DECEMBER 09, 2020 02:10 PM (EST)
AM Best Affirms Credit Ratings of Berkshire Hathaway Inc.’s Subsidiaries
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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 09, 2020 02:10 PM (EST)
AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aaa” of National Indemnity Company (Omaha, NE) and its affiliates (collectively referred to as National Indemnity). Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Finial Reinsurance Company (Stamford, CT), as well as the Long-Term ICR of “bbb-” and the Long-Term Issue Credit Rating (Long-Term IR) of “bbb-” of Finial Holdings, Inc. (Delaware). AM Best also has affirmed the FSR of A++ (Superior) and the Long-Term ICR of “aa+” of Berkshire Hathaway Life Insurance Company of Nebraska (BHLN), and the FSR of A+ (Superior) and the Long-Term ICR of “aa-” of First Berkshire Hathaway Life Insurance Company (Flushing, NY). These companies are subsidiaries of Berkshire Hathaway Inc. (Berkshire) [NYSE: BRK A and BRK B]. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Omaha, NE, unless otherwise specified. (See below for a detailed listing of the companies and ratings.)
The ratings of National Indemnity reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its very strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).
National Indemnity’s management team continues to manage the underwriting cycle successfully, and maintains extensive financial resources and expertise that places the company in a strong position to seize unique market opportunities. In addition, Berkshire provides substantial financial flexibility, diversification and long-term competitive advantages associated with Berkshire’s non-insurance businesses. Furthermore, the ratings reflect the benefits of being part of Berkshire, which includes the proven investment acumen of the organization.
Partially offsetting these strengths is National Indemnity’s exposure to higher levels of equity investments compared with other players in the market. These higher levels of equity investments can result in volatility in the company’s results; however, AM Best’s concern is alleviated somewhat by the superior long-term performance of the group’s investment portfolio.
The ratings of BHLN reflect its balance sheet strength, which AM Best categorizes as strongest, as well its adequate operating performance, limited business profile and appropriate ERM. The ratings also reflect the implicit and explicit support provided by National Indemnity and the rest of the Berkshire organization.
BHLN continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and benefits from an ongoing steady flow of reinsurance transactions. Partially offsetting these positive rating factors are BHLN’s fluctuating statutory operating trends, driven by the deal flow and mortality results on certain blocks, as well as exposure to interest-sensitive business and its heavy concentration in affiliated non-insurance investments.
The impact of COVID-19 on Berkshire Hathaway and its subsidiaries is expected to be manageable and within the company’s risk tolerances, but AM Best will continue to monitor developments related to the pandemic.
National Indemnity and its subsidiaries could experience negative rating actions if there is a series of operating losses over several years that exceeds AM Best’s expectations and negatively impacts the group’s market standing, or if there is a material change in the financial strength and flexibility of Berkshire, the group’s ultimate parent.
The FSR of A++ (Superior) and the Long-Term ICRs of “aaa” have been affirmed for National Indemnity Company and its following affiliates:
The following Long-Term IR has been affirmed:
Finial Holdings, Inc.—
— “bbb-” on $200 million 7.125% senior unsecured notes, due 2023
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.