Tokio Marine Holdings said on Monday it would form a strategic partnership with Warren Buffett's Berkshire Hathaway by initially selling a 2.49 per cent stake through a third-party allotment of treasury shares.
Berkshire Hathaway in 2019 kicked off a number of investments in Japanese trading companies and the firm has increased its stakes multiple times since then.
Tokio Marine expects to use the additional risk capacity that the partnership makes possible to pursue growth opportunities, while Berkshire's core reinsurance entity, National Indemnity, will gain access to Tokio Marine's global insurance portfolio, Tokio Marine said in a filing.
The two firms will also execute joint investments globally, including mergers and acquisitions, Tokio Marine added.
Tokio Marine said it would use the proceeds of up to JPY287.4 billion ($1.80 billion) to buy back its own shares to prevent dilution for existing shareholders.
Following the initial share allocation to National Indemnity, any additional acquisition of Tokio Marine's shares are expected to be made primarily through the open market, Tokio Marine said in a filing.
National Indemnity will agree not to buy more than 9.9 per cent of Tokio Marine's outstanding shares without prior approval from the latter's board, the statement said.
(Reporting by Anton Bridge and Chang-Ran Kim; Editing by Thomas Derpinghaus)