Warren Buffett's Firm Would Have Lost MILLIONS If France Won The World Cup

Warren Buffet was an unexpected beneficiary of France's loss to South Africa on Tuesday, which eliminated the beleaguered, scandal-ridden Les Blues from the World Cup.

Bloomberg reports that the Oracle of Omaha wrote an insurance policy to an unnamed individual that would have paid out in a very big way if France won the World Cup championship. In March, Buffett told CNBC that he was going to lose something in the neighborhood of "30 million bucks" if France won. (Bloomberg adds that bookmakers put France's odds of winning a championship at 12-1.)

Whether or not this is ultimately a form of high-finance gambling on Buffett's part, the $30 million payout dwarfs the individual insurance policies taken out on World Cup players, the Insurance Journal reports. A high-priced World Cup player, the publication notes, could have their bodies insured for upwards of $70 million. Lloyd's estimated the total market for World Cup insurance this year to be worth nearly $9 billion.

Comments

[UnaBohemia]

08:47 PM on 06/24/2010

Is this LEGAL?????????????

[squat6971]

10:37 AM on 06/23/2010

How is this not purely gambling? Where is the "insurance company" aspect to this transaction?
Someone should call the cops

[jozie]

03:56 AM on 06/23/2010

Wish they would have told how much the bet, oops, I mean, insurance policy, cost their customer.

[jasev01]

03:17 AM on 06/23/2010

I wish I can get in this

[NovaNardis]

03:06 AM on 06/23/2010

Why the hell is something like this legal? This is like me saying to my roommate "Hey. I'll bet you $30 that France doesn't win the World Cup." "You're on."

This is making my mind explode; I can't even think of something snarky.

[Barnicle23]

12:47 PM on 06/23/2010

If you would have told your roommate that you will write up a contract that will pay out $30 to him in the event of a Wrold Cup victory by France, apparently that's fine!

[breakingpoint]

02:54 AM on 06/23/2010

I wonder if I can take an insurance policy out on Warren Buffet?

ah what the heck!
http://financialterrorists.wordpress.com

[mackiemary]

12:53 AM on 06/23/2010

Who gives a rats arse about how much Buffet would loose.

[mackiemary]

12:54 AM on 06/23/2010

lose.

[Dnietz]

11:50 PM on 06/22/2010

I'm surprised the French are not blaming their disastrous World Cup on Lance Armstrong cheating them out of it.

[bwillrogers]

11:23 PM on 06/22/2010

From what I see the French team reminds me of the 1919 Black Sox

[1differentdrummer]

06:15 AM on 06/23/2010

Naw, they were playing another game: rugby. Was that a record, two fouls on one play?

[Christophe]

11:14 PM on 06/23/2010

You remind of a mor0n who lived in 1919.

The Black Sox 1919 fixed the game. Do you see the difference?

[bwillrogers]

11:22 PM on 06/22/2010

How was the officiating? Any funny business?

[OneTop]

11:15 PM on 06/22/2010

Ah .... isn't that sweet.

Glad it went to someone who really needed it.

[Chessintervention]

11:56 PM on 06/22/2010

LOL

[taxolotl]

11:15 PM on 06/22/2010

is there any sort of editing at all involved in writing articles for HP?

[Markovich]

11:11 PM on 06/22/2010

Warren has JUMPED THE SHARK.

This is his new Indian guy up in Stamford, Conn.

Oh, he's a big believer. They got the odds down just right.

right Warren?

Right!?

BOOOOOOOOM.

Whoops

[mattwg440]

10:02 PM on 06/22/2010

That's funny, when I try to use a credit card to deposit money to an online gambling site they tell me it's illegal.
Say what , he's got a lot of what? How much ? Ohhhhhh

[GerryS]

11:52 PM on 06/22/2010

dood, or doodette,

it's "insurance"---------------

[bayernishe231]

09:17 PM on 06/22/2010

In the past these were used to insure certain promotions.

For example, if there was a retailer in France who ran a promotion that said everyone who buys a flatscreen TV during the world cup would get a 100% rebate if the French team one. So if they were planning to sell $30mm worth of TVs, wouldn't it be prudent to pay the $2.5mm insurance premium (based on the 12-1 odds in the article) instead of risking $30mm. This way the retailer could lock in the total cost of said promotion.

On Berkshire Hathway's part, because of the nature of the risk I'm sure they got a more attractive risk adjusted payout than the odds. Furthermore, When they provide insurance of this purpose it is for a reason not a synthetic bet.