WASHINGTON (AFP) — Billionaire investor Warren Buffett on Tuesday said he offered to reinsure 800 billion dollars in municipal bonds backed by three insurers hard hit by the US mortgage and credit crunch.
Buffett discussed his offer to bond insurers Ambac Financial Group, MBIA Inc. and Financial Guaranty Insurance Co. during a telephone interview with the CNBC business television network.
Buffett said he had sent that offer to the three bond insurers last week, and that he was giving them 30 days to find a better deal.
He said one bond insurer had turned down the offer and the other two had not responded. The so-called "oracle of Omaha," known for his savvy investments, did not identify the company that rejected his offer.
Bond insurers have been forced to take massive writeoffs on corporate bonds and complex financial structures involved in the subprime, or high-risk, mortgage crisis that began to roil markets in August.
Buffett's offer would reduce uncertainty in markets over the possibility of downgrades of bond insurers such as Ambac and MBIA and allow a speedier recovery from the subprime-related credit problems.
Buffett's holding company Berkshire Hathaway Inc. includes insurance subsidiaries GEICO Auto Insurance and Berkshire Hathaway Life Insurance Company of Nebraska.
In late December, Buffett announced the investment vehicle would enter the municipal bond reinsurance sector.
The Omaha, Nebraska-based Berkshire Hathaway took a 3.0 percent stake in Swiss Re of Switzerland, the world's largest reinsurance group, in late January. Swiss Re expects heavy losses due to its exposure to the US subprime mortgage crisis.
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