Standard and Poor's, the renowned credit rating agency, has announced that it would be cutting Berkshire Hathaway's rating from 'AA plus' to 'AA'. The investment firm of Warren Buffet was downgraded because of a new methodology of evaluating insurance firms and the heightened dependence of Berkshire on its insurance business for income.
The ratings cut could mean that another one can be placed in the next few years. It must be noted though that it retained the credit and financial strength ratings of the insurance company units of Berkshire at 'AA-plus'.
This noted downgraded aligns Berkshire ratings with another service, noted Moody's Investors Service. Its ratings at Moody's is at 'AA2', which is the agency's third highest rating on its boards.
According to S&P analyst John Iten, "The lower credit rating on Berkshire better reflects our view of Berkshire's dependence on its core insurance operations for most of its divided income."
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