Berkshire says General Re CEO Brandon resigns

By Jonathan Stempel

NEW YORK (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz) said Joseph Brandon resigned Monday as chairman and chief executive of its General Re Corp unit, less than two months after a jury convicted four former executives of the reinsurer of fraud.

Brandon was once considered a leading candidate to replace the 77-year-old Buffett at Berkshire's helm. Franklin "Tad" Montross, president of Stamford, Connecticut-based General Re, will replace Brandon as the unit's chairman and chief executive.

A federal jury in Hartford on February 25 convicted the former General Re executives and a former American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) executive over a reinsurance transaction that prosecutors said bolstered AIG's loss reserves by $500 million, making its results look better.

Prosecutors have pressured Berkshire to replace Brandon, the Wall Street Journal said last week. Brandon has not been charged, but his status grew less certain after the U.S. Securities and Exchange Commission told him in 2005 that he could face charges that he violated U.S. securities laws.

"You have to go back to Warren Buffett's credo that management integrity is paramount," said Chuck Hamilton, an analyst at FTN Midwest Securities Corp in Nashville, Tennessee, who has a "neutral" rating on Berkshire. "The SEC and federal prosecutors often have quite a bit of weight in who sits in the top chairs, and can sway management into making changes. I suspect Buffett had no choice."

Berkshire, in a statement, did not give a reason for Brandon's departure. Brandon and Berkshire did not immediately return a requests for comment. Spokesmen for the SEC and the U.S. Attorney in Connecticut declined to comment.

Berkshire Class A shares fell $1,785, or 1.4 percent, to $128,515 on the New York Stock Exchange.

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