The dispute over a life reinsurance contract between Swiss Re and Berkshire Hathaway has been settled.

Swiss Re will take back some treaties and Berkshire Hathaway will pay the reinsurer $US610 million ($582 million).

The total protection provided to Swiss Re by Berkshire Hathaway will be cut from $US1.5 billion ($1.4 billion) to $US1.05 billion ($1 billion).

The settlement is expected to create an accounting gain of about $US100 million ($95 million) for Swiss Re in the March quarter.

The dispute stemmed from a 2010 deal concerning a Swiss Re portfolio of pre-2004 yearly renewable term life business.

The deal was in two parts, with Swiss Re Life & Health America handing a portfolio of business to Berkshire Hathaway.

The second part saw a stop-loss agreement extended by Swiss Re, limiting Berkshire Hathaway’s exposure in the transaction to $US1.5 billion ($1.4 billion).

Other than the recaptured treaties, the deal for the pre-2004 yearly renewable term life business remains in force.

Berkshire Hathaway’s recoveries to date, including the new settlement, are $US815 million ($778 million).

Swiss Re is cautious about the settlement’s effect on earnings beyond the March quarter.

It says results will depend on the performance of the recaptured business and business still covered by the retrocession agreement.

To date, the treaties have produced losses; Swiss Re says this may continue until steps are taken to tackle the causes.

It says payments from Berkshire Hathaway may not cover future losses.