(Bloomberg Gadfly) -- Warren Buffett's Berkshire Hathaway isdiving deeper into its core competency: insurance.

On Monday, the Omaha-based conglomerate agreed tobuy Medical Liability Mutual Insurance Co., a NewYork underwriter of medical professional liability insurance,in a deal worth an estimated $2.7 billion. Thenon Tuesday, Berkshire announced its entry intotransactional liability insurance, which covers the risks anduncertainties associated with mergers, acquisitions andother corporate transactions.

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It's a logical move for Berkshire, which itself has beeninvolved in 190 M&A deals since 2000, according to datacompiled by Bloomberg. Predating that, there were other dealsincluding the 1955 merger between the eponymous BerkshireFine Spinning Associates and Hathaway ManufacturingCo.

Dealmaking expertise

Berkshire's deep dealmaking expertise gives it an insight intohow important this type of insurance is for many buyers andsellers, at all points of the M&A cycle. Deals often hinge uponsuch policies, which protect companies from risks thatcan arise relating to environmental exposures, uncertaintax positions, known litigation, breaches of warranty and more. Ininitial public offerings, it can cover directors and companyofficers against claims of misleading or falsestatements.

As the business is being built from scratch, it will taketime for this commercial insurance subsidiary to make a meaningfulcontribution to Berkshire's wider insurance operation, whichposted underwriting profit of $1.8 billion in 2015. But thecompany has both the staying power and a successful trackrecord as an insurer. Geico, for instance,had 11.4 percent of the auto insurance market at the end of 2015,compared to 2.5 percent when Berkshire acquired control of it twodecades earlier, in part due to its aggressive pricing.

Keeping that in mind, existing transactional liability providers includingChubb and AIG should prepare to defend their turf. But theywill likely be delaying the inevitable. Berkshire — with itsindustry prowess and deep pockets — has the traits ofa worthy competitor.

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