Berkshire Hathaway Acquires Converium's U.S. Assets

It was announced yesterday morning (October 17) that Berkshire Hathaway’s (BRK.A) National Indemnity unit will buy the U.S. assets of Swiss reinsurer Converium (CHR) for $95 million in cash and $200 million in assumed debt. The unit has $1.06 billion in reinsurance liabilities. It is unclear how much reserves are included to back up the liabilities.

Converium ran into serious trouble in 2004 when it discovered a $500 million shortfall and stopped writing new insurance in America. The company needed to sell this asset to a strong buyer to improve its credit rating. The circumstances of the deal would imply that Berkshire is buying this at a fire sale price, but even with the rosiest projections, this will be barely material to a company the size of Berkshire. What the acquisition should do for Berkshire is further improve the results of a reinsurance unit already poised to have a great year with dramatically increased premiums and no major disasters.

CHR 1-year chart:

BRK.A 1-year chart: