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Last Updated : May 06, 2019 05:02 PM IST | Source: Moneycontrol.com

Who is Ajit Jain? Meet one of Warren Buffett's likely successors at Berkshire

Ajit Jain, who graduated with a BTech degree from IIT Kharagpur joined Berkshire Hathaway in 1986.

The debate around billionaire Warren Buffett’s successor at Berkshire Hathaway got reignited after the "Oracle of Omaha" indirectly answered questions regarding succession during the AGM on May 4.

The 87-year-old Buffett is the chairman and CEO of Berkshire Hathaway, the holding company, which partially or fully owns several large corporations. Ninety-five-year-old Charlie Munger is the vice chairman.

At the AGM, Buffett picked out two of his lieutenants, 67-year-old Ajit Jain, who runs Berkshire's insurance business and Greg Abel, 57, who runs its non-insurance businesses.

Terming both Abel and Jain’s accomplishments as "fantastic", Buffet said that the two would "in the near future" join him and Munger in answering shareholder questions.

"You could not have two better operating managers than Greg and Ajit. It's just fantastic what they've accomplished," Buffett said.

Jain, who was born in Odisha, graduated with a BTech degree from IIT Kharagpur. He then joined IBM in India, before moving to the US to earn his MBA from Harvard.

He joined Berkshire Hathaway's insurance business in 1986, at a time he said he knew "little about insurance".

But Jain must have learnt fast, as under his watch, not only did its insurance business grow fast, it also played a vital contribution in Berkshire's investment float.

This happened as Buffett was able to use the vast premiums collected from the insurance business -- dubbed 'float' -- and invest them in his portfolio.

Essentially, the returns generated by Buffett's investments were not just because of the Oracle's legendary stock-picking skills, but were amplified thanks to what was effectively leverage generated by the low-cost 'float' generated by Jain's insurance business.

It has been Jain's superior skills when it comes to underwriting -- or deciding when to offer insurance to customers and at what price -- that ensured that even as the business generated upfront premium by the millions, the business rarely took undue risk or resulted in blow-ups.

Buffett has previously lauded Jain's "unmatched" underwriting skills, saying he insures risks that no one else has the desire or the capital to take on.

"His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the insurance business. Yet he never exposes Berkshire to risks that are inappropriate in relation to our resources," he said.

Jain's "mind, moreover, is an idea factory that is always looking for more lines of business he can add to his current assortment," Buffett added.

Munger too has credited Jain with "creating out of nothing" an immense reinsurance business that produced both a huge "float" and a large underwriting gain.

Buffett's regard for Jain can be seen in a letter to shareholders, in which he said that if "Charlie, I and Ajit are in a sinking boat, and only one of us can be saved, swim to Ajit".

As of 2016 end, Berkshire Hathway’s insurance business employed 44,000 and contributed $113 billion in premiums collected before payments, according to a Mint report.

Buffet has in an earlier interview said that the Berkshire board can install a new CEO within a day when he steps down, dies or becomes incapacitated, as per a Financial Express report.

In a 2014 letter to the company board, Buffett had said: "Both the board and I believe we now have the right person to succeed me as CEO – a successor ready to assume the job the day after I die or step down. In certain important respects, this person will do a better job than I am doing."

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First Published on May 6, 2019 01:52 pm
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