Buffet’s Bond Insurance Unit on the Fast Track

According to Moody's Investors Service, Warren Buffett's news business of insuring municiapl bonds is expanding rapidly as the company backed 112 issues in just the past two day.

Published on February 25, 2008

"I think it's rapid growth. The fact is, he's starting from zero. Whether he's going to be insuring as many on a weekly basis, I don't know," said Lee Epstein, chief executive officer of Money Market One, a San Francisco-based investment dealer.

Berkshire Hathaway Inc only started insuring municipal bonds in late December, and it is one of the few bond insurers that can offer borrowers and investors an unblemished top rating of "AAA."

Rating agencies have already cut or warned they may downgrade insurers that guarantee principal and interest on about $1.6 trillion of municipal debt because the companies face billion-dollar claims from insuring subprime mortgage-related securities.

A Moody's spokesman on Thursday had no further details about what kinds of muni bonds or how much debt the Buffett's new insurer is backing.

"We have rated approximately 112 Berkshire Hathaway Assurance Corp-insured issues between yesterday and today," the spokesman said.