Swiss Re to Pay Back Buffett in 2011

OMAHA, Neb. ( TheStreet) -- The old Shakespearean maxim 'neither a borrower or a lender be' does not apply to Warren Buffett.

The Berkshire Hathaway ( BRK.B) chief just completed an $8 billion loan deal to help fund his acquisition of Burlington Northern, and some of the cash that Buffett has doled out in recent years has helped companies from Goldman Sachs ( GS) to General Electric ( GE) and Swiss Re ( SWCEY) deal with the worst of the financial crises.

Buffett has already profited handsomely from the Goldman and GE investments.

Now, Swiss Re is getting ready to pay back Buffett a convertible loan, on the heels of an earnings report from the world's second-largest reinsurer that, while slightly off expectations, showed that the second-largest reinsurer in the world was no longer in crisis mode.

Swiss Re's capital levels rose to $8.3 billion in the last quarter. In 2009, Swiss Re had to go with cup in hand to Omaha and ask Buffett for a loan after its capital levels were crushed by losses on risky assets. Swiss Re had gone to Buffett for a 3 billion franc convertible loan.

Swiss Re CFO George Quinn was quoted by Reuter's after Thursday's earnings -- during which the more confident reinsurer also reinstated dividends -- saying that the capital excess "increases our confidence that we can achieve some of most important goals and these include the redemption of the Berkshire security in 2011."

While Berkshire Hathaway's typically has impressive operating cash flow numbers, driven by its insurance holdings, Buffett was a net seller of stocks in the fourth quarter of 2009 to an atypical degree, and Buffett had been a net seller of stocks for much of 2009 as Berkshire Hathaway built up its war chest for the purchase of Burlington Northern.

A big payday from Swiss Re in 2011 may make the typically solid operating cash flow from Berkshire Hathaway that much better, in the same way that the preferred shares of Goldman have already reaped short-term rewards for Berkshire investors.

It's good to the borrower and lender that everyone turns to at times of crises.

-- Reported by Eric Rosenbaum in New York.

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