Fitch Affirms Berkshire Hathaway's IDR at 'AAA'; National Indemnity IFS At 'AAA'
Fitch Ratings has affirmed the 'AAA' Issuer Default Rating (IDR) and senior debt ratings of Berkshire Hathaway (NYSE: BRK.A) and the 'AAA' insurer financial strength (IFS) ratings of the National Indemnity Group (National Indemnity). The Rating Outlook remains Stable for National Indemnity Group, while Berkshire Hathaway's Rating Outlook remains Negative. A detailed ratings list follows the end of the release.
The affirmation follows today's announcement that National Indemnity has entered into a reinsurance agreement with Equitas, the Lloyd's run-off vehicle for claims on business written in 1992 and prior. The agreement provides Equitas with $5.7 billion of cover over its existing loss reserves. The cover protects Equitas against adverse loss reserve development and uncollectible reinsurance. In return for the cover, the National Indemnity will receive substantially all of Equitas' assets.
The affirmations recognize the materiality of the transaction relative to National Indemnity's capital base, National Indemnity's experience with similar transactions and Berkshire Hathaway's investing track record. Fitch believes the worst case scenario (i.e., the very unlikely scenario in which losses develop to the full limit, no reinsurance is collectable and claims are payable immediately, leaving no opportunity to earn investment income) would be less than a full year's net income for Berkshire Hathaway and less than 10% of Berkshire's capital base.
Berkshire Hathaway and its subsidiaries engage in both primary insurance and reinsurance of property and casualty risks as well as a number of businesses in the apparel, building products, energy, financial products, aviation services, distribution and retail business sectors. Berkshire Hathaway's principal insurance businesses include: 1) GEICO, 2) General Reinsurance Corp., 3) Berkshire Hathaway Reinsurance Group, and 4) Berkshire Hathaway Primary Insurance Group.
Fitch has affirmed the following ratings with a Negative Rating Outlook:
Berkshire Hathaway, Inc.
--Issuer Default Rating (IDR) 'AAA';
--Senior debt 'AAA'.
Fitch also affirms the following ratings with a Stable Rating Outlook:
Columbia Insurance Co.
National Fire and Marine Insurance Co.
National Indemnity Company
National Indemnity Co. of Mid America
National Indemnity Co. of the South
National Liability and Fire Insurance Co.
Wesco-Financial Insurance Co.
--IFS 'AAA'.
Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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