(Reuters) – Berkshire Hathaway Inc. is in advanced discussions to sell its Applied Underwriters replacement unit to a consortium of insurance companies. People who know the question are Friday.
The deal would be a rare sale by Warren Buffett, who has built up a corporate empire of more than 90 companies in sectors spanning insurance, chemicals, energy, railways, food and retail. Unlike private equity firms, the 88-year-old billionaire investor does not seek out money when he takes over a business.
But San Francisco-based applied insurers are now outside Berkshire Hathaway's insurance focus, making it an unequaled asset Mr Buffett wants to hide, the sources said.
Berkshire Hathaway insurance company includes auto insurer Geico, reinsurance company General Re and a unit that protects against major disasters or unusual risks.
On the other hand, applied insurers provide tied workers with compensation and other employment-related insurance products for SMEs.
A group of insurance companies and an insurance company with reinsurance companies are in talks to buy applied insurers around the value of its business, the sources said, declining to reveal the price and the buyer's identity.
The sources warned there is always an opportunity to negotiate if negotiations ended successfully and asked not to be identified because the question is confidential.
Berkshire Hathaway did not immediately respond to a request for comment.
Applied insurers have also been in the crosshair of California's insurance regulator and reached an agreement in June 201
Mr. Buffett plans to publish his annual letter to Berkshire Hathaway shareholders this weekend, along with the company's annual report. Berkshire Hathaway's cash stack reached $ 103.6 billion at the end of September, as Mr Buffett has struggled to find attractive acquisition opportunities to put money at work.
Mr. Buffetts efforts to divest applied insurers come as one of his biggest investments, Kraft Heinz Co. have soured. On Thursday, the food giant announced a multibillion-dollar write-down on its tent brands, raising concerns that years of severe cost savings had depleted the value of its Kraft and Oscar Mayer products.