Buffett’s warm words for General Re CEO

A clash could be brewing at Berkshire Hathaway (BRKA). Prosecutors are pressuring the company to drop the chief executive of its General Re unit, The Wall Street Journal reports. Joseph Brandon has been CEO of General Re since 2001, so the criminal-fraud convictions of four former General Re executives earlier this year has put him in the government’s cross hairs, the Journal says. The paper, citing people familiar with the situation, says the talks are part of a bid to wind up a probe of General Re.

Brandon hasn’t been charged with any wrongdoing and cooperated with the government without seeking immunity from prosecution, the Journal reports. Still, the Journal says, Brandon’s status has been uncertain since 2005, when he received notice of a federal probe of his role in a reinsurance deal with AIG (AIG) that allowed AIG to claim it had bolstered its loss reserves. Yet Brandon’s status at General Re seems anything but uncertain in Berkshire’s 2007 annual report, published in February.

In the report, Berkshire Hathaway chief Buffett laments the poor condition General Re was in back in 1998, when Buffett agreed to merge with the company. But “now, thanks to Joe Brandon, General Re’s CEO, and his partner, Tad Montross, the luster of the company has been restored,” Buffett writes. “Joe and Tad have been running the business for six years and have been doing first-class business in a first-class way, to use the words of J.P. Morgan.” Buffett is known for speaking his mind, and those words indicate he’s firmly in Brandon’s camp - which seems to make Brandon’s resignation anything but a sure thing.