THE BE R KS H I RE BOOST
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erkshire Hathaway enjoys a top 10 position among the world’s companies. With Warren Buffett at the helm, the holding company owns about 80 businesses in a diverse range of industries, from insurance, railroads and energy companies, to manufacturers, retailers and fast food. Most of the Omaha companies in the Berkshire family, including Nebraska Furniture Mart, Borsheims and Northern Natural Gas, were already quite successful when Berkshire acquired them. “Others probably succeeded more with Berkshire than they might have by themselves,” said Steve Jordon, author of “The Oracle & Omaha.” Here’s a look at three companies that benefited from the Berkshire boost.
M AT T M I L L E R
NATIONAL INDEMNITY COMPANY
APPLIE D U NDE RWRITE RS
BH ME DIA GRO UP
National Indemnity’s story opens in 1940 in a two-room office in Omaha. Brothers Arthur and Jack Ringwalt founded the firm as a specialty insurance company – a four-employee operation that wrote liability insurance for taxis. Today, National Indemnity Company is one of the leading property/casualty members of the Berkshire Hathaway group of insurance companies. Stock control changed from Jack Ringwalt to Berkshire Hathaway in March of 1967. (In the early 1970s, Berkshire Hathaway actually held its annual shareholders meetings in the National Indemnity Company’s lunchroom.) In the 2004 Berkshire Hathaway Annual Report, Buffett wrote, “Indeed, had we not made this acquisition, Berkshire would be lucky to be worth half of what it is today.” When National Indemnity Company launched its Specialty Risk Division in 1985, an ad in Business Insurance featured the headline, “Berkshire Hathaway wants to see property/ casualty risks where the premium is $1,000,000 or more.” “National Indemnity Company’s success is pretty clearly tied to Berkshire, which has turned it into a huge property-casualty insurer,” said Jordon.
Applied Underwriters was 16 years old when it joined the Berkshire Hathaway family. The acquisition in 2006 prompted an immediate growth spurt. “As anticipated, our new relationship with Berkshire Hathaway is generating positive marketplace responses and exciting growth opportunities for our businesses, our managers and employees and our independent agent network,” Sidney Ferenc, chairman and CEO, told the Claims Journal seven years ago. Based in Foster City, Calif., with its national operations center in Omaha, Applied Underwriters provides workers’ compensation and business services for small and mediumsized companies. From the start, Ferenc was confident that the company’s relationship with Berkshire would take it to an even stronger national leadership position in the industry. Buffett, in announcing the deal, was confident that Berkshire had picked another winner. “We invest in proven companies that are industry leaders and offer significant growth potential,” he said in 2006. “Applied’s management team has the disciplined mindset necessary to lead a profitable underwriting operation.” Today, the company is twice as large in terms of customers and revenue. It has one of the highest customer retention rates in the industry at over 90 percent.
Berkshire launched BH Media Group after the $200 million purchase of the Omaha World-Herald in December 2011. Expanding steadily since, the division now owns more than 80 newspapers in Nebraska, Iowa, Virginia, North Carolina, South Carolina, Alabama, Florida, Texas, Oklahoma and New Jersey. “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in May 2012 after a $142 million acquisition of 63 daily and weekly newspapers in the southeastern United States. When Berkshire bought the Omaha World-Herald, Buffett said, “I think newspapers . . . have a decent future. It won’t be like the past. But there are still a lot of things newspapers can do better than any other media. They not only can be sustained, but are important.” Buffett, an avid newspaper reader, has said that he wants to buy more newspapers in cities where people are interested in their communities. The Press of Atlantic City, N.J., was the latest daily to join BH Media Group in July 2013. Other dailies include the Tulsa World, the Roanoke Times and the Winston-Salem Journal.
SEE MORE An influx of visitors and national media for the 2013 Berkshire Hathaway shareholders meeting, the NCAA Men’s College World Series and the U.S. Senior Open provided a unique opportunity to promote more than tourism and hospitality in Greater Omaha from May through July. The Chamber touted the city’s young entrepreneurs in an “Only in Omaha” image campaign that included airline magazine ads and testimonial-style videos. Hear the success stories at OmahaProud.com.
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