New York » Standard & Poor's is warning that Warren Buffett's bid for Burlington Northern Santa Fe Corp. could sap the liquidity and capital position of the legendary investor's insurance operations at Berkshire Hathaway Inc., jeopardizing the company's AAA rating.

On another front, Berkshire Hathaway and Burlington Northern Santa Fe Corp. are being sued by investors over claims Berkshire's acquisition of the railroad won't maximize shareholder value.

The lawsuit, filed last week in Texas state court, claims directors at Burlington Northern didn't provide shareholders with sufficient information allowing them to determine whether they should tender their shares for the merger agreement.

As for Bershire Hathaway's standing, S&P placed its ratings on Berkshire Hathaway on CreditWatch with negative implications following Berkshire's announcement last week that it will buy Burlington Northern for $26.3 billion.

Standard & Poor's said it expects a significant part of the cash portion will come from Berkshire Hathaway's core insurance operations and the transaction will reduce the liquidity and "capital adequacy" of the company's insurance operations.

Standard & Poor's Ratings Services also placed its 'BBB' corporate credit rating and other long-term ratings on railroad Burlington Northern on CreditWatch with positive implications.

Standard & Poor's credit analyst Anita Ogbara said that at the close of the transaction, which is expected early next year, "we will assess the new capital structure and any potential parental support from Berkshire Hathaway."

She said she would most likely limit a ratings upgrade, if any, by one notch, to BBB+.

Berkshire Hathaway and Burlington Northern did not immediately comment. Buffett told CNBC on Tuesday that Berkshire will have $20 billion of consolidated cash after completing the Burlington deal.

The acquisition of Burlington Northern Santa Fe, the nation's second-largest railroad, would be the biggest ever for Buffett's investment company. Berkshire Hathaway owns a 22 percent stake in Burlington Northern and would buy up the rest under the deal.

It requires approval from Burlington shareholders and antitrust regulators.

Standard & Poor's credit analyst John Iten said Berkshire Hathaway's insurance operations' capital adequacy has declined over the past year, reflecting the drop in the market value of the company's portfolio of equity holdings of the insurance subsidiaries.

In addition, in the past 12 months the insurance operations acquired Berkshire Hathaway's investments in Goldman Sachs, General Electric Co., WM. Wrigley Jr. Co. and Swiss Re, Iten said. These large investments are boosting investment income but also have increased the insurance companies' exposure to equities and speculative-grade bonds, he said.

The investments also have reduced liquidity because Berkshire Hathaway primarily used cash and short-term investments and did not rely on the sale of longer-term investments.

The insurance companies already own a substantial amount of Burlington Northern stock, "so any further share purchases will increase the concentration risk associated with having a substantial portion of invested assets in securities of one company," he said.

Shares of Berkshire Hathaway's Class A shares trade in the $102,000 range, while its Class B shares trade in the 3,400 range. Burlington Northern stock is near $100.