The State-owned health insurance company VHI has said it is working on securing a longer-term partnership with Berkshire Hathaway, the company run by billionaire investor Warren Buffett.
The re-insurance contract between VHI and Berkshire Hathaway, which was announced yesterday, will run for one year.
Meanwhile, the Minister for Health James Reilly has warned that the re-insurance deal could not be a substitute for cost control at the VHI.
Speaking yesterday he said he welcomed the new arrangement between VHI and Berkshire Hathaway.
However, he said the process to control costs would continue unabated and that costs in the private health insurance system were “far too high”.
The deal announced yesterday will see Berkshire Hathaway reinsure about €700 million of VHI’s claims – about 50 per cent of the total.
'First investment'
In a statement VHI confirmed that it had entered into a reinsurance contract with Berkshire Hathaway, which it described as one of the largest reinsurers in the world.
"This is the first investment this company has made in the insurance market in Ireland and as such is a major vote of confidence in VHI Healthcare. It is a short-term deal; however, we are working on securing a longer-term partnership."
VHI said the new initiative should reduce the capital requirements of the company to secure authorisation from the Central Bank. The authorisation process is due to be completed by the end of year.
The Government had previously been advised by the Department of Health that it would potentially have to invest more than €200 million to bring the company's reserves up to a level needed to facilitate the authorisation process.
The company said yesterday that the re-insurance deal with Berkshire Hathaway would minimise the amount of capital required from Government.
