But it assumes a large role for the insurance industry, which already offers reinsurance policies without government backing.

The syndicate bought a reinsurance policy to pay any future claims; the premium was equal to the amount of the reserve.

A reinsurance policy would allow a second insurer to share in the gain and potential loss of the policy, much like an investor.

To insurers, having a pool of readily available money may be more appealing than taking out a reinsurance policy, which is simply a promise to pay.

Gerling Konzern is one of the world's largest writers of reinsurance policies.

Mr. Buffett blamed industry conditions, but said there were signs that pricing of reinsurance policies was starting to rise.

Although the company will stop issuing new policies by early next year, he said, Lincoln will continue to sell disability reinsurance policies to other insurance companies.

These companies typically write one or more reinsurance policies to protect buyers (most commonly, insurers or reinsurers) called "cedants."

Both companies intend to limit their insurance activity to reinsurance policies sold to insurance companies, where claims are typically not paid for years after premiums are collected.

Recently, those subsidiaries have been big issuers of super-catastrophe reinsurance policies, which pay off only if other insurance companies suffer huge losses from events like hurricanes or earthquakes.

But Berkshire said that a side letter was part of a finite reinsurance policy General Re sold to H.I.H. before it collapsed.

So he went out and found other insurance and reinsurance policies to sell, including National Indemnity Company, a unit of Berkshire Hathaway.

Though Samsung Fire & Marine Insurance and Green Insurance had insured the ship for up to $45 million, their reinsurance policy through the Korean Reinsurance company would not cover "war risk".

Marsh & McLennan recently formed a Bermuda-based insurer, Axis Specialty, while the AON Corporation said it would add property and reinsurance policies to its Combined Specialty Corporation.

One act of God bond, put together by Guy Carpenter & Company, a unit of the Marsh & McLennan Companies and the largest broker of reinsurance policies, offers bonds that pay interest at 10 percentage points or more above Treasury bonds.

"Commutation provision" means a verbal or written agreement, whether or not formally incorporated into an insurance or reinsurance policy, that allows the policyholder to commute the policy, usually implying that all liabilities and rights created by that contract are extinguished in return for the balance of an experience account.