Berkshire Hathaway, with its $7 billion deal to take over Lloyd's Equitas operation, is gambling that the move will be profitable because it has extensive background in handling asbestos claims, according to a brokerage expert.
The move, which analysts greeted positively today, will see Equitas--Lloyd's runoff operation for asbestos and other long-term exposures--buying $7 billion in reinsurance from the Berkshire subsidiary National Indemnity Company, which will run its operations.
Besides providing the reinsurance for all Equitas' liabilities National Indemnity will take on the staff and operations of Equitas and conduct the run-off of Equitas' liabilities.
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