Dear Friend,

I’ve got to dash because I’m sending February’s magazine down to the printers today.

But what keeps humming around my head is this massive 20% Berkshire Hathaway quota-share deal with Swiss Re.

Why? Why? Why?

Okay, maybe it’s smart for Swiss Re to downsize and offload capacity into a softening market, but why on earth is Berkshire ramping up exposure into that same softening market?

I suppose it also just goes to show that it takes two opposing views to make a market.

Berkshire is the smartest outfit in the business, the architect and epitome of the ‘get rich slow’ philosophy. They are also ultra contrarians, knowing that it is usually best to buy when everyone else is selling and sell when everyone else is buying – but a $3.2bn quota share just seems a little rich.

Were it a company in its own right this single slip would be the 12th largest reinsurer in the world. (And if you still got 2.5 points, the brokerage would be $80m a year!).

The underwriting information that Swiss Re must have to pass to BH to maintain such a deal must also be of extreme strategic value to BH, so that is another consideration.

I mean, you need to have pretty good disclosure to get a handle on all the aggregates and potential clashes with existing BH business — we are talking colossal numbers here.

Wow — I bet that placing file is a mile thick — (so maybe the notional fantasy-league $80m brokerage would be well earned after all?!)

So I’ve got it — let’s hazard a cheeky guess that this move is a prelude to an eventual takeover move from the sage of Omaha for the reinsurance gnome of Zurich and the timing of such a possible future transformational deal is almost immaterial.

Eureka! That must be it!

Hey, soft market, you’ve already got a lot to answer for!