6 December 2012 Insurance

Berkshire Hathaway 'just trying to limit losses'

The recent dispute between Warren Buffett's Berkshire Hathaway and Swiss Re over a life insurance deal agreed in 2010 is unlikely to result in any meaningful loss for Swiss Re, says an analyst, who claims Berkshire Hathaway is simply trying to limit its losses.

Berkshire Hathaway is claiming up to $1bn from the world’s second biggest reinsurer, Swiss Re revealed in its third-quarter earnings statement. It added that the claim was without merit.

But a senior analyst familiar with the companies and the dispute said that, while it is difficult to say definitively which party is in the wrong, Berkshire Hathaway is likely to simply be trying to recoup some losses.

“Swiss Re says the allegations are without merit. I am more likely to side with this version of events,” the source said. In regards to this opinion, Swiss Re said it had no further comment to make and Berkshire Hathaway was not available to give comment at this time.

The two sides will initially try and resolve the dispute. The analyst said the worst case scenario for Swiss Re would be for the dispute to go to arbitration proceedings or a full court case.

Other analysts have also noted that even if Swiss Re had to pay the full $1 billion claimed by Berkshire Hathaway, it would not affect the reinsurer’s ability to pay dividends to its shareholders as expected.

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