Buffett Bonds

Reuters/NY Times:

Billionaire investor Warren Buffett is set to launch a bond insurer targeting local governments, seeking to profit from troubled credit markets, the Wall Street Journal reported on Friday.

The new bond insurer, Hathaway Assurance Corp. is set to start operating on Friday in New York state, and guarantee the bonds that cities, counties and states use to finance public works, the report said, quoting Buffett from an interview.

Buffett's Berkshire Hathaway Inc owns some 50 businesses, including auto insurer Geico Inc. Buffett and Ajit Jain, who heads Buffett's insurance businesses, will also seek approval to operate in California, Puerto Rico, Texas, Illinois and Florida, the report said.

Berkshire representatives were not immediately available for comment.

The report comes amid warnings from credit ratings agencies that some major insurers, including Ambac Assurance Corp. and MBIA Inc. , may lose their triple-A ratings due to exposure to subprime mortgage debt.

Buffett's new venture is almost certain to be backed by a triple-A credit rating, the report said.

...

This is a timely move and should be good for the municipal finance business. Amback and MBIA were hurt because they were no better at analyzing the risk of the subprime mortgage business than the investment bankers who have lost billions. They may also have been victims of the fraud that has been perpetrated in the mortgage business. If Buffett focuses on traditional public finance credit instruments he should make good money at little risk and save local governments substantial interest costs at the same time. That is the traditional role of the credit insurers.

Comments

Post a Comment

Popular posts from this blog

Should Republicans go ahead and add Supreme Court Justices to head off Democrats

Washington Post: Some Democrats eye adding more justices to the Supreme Court to change its ideological bent The once-remote idea has gained the attention of liberals angered by the GOP push to remake the federal courts. Probably the easy way to defeat this court-packing scheme is for Trump to propose doing the same thing now.  It would lead to Democrat denunciations and claims that it would be wrong, thereby blowing up any attempt by them in the unfortunate event of Democrats winning a presidential election.
Read more

29 % of companies say they are unlikely to keep insurance after Obamacare

Conn Carroll: A new survey of 368 midsize to large companies found that 29% of them are considering terminating their active employee health care plans when Obamacare is full implemented in 2014. Only 71% of employers surveyed said they did not expect to drop their health coverage, while 20% said they did not know and 9% said they were planning to exit. The latest survey, conducted by Towers Watson, echoes an ealier survey by McKinsey & Co. finding that 30% of private-sector employers were planning to drop their employee health insurance coverage by 2014. When the Congressional Budget Office crunched Obamacare's spending numbers, they estimated that only 7% of employees currently covered by employer-sponsored plans would lose their plans. ... This means the cost of the health care fiasco will be hundreds of billions more than estimated by the CBO and Congressional Democrat. It is also clear that Obama's pledge that you could keep your health care plan if you wanted t...
Read more

Is the F-35 obsolete?

Headline USA: Pentagon Fires Back after Musk Calls Its Most Expensive Project ‘Obsolete’ 'Yeah, as I'm sure you can appreciate, Mr. Musk is, currently, a private citizen, I'm not going to make any comments about what a private citizen may have to say about the F-35....'   ... ... Drones appear to be replacing jets for many operations.  The Russia-Ukraine war is an example of that.  Drones are often hard to detect and can be used for intelligence operations as well as for attacking enemy targets.  It would not surprise me to see drones engaging other drones in combat.  They also cost much less than manned fighters.  
Read more