Berkshire Hathaway is holding talks to divest its workers compensation business Applied Underwriters to a consortium of insurance companies, Reuters reported citing people familiar with the development.
Along with a group of insurance firms, a hedge fund-backed reinsurance firm is also engaged in discussion to acquire Applied Underwriters at almost the value of its book of business, the sources told the news agency.
Applied Underwriters provides workers compensation and other employment-related insurance products for small and medium-sized (SEMs) businesses.
The workers compensation business has been put on sale as it “sits outside Berkshire Hathaway’s insurance focus” the publication reported.
It is considered a non-core asset as Warren Buffett backed company’s insurance businesses include the auto insurer Geico, reinsurer General Re, and a unit that protects against major catastrophes or unusual risks.
However, the undisclosed sources also told Reuters that there is a possibility that deal may also collapse.
In May 2006, Berkshire Hathway acquired Applied Underwriters and all of its subsidiaries – including its North American Casualty insurance companies.
In January this year, Berkshire Hathaway Specialty Insurance (BHSI) unveiled plans to expand into the property construction insurance market in the UK and Ireland.
Also, Berkshire Hathaway Travel Protection (BHTP) unveiled a new travel insurance product targeted at cruise travelers in the beginning of this year.