A.M. Best Affirms Credit Ratings of Berkshire Hathaway Inc.’s Subsidiaries
December 22 2016 - 11:47AM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “aaa” of National Indemnity Company
(National Indemnity) (Omaha, NE) and its affiliates. Concurrently,
A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term
ICR of “a-” of Finial Reinsurance Company (Stamford, CT), as
well as the Long-Term ICR of “bbb-” and the Long-Term Issue Credit
Rating (Long-Term IR) of “bbb-” of Finial Holdings Inc.
(Delaware). A.M. Best also has affirmed the FSR of A++ (Superior)
and the Long-Term ICR of “aa+” of Berkshire Hathaway Life
Insurance Company of Nebraska (BHLN) and the FSR of A+
(Superior) and the Long-Term ICR of “aa-” of First Berkshire
Hathaway Life Insurance Company (Flushing, NY). These companies
are all subsidiaries of Berkshire Hathaway Inc. (Berkshire)
[NYSE: BRK A and BRK B]. The outlook for these Credit Ratings
(ratings) is stable. All companies are headquartered in Omaha, NE,
unless otherwise specified. (See below for a detailed listing of
the companies and ratings.)
The affirmation for the ratings of National Indemnity reflects
its consistently superior operating and total return performance,
superior risk-adjusted capitalization and global market profile.
National Indemnity’s management team continues to be adept at
dealing with the underwriting cycle and has the financial resources
and acumen necessary to take advantage of unique opportunities.
A.M. Best believes that this distinctive aspect and its superior
market profile provide National Indemnity with the ability to
outperform the market in terms of underwriting performance.
Furthermore, the ratings reflect the benefits of being part of
Berkshire, which includes the proven investment acumen of Mr.
Warren Buffett with this expertise heavily relied upon to bolster
the total returns of the organization. In addition, Berkshire
provides substantial financial flexibility, diversification and
long-term competitive advantages associated with Berkshire’s
non-insurance businesses.
National Indemnity’s risk-based capitalization remains
consistently at the superior level. Historically, the company has
managed its aggregate risk accumulations conservatively, and as a
result, its risk-based capitalization has continued to remain in
the superior range.
Partially offsetting these strengths is National Indemnity’s
exposure to higher levels of equity investments as compared with
most of its peers. These higher levels of equity investments can
result in volatile results; however, A.M. Best’s concern is
somewhat mitigated by National Indemnity’s investment portfolio’s
superior long-term performance.
The importance of Mr. Buffett (as CEO) to the entire Berkshire
organization and the lack of transparency with regard to his
successor remain a concern for A.M. Best. Although A.M. Best
believes there are very strong internal candidates to succeed Mr.
Buffett, the lack of clarity in regard to a chosen successor adds a
degree of uncertainty to the future direction of the corporation,
as Mr. Buffett personally controls the capital allocation within
the firm. Nevertheless, A.M. Best believes Berkshire’s corporate
strategy, culture and decentralized operating structure will
facilitate a successful transition in management when it
occurs.
The ratings of BHLN recognize its adequate level of
risk-adjusted capitalization, steady flow of transaction activity
and the implicit and explicit benefits of being part of the
Berkshire organization. Partially offsetting these positive rating
factors are BHLN’s fluctuating statutory operating trends driven by
the deal flow and mortality results on certain blocks, increased
exposure to interest sensitive business and its heavy concentration
in affiliated non-insurance investments.
National Indemnity’s ratings could experience negative rating
actions if large catastrophic losses in combination with large
investment losses decrease its risk-based capitalization below A.M.
Best’s expectations, the company experiences a series of operating
losses over several years that exceed A.M. Best’s expectations or
there is a material change in the financial strength and
flexibility of the group’s ultimate parent, Berkshire.
The FSR of A++ (Superior) and the Long-Term ICRs of “aaa” have
been affirmed for National Indemnity Company and its
following affiliates:
- Columbia Insurance Company
- National Fire & Marine Insurance
Company
- National Liability & Fire
Insurance Company
- National Indemnity Company of
Mid-America
- National Indemnity Company of the
South
- Berkshire Hathaway Specialty
Insurance Company
- Berkshire Hathaway Direct Insurance
Company
The following Long-Term IR has been affirmed:
Finial Holdings, Inc.
-- “bbb-” on $200 million 7.125% senior unsecured notes, due
2023
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20161222005545/en/
A.M. BestGreg Reisner, +1 908 439 2200, ext.
5224Director – P/Cgreg.reisner@ambest.comorPeter Kelly, +1
908 439 2200, ext. 5834Senior Financial Analyst –
L/Hpeter.kelly@ambest.comorChristopher
Sharkey, +1 908 439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1 908 439 2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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