Berkshire Hathaway Acquiring Underwriting Company
By Josh Funk, AP Business Writer - February 10, 2006OMAHA, Neb. (AP) _ Berkshire Hathaway Inc. on Wednesday announced that it is buying Applied Underwriters, a San Francisco-based underwriting company.
Berkshire Hathaway, the Omaha investment vehicle run by billionaire Warren Buffett, said in a news release that Applied Underwriters will continue to be run by its founders, Chief Executive Officer Sidney Ferenc and Chief Operating Officer Steven Menzies.
Terms of the sale were not disclosed, and Ferenc and Menzies declined to release details of their company, such as financial information and the total number of employees.
Berkshire Hathaway shares rose $100 Wednesday to close at $87,800 on the New York Stock Exchange.
Applied Underwriters has done business with three Berkshire companies since 2000, Menzies said.
"As that relationship evolved, it became natural to look at acquisition," Menzies said.
Ferenc said he and Menzies were not looking to sell their company, but when Berkshire officials suggested recently they might be interested in buying the company, the two men decided to meet with Buffett.
Selling the company to Berkshire allows Ferenc and Menzies to pay off outside investors while continuing to run the company.
Applied Underwriters will keep its San Francisco headquarters and its national service center in Omaha, Berkshire Hathaway said. About 400 people work in the Omaha center.
"Applied's management team has the disciplined mind-set necessary to lead a profitable underwriting operation," Buffett said in the news release.
A privately held company founded in 1994, Applied Underwriters was described as having "specific expertise in crafting workers' compensation and business services solutions for small and medium-sized enterprises."
Applied Underwriters offers packages of payroll, workers' compensation insurance, other types of insurance and services to companies. Menzies said having all those functions under one roof makes the company unique.
"We believe we've created a niche in integrated workers' compensation," Ferenc said.
And the company founders said they had developed technology that helps them evaluate underwriting risks accurately to generate profits.
The sale includes all of Applied Underwriters' subsidiaries, including Continental National Indemnity Insurance Company and California Insurance Company.
Berkshire owns several companies that sell primary insurance and reinsurance of property and casualty risks, including GEICO and General Reinsurance Corp.
Berkshire also owns companies that sell furniture, jewelry, candy, carpet and paint, and it has large stakes in other well-known companies such as Coca-Cola Co., American Express Co. and The Washington Post Co. | 
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