Run by billionaire investor Warren Buffett, Berkshire said that in December 2004, General Re received a request from the Securities and Exchange Commission for documents and information relating to non-traditional products. Additionally, in January 2005, General Re was served with subpoenas for the same information by both the SEC and New York State Attorney General Eliot Spitzer's office.

Berkshire stated that it cannot "predict the outcome of these investigations, is unable to estimate a range of possible loss, if any, and cannot predict whether or not that outcome will have a material adverse effect" until the probes are completed or otherwise resolved.

Berkshire also disclosed that the liquidator of HIH Insurance, a giant Australian insurer, is planning to make claims against General Re for the insolvent company. HIH became its country's biggest corporate failure in 2001 with losses of $5.3 billion

Berkshire did not discuss whether any extended legal action might result from the claims.

According to the liquidator, General Re engaged in deceptive conduct that assisted the firm in improperly accounting for such transactions as reinsurance, and such deception was a causal factor that led to the insolvency of HIH, Berkshire's report stated.

Berkshire Hathaway joins a growing list of companies that regulators are questioning in regard to non-traditional finite insurance products. In the past two weeks, CNA Financial and RenaissanceRe Holdings Ltd. also said they are being investigated regarding finite products.

Regarding 2004 financial results, Berkshire said its insurance businesses reported $1.01 billion in 2004 net underwriting gain, down slightly from the year-ago figure of $1.11 billion.

The company's GEICO auto insurance unit posted significantly improved underwriting income of $970 million for 2004, compared with $452 million for 2003.

General Re reported $3 million underwriting income for 2004, down from $145 million one year ago. Berkshire Hathaway Reinsurance Group posted $417 million underwriting profit, down from $1.05 billion in 2003, while Berkshire Hathaway Primary Group improved to $161 million, up from $74 million.

Commenting on GEICO's performance, Mr. Buffett said the auto insurer made significant headway in the New Jersey marketplace after its re-entry last August following changes in insurance regulatory statutes there.

Response from New Jersey drivers, he said "is multiples of my expectations. We are now serving 140,000 policyholders--about 4 percent of the New Jersey market."