Swiss Re shares surged in early trading on Wednesday after the world's largest reinsurance group said Warren Buffett's Berkshire Hathaway group had taken a 3 per cent stake as part of a broader business deal.
The Swiss group also said it would increase its share buyback programme by SFr1.75bn ($1.59bn) following the investment from Omaha-based Berkshire.
The total buyback programme, including shares already repurchased, would now add up to SFr7.75bn, Swiss Re said.
In addition to its investment, Berkshire will assume 20 per cent of Swiss Re's property and casualty business over the next five years.
"The additional capital efficiency as well as the downside protection will permit Swiss Re to retain flexibility in a softening property and casualty market," said Jacques Aigrain, Swiss Re chief executive.
Swiss Re shares, which have fallen 8.5 per cent this year on worries about the company's exposure to mortgage-backed loans, were 12 per cent higher at SFr82.35 at 10:20 GMT.
Mr Buffett has recently invested in the troubled bond insurance market. Shares in MBIA and Ambac, two of the largest bond insurers in the US, have fallen sharply in recent months on concerns that they are exposed to poor quality loans that could undermine their ability to write new business.
Earlier this month Berkshire, which has $40bn-plus of capital, spent $105m setting up a new New York insurer of municipal bonds. New York state is one of the biggest issuer of municipal bonds but Mr Buffett's new venture is expected to expand into other states including California and Texas.