The counterparty credit rating on Berkshire Hathaway Inc. (BRK) is based on its extremely strong capitalization and competitive position, as well as extremely strong financial flexibility. In addition, BRK has improved its operating performance in 2002 and 2003, and this further supports the rating. Offsetting these positives are concerns about BRK's exposure to large loss events, investment concentrations, and exposure to adverse reserve development due to the assumption of retroactive risks. BRK's competitive position is viewed as extremely strong, and is supported by its leadership position within a variety of insurance and reinsurance sectors through its operating companies. In the U.S. property/casualty (P/C) reinsurance sector as of year-end 2003, NICO was ranked the largest reinsurer by the Reinsurance Association of
