Buffett to start up municipal bond insurer: report

NEW YORK (Reuters) - Billionaire investor Warren Buffett is set to launch a bond insurer targeting local governments, seeking to profit from troubled credit markets, the Wall Street Journal reported on Friday.

The new bond insurer, Hathaway Assurance Corp. is set to start operating on Friday in New York state, and guarantee the bonds that cities, counties and states use to finance public works, the report said, quoting Buffett from an interview.

Buffett's Berkshire Hathaway Inc (BRKa.N) owns some 50 businesses, including auto insurer Geico Inc. Buffett and Ajit Jain, who heads Buffett's insurance businesses, will also seek approval to operate in California, Puerto Rico, Texas, Illinois and Florida, the report said.

Berkshire representatives were not immediately available for comment.

The report comes amid warnings from credit ratings agencies that some major insurers, including Ambac Assurance Corp. and MBIA Inc. (MBI.N), may lose their triple-A ratings due to exposure to subprime mortgage debt.

Buffett's new venture is almost certain to be backed by a triple-A credit rating, the report said.

Buffett was quoted as saying the new company will avoid investing in structured products, such as bonds backed by cash-generating assets such as mortgages and credit-card receipts.

"We will keep a capital ratio that's stronger than anybody's," he told the Journal.

(Reporting by Ritsuko Ando; Editing by Valerie Lee)