This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Buffett Watch: Moody's Cuts Rating

Updated from Wednesday, April 8

Warren Buffett's Berkshire Hathaway (BRK-A) and several subsidiaries were downgraded late Wednesday by Moody's Investors Service, which cited hits to "key businesses" amid the recession.

Moody's downgraded Omaha, Neb.-based Berkshire's long-term issuer rating to Aa2 from Aaa, as well as the insurance financial strength rating of National Indemnity Co. and other major insurance subsidiaries to Aa1 from Aaa.The rating agency said the outlook for all the entities is stable.

Falling stock prices have hit the companies' investment portfolios and their capital cushions, said Bruce Ballentine, Moody's lead analyst for Berkshire. Berkshire's portfolio includes pressured financial companies like American Express (AXP), Wells Fargo (WFC) and US Bancorp (USB), consumer staples makers like Procter & Gamble (PG), Coca-Cola (KO) and Kraft (KFT), and Moody's Investors Service (MCO) itself.

"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," Ballentine said in a press release.

Moody's action came almost a month after Fitch Ratings cut Berkshire's triple-A issuer default rating, but affirmed its triple-A insurer financial strength ratings on the company's insurance and reinsurance subsidiaries, with a negative outlook. Standard & Poor's two weeks ago revised its rating outlook for Berkshire, to negative from stable.

National Indemnity's regulatory capital fell by 22% during 2008 to $27.6 billion as of year-end and by a significant additional amount through early March, Moody's said. The rating agency said National Indemnity still has a robust capital base, but remained exposed to further stock market downturns.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs