NEW YORK (Bloomberg) - Bermuda-based Arch Capital Group Ltd. countersued a unit of Warren Buffett's Berkshire Hathaway Inc., accusing General Reinsurance Corp. of unfair trade practices.

General Re sued Arch in May saying the reinsurer conspired with four former executives of the unit to steal trade secrets that cost "hundreds of millions of dollars" to develop.

The four executives worked for a General Re unit specialising in coverage for insurers against unusual, potentially large losses on properties such as office towers.

They took on similar roles for a new business at Arch, prompting General Re to sue in state court in Stamford, Connecticut.

"Gen Re, through this litigation, attempts to handicap Arch's ability to launch" a competing business, Arch said in its countersuit filed on Monday.

The company is seeking unspecified punitive damages and compensation for lost profit.

Arch's counterclaim is "nothing more than an attempt to deflect attention from their own words and actions," said Damon Vocke, General Re's general counsel.

Pen Pendleton, a spokesman for Arch, declined to comment.

In June, the two sides agreed in court that Arch could solicit General Re's clients provided it made no use of the Stamford-based company's trade secrets. Previously, Arch was prevented from such solicitation under a temporary restraining order issued by a judge in May.

General Re mischaracterised the agreement to suggest to Arch's customers and potential customers that the restraining order was still in place, Arch said in its counterclaim.

Arch also said it had no knowledge of any plot by the four executives to steal trade secrets from their former employer.

The executives were not bound by employment contracts or non-compete agreements, Arch said.

General Re said in its May complaint that e-mails recovered from company computers showed the four conspired "to sell to the highest bidder the Gen Re business for which they were responsible."

Berkshire Hathaway, based in Omaha, Nebraska, is the world's third-largest reinsurer, behind Swiss Reinsurance Co. and Munich Re, the second largest.

Buffett built his $174 billion holding company by acquiring out-of-favor stocks and businesses.

Shares of Arch fell 81 cents, or 1.2 percent, to $66.68 in Nasdaq Stock Market trading. Berkshire shares gained $305, or 0.3 percent, to $112,995 in New York Stock Exchange composite trading.

The companies are scheduled to appear in court on September 6 to discuss the June agreement.