Buffett's Berkshire (BRK-A) Hopes to Bank on Gain in Spain

November 30, 2012 7:53 AM EST
Warren Buffett's Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) is making a strong play on a Spanish recovery, according to reports out Friday.

The venerable investor and his conglomerate are investing €600 million with CaixaBank SA for future cash flow from a portfolio of life-insurance policies it currently holds.

CaixaBank said the investment will provide a one-off gain of €524 million. The bank said it began contacting re insurers over the summer on an investment and that it will continue servicing the policies.

Despite being one of Spain's stronger banks, CaixaBank hasn't been immune to the financial troubles hitting the euro-zone over the last few years. In particular, CaixaBank took a big hit when Spain's real estate market collapsed five-years ago. The fallout hit the banks asset portfolio as well as caused it to clamp down on lending policies.

But, Berkshire investors (hello all ten of you!) shouldn't be worried. Spanish banks typically push clients to take up insurance policies jointly with a loan or mortgage deals, the WSJ notes this morning, increasing banks' cash flow without much of the risk. That means the segment is largely isolated from broader market turbulence.

Buffett currently holds the title of second-richest American behind cohort Bill Gates. He's fourth richest globally, according to the latest Bloomberg poll.

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