(Bloomberg) -- Warren Buffett, who built Berkshire Hathaway Inc. by reinvesting premiums from insurance units, said low bond yields have hurt the prospects of that strategy.

“That game has been over for a while,” Buffett said Saturday during Berkshire’s annual meeting in Omaha, Nebraska. “It looks like it will be at least unattractive, if not terrible, for a considerable period in the future.”

Berkshire has exited investments in reinsurance rivals Munich Re and Swiss Re AG and this year scaled back some operations at its own Gen Re unit. Buffett has been shifting instead to industries like manufacturing and utilities in recent years.

“It is no fun running a traditional reinsurance company and having money come in, particularly in Europe,” Buffett said. Businesses in the industry “look around for investment choices and find out that a great many of the things you were buying a few years ago have negative yields.”

Reinsurers provide coverage for primary carriers, and have been hurt in recent years by more competition from Wall Street investors entering the business. U.S. hedge fund mangers including Dan Loeb and David Einhorn have set up companies offshore, which give them permanent capital to invest in stocks and a tax advantage. Buffett said that industry will be less attractive over the next decade, partly due to those types of firms.

Behind the ‘beard’

Reinsurance is a “beard” that people hide behind to manage money outside the U.S., he told shareholders.

“It’s not the greatest reinsurance in the world,” he said. “Nevertheless it is a very, very easy way to have a disguised investment operation in a friendly tax jurisdiction.”

Still, Buffett said that reinsurance operations at Berkshire have the advantage of size, meaning they can take on risks that smaller rivals won’t take. He also said his company benefits from its diversity of operations.

The billionaire has said for years that central bank stimulus policies have discouraged fixed-income investing. He said at the 2013 meeting that he pitied investors who stuck with bonds amid low interest rates. The yield on the benchmark 10-year U.S. Treasury was 1.83% as of April 29, compared with about 1.74% when he made the remark three years ago.

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Buffett says bonds unattractive, if not terrible, for reinsurers

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