Warren Buffett’s Berkshire Hathaway (BRK.A) has bought a 3.7% stake in Insurance Australia Group for $388 million. IAG announced the partnership, under which there will be a 20% quota share agreement across its consolidated insurance business for ten years. It says the deal enables both companies to draw on each other’s strengths to better meet customer needs. Berkshire entered its first commercial transaction with IAG about fifteen years ago, according to Warren Buffett, who explained why he predicts its newly-established partnership will continue for years to come. He said, ‘IAG is a terrifically strong company with great strengths in many areas. Berkshire’s got some strengths and we believe by bringing these two companies closer together as partners, that each company will benefit in various financial ways. Even though this contract runs for ten years, I expect for decades and decades and decades to come that both companies will benefit in many ways that perhaps we can’t even visualize right now.’ Buffett said at 84 years old, the partnership marks his first investment in an Australian company.
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