S&P downgrades Berkshire Hathaway rating

Warren Buffett (AP photo/Nati Harnik) Warren Buffett (AP photo/Nati Harnik)

NEW YORK (AP) — Standard & Poor's Ratings Services cut a major rating for Warren Buffett's Berkshire Hathaway, in part because of the company's focus on the insurance industry.

The ratings agency dropped its counterparty credit rating for the Omaha-based company by one notch to AA, from AA plus.

Like the old rating, the new rating is an investment-grade rating.

Berkshire Hathaway is the parent of Gen Re, a major player in the group disability, group life and annuity reinsurance markets, and of several property-casualty companies, including GEICO.

S&P says the new rating move reflects Berkshire Hathaway Inc.'s dependence on its core insurance operations for most of its dividend income.

"Management succession at BRK is also an offsetting factor," the rating agency noted. Berkshire has picked a successor for the 82-year-old Buffett, but has not made the name of the person public.

S&P says the investment firm's non-insurance businesses generate most of its operating income, but aside from the insurance subsidiaries only Burlington Northern Santa Fe LLC has provided a significant part of its total dividends. The outlook on all of the ratings is negative.

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