Positive Ratings News for Warren Buffett and Berkshire Hathaway

Industrials

Published: June 23, 2014 1:41 pm

Berkshire Hathaway Inc. (NYSE: BRK-A) may be considered one of the strongest companies in America, or in the world. Well, the company just had a bit of a negative tone removed from one of the ratings agencies. Standard & Poor’s has affirmed its AA/A-1+ ratings, but where the call gets interesting is that S&P moved its Negative outlook up to Stable.

Monday’s move to Stable is due to the insurance outfits inside of Berkshire Hathaway showing improved capital adequacy. S&P did note that they believe that Berkshire Hathaway’s credit ratings will remain subject to an aggressive acquisition strategy. Still, the ratings agency sees Berkshire Hathaway’s insurance operations to maintain extremely strong capitalization.

The AA+ insurance financial strength on the property and casualty and life and health, as well as the reinsurance, have improved since 2013. One risk is that the aggressive acquisition strategy may result in a decapitalization of the insurance outfits as a whole (BRKIS). Still, S&P said that extremely strong capitalization and sustained operating performance is running at or above the ratings agency’s base case scenario.

While a paths for an additional upgrade or downgrade are laid out, it sounds as though S&P has made its ratings agency news for quite some time.

Berkshire Hathaway shares were at $189,600 in mid-Monday trading, versus a 52-week trading range of $163,038 to $194,670.

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