For multinational conglomerate Berkshire Hathaway the good news is that losses connected with a massive fire at a French refinery last September is covered by insurance, CEO Warren Buffett explained in his annual letter to the stockholders.
But, in what underscores the wide scope of Berkshire’s operations, the bad news is Berkshire Hathaway also owns the insurance company that will have to shell out.
“Since 2011, we have owned Lubrizol, an Ohio-based company that produces and markets oil additives throughout the world,” Buffett writes. “On September 26, 2019, a fire originating at a small next-door operation spread to a large French plant owned by Lubrizol.”
The result was significant property damage and a major disruption of Lubrizol’s business.
“Even so, both the company’s property loss and business-interruption loss will be mitigated by substantial insurance recoveries that Lubrizol will receive,” Buffett writes. “But, as the late Paul Harvey was given to saying in his famed radio broadcasts, ‘Here is the rest of the story.’”
“One of the largest insurers of Lubrizol was a company owned by … uh, Berkshire.”
More than 9,500 tons of chemicals at the Lubrizol plant and a neighboring facility, Normandie Logistique, burned last year, causing major environmental concerns across the region. The fire is currently the subject of an ongoing parliamentary investigation.
A press release issued by Lubrizol states that FM Global has been the company’s property insurer since 2008.
Buffett quoted from the Bible as he closed out his mea culpa to the stockholders.
“In Matthew 6.3, the Bible instructs us to ‘Let not the left hand know what the right hand doeth,’” Buffett writes. “Your chairman has clearly behaved as ordered.”