A.M. Best Places Ratings of Berkshire Hathaway Inc.’s Subsidiaries Under Review with Negative Implications

A.M. Best Co. has placed the financial strength ratings (FSR) and issuer credit ratings (ICR) of the domestic and international property/casualty and life/health subsidiaries of Berkshire Hathaway Inc. (BRK) (Omaha, NE) [NYSE: BRK.A and BRK.B] under review with negative implications. Concurrently, A.M. Best has placed the FSRs of A++ (Superior) and ICRs of “aaa” of National Indemnity Group (National Indemnity) (Omaha, NE) and Government Employers Group (GEICO) (Chevy Chase, MD) and their members under review with negative implications. In addition, A.M. Best has placed the FSRs of A++ (Superior) and ICRs of “aa+” of General Re Group (Gen Re) (Delaware) and its members under review with negative implications. (Please see link below for a detailed listing of the companies and ratings.)

These ratings actions follow the recent announcement that BRK intends to acquire for $100 per share in cash and common stock the remaining outstanding shares of Burlington Northern Santa Fe Corporation (BNSF) [NYSE: BNI], which would increase BRK’s holdings to 100%. This transaction is valued at $44 billion and includes the assumption of $10 billion of BNSF debt.

The placing of the ratings under review reflects A.M. Best concerns regarding the utilization of BRK’s insurance and reinsurance operations as a funding source for this transaction.

Additionally, A.M. Best is concerned with the liquidity and concentration risk pertaining to a single large investment as a substantial portion of BRK’s portfolio, since the majority of BRK’s equity investments are held at the insurance and reinsurance entities. A.M. Best will assess the under review status over the near term as more details regarding the capitalization and liquidity of the insurance and reinsurance operations is presented by management.

For a complete listing of Berkshire Hathaway Inc.’s domestic and international property/casualty and life/health subsidiaries, FSRs, ICRs and debt ratings, please visit www.ambest.com/press/110603berkshirehathaway.pdf.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.