Warren Buffett’s conglomerate business Berkshire Hathaway is beginning to put a succession plan in place for when he and Charlie Munger retire and the firm’s re/insurance leader Ajit Jain has been promoted to the Board of Directors in a new role as Vice Chairman of the Insurance division.
Berkshire Hathway’s insurance and reinsurance operations are an enormous driver of the conglomerate’s value, with the $100 billion or more insurance float providing the ammunition for Warren Buffett’s investment bets.
The firm operates a total-return reinsurance model, aiming for profitable underwriting returns as well as an accumulation of premium float, which can then be put to work in its investments and acquisitions of other companies.
Berkshire Hathway has created two new board director positions, extending the board to 14 people, one of which sees the firm’s reinsurance chief Ajit Jain becoming Vice Chairman of Berkshire Hathaway’s Insurance Operations.
Jain was already leading the insurance and reinsurance operations at Berkshire Hathaway, having joined the Berkshire Hathaway Insurance Group in 1986, holding the role of Executive Vice President of National Indemnity Company and with overall responsibility for leading Berkshire Hathaway’s reinsurance operations.
Jain had been positioned as a possible successor for the operational part of the Berkshire Hathaway reinsurance and insurance business, potentially even a successor for Warren Buffett himself. This new role will see him having even greater influence over the direction of the firm’s insurance and reinsurance operations and board level input across the company.
Buffett commented today, “It’s part of the movement towards succession at this time. They are both key figures and this would have made sense five years ago. They have Berkshire in their blood.”
Further explaining the moves, Buffett said, “It’s very good for Berkshire and it’s even better for me,” but he’s in no hurry to step down and added, “It’s a transition period that may last a long time, or if something happened to me it could happen very soon.”
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