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NEW YORK: There is likely to be one sure winner when the dust settles from the turmoil in the U.S. bond insurance industry: Warren Buffett.

Whether the insurers get rescued as regulators seek capital for them, or suffer credit rating downgrades that threaten their business or survival, Berkshire Hathaway, run by Buffett, looks like it could cash in.

Berkshire, which created Berkshire Hathaway Assurance on Dec. 28 to enter the bond insurance market, has the balance sheet, credit ratings and pedigree to become a major force in the industry, analysts say.

Buffetts entry into the business comes amid expectations that MBIA and Ambac Financial Group, and smaller rivals like FGIC and ACA Capital Holdings, are going to be severely weakened at best.

On Thursday, MBIA reported a $2.3 billion quarterly loss and said it was looking for ways to raise capital.

In creating a bond insurer, Buffett is counting on issuers paying him higher fees for the security of having the backing of triple-A rated Berkshire and its $47 billion cushion of cash. A group of U.S. state insurance regulators this week offered to speed up licensing for the new Berkshire unit.

Buffett has not shown any interest in bailing out an entire business, as he tried in 1991 when he took over Salomon Brothers after a scandal involving fictitious bids at U.S. Treasury auctions.

That is considered one of Buffetts worst investments.

“Berkshire has stated an intent to do premium business at premium prices,” said Janet Tavakoli, president of Tavakoli Structured Finance in Chicago, who has worked in structured products since 1985 and owns Berkshire stock. “It has very good underwriting standards, likes to completely understand the risks of what it is underwriting, and has the capital to back its insurance products.”

Berkshire officials were not available to comment on the companys plans.

Bond insurers, which guarantee about $2.5 trillion of bonds issued mainly by state and local governments, got caught off guard after venturing beyond their traditional business of writing coverage for bonds typically used to finance hospitals, roads, schools and sewer systems. Instead, they chose to also underwrite a variety of structured products, including securities backed by risky subprime mortgages, whose value has plummeted. This jeopardized MBIAs and Ambacs triple-A ratings and left them scrounging for capital to cover possible claims.

Fitch Ratings took away FGICs triple-A rating Wednesday, downgrading it by two notches to double-A.

Wilbur Ross, the billionaire investor that controls WL Ross Co., told CNBC television in Asia on Thursday that he might invest more than $1 billion in bond insurers, but would prefer that they retained their triple-A ratings.

By venturing into bond insurance on its own, Berkshire is not burdened by any known or undisclosed problems that it could face if it entered the business by acquiring a rival. Berkshire, with more than 70 businesses, also offers issuers the diversification that pure bond insurers cannot.

Regulators like the New York State insurance commissioner are working with banks to explore ways to shore up the industry. Without a fix, investors might unload hundreds of billions of dollars of bonds they no longer considered as safe as they thought. Borrowing costs would also rise, straining municipal budgets and, ultimately, burdening taxpayers.

Buffett does not have this worry. Ajit Jain, a Berkshire insurance executive who is considered a candidate to eventually replace Buffett, has been quoted as saying Berkshire might support existing insurers through reinsurance and capital.

Jain was unavailable to comment.

Berkshire has made some big bets on insurance before. In October 2006, its National Indemnity unit took on some $7 billion of liabilities of Equitas, which Lloyds of London created a decade earlier to avoid collapse from claims tied mainly to asbestos exposure.

It was essentially a bet that the worst was over regarding asbestos claims. Many companies stopped using asbestos for insulation and fireproofing by the mid-1970s, but the symptoms of exposure to the material can take decades to surface.

Berkshire also charged higher rates to cover storm damage after rivals retrenched following Hurricane Katrina in 2005.

That was a good move for Berkshire in 2006 and 2007, both quiet years for big storms. Buffett has said Berkshire is willing to lose $6 billion from a single storm.

In January, Berkshire bought a 3 percent stake in Swiss Re and agreed to take on 20 percent of its property and casualty reinsurance business for five years.

“Ive met Warren Buffett. Ive spoken to him about structured products. Hes astonishingly good,” Tavakoli said. “I would be surprised if he were to touch the financial guarantors structured products, given that the underwriting standards seemed so poor. Berkshire is clear that it is happy to do zero business when the risk premiums make no sense and thats something the guarantors didnt learn.”

JUSTICE Secretary Kenny MacAskill today signalled the Scottish Government is ready to change the law in a bid to prevent a repeat of the World’s End murder acquittal.

He is expected to use a criminal justice bill scheduled for autumn next year to give the prosecution the right to appeal when a judge rules there is no case to answer.

Mr MacAskill said: “I do believe the time has come for the Crown to have a right of appeal.”

He also promised early consultation on two further reforms - scrapping the “double jeopardy” rule, which prevents anyone being tried twice for the same crime; and allowing an accused person’s previous convictions to be revealed to the jury during a trial. Earlier this week, convicted killer and rapist Angus Sinclair, 62, was acquitted of the 1977 murders of Christine Eadie and Helen Scott after judge Lord Clarke accepted the defence lawyer’s submission that lack of evidence meant there was no case to answer.

The two 17-year-olds were last seen alive leaving the World’s End pub in the Royal Mile. Their bodies were later found at remote spots in East Lothian.

The prosecution came under fire for failing to present crucial evidence in court and not pressing charges on four Glasgow murders for which they believed Sinclair was responsible.

But Lord Advocate Elish Angiolini yesterday defended the way the prosecution had been conducted and told the Scottish Parliament she believed there had been enough evidence for the case to be put to the jury.

She said evidence not presented in court - about DNA found on the underwear used to strangle the girls - was unlikely to have made any difference to Lord Clarke’s decision. She told MSPs she was “disappointed” the case had not reached a jury - and if the Crown had the right to appeal against the judge’s decision she would have done so.

Afterwards, Mr MacAskill said Ms Angiolini made clear the “tragedy” that had occurred in the collapse of the trial. He said: “It is my duty to make sure we try and reduce, if not end, the opportunity for such other cases to recur.

“We cannot resolve what happened in the World’s End murder case. I’m sorry for the families. I will be consulting and discussing the position on matters such as Crown right of appeal and the position relating to double jeopardy.”

He said he did not believe giving the prosecution a right of appeal would undermine the principle that an accused person was innocent until proven guilty.

“Many of the constraints put on the Crown in Scotland are much more significant than happen elsewhere,” he said.

“Without undermining the rights of the accused I will want to make sure the Crown have equal rights to match and balance the rights of the accused.”

Liberal Democrat justice spokeswoman Margaret Smith, MSP for Edinburgh West, said the idea of allowing the prosecution to appeal against a judge’s “no case to answer ruling” should be looked at. But she said: “We should not be coming forward with knee-jerk responses on the back of one judgement, however disappointing it is.”

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LONDON: Swedish prosecutors Thursday charged four men with facilitating copyright infringement in connection with a Web site called Pirate Bay, the No. 1 target in the entertainment industrys fight against the unauthorized digital copying of films, games and music.

Pirate Bay operates the worlds largest “BitTorrent tracker,” a directory of movies, music and other media files available on the Internet. While it does not actually store the files on its own computers, the authorities said the site helps others to violate copyright laws by linking providers of pirated songs and films with people searching for the same material.

The Motion Picture Association, the international counterpart to the Motion Picture Association of America, the Hollywood trade organization, and music industry trade groups have made Pirate Bay the recent focus of their legal efforts to fight Internet piracy.

“This is not going to change the world, but it is going to represent a huge victory lap for the content industries, because so much of this is personal,” said Eric Garland, chief executive of BigChampagne Online Media Measurement, which tracks digital traffic.

While the music and movie industries have won court victories in the past decade against file-sharing services like Kazaa, Grokster and Napster, the campaign against Pirate Bay has a symbolic dimension, analysts say, because of the highly public way in which the operators of the service have thumbed their noses at the media companies.

Rather than hiding out in their bedrooms like teenage hackers, Pirate Bays operators have spoken out publicly and defended themselves on free-speech grounds, vowing to keep the site running even if they are found guilty.

Proving the case against Pirate Bay could be difficult, some analysts say. Sweden has some of the loosest copyright protections in Europe, though politicians, under pressure from the U.S. government and U.S.-financed media organizations, have vowed to tighten them.

Some people in Sweden, including a political organization called the Pirate Party, portray the digital copying of films and music as a way of life. After Pirate Bays offices were raided last year, the site and its founders became folk heroes, with hundreds of people taking to the streets in protest.

On Thursday, the authorities charged four men whom they identified as the main operators or financial backers of the site: Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde and Carl Lundstrom.

A lawyer for Sunde, Peter Althin, denied the allegations, adding that Sunde had acted only as a spokesman for Pirate Bay, was not involved in operating the site and had no financial interest in it. Lawyers for the other men did not return calls.

“In case we lose the pending trial (yeah right) there will still not be any changes to the site,” a posting on The Pirate Bays blog read Thursday. “The Pirate Bay will keep operating just as always. Weve been here for years and we will be here many more.”

The prosecution said Pirate Bay had profited from piracy by selling advertising on its site, bringing in annual revenue of about \3 million, or $4.5 million.

“The Pirate Bay operation has caused massive financial damage to rights holders,” said Ludvig Werner, chairman of the Swedish arm of the International Federation of the Phonographic Industry. “The profiteers behind The Pirate Bay have no interest in free speech, and they are not running The Pirate Bay because they love music and films. They are totally mercenary and are driven by the desire for personal wealth.”