By Oliver Suess
Jan. 26 (Bloomberg) — Munich Re, the world’s biggest reinsurer, said Warren Buffett raised his stake in the company to more than 3 percent.
Buffett’s stake rose to 3.045 percent on Jan. 18, Munich Re said in a statement distributed by the DGAP newswire today. Stakeholders of German companies must declare share purchases or sales that bring their investments above or below certain thresholds.
Buffett, whose Berkshire Hathaway Inc. owns the world’s third-biggest reinsurer, is Munich Re’s No. 2 shareholder after asset manager BlackRock Inc. New York-based BlackRock increased its stake in Munich Re through the purchase of Barclays Global Investors, and held 4.58 percent on Dec. 1, according to the reinsurer.
“I would doubt that Buffett is interested in taking over Munich Re as that would expose Berkshire, which already has a significant reinsurance business, too much to the sector,” said Konrad Becker, an analyst at Merck Finck & Co. in Munich who recommends buying Munich Re shares. “I think Buffett rather bets on rising share prices at Swiss Re as well as Munich Re.”
Munich Re rose 1.30 euros, or 1.2 percent, to 109.80 euros in Frankfurt, valuing the company at 21.7 billion euros ($30.5 billion). That compares with a 0.3 percent gain in the 29-member Bloomberg Europe 500 Insurance Index.
Swiss Re Stake
The investment by Buffett “acknowledges our sustainable strategy,” spokeswoman Johanna Weber said via telephone.
Buffett didn’t respond to an e-mail message left with his assistant, Carrie Kizer, before business hours in Omaha, Nebraska, where Berkshire Hathaway is based.
Billionaire investor Buffett has been a shareholder in Munich Re since at least 2008. Munich Re Chief Executive Officer Nikolaus von Bomhard told shareholders at the annual meeting in Munich that year that he expected Buffett to remain a shareholder in the company. At the time, Buffett’s stake was below the 3 percent threshold, the lowest that requires disclosure.
Buffett’s Berkshire held 3 percent of Swiss Re as of March 2009, data compiled by Bloomberg show. The Zurich-based reinsurer is increasing surplus capital as it bids to regain its AA credit rating and repay 3 billion francs ($2.87 billion), which Buffett injected into the company last February.
Swiss Re last week also sold Berkshire Hathaway a block of closed U.S. individual life reinsurance business to cut risk and improve its capital position.
Reinsurers help primary insurers such as Allianz SE and Axa SA shoulder risks for clients.
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