Alice D. Schroeder
|Born||December 14, 1956|
|Occupation||Author and insurance analyst|
|Alma mater||McCombs School of Business|
Alice Schroeder (born December 14, 1956) is an American author and former insurance analyst. In the first week of October 2008, she published The Snowball, Warren Buffett and the Business of Life, a The New York Times Bestseller List bestseller. As a project manager for the US FASB, she managed SFAS No. 113. Since 2008, Schroeder has worked as a columnist for Bloomberg News.
Early life and education
Work for the Financial Accounting Foundation
From 1980 to 1991, Schroeder worked as a CPA at Ernst and Young, starting in Houston. In 1991 Schroeder became a project manager for the Financial Accounting Standards Board in Norwalk, Connecticut. Her projects focused on ending abusive insurance industry accounting practices primarily due to the use of finite risk transfer contracts, an issue which later became central to the criminal allegation faced by employees of AIG and Berkshire Hathaway-owned General Re, the release of:
- SFAS No. 113: Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,
- EITF Issue 93-6: Accounting for Multiple-Year Retrospectively Rated Contracts (RRC's), and
- EITF Issue 93-14: Accounting for Multiple-Year Retrospectively Rated Insurance Contracts by Insurance Enterprises and Other Enterprises.
When Greenberg was terminated from AIG at the insistence of New York State Attorney General Eliot Spitzer, five employees of General Re and AIG were also indicted in connection with an accounting fraud at AIG that overstated reserves in this and subsequent quarters, the accounting rules violated were those Schroeder oversaw as an FASB project manager. Schroeder testified as an expert witness about accounting for finite risk reinsurance at this Federal criminal conspiracy trial in Hartford, Connecticut. Warren Buffett was never named in the case. Former AIG CEO Greenberg and CFO Howie Smith disputed in court whether the New York AG had the power to pursue a civil fraud case against them. The U.S. Second Circuit Court of Appeals has overturned the convictions of all five Gen Re and AIG employees. In mid-2012 they signed deferred prosecution agreements with the Department of Justice that acknowledged mistakes and misjudgments but not criminal wrongdoing.
In 1993, Schroeder left the FASB to work a sell-side insurance investment analyst for Dowling Partners in Hartford, a boutique firm run by V.J. Dowling. In 1994, Schroeder moved to CIBC Oppenheimer. In 1998, she joined PaineWebber. In 1998 Schroeder wrote Warren Buffett a letter requesting a meeting for her clients about Berkshire's recent acquisition of the reinsurer General Re, which she covered. Afterward, Buffett approached her to become the first and only Wall Street sell-side analyst to whom he would speak. Schroeder then initiated coverage of the hard-to-analyze Berkshire Hathaway in a favorable report This was the first significant Wall Street coverage the company received. In 2000, Schroeder was hired by Morgan Stanley, where she was voted the #1 Property-Casualty insurance analyst two years in a row after having been ranked a member of the Institutional Investor All-America Research Team for seven years. In 2002. Schroeder was voted one of Business Insurance magazine's. That year, she was also named analyst/researcher of the year by The Review, a reinsurance industry publication.
Books and reporting
In 2003, Schroeder has reported that an investment writer approached her to jointly write a book about Warren Buffett and corporate governance. Schroeder felt this was not the right book and discussed another idea with Buffett, who offered to cooperate with her if she wrote a more comprehensive book. In June 2003, Schroeder, a managing director at Morgan Stanley, began travelling to Omaha to research and write Buffett's official biography, The Snowball. Schroeder spent approximately 2,000 hours with Buffett and interviewed 250 other people. Schroeder reportedly received a $7 million book contract for publishing The Snowball.
The Snowball was published September 29, 2008 and debuted at #1 on The New York Times. Wall Street Journal and Publishers Weekly lists of hardcover nonfiction best-sellers and remained on the bestseller list for more than three months. After the book’s publication, Buffett reportedly stopped speaking to Schroeder. He canceled the yearly dinner Schroeder hosted in Omaha at which she interviewed him before nearly two hundred people. The New York Times reviewer Janet Maslin called it one of her ten favorite books of 2008. Time Magazine and People also named The Snowball one of the ten best books of the year.
MBIA and Bill Ackman report
In 2002, activist hedge fund manager Bill Ackman challenged bond insurer MBIA's AAA rating calling for a division between MBIA's bond insurers' structured finance business and its municipal bond insurance side. Ackman published a report raising extensive concerns about MBIA's continued solvency. He gave Schroeder’s team an early draft and suggested they downgrade MBIA, but they initially resisted. Schroeder and her colleague Vinay Saqi eventually responded to Ackman’s report, partially acknowledging Ackman’s thesis.
Goldman Sachs pistol retraction
On November 30, 2009, Schroeder published an opinion piece on Bloomberg News stating that several Goldman Sachs bankers, in a show of prescience about potential social unrest, had obtained pistol permits. In a December 9, 2009, Wall Street Journal blog post, journalist Susanne Craig reported that New York City Police Department spokesman Paul J. Browne retracted certain earlier information it had earlier given Alice Schroeder on the number of banker permit applications, which was part of the basis for the column. Bloomberg has since re-published the column on its website in corrected form.
First Call estimate
In 2002, the Wall Street Journal broke the news that Thomson Reuters' First Call, a research database which compiles the earnings estimates of Wall Street analysts to publish consensus earnings estimates for public companies, removed Schroeder's estimate on Chubb Insurance from the database after Schroeder refused to raise her estimate on Chubb to match that of other analysts, whom she disagreed with. Once other investment banks complained about similar experiences, First Call agreed to include a broader range of analyst forecasts in its estimates and better disclose the factors that account for their differences in judgment.
- Cheryll Hall (October 28, 2008). "Dallas native Alice Schroeder tells Warren Buffett's life story". Dallas Morning News.
- Unknown article, www.mccombs.utexas.edu/, 2008, archived from the original on December 22, 2008, retrieved January 11, 2017
- GenRe/AIG finite trial coverage, businessinsurance.com, May 26, 2009
- Roberts, Sally (April 20, 2008), Brandon steps down as Gen Re chief, Business Insurance
- Defense rests in fraud trial charging Gen-Re- AIG with deception, edit.property-casualty.com, May 2008[dead link]
- Unknown article, www.businessinsurance.com/a, archived from the original on 2013-01-18
- AIG ex-CEO Greenberg eyes reversing NY fraud, news.yahoo.co, archived from the original on 2012-05-19
- Shelp, Ronald (August 5, 2011), Spitzer Loses Big While Greenberg Wins Once Again, Forbes, retrieved January 14, 2017
- Douglas Mcleod (January 9, 2008). "Analyst testifies AIG/Gen Re deal distorted reserves". Business Insurance magazine.
- Simoleon Sense interviews Warren Buffett's biographer Alice Schroeder part 1, www.simoleonsense.com, archived from the original on 2010-11-02
- Warren Buffett, Dallas News, archived from the original on May 19, 2010, retrieved January 14, 2017
- Cheryll Hall (April 15, 2002). "Yeah ... but what does Alice Schroeder think?". Risk & Insurance. Archived from the original on March 19, 2009. "Archived copy". Archived from the original on 2009-03-19. Retrieved 2010-01-08.CS1 maint: Archived copy as title (link)
- Initiation of Coverage of Berkshire Hathaway by Analyst Alice Schroeder, scribd.com/, archived from the original on 2014-06-12, retrieved January 14, 2017
- Alice Schroeder (January 1999). "Berkshire Hathaway: The Ultimate Conglomerate Discount?" (PDF). PaineWebber Property and Casualty Insurance Coverage. Archived from the original (PDF) on 2011-07-17.
- B. Treaster, Joseph (July 22, 2000), Noted Insurance Analyst Moves, The New York Times, retrieved January 14, 2017
- ’’Institutional Investor’’ magazine, October 2001, October 2002
- Rising Stars, findarticles.com[dead link]
- TRV review of worldwide reinsurance awards winners, The Review, archived from the original on August 5, 2009, retrieved January 14, 2017
- Waco Tribune questions with Alice Schroeder, verythingwarrenbuffett.blogspot.com, March 2009, archived from the original on 2012-04-02
- Tim Woods (October 20, 2008). "Buffett's career a battle of greed vs. principles, Q&A with Alice Schroeder, biographer of financial master Warren Buffett". CNN.com.
- Q&A with Alice Schroeder, Meredith Maran, October 2008, archived from the original on 2009-01-06
- Hardcover Nonfiction, The New York Times, October 10, 2008
- Leslie Wayne (February 3, 2009). "Buffett cancels event with biographer". New York Times.
- Janet Maslin (November 27, 2008). "Janet Maslin's 10 Favorite Books of 2008". New York Times.
- Grossman, Lev (November 3, 2008), Top 10 Non-fiction Books, Time Magazine
- People Magazine December 29, 2008
- Christine Richard and Katherine Burton (January 31, 2008). "Ackman Devoured 140,000 Pages Challenging MBIA Rating". Bloomberg L.P.
- Ackman report
- Bethany McLean (May 16, 2005). "The Mystery of the $890 Billion Insurer". Fortune.
- S. Richard, Christine (March 29, 2011), Confidence Game: How Hedge Fund Manager Bill Ackman Called Wall Street's Bluff, Bloomberg Press
- Schroeder, Alice (November 30, 2009), Op-ed, Bloomberg News, archived from the original on 2010-01-31
- Journal, Deal (December 9, 2009), Are Goldman Sachs Bankers Really Carrying Guns?, Wall Street Journal
- Christopher Oster and Jonathan Weil (August 7, 2002). "Do First Call's Earnings Estimates Filter Out Bad News?". The Wall Street Journal.
- Christopher Oster and Ken Brown (August 22, 2002). "First Call Changes Last Word on Earnings". The Wall Street Journal. p. C1.
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