Buffett to buy Indian insurer

Rules on state-owned insurers would have to change

Berkshire Hathaway chief executive Warren Buffett wants to buy a majority stake in an Indian state-owned general insurance company, the Business Standard reports.

He is scheduled to visit India next year to take up the issue with the government. Indian rules do not allow the government to sell its stake in the four public sector general insurance companies – New India Assurance, United India Insurance, National Insurance and Oriental Insurance.

Last week, Buffett had told shareholders that he did not rule out India as a possible investment destination for Berkshire investments. “The investments could be in companies or marketable securities, though bureaucratic obstacles could complicate any plans to invest, including limitations on foreign ownership,” he said, adding that, “we’ve looked a lot at being in the insurance business in India”.

Rules bar foreign investors from holding more than 26% stake in an insurance company. The government has proposed to increase the ceiling to 49%, but that will not enable Buffett to have a majority control. He can be the largest shareholder, with the remaining stake split between Indian players.

Bershire Hathaway announced it Q1 results on Friday showing General Re made P&C losses of $61m, worsening from $23m for Q1 2009.