OMAHA, May 1 -- Berkshire Hathaway Inc. chief executive Warren E. Buffett and his investing partner, Berkshire Vice Chairman Charlie Munger, said they thought recent investigations and enforcement actions have cleaned up abuses in the reinsurance industry.
"I really think it's gone," Buffett said, adding, "there will always be outright crooks looking to steal money."
Berkshire subsidiary General Re has been involved in several reinsurance probes. Buffett said Sunday he did not understand the extent of management problems when Berkshire acquired General Re in 1998. "I would say that I misjudged the culture that existed at Gen Re going in."
Buffett also said he understood but disagreed with debt rating agency Fitch's recent move to downgrade Berkshire's outlook from "stable" to "negative." Fitch cited uncertainty over who would succeed Buffett, 74. Buffett described Berkshire as a simple company with enormous and stable earnings potential that should not be hard for someone else to run. Over the weekend, he told shareholders there are three executives at Berkshire who could take over when he departs.
An executive widely mentioned candidate in Omaha this weekend has been senior Berkshire executive Ajit Jain, who runs National Indemnity Co. and other insurance operations and is thought to be close to Buffett. Munger singled Jain out for special praise during the annual meeting Saturday. In response to a question Sunday about Jain's involvement in insurance deals being looked at by regulators, Buffett said, "There's nobody at Berkshire Hathaway that I would have more confidence in than Ajit."
Buffett also said the election of Microsoft Corp. founder Bill Gates to Berkshire's board should assuage fears about the company's future. "With Bill you've got one of the best minds in the world. You have someone who wants very much to be helpful throughout my life and beyond my life in making sure Berkshire achieves what we hope it achieves."
Buffett also offered a grim outlook for the newspaper industry during a three-hour news conference a day after Berkshire's annual meeting, saying he sees no clear way for papers to stem recent circulation declines or turn Internet operations into highly-profitable enterprises. "The economics for newspapers are worse now than they used to, and the prospects are worse," said Buffett, a long-time director and large shareholder of The Washington Post Co.
Buffett said declines in circulation result from readers turning to alternative sources , such as free Web sites and television. And he said owning the dominant news Web site in a region is not enough to guarantee sustained profitability for newspaper firms.
As an example, he cited Buffalo, where Berkshire owns the Buffalo News and Buffalo.com, which he described as the most popular news Web site in the city. "We've got the best position, but it isn't remotely like owning the paper 30 years ago."
Buffett said buying newspapers was once an excellent investment because the dominant paper in any city could count on steady advertising revenue and could raise ad rates, often as much as it wanted, every year. With circulation dropping, that is no longer the case, Buffett said.