Billionaire investor Warren Buffett said that he has offered to help out troubled bond insurers by offering a second level of insurance on up to $800 billion in municipal bonds.
In an interview on CNBC, Buffett said his Berkshire Hathaway holding company made the offer of reinsurance to bond insurers Ambac Financial Group, MBIA and Financial Guaranty Insurance Co. Without specifying, Buffett said one firm rejected his offer, and he was still waiting to hear from the other two.
Many have speculated Buffett could step in and help out the troubled industry, though he made clear his offer was not altruistic. When I go to St. Peter, I will not present this as some act that will entitle me to get in, Buffett said on CNBC. Were doing this to make money.
Earlier this month, Buffett said Berkshire would not invest in any of the bond insurers, but his company would consider insuring some of the risks the bond insurers had assumed.
Bond insurers write policies that promise to cover payments to bondholders if the organization that issued the bonds defaults. Reinsurance policies offer coverage to insurance companies that want to completely or partly insure the risk they have assumed for their customers. (For more on this topic, please see Letters of support, which appeared in the Feb. 4 edition of Modern Healthcare. Subscription required.)-- by the Associated Press
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