Warren Buffet, the billionaire chairman and CEO of Berkshire Hathaway, says life insurers took “crazy” financial risk by selling variable annuities with unrealistic promises.

Warren Buffet

“I always thought they were crazy when they were doing it,” said Buffett at a press conference in Omaha May 3. Berkshire Hathaway owns auto insurer GEICO and other property-casualty operations, making up about half of its total portfolio.

He said the financial risk, because the annuities are tied closely to the success of the stock market, was too great for some life insurers to attempt the maneuver, yet they went ahead.

Buffett, who also blamed asset-backed securities linked to commercial mortgages for insurers’ problems, said Berkshire has been asked to reinsure some of the risk of the variable annuities and has declined.

“Life companies had those two temptations, one on the asset side, one on the liability side, and those that succumbed are in real trouble,” Buffett said.

Hartford Financial and Genworth Financial have been battling after suffering losses at the hands of their variable annuities. About 10 insurance companies are seeking federal aid. Genworth Financial learned last month that it would not qualify.