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Equitas agrees $7bn deal with Berkshire Hathaway

In a landmark transaction, Lloyd's run-off vehicle Equitas has agreed a $7bn reinsurance deal with Berkshire Hathaway which, once completed, will bring finality to the vehicle.

According to a statement from the Society, once completed the deal will "end the residual legal liabilities of Lloyd's and bring finality to Names reinsured by Equitas".

Lloyd's is contributing £90mn to the transaction. Equitas - which was formed in 1996 with £15.4bn of outstanding liabilities had shrunk them to £4.2bn as at March 2006. However, it has continued to shadow Lloyd's ongoing financial strength and the prospect of closure will be welcomed by the Society.

Lloyd's Chairman, Lord Levene, said: "This agreement marks a significant milestone for Lloyd's. It enables us to close a chapter in Lloyd's history and move forward."

Rating agency Standard & Poor's has placed its A financial strength rating on Lloyd's on positive outlook following the announcement.

The announcement comes in the same week as Berkshire Hathaway's subsidiary National Indemnity agreed to buy Converium's run-off North American operations.

The Insurance Insider will provide further analysis during the day.

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