The economic outlook is having a tsunami affect on ratings, impacting even the largest, previously most stable insurers, and Berkshire Hathaway is no exception.

Attributing the cut in ratings made earlier this month by Fitch Ratings to Berkshire to the notion that “no financial-oriented holding company should be rated AAA because of significant market volatility,” Berkshire took it on the chin again today with news that Standard & Poor may drop its AAA credit rating because “values have fallen in its equity portfolio and capital has shrunk at the insurance operations.”

According to the Wall Street Journal, the rating agency said the capital adequacy of Berkshire's insurance operations was significantly lower at the end of 2008 than a year earlier, but it was still appropriate for the rating. If the value of the company's equity holdings stabilizes or improves in the next 12 months, or Berkshire is able to rebuild its capital position in the next one to two years, reported the Journal, S&P will change the outlook back to stable. But if capital falls further, Berkshire's ratings could be cut one notch, the ratings agency said.

Although S&P affirmed all of its ratings on Berkshire, including its AAA/A-1+ counterparty credit rating, the rating agency’s outlook has creates an opening for even more volatility for Berkshire and the market.

Class A shares of Berkshire lost nearly a third of their value in 2008, and have fallen another 12% this year. They closed Tuesday at $88,500, down 1.7%, reports Dow Jones.

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