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Berkshire Hathaway and Allstate Stop Partnership That Delivered $76 Million to Customers

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Berkshire Hathaway’s insurance unit said on Tuesday that it was cutting ties with the law firm for delivering $76 million in compensation to customers, a result that was blamed by the insurer on poor legal advice.

The provision would leave the company roughly $100 million short of the compensation needed to satisfy tens of thousands of customers who signed up for services like home insurance through a partnership between Allstate Corp. and Washington National Insurance Co. That deal was struck nearly 40 years ago, and once accounted for nearly a third of Berkshire’s insurance premiums.

Berkshire Hathaway HomeServices, which includes the Washington National partnership, said in a filing that it was “terminating” its partnership with the law firm of McGuireWoods, which said last month that it was working with the U.S. Securities and Exchange Commission on an investigation.

The non-lawyers running Berkshire Hathaway HomeServices had initially planned to resume operations by next month, Berkshire Hathaway HomeServices spokesman Bill Heim said. But on Tuesday they announced they were cutting ties with McGuireWoods, after concluding that by law firms are supposed to have to identify themselves, as they suggested to Berkshire Hathaway HomeServices customers in complaints that were filed last year and this year.

Heim said that the cut off did not affect customers of other businesses like Allstate.

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