 1984, National Indemnity's monthly volume averaged $5 million, about what it had been running for several years.

By the first quarter of 1986, monthly volume had climbed to about $35 million.

In recent months, a sharp decline has set in.

Insurance companies collect money first and pay out claims later.

There happened to be an insurance company right in Omaha called National Indemnity, and the owner was a guy named Jack Ringwalt.

This Ringwald was a bit of an eccentric old man.

In 1940, he started with $125,000, specializing in providing insurance for businesses like taxis that others didn't want to touch.

What happened?

Well, in 1967, they discovered a fantastic, well-run insurance business called National Indemnity.

They bought it for $8.6 million.

And insurance, unlike textiles, was a wonderful business, right? Because it generated cash up front before paying out claims later.

OK, what do you mean by parked?

At the time, the management team ran a private investment partnership where they and their investors own 100 percent of the assets.

But instead of buying national indemnity for that private partnership, they bought it under the corporate umbrella of Berkshire Hathaway.

Which they only own 61 percent of at the time.

And it was early in the history of Berkshire Hathaway when Buffett increasingly began to rely on insurance.

Early in his career, Buffett acquired companies including National Indemnity and later Geico.

Yes, Geico.

The same one that with the lizard? The gecko lizard? Yes, that one is owned by Berkshire Hathaway.

And they still are today.

Uh, Berkshire has a company called NICO, National, uh, Insurance, National Indemnity Company.

I think it's National Indemnity Company, NICO.

And, uh, when I was working in the re-insurance world, I would, uh, I would call NICO, like, when I was trying to get a deal done.

They wouldn't take my call unless I had $100 million deal or greater.