Sunday, February 3, 2008

Buffett may emerge as the winner from U.S. bond market turmoil (BRK.A; MBI; ABK)

See post immediately below for more of Mr. Buffett.

From the International Herald Tribune:

There is likely to be one sure winner when the dust settles from the turmoil in the U.S. bond insurance industry: Warren Buffett.

Whether the insurers get rescued as regulators seek capital for them, or suffer credit rating downgrades that threaten their business or survival, Berkshire Hathaway, run by Buffett, looks like it could cash in.

Berkshire, which created Berkshire Hathaway Assurance on Dec. 28 to enter the bond insurance market, has the balance sheet, credit ratings and pedigree to become a major force in the industry, analysts say.

Buffett's entry into the business comes amid expectations that MBIA and Ambac Financial Group, and smaller rivals like FGIC and ACA Capital Holdings, are going to be severely weakened at best.

On Thursday, MBIA reported a $2.3 billion quarterly loss and said it was looking for ways to raise capital....MORE