NEW YORK (Bloomberg) - Billionaire investor Warren Buffett's Berkshire Hathaway Inc. will collect $224 million from Florida in exchange for an assurance that he will provide capital to the state if a major hurricane strikes this year.

Berkshire agreed to buy $4 billion in tax-free state bonds should the state's catastrophe programme needs to raise money after a major storm, said Dennis MacKee, a spokesman for the State Board of Administration, in an interview yesterday.

The deal may erase some of the uncertainty about Florida's ability to raise funds after a hurricane. In an effort to lower prices for property insurance, the state sells coverage to homeowners and private companies at below-market rates, and plans to fund cash shortfalls in the bond market. Raising money could be a "very challenging task", Fitch Ratings said in March.

"Given the state of the financial markets today, this addresses a possible need we have to place a pretty substantial bond issue," Mr. MacKee said. "We were looking for a liquidity product that would allow us to move quickly after a major storm."

Berkshire will have to purchase the debt if the state's fund incurs $25 billion in losses, Mr. MacKee said. Omaha, Nebraska-based Berkshire would collect 6.5 percent annual interest over the 30- year life of the bond, Mr. MacKee said.

Mr. Buffett has said Berkshire is prepared to lose as much as $6 billion on a single catastrophe if the company is paid for the risk. Berkshire typically gets about half its profit from insurance.

The Miami Herald reported the transaction earlier yesterday.