Dnivash’s Weblog

Joseph Brandon ,  chairman and chief executive of General Re Corp. , the reinsurance subsidiary of Berkshire Hathaway Inc., resigned effective Monday in the wake of federal pressure involving a fraud case.

Gen Re President Franklin “Tad”  Montross will assume  Mr. Brandon’s titles.

Federal prosecutors have been pressuring Berkshire to replace Brandon following criminal-fraud convictions of four former General Re executives earlier this year, people familiar with the situation told The Wall Street Journal last week. His removal was seen as part of an effort to conclude the government’s investigation into General Re.

With the aid of trial testimony from two other ex-General Re executives who had pleaded guilty early on in the investigation, the federal government secured convictions against all those charged after arguing that a sham deal between General Re and American International Group Inc., the insurance giant that had been General Re’s biggest client, had improperly burnished AIG’s earnings, thereby boosting its stock price.

Berkshire bought General Re, which is in the business of insuring the risk of other insurers, a decade ago and inherited its management. Brandon led General Re since 2001 and was chief financial officer before that. The unit generated more than $6 billion in revenue last year, 5% of Berkshire’s revenue.

Mr. Brandon’s status at the company has been uncertain since 2005, when he received formal notice by federal securities regulators that they were looking into whether he violated securities laws. Neither the Securities and Exchange Commission nor prosecutors have charged Mr. Brandon with any wrongdoing. He has cooperated with the government without  seeking immunity from  prosecution, two people familiar with the situation told the Journal.