A.M. Best Affirms Ratings of National Indemnity Group

Business Wire, May 16, 2007

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Superior) and issuer credit ratings (ICR) of "aaa" of the professional reinsurers of the National Indemnity Group. A.M. Best has also affirmed the A FSR and assigned ICRs of "aaa" to the five non-reinsurance members of the group. All companies are headquartered in Omaha, NE. The outlook for all ratings is stable.

The ratings reflect the group's core importance within the Berkshire Hathaway Inc.'s [NYSE: BRK.A and BRK.B] insurance and non-insurance organizations, superior risk-adjusted capitalization, excellent market profile and strong total return measures. These strengths are demonstrated through National Indemnity Group's significant underwriting capacity in its reinsurance and primary insurance operations, strong management team and the operating flexibility to respond to market opportunities.

Management's conservative risk management strategy has enabled the group to absorb significant catastrophe losses in recent years while maintaining ample capacity to support its ongoing business risks. National Indemnity monitors its catastrophe exposure on a zonal aggregate limit basis, and its per occurrence exposure is manageable relative to its carried surplus. The group has also demonstrated the underwriting expertise to achieve favorable operating returns over the long-term, despite volatility in earnings stemming from high severity losses and irregular earned premiums derived from retroactive reinsurance or single large risk contracts. On an economic basis, the group has generated excellent total returns on statutory surplus, which have averaged 17.6% over the most recent five-year period.

Somewhat offsetting these positive ratings factors are the group's elevated common stock leverage and relatively aggressive acquisition strategy. Although above average in allocation, the group's high common stock leverage has contributed to very strong total return on equity measures in both the five and ten-year periods. In March of 2007, National Indemnity Group completed a reinsurance transaction whereby it will provide London-based reinsurer Equitas, up to $5.7 billion of coverage, with the potential for an additional $1.3 billion of coverage, in excess of Equitas' March 31, 2006, undiscounted reserves. However, A.M. Best believes that the group has the capitalization and management track-record to integrate such transactions and will monitor the group's acquisition strategy going forward.

A.M. Best also believes that National Indemnity Group could currently withstand the compound effect of a mega-catastrophe and moderate devaluation of its invested assets while still maintaining superior financial strength.

The FSR of A and the ICRs of "aaa" have been affirmed for National Indemnity Group and its following members:

* National Indemnity Company

* Columbia Insurance Company

* Wesco-Financial Insurance Company

The FSR of A has been affirmed and the ICRs of "aaa" have been assigned for the following members of National Indemnity Group:

* National Fire & Marine Insurance Company

* National Liability & Fire Insurance Company

* National Indemnity Company of Mid-America

* National Indemnity Company of the South

* Berkshire Hathaway Life Insurance Company of Nebraska

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.