January 2, 2008
HEARD ON THE STREET
Reinsurance Trial May Ask:
What Did Buffett Know?
By KAREN RICHARDSON
DOW JONES REPRINTS
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January 2, 2008; Page C1
Warren Buffett has been riding high in recent days on a wave of
good news, but a coming criminal trial of some of his former
employees could have a sobering effect.
While the Omaha billionaire hasn't been charged with any
wrongdoing, the Jan. 7 criminal trial of four former insurance executives of General Re Corp., a
reinsurance unit of
Inc., and one former executive of
Inc., could be as much about Mr. Buffett as it will be about a seven-year-
old reinsurance transaction that federal prosecutors said was a fraud.
The case, to be heard in federal court in Connecticut, is the culmination of a nearly three-year
inquiry into what prosecutors said was a sham deal that helped AIG boost its loss reserves in 2000
and 2001 by about $500 million, misleading analysts and investors about the amount of losses
AIG could absorb and buttressing its stock price. The trial will likely cast an unflattering light on
the alleged inner workings of General Re and renew questions about the involvement of Mr.
Buffett in the transaction.
On trial will be Ronald Ferguson, 65 years old, former General Re chief executive; Elizabeth
Monrad, 53, former General Re chief financial officer; Christopher Garand, 60, General Re's ex-
senior vice president of finite reinsurance; Robert Graham, 59, General Re's ex-assistant general
counsel; and Christian Milton, former head of reinsurance at AIG. Several of the defendants will
assert in the trial that Mr. Buffett, widely known as the "Oracle of Omaha" for his investment
prowess and his reputation for integrity, knew about the deal, giving it the stamp of legitimacy.
Amid the investigation, AIG acknowledged it accounted improperly for the deal and restated