Ajit Jain, Seen as Pos­si­ble Buf­fett Suc­ces­sor, Gets Big­ger Role

Gen Re CEO, who has been re­port­ing to Buf­fett, to re­tire by the end of this year, but the new CEO will re­port to Jain

The Economic Times - - Sports -

Noah Buha­yar, Kather­ine Chiglin­sky & Son­ali Basak

Seat­tle | New York: Ajit Jain, long con­sid­ered a top can­di­date to re­place bil­lion­aire War­ren Buf­fett as chief ex­ec­u­tive of­fi­cer of Berk­shire Hath­away Inc, is ex­pand­ing his over­sight of the com­pany’s in­sur­ance oper­a­tions.

Gen Re, one of the ma­jor rein­sur­ance busi­nesses at Berk­shire, said Tues­day that CEO Tad Mon­tross, 60, will step down by the end of this year. His re­place­ment hasn’t been named, but will re­port to Jain, said Sabine Denne, a spokes­woman for the rein­surer.

Buf­fett, 85, has said he con­sid­ers Jain fam­ily. The 64-year-old built a sep­a­rate un­der­writ­ing unit, Berk­shire Hath­away Rein­sur­ance Group, into one of the com­pany’s largest oper­a­tions. He has ex­panded that busi­ness, even amid in­creased in­dus­try-wide com­pe­ti­tion, while Gen Re has re­trenched in some mar­kets.

“It’s a deep­en­ing of his in­volve­ment with the in­sur­ance ver­ti­cal,” rather than a state­ment about who will suc­ceed Buf­fett, Tom Russo, who over­sees $11 bil­lion at Gard­ner Russo & Gard­ner, in­clud­ing Berk­shire shares, said of Jain’s new du­ties. “Tad’s aw­fully young to be re­tir­ing.”

At the end of De­cem­ber, Jain’s rein­sur­ance unit had about $44 bil­lion of float, which in­cludes pre­mium dol­lars that Buf­fett can in­vest be­fore pay­ing claims. That com­pares with $18.6 bil­lion at Stam­ford, Con­necti­cut-based Gen Re. Rein­sur­ers as­sume risks from pri­mary car­ri­ers.

Un­der­writ­ing profit at Mon­tross’s unit de­clined by half last year to $132 mil­lion as com­pe­ti­tion pushed down rates for prop­erty-and-ca­su­alty cov­er­age. The unit, which gen­er­ates about $6 bil­lion in an­nual pol­icy sales, said last month it was ex­it­ing P&C oper­a­tions in six lo­ca­tions, in­clud­ing Hong Kong and Seat­tle amid a global re­or­gan­i­sa­tion.

Buf­fett said last year that he ex­pects a slump in rein­sur­ance re­sults in the com­ing decade as in­vestors en­ter the mar­ket. Given that view, it makes sense to con­sol­i­date oper­a­tions un­der Jain rather than bring on some­one new to re­port to Buf­fett, who al­ready over­sees dozens of CEOs, said Jeff Matthews, an in­vestor and au­thor of books about Berk­shire.

Mon­tross, who re­ports to Buf­fett, had been dis­cussing his po­ten­tial re­tire­ment for some time with the bil­lion­aire and felt like it was a time to move on, ac­cord­ing to a per­son with knowl­edge of his plans. He’ll work on the tran­si­tion with Jain and have more time with fam­ily, said the per­son, who asked not to be iden­ti­fied dis­cussing pri­vate talks.

Buf­fett didn’t re­spond to a mes­sage seek­ing com­ment. In­sur­ance In­sider re­ported on Mon­tross’s de­par­ture plans ear­lier Tues­day. Berk­shire has grown in re­cent decades through ac­qui­si­tions, in­clud­ing a rail­road, util­ity oper­a­tions, re­tail­ers and man­u­fac­tur­ing busi­nesses. In­sur­ance un­der­writ­ing and in­vest­ment in­come last year con­trib­uted less than a quar­ter of Berk­shire’s profit. Still, Buf­fett says in­sur­ance re­mains a key busi­ness as his com­pany di­ver­si­fies, and has long praised Jain.

“Ajit has prob­a­bly made a lot more money for Berk­shire Hath­away than I have,” Buf­fett said at an event in In­dia in 2011 in his re­sponse to a ques­tion about whether Jain would suc­ceed him. “I re­ally feel about him like I would a brother or a son.” —Bloomberg

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