Warren Buffett's brand-new municipal bond insurer, Berkshire Hathaway Assurance Corporation, has sold its first coverage, backing a $10 million bond issued by New York City yesterday.
Ajit Jain, who runs Berkshire's insurance businesses, tells the New York Times, "We're tip-toeing into the market, doing very small deals. We want to see if we can get the pricing that we find acceptable to us. Once we find this is real, we'll put in a lot more capital."
UPDATE: IN A LIVE INTERVIEW ON CNBC'S STREET SIGNS TODAY, JAIN REVEALED THAT BERKSHIRE IS TALKING "RIGHT NOW" WITH BOND INSURERS ABOUT A POSSIBLE PURCHASE OR PARTNERSHIP.
That cautious approach is exactly what Buffett himself was talking about when he first revealed plans for the muni bond insurance business late last month. He made it clear to the Wall Street Journal that Berkshire wouldn't be making the same mistakes, charging too little and taking on too much risk, as the now-struggling bond insurers Ambac and MBIA .
Jain also told the Times Berkshire's move into bond insurance was pushed forward by New York State's top insurance regulator Eric Dinallo, who called Jain to suggest Berkshire get into the business.
According to the newspaper:
"As it turned out Berkshire Hathaway was trying to figure out how to capitalize on the troubles in the municipal bond market and was ready to move when the phone rang. Both sides came together in a meeting in New York. 'We talked very quickly and we reached middle ground on a number of issues,' Mr. Jain said."