Probe on Buffett company widens

WARREN Buffett’s Berkshire Hathaway Inc, which is under investigation for its role in improper reinsurance accounting at American International Group Inc, said over the weekend that the American government is inquiring about its own books.

Some of Berkshire’s insurance units, which include General Re Corp, were asked how they accounted for a type of reinsurance contract that can be abused to polish financial results, the company said. Second-quarter profit at Omaha, Nebraska-based Berkshire rose 13% as investment income from the insurance businesses cushioned a loss from foreign-currency holdings.

The disclosure suggests state and federal prosecutors may be widening their probe beyond General Re’s role in a four-year-old reinsurance contract that allowed AIG to overstate reserves for claims by $500 million (€410 million). At issue was whether General Re executives knew AIG would use the contract improperly.