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Fitch cuts Berkshire's top rating on investments, Buffett role
HONG KONG, March 13 |
HONG KONG, March 13 (Reuters) - Fitch cut its top rating on Warren Buffett's insurance and investment company Berkshire Hathaway, citing its "large, unhedged" exposures to equity and credit markets and concerns about the U.S. billionaire's tight grip on the firm.
Fitch cut Berkshire's (BRKa.N) (BRKb.N) issuer default ratings by one notch to "AA-plus", while lowering Berkshire's senior unsecured ratings by two notches to "AA". For statement see [ID:nWNA8947}
However, it affirmed its "AAA" insurer financial strength ratings on the company's insurance and reinsurance subsidiaries.
The outlook for all of Berkshire's entities is negative.
Fitch Ratings is the first major credit agency to cut Berkshire's "AAA" rating. The move comes after General Electric Co (GE.N) was stripped of its top rating by Standard & Poor's on Thursday. [ID:nN12349101]
"Fitch views the company's potential earnings and capital volatility derived from its large, unhedged market exposures as inconsistent with the stability required at the 'AAA' level," Fitch said in its statement on Berkshire.
Those exposures include Berkshire's equity investments, as well as well as its holdings of derivative contracts tied to equity and credit markets, Fitch said.
The credit agency also noted Berkshire remains too closely linked to Buffett to merit a "AAA" rating.
"Fitch views this risk as unrelated to Mr. Buffet's age, but rather Fitch's belief that BRK's record of outstanding long-term investment results and the company's ability to identify and purchase attractive operating companies is intimately tied to Mr. Buffett," it said, referring to Berkshire. (To read the full text of the ratings announcement, click on [ID:nWNA8947] (Reporting by Rafael Nam; Editing by Kim Coghill)
