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S&P downgrades credit rating of Berkshire Hathaway

Seen as a major setback for billionaire investor Warren Buffett.

The ratings agency Standard & Poor’s (S&P) has downgraded credit rating of Warren Buffett’s Berkshire Hathaway from AA+ to AA, citing the conglomerate holding company’s over dependence on its insurance operations for dividend income.

The agency’s downgrading is seen as a major setback for billionaire investor Warren Buffett, who built $277bn worth of businesses around an insurance firm.

Apart from the management succession plan at Berkshire Hathaway, S&P highlighted Warren Buffett’s preference for large stock holdings in a small number of companies, and huge contribution to earnings of the company’s railroad business Burlington Northern Santa Fe as long-term risk factors.

Burlington Northern Santa Fe is currently the only noninsurance subsidiary company.

Eric Hedman of S&P’s insurance ratings told the Financial Times that “what that means is that they have a very unique individual, Warren Buffett, who continues to run the company”.

The ratings agency further added that Berkshire Hathaway has very strong financial risk profile.

Earlier this month, Buffett said that the company’s board had found his successor.

Rodney Clark, managing director of insurance ratings at S&P, told the Wall Street Journal that the ratings firm wanted to make it clear that the cut didn't result "from a deterioration of Berkshire or its performance. That's not the case.”

The rating is likely to have marginal effect on Berkshire Hathaway in the near future.

Berkshire Hathaway, which oversees and manages several subsidiary companies, has cash reserves of $49bn.

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No, David Cameron’s speech was not “left wing”

Come on, guys.

There is a strange journalistic phenomenon that occurs when a party leader makes a speech. It is a blend of groupthink, relief, utter certainty, and online backslapping. It happened particularly quickly after David Cameron’s speech to Tory party conference today. A few pundits decided that – because he mentioned, like, diversity and social mobility – this was a centre-left speech. A leftwing speech, even. Or at least a clear grab for the liberal centre ground. And so that’s what everyone now believes. The analysis is decided. The commentary is written. Thank God for that.

Really? It’s quite easy, even as one of those nasty, wicked Tories, to mention that you actually don’t much like racism, and point out that you’d quite like poor children to get jobs, without moving onto Labour's "territory". Which normal person is in favour of discriminating against someone on the basis of race, or blocking opportunity on the basis of class? Of course he’s against that. He’s a politician operating in a liberal democracy. And this isn’t Ukip conference.

Looking at the whole package, it was actually quite a rightwing speech. It was a paean to defence – championing drones, protecting Britain from the evils of the world, and getting all excited about “launching the biggest aircraft carriers in our history”.

It was a festival of flagwaving guff about the British “character”, a celebration of shoehorning our history chronologically onto the curriculum, looking towards a “Greater Britain”, asking for more “national pride”. There was even a Bake Off pun.

He also deployed the illiberal device of inculcating a divide-and-rule fear of the “shadow of extremism – hanging over every single one of us”, informing us that children in UK madrassas are having their “heads filled with poison and their hearts filled with hate”, and saying Britain shouldn’t be “overwhelmed” with refugees, before quickly changing the subject to ousting Assad. How unashamedly centrist, of you, Mr Prime Minister.

Benefit cuts and a reduction of tax credits will mean the Prime Minister’s enthusiasm for “equality of opportunity, as opposed to equality of outcome” will be just that – with the outcome pretty bleak for those who end up losing any opportunity that comes with state support. And his excitement about diversity in his cabinet rings a little hollow the day following a tubthumping anti-immigration speech from his Home Secretary.

If this year's Tory conference wins the party votes, it’ll be because of its conservative commitment – not lefty love bombing.

Anoosh Chakelian is deputy web editor at the New Statesman.