Warren Buffett’s huge Burlington Northern (BNI) buy may have had unintended consequences for his company Berkshire Hathaway (BRKB).
The firm might now lose its AAA credit rating from Standard & Poor’s after losing it from Moody’s and Fitch earlier this year.
Then again, maybe Mr. Buffett doesn’t care at all. Brand Buffett probably instills far more confidence than the flimsy ratings put out by discredited ratings firms.
Bloomberg: “This transaction will decrease the liquidity and capital adequacy of the insurance operations” at Omaha, Nebraska-based Berkshire, the ratings company said in a statement today placing Buffett’s firm on “CreditWatch with negative implications.”
Berkshire lost the top grade from Moody’s Investors Service and Fitch Ratings earlier this year as declines in the value of derivatives tied to stock markets contributed to the company’s first quarterly loss since 2001. Buffett’s insurance units scaled back catastrophe coverage this year to protect capital.
S&P said it expects to complete its review within 90 days. On March 24, the ratings firm lowered its outlook on Berkshire to “negative” from “stable,” signaling it may be cut within two years.