Geico Owner, Billionaire Buffett Says Hurricane Damage Will Linger
OMAHA, NE (AP) — Billionaire Warren Buffett says the storm damage in Texas is staggering, but he isn't sure yet how much insurance companies will have to pay in claims.
Buffett's Berkshire Hathaway conglomerate owns Geico and several other insurers, so his company will be helping people rebuild. Buffett appeared on CNBC Wednesday before dining with the person who paid nearly $2.7 million in a charity auction for lunch with Buffett.
"The effects of this are going to go on for a long time," Buffett said.
The investor expects that 50,000 of the roughly 500,000 vehicles Geico insures in the area will be total losses. But Buffett predicted there will also be large uninsured losses after this storm.
Buffett said Berkshire hasn't written much catastrophe insurance in recent years because prices were too low, so that will limit the Omaha, Nebraska-based company's exposure. By contrast, Berkshire recorded $3.4 billion in hurricane-related losses in 2005 when Hurricanes Katrina, Rita and Wilma struck the Gulf Coast.
Buffett predicted that the damage from Harvey won't derail the relatively steady 2 percent growth in the U.S. economy, but it will be devastating to some individuals and families.
Buffett is Berkshire's chairman and CEO. The conglomerate owns more than 90 companies, including BNSF railroad, several major utilities and an assortment of manufacturing and retail companies.
Earlier this week, Berkshire became the largest shareholder in Bank of America to go along with its major stake in Wells Fargo. Buffett said he likes both banks and plans to continue holding their shares.
"It will be a long, long time before we sell Bank of America shares," he said.
Buffett also expressed confidence in one of Berkshire's few high-tech investments, Apple. Buffett bought more shares of the phone and computer maker in the second quarter to give his company 130.2 million shares.
"I've never sold an Apple share," he said.
Buffett celebrated his 87th birthday Wednesday at the charity lunch that benefits the Glide Foundation, which helps homeless people in San Francisco. Buffett has raised more than $25 million for Glide through the auctions.
The winner of this year's lunch auction has remained anonymous. That person received a relative bargain compared to last year's record bid of $3,456,789, which tied for the record set in 2012.
– by AP Reporter Josh Funk