Warren Buffett and Berkshire Hathaway are looking to obtain as much as $1 billion from Swiss Re, a reinsurer. They have a dispute with the company based upon a life insurance deal that the two businesses agreed upon in 2010.
Berkshire Hathaway is currently “alleging damages of between $0.5 and $1 billion,” said the company Swiss Re on the 73rd page of their earnings statement. This was made available to the public during the third quarter, and was issued on November 8. They also claim that the issue is without merit.
There was no one from Berkshire Hathaway or Swiss Re available to make a comment.
The claim that Berkshire Hathaway is making against the company was reported at first by the Insurance Insider newspaper this past Monday.
This past Tuesday, shares of Swiss Re were up about 0.8% at 6:25 in the morning Eastern time, and this is in line with the European insurance sector index. .SXIP.
An analyst from J.P. Morgan mentioned that Swiss Re wouldn’t have any problem meeting their current dividend forecasts whether they have to pay Berkshire Hathaway or not.
“Swiss Re’s capital is in our view strong enough to absorb this and still have the ability to raise the normal dividend and pay a special dividend too,” wrote J.P. Morgan in a note.
Both Berkshire Hathaway and Swiss Re have met to discuss the claim, but both parties could not come to a resolution. This can obviously lead to arbitration proceedings, which was also mentioned by the reinsurer in the same statement made available on November 8.
In 2009, Swiss Re, who is the number two reinsurer, received an emergency loan from Berkshire Hathaway in the amount of $3.3 billion. The loan was needed to offset heavy losses from different types of investments during the financial crisis. The loan has been repaid since then.