Insurance Australia Group in deal with Warren Buffett's Berkshire Hathaway

Insurance Australia Group has formed a strategic relationship with Warren Buffett's investment giant Berkshire Hathaway that will see the US group take a 3.7 per cent stake in IAG via a $500 million placement.

The deal will reduce IAG's capital requirements, which it said could either be directed to acquisitions, invested in its exiting business or returned to shareholders.