Everything Warren Buffett: CNBC: Warren Buffett Was Mystery Bidder for Bermuda-Based Reinsurer

Friday, July 17, 2009

CNBC: Warren Buffett Was Mystery Bidder for Bermuda-Based Reinsurer - Bloomberg

Published: Thursday, 16 Jul 2009 | 1:50 PM ET

By: Alex Crippen
Executive Producer

Warren Buffett: IPC Holdings Mystery Bidder

Warren Buffett's Berkshire Hathaway reportedly made a secret, but unsuccessful, $1.7 billion cash offer for Bermuda-based reinsurer IPC Holdings earlier this month.

Bloomberg reports today (Thursday) it's been told by "two people with knowledge of the bid" that Berkshire is the mysterious 'Party M' mentioned in a new regulatory filing.

Party M is described as a "global insurance and reinsurance company" in the filing, which outlines the lower-priced cash-and-stock deal that IPC reached instead with Validus Holdings. Shareholders for both companies still need to approve the agreement.

The filing says Party M's bid was rejected because it didn't want IPC to pay a third-quarter dividend. IPC also turned down other bids from Flagstone Reinsurance Holdings, a "large private equity firm," and another reinsurer referred to as "Party N."

It wouldn't have been Buffett's first move in reinsurance, although Berkshire has been backing away recently from writing catastrophic property damage reinsurance policies.

It bought General Re for $16 billion in 1998 and invested $2.6 billion in troubled Swiss Re this year. It appears to be looking for other 'Re' opportunities created by the global recession.

Morningstar analyst Bill Bergman tells Bloomberg, "A deal with IPC could have been a cost-effective way for Berkshire to spread its wings even more... The environment for deals is getting better every day."

Current Berkshire stock prices: