Buffett: bad-mouthing the U.S. insurance industry

Declared that the three bonds to insurance companies no longer underwriting the value of 800 billion U.S. dollars of municipal bonds to provide reinsurance

"According to common sense, we are in recession."

"My children will live better than I, although they do not believe that this judgement."

-- "God Unit" Warren Buffett

Known as "God Unit" Warren Buffett on the 3rd in the United States told CNBC television that the U.S. economy has actually entered a "recession." He also announced that the three bonds to insurance companies no longer underwriting the value of 800 billion U.S. dollars of municipal bonds to provide reinsurance.

According to "common sense"

Buffett said that from his leadership of Berkshire Hathaway Inc. reports on retail companies, to significantly reduce Americans, and because real estate prices fell, to millions of Americans owned property Decline in value.

Buffett said, "According to common sense, we are in recession."

Buffett cited "common sense" because the economic indicators, the current problems facing the U.S. economy is still not enough recession levels. Most economists believe that two consecutive quarters of gross domestic product (GDP) growth means that the negative economic recession. The U.S. Department of Commerce announced on the 28th last month, the figures showed that U.S. gross domestic product growth in the last quarter of last year, 0.6 percentage points, while in the previous quarter, the figure is 4.9 percentage points.

Buffett's judgement and many economists similar. U.S. National Association of Industrial Economics published a survey, the economists surveyed, about 45 percent believe that the U.S. economy will enter a recession in 2008.

However, Buffett believes that the long term, the U.S. economy will not Yijuebuzhen. "My children will live better than I, although they do not believe that this judgement."

Bad-mouthing insurance

The insurance industry is the heavy investment in the first Buffett. Over the years, Berkshire Hathaway, about half the proceeds from the insurance industry. But on the 29th last month announced the company's financial report shows that, Berkshire Hathaway last year from the insurance industry earned a net profit of 2.2 billion U.S. dollars, while last year, this figure is 2.5 billion U.S. dollars.

At the same time with the financial report released an open letter to shareholders, Buffett bad-mouthing the insurance industry. He said: "We, including the insurance industry profits in 2008 will be a significant decline." He estimated that, even if the United States this year not to be subjected to major natural disasters, the insurance industry's profits will be down about 4 percentage points. He said that if a hurricane or earthquake and other natural disasters, the insurance industry will face a more difficult situation.

Last month, the largest U.S. insurer American International Group (AIG) released earnings reports that the fourth quarter of last year because of credit losses in the Group nearly 5.3 billion U.S. dollars Jukui. 2007 full year group profit 6.2 billion U.S. dollars, less than the total 2006 profits of 14.05 billion U.S. dollars half.

In addition, Buffett announced on the 3rd, not for the three insurance companies underwriting the bonds worth 800 billion U.S. dollars of municipal bonds to provide reinsurance. He proposed last month on the 12th, Berkshire Hathaway is willing to each of the three bond underwriting of municipal bond insurance companies to provide reinsurance, but does not include other complex high-risk financial instruments. These insurers to pay premiums collected by the return of 1.5 times. That proposal did not receive responses.