Buffett’s Muni Bond Carrier Gets Top Rating from Moody
Berkshire Hathaway Inc's new municipal bond insurance arm, established in late December 2007 by billionaire investor Warren Buffett, received Moody's Investors Service's top rating, citing its fast growth despite a credit crunch. This is the insurer's second top rating, with Standard & Poor's Rating Services being the first with its highest triple A rate.
By late April, the new bond insurer had guaranteed more than $8 billion of municipal bonds, based on the net par amount, according to Moody's analyst James Eck.
Warren Buffett created the bond insurer late last year partly at the request of New York's insurance superintendent Eric Dinallo, who was trying to stabilize the troubled insurers that guarantee about half of the $2.6 trillion of municipal bond market.
Several insurers faced downgrades because they expanded into risky mortgage-linked securities, and investors were fleeing the debt they guaranteed, seeking to avoid losses.
"Berkshire Hathaway Assurance Corporation has rapidly grown its insured portfolio of U.S. public finance credits during a period of great stress in the credit markets," Eck said in a statement.
"The company's sound financial profile and its affiliation with Berkshire give it a meaningful presence in the financial guaranty insurance marketplace," he added.
Published on April 28, 2008
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