Buffett's Berkshire (BRK.A) Cuts Exposure to Reinsurance Market

A WSJ article this morning is highlighting recent steps taken by Berkshire Hathaway (NYSE: BRK.A) in an attempt to bolster the conglomerate's credit rating. The company had its long-term rating cut from Aaa to Aa2 by Moody's at the beginning of April.

Traders are viewing Berkshire's pullback from the catastrophic property damage reinsurance market as one of the most prominent actions taken so far by Warren Buffett's company. The news comes at a time when cash in Berkshire's coffers are at an all-time low: "just" $20 billion in cash at the end of Q1.

As the WSJ notes, Berkshire's Reinsurance unit effectively writes policies for other insurers who feel that they should offset some exposure big losses like hurricane damage, for example. While claims are usually rarely made for this kind of insurance, when a customer does make a claim, the exposure is huge.

In 2006, 2007 and 2008, Berkshire's Reinsurance segment brought in $2.2 billion, $1.6 billion and $955 million, respectively.

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