Buffett's Hathway launches municipal bond insurance company

29 December 2007

Mumbai: Billionaire investor Warren Buffett's Berkshire Hathaway Inc has launched a bond insurer that would help state and local governments lower their borrowing costs, and possibly lure business from established rivals struggling with failing credit markets.

The new insurer, Berkshire Hathaway Assurance Corp., is expected to get a licence to operate from New York State's insurance department by Monday, US regulatory authorities said.

Berkshire Hathaway Assurance Corp would guarantee the bonds that cities, counties and states use to finance public works, a Wall Street Journal report said, quoting Buffett from an interview.

Berkshire Hathaway Inc owns some 50 businesses, including auto insurer Geico Inc. Buffett and Ajit Jain, who heads Buffett's insurance businesses, will also seek approval to operate in California, Puerto Rico, Texas, Illinois and Florida, the report said.

Buffet's entry into the bond insurance market comes amid warnings from credit rating agencies that some major insurers, including Ambac Assurance Corp. and MBIA Inc., may lose their triple-A ratings due to exposure to subprime mortgage debt.