November 13, 2006

Re: Berkshire Hathaway Reinsurance of Equitas

Dear Member:

ANA management recognizes that you have been patiently waiting for our analysis of the material terms and conditions of the agreement between a division of Warren Buffet’s Berkshire Hathaway organization and Equitas. There is little doubt that this agreement holds a great deal of promise for Names. It is a momentous achievement, even under the worst-case developments we have been able to envision.

So far, the documentary record is sparse however: some news stories, a letter to Names from Equitas’ Chairman, and press announcements from Equitas and Lloyd’s. Mr. Buffet’s comments have been understandably limited, as the duty to inform reinsured Names falls on Equitas, not Berkshire.

Assurances from Equitas’ Chairman that you will soon "be able to sleep soundly knowing that this chapter is closed" do not relieve the ANA of its obligation to its members to conduct the necessary due diligence. After 3 weeks of dialogue with our many and varied sources on both sides of the Atlantic, vital issues remain unclear.

From what we can tell at present, Phase I of the Berkshire/Equitas arrangement is straight reinsurance. This by itself does not remove the original and ongoing legal liability of Names in relation to US policyholders and ceding companies that purchased coverage from Lloyd’s syndicates prior to 1993. Importantly, too, US policyholders and cedants with outstanding claims against Lloyd’s and/or Equitas have not yet publicly commented on this deal. Until they make their views known – in the press or the courts – Names will be wise to remain vigilant.

We are told that in Phase II of the plan a novation of Names’ liabilities to policyholders/cedants will be sought from the UK courts. The announced timeline projects that milestone for sometime in 2009. We see little reason to celebrate or sleep easy until such a ruling is actually handed down.

In summary, the Berkshire/Equitas reinsurance agreement is a big plus for the Names, simply by virtue of the finite increase in coverage of $5.7 billion. The ANA cannot complete our analysis of the deal, however, until contractual wording is available for review, policyholder/cedant sentiment is apparent, and events develop more conclusively. In the meantime, we strongly recommend that you stay the course that you and your personal advisor(s) have charted to protect your interests.

We are continuing to work hard to obtain the full facts associated with this matter and will keep you posted on what we discover.

Yours sincerely,

J.F. "Jack" Shettle, Sr.
Chairman

Berkshire to assume Equitas liabilities
Omaha World Herald, Oct. 21, 2006