Paul Morigi/Getty Images for Fortune/Time Inc
- The bosses of a Brazilian reinsurance giant falsely claimed Warren Buffett's Berkshire Hathaway was one of its investors.
- IRB-Brasil Resseguros CEO Jose Carlos Cardoso and CFO Fernando Passos also said they were close to Berkshire's insurance chief, Ajit Jain, Bloomberg reported.
- IRB's stock plunged as much as 41% and its CEO and CFO resigned after Berkshire denied it was a shareholder this week.
- The company plans to launch an investigation and be more transparent going forward.
- Visit Business Insider's homepage for more stories.
The bosses of a Brazilian reinsurance giant boasted that Warren Buffett's Berkshire Hathaway was one of its investors. The company's stock nosedived and its chief executive and finance boss stepped down after Berkshire denied the claim this week.
IRB-Brasil Resseguros CEO Jose Carlos Cardoso and CFO Fernando Passos said on a conference call on Monday that the famed investor's conglomerate - which owns Geico and other insurers - had raised its stake in the company, Bloomberg reported, citing a research note by two analysts who said they were on the call.
Cardoso and Passos also claimed to have a close relationship with Berkshire insurance boss Ajit Jain, Bloomberg said, citing the Eleven Financial report signed by analysts Carlos Daltozo and Tatiana Brandt.
IRB didn't immediately respond to a request for comment from Business Insider.
Berkshire denies the claim
Brazilian newspaper O Estado de S.Paulo reported last week that Berkshire had bolstered its investment in IRB. The story prompted Berkshire to deny the claim in a statement on Tuesday.
"Berkshire Hathaway is not currently a shareholder of IRB, it has never been a shareholder of IRB and it has no intention of becoming a shareholder of IRB," the company said.
The denial sent IRB's stock down as much as 41%, marking its worst day on record. Cardoso and Passos also resigned on Wednesday - days after IRB's chairman, Ivan Monteiro, stepped down, company filings show.
"We take this extremely seriously"
Cardoso and Passos - the CEO and CFO who resigned - claimed Berkshire was a shareholder because they had lost the market's confidence, Guimaraes told analysts during a Wednesday call. "There was no question at all in terms of the balance sheet," he added.
Still, "Berkshire was not a shareholder of IRB," he said. "We take this extremely seriously."
IRB has been under pressure since short-seller Squadra Investments published a report questioning its accounting last month, which the reinsurer framed as an attempt to manipulate its stock price, Bloomberg said.
The company has appointed Werner Suffert, a former board member, as CFO and interim CEO. Pedro Guimaraes, the CEO of state bank Caixa Economica Federal, accepted the role of interim chairman.
IRB plans to investigate the Berkshire matter and improve the transparency of its market disclosures, Guimaraes added. It will also revise its financial guidance to reflect market conditions, Suffert said on the call.
