Tsuen Wan International: Berkshire Hathaway gets $1.65 bln for assuming AIG asbestos risk.

April 21, 2011 - PRLog -- Tsuen Wan International has learned from an AIG statement that the deal with Berkshire’s National Indemnity will result In a deferred pretax gain of $200 million this quarter.

Buffett, who oversees the biggest reinsurer in the United States, has previously assumed similar risks from XL Group and CNA Financial Corp. as carriers move to streamline or lesson liabilities.

The deals present the 80 year old Buffett substantial funds to invest as well as the chance of profit if the claims made against the policies are less than the underwriter’s projections.


In a recent note to clients Barclays Capital said that the deal is attractive to Berkshire because of the investment income it could generate on the fee.

“These retroactive reinsurance transactions typically produce GAAP underwriting losses for Berkshire but the economics should be attractive over the life of the contract taking into account investment income generated by the upfront premiums before claims are paid (float),” Barclays analyst Jay Gelb said in his note.

Paul Howard, director of research at Solstice Investment Research told Tsuen Wan International that Buffett’s “acumen of investment performance is better than what AIG could do.”

AIG is simplifying its liabilities as it moves to pay back government bailout capital  with private investment.

In July 2010, Berkshire’s National Indemnity assumed liabilities relating to asbestos and pollution claims from the Chicago-based CAN in exchange for a $2billion fee.

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Tsuen Wan International is a leading independent investment company, based in the heart of Hong Kong. Tsuen Wan International offers a variety of investment products for institutional, corporate and high net worth investors in equity debt and FX markets.