The steep cost of underemploying highly skilled immigrants

Fitch rates berkshire hathaway finance corporations senior debt issue a+


(The following statement was released by the rating agency) CHICAGO/BOGOTA, May 10 (Fitch) Fitch Ratings has assigned 'A+' ratings to the $1 billion of senior unsecured notes issued by Berkshire Hathaway Finance Corp. (BHFC). The notes are guaranteed by Berkshire Hathaway Inc. (NYSE: BRK). The 'A+' ratings are equivalent to Fitch's ratings on BHFC's outstanding senior unsecured notes that are guaranteed by BRK. The issuance of senior unsecured notes consisted of the following: $500 million, 1.3% coupon, maturing in 2018 and $500 million, 4.3% coupon, maturing in 2043. Proceeds from the senior notes are to be used to redeem notes maturing this month. KEY RATING DRIVERS Fitch's ratings on BRK are supported by extremely strong capitalization and market position of its insurance subsidiaries, solid operating performance with good diversification across business lines and excellent financial flexibility and liquidity. Also considered in the ratings are material risk exposures related to an above average investment allocation to common stocks, a substantial position in equity derivatives, insured natural catastrophe exposures and various issues associated with the company's acquisition strategy and succession planning. BRK's consolidated financial leverage was 24% of total capital as of March 31, 2013. Consolidated interest coverage for the first three months of 2013 was greater than 10x excluding realized investment gains. Both financial leverage and interest coverage ratios are not expected to change meaningfully given the modest size of the issuance relative to total capitalization and since proceeds will be used to pay maturing debt. BRK's debt-to-total capital and debt-to-tangible capital ratios at the holding company level (including debt issued by the company's finance company subsidiaries and guaranteed by BRK) were 17% and 22%, respectively at March 31, 2013. Fitch views BRK's ability to fund finance operations at a low cost as an important competitive advantage for the finance operations and also notes that much of the finance company debt is guaranteed by BRK. RATING SENSITIVITIES Key rating triggers that could lead to a future downgrade include: --Deterioration in the credit quality of key insurance subsidiaries (National Indemnity, GenRe, and GEICO) that is no longer consistent with the current 'AA+' rating. Measures of credit quality include Fitch's judgment of capitalization, a total financing and commitments ratio greater than 1.5x, net leverage (excluding affiliated investments) over 3.5x or a sharp and persistent reduction in underwriting profits; --A run-rate debt-to-tangible capital ratio from the holding company, insurance and finance operations (including debt issued or guaranteed by the holding company) that exceeds 30%; --Material increases in leveraged equity market exposure such as its equity index put derivative portfolio; --Acquisitions or other actions that reduce outstanding cash below $10 billion or approximately 5x consolidated interest expense. Key rating triggers that could lead to an upgrade include: --A commitment to lower debt-to-tangible capital ratios attributed to the holding company, insurance and finance operations. Fitch believes that this would likely require the scaling back of the finance operations. Fitch assigned the following ratings: Berkshire Hathaway Finance Corporation (BHFC) --$500 million 1.3% senior notes due May 2018 'A+'; --$500 million 4.3% senior notes due May 2043 'A+'. Fitch took no action on the following ratings: Berkshire Hathaway, Inc. --Issuer Default Rating (IDR) 'AA-'; --$750 million floating rate senior notes due Aug. 2014 'A+'; --$1.7 billion 3.20% senior notes Feb. 2015 'A+'; --$750 million 2.20% senior notes due Aug. 2016 'A+'; --$1.1 billion 1.9% senior notes due Jan. 2017 'A+'; --$500 million 3.75% senior notes due Aug. 2021 'A+'; --$600 million 3.40% senior notes due Jan. 2022 'A+'. Berkshire Hathaway Finance Corporation (BHFC) --IDR 'AA-'; --$1 billion 4.6% notes due May 2013 'A+'; --$1 billion 5% notes due Aug. 2013 'A+'; --$950 million 4.625% notes due Oct. 2013 'A+'; --$375 million floating rate senior notes due Jan. 2014 'A+' --$375 million 1.50% senior notes due Jan. 2014 'A+'; --$400 million 5.1% notes due July 2014 'A+'; --$1 billion 4.85% notes due Jan. 2015 'A+'; --$500 million 2.45% senior notes due Dec. 2015 'A+'; --$1,350 million 1.6% senior notes due May 2017 'A+'; --$1.25 billion 5.4% notes due May 2018 'A+'; --$750 million 4.25% senior notes due Jan. 2021 'A+'; --$775 million 3% senior notes due May 2022 'A+'; --$750 million 5.750% senior notes due Jan. 2040 'A+' --$500 million 4.4% senior notes due May 2042 at 'A+'. GEICO Corporation --IDR 'AA-'; --$150 million 7.4% senior notes due July 15, 2023 'A+'. General Re Corporation --IDR 'AA-'. --$500 million commercial paper program 'F1+'; --Short-term IDR 'F1+'. Fitch did not take a rating action on the following insurance subsidiaries that currently carry an 'AA+' Insurer Financial Strength: --Government Employers Insurance Company; --General Reinsurance Corporation; --General Star Indemnity Company; --General Star National Insurance Company; --Genesis Insurance Company; --National Indemnity Company; --Columbia Insurance Company; --National Fire and Marine Insurance Company; --National Liability and Fire Insurance Company; --National Indemnity Company of the South; --National Indemnity Company of Mid-America; --Wesco Financial Insurance Company. Contact: Primary Analyst Douglas M. Pawlowski, CFA Senior Director +1-312-368-2054 Fitch Ratings, Inc. 70 W. Madison Chicago, IL 60602 Secondary Analyst Christopher A. Grimes, CFA Associate Director +1-312-368-3263 Committee Chairperson Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.this site Additional information is available at 'this site'. Although BRK's General Reinsurance Corp. subsidiary participated directly in the rating process, BRK did not participate other than through the medium of its public disclosure. Applicable Criteria & Related Research: --'Insurance Rating Methodology' (Jan. 11, 2013). Applicable Criteria and Related Research Insurance Rating Methodology — Amended here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW. FITCHRATINGS. COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

How to bank your childs money


When I told my 7-year-old that her wallet was getting full and it was time to open a bank account, her eyes widened. She wanted to know if she would be allowed to carry her own ATM card. Um, no. When transitioning from a piggy bank to handling a debit card linked to an active account, financial experts say it is best to start with a trip to a bank, but which one and when? Here are some steps to get started: 1. Bank of Mom and DadDon't be in a rush to move away from the bookshelf bank, says financial literacy expert Susan Beacham. There are lessons to be learned from physical contact with money. Sticking with a piggy can be especially effective if you teach your kids to divide their money into categories. Beacham's Money Savvy Pig (this site) has four slots: save, spend, donate, invest. When you cannot stuff one more dime into the slots, it is time to crack it open and seek your next teachable moment.

2. Neighborhood convenienceMany adults bank online, but kids still benefit from visiting a branch, says Elizabeth Odders-White, an associate dean at the Wisconsin School of Business in Madison. Do not worry about the interest, Beacham says. "A young child who gets a penny more than they put in thinks it's magical. You're not trying to grow their money as much as grow their habits." Your second consideration should be fees. Your best bet may be where you bank, where fees would be determined by your overall balance and you could link accounts. Another option is a community bank, particularly a credit union, which are among the last bastions of free checking accounts.

"The difference between credit unions and banks is that credit unions are not-for-profit and owned by depositors," says Mike Schenk, a vice president of the Credit Union National Association. At either type of institution, you could open a joint account, which would be best for older kids because it allows them to have access to funds through an ATM or online, says Nessa Feddis, a senior vice president at the American Bankers Association. (For more on credit options, see reut.rs/19AD2sO)Or you could open a custodial account, for which you would typically need to supply a birth certificate and the child's Social Security number. Taxes on interest earned would be the child's responsibility, but likely would not add up to much on a small account. A minor account must be transferred by age 18 to the child's full control.

3. Big Money If your child earns taxable income, the money should go into a Roth individual retirement account, experts say. There is usually no minimum age and many brokerage firms have low or no minimums to start an account. You can pick a mix of low-cost ETFs, and let it ride. Putting away $1,000 at age 15 would turn into nearly $30,000 by age 65, at a moderate growth rate, according to Bankrate.com's retirement calculator. Not all kids can bear to part with their earnings, but there are workarounds. One tactic: a parent or grandparent supplies all or part of the funds that go into the Roth, akin to a corporate matching program. The other is to work with your child to understand long-term and short-term cash needs. That is what certified financial planner Marguerita Cheng of Blue Ocean Global Wealth in Potomac, Maryland, did with her daughter, who is now in her first year of college. While mom and dad pay for basic things like tuition, the teen decided to pool several thousand dollars from her summer lifeguard earnings, money from her on-campus job and gifts from her grandparents to fund several educational trips."She would make money investing, but it's only appropriate if you have a longer time horizon," says Cheng. "It's not even about the money, it's the pride she gets from paying for it herself."