BUSINESS APRIL 8, 2009, 5:29 P.M. ET
Moody's Cuts Berkshire Ratings
By JAY MILLER
Moody's Investors Service stripped several Aaa ratings from Berkshire Hathaway Inc. and its insurance units, as losses pile up amid the severe declines in equity markets and the broader economy.
The ratings firm, which itself is a minority-owned affiliate of Berkshire, knocked the investment company's long-term issuer rating down two notches to Aa2. In addition, the insurance financial strength ratings on the company's National Indemnity Co. unit and other major insurance units fell a notch to Aa1.
The ratings outlooks are all stable.
Moody's said that for National Indemnity, falling stock prices have eroded the capital cushion. Meanwhile, Berkshire's noninsurance businesses have been hurt by the recession, particularly in areas tied to housing, construction, retailing or consumer finance.
"These extraordinary market pressures have reduced the excess cushion available from National Indemnity and the other affected operations to support potential funding needs of the parent company," said Moody's analyst Bruce Ballentine.
Last month, Fitch Ratings cut its credit ratings on Berkshire, saying no financial-oriented holding company should be rated AAA because of significant market volatility. Standard & Poor's Ratings Services changed its ratings outlook on the company and its units to negative from stable, citing the drop in insurance operations capital caused by stock market declines.
Class B shares of Berkshire were down $5 to $2,915 in after-hours trading.
Write to Jay Miller at Jay.Miller@dowjones.com
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