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Investing.com -- On May 22, 2025, Moody’s Ratings affirmed the Aa2 senior unsecured debt rating, Aa2 long-term issuer rating, (P)Aa2 senior unsecured shelf rating, and Prime-1 short-term issuer rating of Berkshire Hathaway Inc . (NYSE:BRKa) (NYSE:BRK). The ratings also apply to the debts of subsidiaries that are unconditionally and irrevocably guaranteed by Berkshire. These include the Aa2 backed senior unsecured debt rating and (P)Aa2 backed senior unsecured shelf rating of Berkshire Hathaway (NYSE:BRKb) Finance Corporation, and the Aa2 backed senior unsecured debt ratings of The Lubrizol Corporation and Precision Castparts Corp. The rating outlook for these entities remains stable.
Moody’s ratings of Berkshire reflect the company’s extraordinarily well-capitalized insurance operations, its highly diversified earnings and cash flow from regulated and non-regulated businesses, and its conservative financial policy. The latter includes maintaining a large liquidity pool and moderate financial leverage. However, potential earnings and capital volatility related to the company’s large, concentrated stock investments and its large individual insurance transactions partly offset these strengths. The company also faces challenges in enterprise risk management due to its vast business portfolio, and in adapting to a new CEO effective at the start of 2026.
In the first quarter of 2025, Berkshire reported net operating earnings of $9.6 billion, down from $11.2 billion in the first quarter of 2024. This decrease was largely due to California wildfire losses in early 2025, which reduced insurance underwriting income. However, this impact was partly offset by higher insurance investment income and higher earnings in the BNSF (railroad) and Berkshire Hathaway Energy segments. Operating earnings were slightly down in the manufacturing, service and retailing segment. Net earnings attributable to Berkshire fell to $4.6 billion in the first quarter of 2025 from $12.7 billion in the first quarter of 2024, mainly due to net investment losses in the recent quarter compared to net investment gains in the prior year quarter.
Factors that could lead to an upgrade of Berkshire’s ratings include meaningful improvement in standalone credit profiles of major operating units and continued holdings of substantial cash and equivalents at or readily available to the parent company relative to outstanding indebtedness. Conversely, factors that could lead to a rating downgrade include meaningful deterioration in standalone credit profiles of one or more major operating units, a shift toward a less conservative financial profile, operating and/or investment losses causing a 15% decline in shareholders’ equity in a given year, or a significant decline in cash and equivalents at or readily available to the parent company.
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