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If I had to speculate I'd say that this could be one of those deals where the accounting doesn't match the economics - where Berkshire is paid to take a book of business off another party's hands that will result in pretty accounting for the other party but not necessarily good economics.

Yes, this used to be a nice sideline business for Berkshire, trading its stellar balance sheet and its unconcern with immediate accounting effects in return for good economics. The multiple 'finite' reinsurance deals of the past, culminating in the unfortunate AIG deal that resulted in some hand-slapping for Berkshire, and we have seen less of them (none of them?) since then.

You can be pretty sure Berkshire will not be booking a EU524 loss on this one, but maybe Caixa was required to heavily discount those future cash flows, by European banking conventions, and this gets them closer to compliance. There may be numerous Spanish banks in the same situation, so hopefully this will provide something for Buffett to do between TV appearances.

Regards, DTM
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