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By Jason Stipp | 04-30-2011 11:59 AM

Buffett Faces Sokol, Dividend Questions

Morningstar's Paul Larson and Gregg Warren offer commentary on the morning Q&A hot topics, including Buffett's explanation of the Sokol incident and the big dividend question.

Jason Stipp: I'm Jason Stipp for Morningstar. We're here at the lunch break of the Berkshire Hathaway Annual Shareholders Meeting for 2011.

I'm here with Gregg Warren, Berkshire analyst, and Paul Larson, equity strategist and editor of Morningstar StockInvestor. They're going to give me their take on the first half of the Q&A and any insights that they gleaned from what Buffett and Munger had to say.

Thanks for joining me, guys.

Gregg Warren: Thanks for having us.

Paul Larson: Thanks for having me.

Stipp: So, first question for you: Buffett talked a little bit about their first-quarter results. He mentioned that it was a bad catastrophe year. He said that in 2011 they might actually have a underwriting loss because of that. What's your takeaway from the catastrophe results, Paul?

Larson: Well, they were quite large. The silver lining is that usually when we have a large catastrophe year that the pricing on insurance does indeed go up. So, I would expect next year will be a much better year, all else equal, just because of the pricing increase, as well as the fact that we should have a reversion to mean. This was a very, very bad year.

Stipp: Gregg, did anything jump out at you from the results that you saw from the first-quarter numbers that he showed?

Warren: I thought the losses in Japan were a bit higher than what we were anticipating, so I'm curious to see the results when they do come out, and be able to dig into there and figure out where the exposure really was for that.

Australia and New Zealand were kind of known events, and they also made note of the fact that with the tornadoes running through the South this past week, that's also going to weigh on the claims at GEICO.

I think, the more interesting point was the fact that GEICO's new policies have increased 50% year-over-year. That was pretty impressive.

Stipp: The question that was on everyone's mind before the meeting started, obviously, was the David Sokol incident. Buffett did say, "I made a mistake when I didn't ask Sokol, 'When did you buy this stock?'" Those words did come from his mouth, but I know that a lot of folks were listening for a lot of things. They wanted to hear a lot of things. Did you hear what you wanted to hear on this issue, Paul?

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