Updated from 2:36 p.m. EDT

Berkshire Hathaway ( BRK.A) is in danger of losing its triple-A rating with Standard & Poor's if its capital levels or the value of its equity holdings continue to dwindle.

S&P late Tuesday revised its rating outlook for Berkshire, the Omaha, Neb., insurance and investing firm headed by billionaire investor Warren Buffett, to negative from stable. If the outlook for Berkshire continues to worsen over the next year, S&P could cut the insurer's rating.

"The decline in equity values in 2009 has reduced the statutory capital of the insurance operations, and a preliminary analysis of the group's capital adequacy indicates that the group's capital is no longer redundant at the 'AAA' level," said S&P credit analyst John Iten in a research report.

In December, S&P said it would consider downgrading Berkshire's outlook to negative if capital markets continued to weaken, investment-related losses reduced capital below the triple-A level, and the firm was not able to rebuild capital back up to that level within a reasonable time frame.

S&P said the time horizon for the outlook is 12 months. If, during that period, a continued downturn in equity values hurts its capital further, or if it appears that the insurance business won't be able to restore its capital back to the triple-A level, then the agency will lower its rating.

However, S&P said a downgrade of the insurance company's ratings would likely be a one-level drop. Still, a downgrade by S&P would the be the second for Berkshire this year, after Fitch Ratings reduced the insurer's issuer default rating to double-A-plus from triple-A and its senior unsecured debt rating to double-A from triple-A.

Gerald Martin, a professor at American University's Kogod School of Business who has studied Berkshire, argues that the recent moves by the ratings agencies are more indicative of what is happening with the general economy and not specifically aimed at something happening with the insurer.

"Right now, we're having ratings agencies do what they do best, and that's play catch-up," Martin said. "Unfortunately, that's what happens. The tide has gone out, and the firms that were overleveraged and who did risky things are the ones getting caught. But I have yet to see anything that I deem risky that Berkshire is undertaking."

Martin also notes that rating agencies are piling the downgrades on several other companies, such as General Electric ( GE).

"Who would've thought a little more than a year ago that would happen?" Martin asked.

After opening higher, the Class A shares of Berkshire ended Wednesday down $1,650, or 1.9%, to $86,850. The stock is down 10% in 2009 and more than 32% over the last year.

Shares have continued to face pressure after Buffett's annual report showed that Berkshire endured a 96% drop in its fourth-quarter profit, largely due to unrealized losses of $3.25 billion on investments and derivative contracts. Berkshire's book value -- assets minus liabilities -- declined 9.6% to $70,530 a share last year, only the second time book value has dropped under Buffett. The other instance was a 6.2% decrease in 2001.

Berkshire owns a diverse mix of companies, including insurance, restaurants and utilities, among other businesses. The firm also has large investments in companies including General Electric ( GE), Wells Fargo ( WFC), Goldman Sachs ( GS)and Coca-Cola ( KO).