Open

Coming up

Don't miss

Replay


LATEST SHOWS

DEBATE

Europe's Plan for Putin - Will Russian Leader Bend After New Sanctions?

Read more

FOCUS

Pakistan's Ahmadis living in fear of extremist attacks

Read more

WEB NEWS

Web users show solidarity with Iraqi Christians

Read more

THE INTERVIEW

Gilles Kepel, Islamic and Arab world specialist

Read more

BUSINESS DAILY

Argentina braced for another debt default

Read more

DEBATE

Too Late for Sanctions? Pressure Mounts on Russia over Ukraine (part 2)

Read more

DEBATE

Too Late for Sanctions? Pressure Mounts on Russia over Ukraine

Read more

MEDIAWATCH

'What would you do?'

Read more

AFRICA NEWS

Ebola virus: Liberia shuts most border points

Read more

  • Graphic: Ebola spreads across West Africa

    Read more

  • In pictures: ن - a sign of support for Iraq’s persecuted Christians

    Read more

  • Scores killed as Israel ramps up Gaza bombardment

    Read more

  • EU broadens sanctions on Russia over Ukraine crisis

    Read more

  • Calls mount to ban France’s ‘violent’ Jewish Defence League

    Read more

  • Venezuela: Hugo Chavez’s ‘little bird’ strikes again

    Read more

  • France extradites suspected Jewish Museum shooter to Belgium

    Read more

  • Video: How tourism is helping Rwanda’s gorillas, ex-poachers

    Read more

  • Rare Sri Lankan leopard cubs born in French zoo

    Read more

  • France evacuates its nationals from Libya

    Read more

  • US says Russia violated arms treaty by testing cruise missile

    Read more

  • Argentina in last-ditch effort to avert default

    Read more

  • Karzai’s cousin killed in Afghan suicide attack

    Read more

  • Libya oil tanker fire blazes out of control

    Read more

  • In pictures: From Gaza to Mosul, bittersweet end of Ramadan for Muslims

    Read more

  • Moroccan police arrest French al Qaeda recruiter

    Read more

Business

Warren Buffett's investment firm downgraded again

Latest update : 2009-04-09

Investment tycoon Warren Buffett's investment firm, Berkshire Hathaway, was downgraded by credit ratings agency Moody's to "Aa2" from "AAA", the highest rating. The firm had already been downgraded by the ratings agency Fitch.

AFP - Ratings agency Moody's Investors Service downgraded Wednesday the "AAA" rating on US billionaire investor Warren Buffett's Berkshire Hathaway, citing damage from falling stocks on its insurance business.

Moody's lowered parent holding company Berkshire Hathaway's rating two notches to "Aa2" from "AAA."

It cut the rating on Berkshire's flagship insurance subsidiary National Indemnity Company by one notch, to "Aa1" from "AAA," and took the same action with the company's other major insurance subsidiaries, including GEICO and General Re.

"Today's rating actions reflect the impact on Berkshire's key businesses of the severe decline in equity markets over the past year, as well as the protracted economic recession," said Bruce Ballentine, Moody's lead analyst for Berkshire.

"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."

Last month, rival Fitch Ratings downgraded Berkshire to "AA" from "AAA."

The third major ratings agency, Standard & Poor's, has maintained the company's top rating but put it on "negative" watch for a possible downgrade.

Ballentine said that falling stock prices had reduced the value of National Indemnity's investment portfolio and subsequently its capital cushion against insurance and investment exposures.

National Indemnity's regulatory capital fell by 22 percent during 2008, to 27.6 billion dollars as of year-end, and by a significant additional amount through early March 2009.

"National Indemnity still has a robust capital base, in Moody's view, but it remains exposed to further equity market declines," he said.

Some of Berkshire's non-insurance businesses have not been spared in the 16-month-old recession "which has caused a meaningful drop in earnings and cash flows, particularly for businesses tied to the US housing market, construction, retailing or consumer finance," he said.

"The downgrade of the parent company rating to Aa2 from AAA reflects the potential for further declines in the support available from these dual sources" of insurance and non-insurance businesses.

Berkshire Hathaway posted a net profit of 4.99 billion dollars for 2008, despite a deepening US recession and a global economic and financial crisis.

Its assets, however, have lost nearly 10 percent of their value, a performance unusually weak for Buffett, known as the "Oracle of Omaha" for his astute investment decisions.

Date created : 2009-04-09

COMMENT(S)