Buffett’s vote of confidence in VHI

VHI chief executive John O’Dwyer said that an extension of a reinsurance deal with the VHI for a further four years by Warren Buffett’s Berkshire Hathaway was "a real vote of confidence" in the insurer.

The health insurance boss in an interview on RTÉ’s Morning Ireland said that signing the deal ultimately means that its capital position is improved and, along with its business strategy, this will help the insurer to reach appropriate solvency levels, He said the deal will mean that the VHI will not need to go to the Government to seek a handout.

Last July Warren Buffett signed what it said then was a €700m reinsurance deal with VHI. The deal, which was VHI’s first reinsurance deal, involved the billionaire’s company, Berkshire Hathaway, taking over some of the risks of the insurer, to a value of up to €700m. It has been reported that the new deal will save the Government from pumping in up to €200m into the VHI’s reserves. In 2011, the Government believed that it would face a request of €293m from the VHI.