A.M. Best has assigned a financial strength rating (FSR) of ‘A++’ (Superior) and an issuer credit rating (ICR) of “aaa” to Berkshire Hathaway Direct Insurance Company (BHDIC), based in Omaha, and has assigned a stable outlook to both ratings.
“The ratings are based on BHDIC’s 90 percent quota share agreement with National Indemnity Company (NICO), which has been rated “aaa” for the past 10 years,” Best’s report explained.
The report also indicated that as a new company formation, Best “expects BHDIC to adhere to its plans for superior risk-based capitalization and net profitability over the next five years as presented in the company’s financial projections. BHDIC was formed from the shell of American Centennial Insurance Company, which was acquired by Berkshire Hathaway Inc. in 2008.”
The revised company’s plans “to offer several lines of business to small business customers on a direct basis through the internet,” Best said. “The company’s initial offerings are anticipated to be workers’ compensation and business owners’ package policies.
“Back office operations and investment management will be supported by affiliated Berkshire Hathaway companies. BHDIC’s risk management, including overall exposures, risk appetite and control systems, will be fully incorporated into NICO’s existing risk management program.”
Source: A.M. Best
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