Warren Buffett’s Berkshire Hathaway lost its top credit grade from Fitch Ratings this week on concern over the holding company’s exposure to volatile markets and the daunting task of finding an eventual successor for its legendary chairman.

The action came hours after another colossus, General Electric, lost its triple-A rating from Standard & Poor’s on Thursday, and underscores Wall Street’s fears that even corporate America’s most unassailable institutions will not make it through the deepening financial crisis unscathed.

Fitch dropped Berkshire one notch to AA+ from triple-A and assigned a “negative” outlook to the rating. The Omaha-based company still maintains a top credit grade from S&P and Moody’s.

“Fitch views the company’s potential earnings and capital volatility derived from its large, unhedged market exposures as inconsistent with the stability required at the triple-A level,” the firm said in a statement.

“Fitch views Berkshire’s investments in a wide variety of retail, service and manufacturing companies as mitigating this exposure somewhat, but Fitch does not view Berkshire’s degree of diversification as sufficient to offset these concerns at the triple-A level.”

Berkshire is coming off its worst year since Mr Buffett took control of the former textiles maker in 1965. Its class A stock fell 32 per cent last year, and per-share book value, or total assets minus intangible assets and liabilities, fell 9.6 per cent – the steepest drop in Mr Buffett’s tenure.

The class A shares fell 3.7 per cent to $82,570 on Friday in midday trading on the New York Stock Exchange. They have dropped 14 per cent so far in 2009.

Last month, the company said net income had slipped 59 per cent in 2008 from $12.2bn, or $8,548 a share, a year earlier to $4.99bn, or $3,224 a share. Revenue fell 8.8 per cent from $118.2bn to $107.8bn.

While the performance of Berkshire and its investments may rebound, higher returns will do little to address what Fitch called its “long-standing concerns with respect to ‘key man’ risk in the form of the company’s chairman.”

Mr Buffett, 78, has said Berkshire will split his dual roles at the company and name separate successors for chief executive and chief investment officer posts. It is unlikely Berkshire’s next investment chief will come close to Mr Buffett’s track record for performance.

Fitch believes Berkshire’s record of outstanding long-term investment results and the company’s ability to identify and purchase attractive operating companies is intimately tied to Mr Buffett.

Berkshire now generates about half its income from insurance businesses.

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