Berkshire Hathaway takes US$1.8 billion stake in Japan's Tokio Marine, forms partnership

Berkshire Hathaway, the conglomerate built by Warren Buffett, is buying a 2.49 percent stake in Japanese insurer Tokio Marine Holdings for about US$1.8 billion (HK$14.1 billion) as part of a new strategic partnership, deepening its financial commitment to Japan.

Tokio Marine said on Monday it will sell about 48.2 million treasury shares to National Indemnity, one of Berkshire’s main reinsurance businesses.

The companies plan to collaborate in reinsurance and work together globally on strategic investments including mergers and acquisitions.

National Indemnity will assume part of Tokio Marine's portfolio, and can boost its stake to 9.9 percent through open-market purchases without approval from Tokio Marine’s board.

The Japanese insurer plans to use up to 287.4 billion yen of proceeds to repurchase its own shares to prevent dilution for existing shareholders.

Tokio Marine said the partnership adds “long-term and stable risk capacity” to help boost growth and mitigate underwriting volatility, particularly from natural catastrophes such as hurricanes. CEO Masahiro Koike added that Berkshire’s corporate culture and values “closely align with ours.”

Ajit Jain, Berkshire’s vice chairman overseeing insurance operations, said in a statement he expected the partnership to create “compelling long-term opportunities for both organizations.”

Tokio Marine was founded in 1879, and operates in dozens of countries and regions. National Indemnity and Berkshire are based in Omaha, Nebraska.

Berkshire has been investing in Japan since 2019, and built approximately 10 percent stakes in five major Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. Those stakes were worth US$35.4 billion as of December 31, more than twice what Berkshire paid.

Greg Abel, who succeeded Buffett as Berkshire’s chief executive on January 1, said in a February 28 shareholder letter he viewed Berkshire’s Japanese investments as “comparable to our major US holdings in importance and long-term value creation opportunity.”

Reuters