Former General Re chief takes Fifth on practices

RONALD FERGUSON, former chief executive of Berkshire Hathaway’s General Re unit, refused to answer questions from federal prosecutors and regulators on reinsurance accounting, prompting the company to sever remaining ties.

Mr Ferguson, who stepped down as chief executive in 2001, cited his Fifth Amendment right to avoid self-incrimination yesterday in response to subpoenas from the US Department of Justice and the US Securities and Exchange Commission (SEC), Berkshire said in a statement. In response, General Re, the largest US reinsurer, said Ferguson will no longer be a consultant.

Mr Ferguson’s refusal to answer questions underscores the extent to which Berkshire, run by billionaire investor Warren Buffett, is now embroiled in probes of accounting abuses by its customers. American International Group, the world’s largest insurer, is among at least three General Re clients being investigated in a probe of non-traditional reinsurance that can be used to mask losses or smooth earnings.