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House of Assembly - Fifty-Fourth Parliament, First Session (54-1)
2019-10-29 Daily Xml
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Answers to Questions

Motor Accident Commission

1316 The Hon. S.C. MULLIGHAN (Lee) (11 September 2019). With regard to Berkshire Hathaway:

(a) Was there an up-front fee received from Berkshire Hathaway for the right to manage the Motor Accident Commission 'back book' of insurance claims?

(b) Is there any ongoing payment or fee required from Berkshire Hathaway as part of the arrangement entered into?

(c) What are the other terms of the arrangement reached with Berkshire Hathaway?

The Hon. S.S. MARSHALL (Dunstan—Premier): I have been advised:

(a) There was no up-front fee received from Berkshire Hathaway.

The transaction resulted in the transfer of outstanding claims' liabilities to Berkshire Hathaway's reinsurance arm, National Indemnity Company (NICO), such that all the ongoing risk of these liabilities is now managed by Berkshire Hathaway.

A reinsurance premium of $717.7 million was paid to NICO, comprising an initial provisional payment of $715.2 million calculated in December 2018, and a subsequent $2.5 million true-up payment made on 10 April 2019.

The true-up payment reflects the claims outcomes, management expenses, and other calculations per the terms of the reinsurance deed with NICO, which is available online.

(b) There are no ongoing payments or fees required from Berkshire Hathaway as part of the arrangement.

(c) The terms of the arrangement reached with Berkshire Hathaway are detailed within the reinsurance deed, which is available online via the SA Tenders and Contracts website.

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