Berkshire Hathaway is getting a big piece of Swiss Re's insurance action as the world's largest reinsurer hooks up with Warren Buffett in what one analyst calls "an odd coupling."

Swiss Re Swiss Re's head office on Lake Zurich in Switzerland.

But Britain's Telegraph says insurance analyst William Hawkins of Keefe, Bruyette & Woods isn't negative on the deal, which has Berkshire buying a 3 percent stake in Swiss Re for about $800 million and getting 20 percent of its property/casualty business for the next five years.

Hawkins' view: "Berkshire Hathaway is not a charity and when we see them taking such a significant role in the strategic future of a major competitor, we believe it is wise to be cautious.  This should be taken as a vote of confidence in Swiss Re by one of the world's most respected investors."

The deal allows Swiss Re to increase the size of a stock buyback and "retain flexibility in a softening property and casualty market," according to the company's CEO in a news release announcing the deal.

European investors responded by sending Swiss Re shares sharply higher today.  They had been down 8.5 percent since the beginning of the month amid credit fears and weakening pricing power in the reinsurance business.  (The Wall Street Journal has suggested Berkshire's stock price has also fallen victim to pricing weakness.) 

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While the Berkshire deal helps Swiss Re through a tough patch, giving a fifth of its property/casualty business to Buffett potentially limits Swiss Re's upside when things pick up, as Buffett clearly expects they will.

Is a bigger deal coming?  In a Market Talk item today, Dow Jones quotes Merrill Lynch's Brian Shea as saying, "We do not think it would be feasible, particularly from a revenue loss standpoint, for the world's number 1 and number 3 reinsurers to merge."

But Forbes paraphrases analyst Fabrizio Crocs of Landsbanki Kepler in Zurich as saying he "wouldn't be surprised if (Berkshire) moved towards a full takeover after testing the water with an initial investment."

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