By Joan Gralla and Jonathan Stempel

OMAHA, Nebraska (Reuters) - Warren Buffett on Saturday said his Berkshire Hathaway (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) holding company bought $4 billion (2 billion pounds) of auction-rate securities during the market's recent distress.

Speaking at Berkshire's annual shareholder meeting, Buffett also said his new municipal bond insurer, Berkshire Hathaway Assurance Corp, is becoming a major force, capturing higher premiums than rivals that have been strained by exposure to subprime mortgages.

The $330 billion market for auction-rate securities, which are long-term bonds whose rates are reset periodically, froze this winter.

Investors flooded dealers with paper backed by bond insurers whom they feared would lose their "triple-A" credit ratings. As a result, many municipal bond issuers were for several weeks forced to pay uncommonly high interest rates.

Buffett spoke of how debt issued by the Los Angeles County Museum of Art fetched a 3.15 percent interest rate on January 24, and 8 percent just three weeks later.

He also said Berkshire has bought auction-rate debt with an 11.3 percent rate from one broker, at the exact time another broker was offering a 6 percent rate.

"Those are huge dislocations in the market. That's crazy," Buffett said. "Those are great times to make unusual amounts of money." He said, nonetheless, that Berkshire, whose market value is more than $200 billion, is so large that such investments won't have a big impact on results.

Buffett also confirmed that the bond insurer he created in December was rapidly increasing market share, having won some $400 million of business in the first quarter.