The insurance businesses of billionaire investors Warren Buffett and Wilbur Ross are close to buying all or part of the U.S. bond insurance unit of Dexia Belgian business daily De Tijd said on Tuesday.
"The transaction is in the final stages, according to several sources," the newspaper said on its website. Belgian-French financial services group Dexia, which received a 6.4 billion euro ($8.3 billion) bailout from the French, Belgian and Luxembourg governments in September, has said it will present the results of a strategic review on Friday.
This could include a decision on the fate of Financial Security Assurance (FSA), the U.S. bond insurance arm that made a first-half net loss of $752 million and whose triple A credit rating is under threat. Dexia's board charged new Chief Executive Pierre Mariani with exploring options to reduce the risk associated with FSA's activities and had said he should do so by this Friday, when Dexia also presents its third-quarter results.
Reacting to what it called "rumors" that it would consider selling all or part of FSA, Dexia confirmed Mariani was looking at options for the unit and that the group would communicate further in due course.
Dexia, which has provided FSA with a $5 billion unsecured standby credit line, decided in August that FSA would exit the risky asset-backed securities market and focus on guaranteeing municipal bonds, though it still has a portfolio of riskier assets.
De Tijd said insurers Berkshire Hathaway Assurance and Assured Guaranty were particularly interested in the "healthy" part of FSA -- guaranteeing municipal bonds -- but there were also talks about its riskier activities.
The latter might be placed in a separate holding, De Tijd said. Buffett started Berkshire Hathaway Assurance at the start of this year, while Ross is a large shareholder in Assured Guaranty. WL Ross & Co holds 13.4 percent of Assured and agreed in September to buy up to 5 million additional shares, which would bring its holding up to 18.9 percent.
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