Tag: Ajit Jain

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Ajit Jain’s $20 Mil Stock Purchase Shows His Belief in Berkshire Hathaway

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Ajit Jain, Berkshire Hathaway’s Vice Chairman of Insurance Operations, has purchased $20 million in Berkshire Hathaway stock.

Jain purchased the stock on December 18, at prices ranging from $295,750 to $297,000 a share for Berkshire Hathaway’s A shares, which had been as high as $335,900 in October.

In January 2018, Jain, who along with Greg Abel, who was elevated to Vice Chairman of Non-insurance Operations, became vice chairmen, a move that puts them in line for the long term leadership of Berkshire Hathaway.

Jain’s stock purchase shows that he not only believes in leading Berkshire, but owning it as well.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Buffett Successors Insurance

Ajit Jain Not Only Helps Run Berkshire, He Owns Berkshire

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Newly appointed Berkshire Hathaway vice chairman Ajit Jain not only oversees all of Berkshire’s insurance operations, he has a significant stake in the conglomerate.

Berkshire’s regulatory filing this past Thursday revealed that Jain has roughly $109 million in Berkshire stock.

Jain owns $21.7 million of Berkshire stock, and also indirectly owns $87.5 million of Berkshire stock held by his wife, a family non-profit foundation and two family trusts.

The filing makes clear that Jain needs to not only stay in Warren Buffett’s good graces, he definitely need to be good to his wife.

2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Acquisitions Buffett Successors Charlie Munger Warren Buffett

Major Changes Coming With Abel’s and Jain’s New Roles as Vice Chairmen

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With Gregory Abel elevated to Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations, and Ajit Jain appointed Vice Chairman – Insurance Operations, Warren Buffett has made clear that major changes are in store in the command structure of Berkshire’s operations.

While Buffett has no interest in stepping down as chairman, he is shifting the responsibility for both the bolt-on acquisitions and the setting of salaries and compensation for Berkshire’s managers to his new vice chairmen.

“They’ll decide the compensation of the people underneath,” Buffett explained in a January 10 interview on CNBC. “I mean, certain people we have compensation arrangements with that we will have in force for their lifetime because we made up at the time of acquisition, but aside from the ones that are fixed, those decisions will be theirs. And smaller bolt on acquisitions will probably be theirs if there’s a large bolt on acquisition, then Charlie and I will get involved.”

Berkshire shareholders apparently should have no fear that Buffett’s famed “elephant gun,” the term he uses for hunting for giant-sized acquisitions, will be silenced any time soon.

2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Buffett Successors Charlie Munger Warren Buffett

Only One CEO in Berkshire’s Future Says Warren Buffett

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With both Greg Abel and Ajit Jain recently promoted to the positions of vice chairman, the obvious question is will they one day be co-CEOs of Berkshire.

“No” say’s Warren Buffett, who in a January 10 interview on CNBC made it clear that there will only be one CEO.

“When I’m not CEO, there will be another CEO, Buffett explained. “There will be a CEO. And how that CEO will organize things will be up to him in this case. And he will figure out the best way to do it. And it won’t change very much. It will change a little, but it won’t change very much.”

So, will the CEO be Abel or Jain? From Buffett’s remarks it seems clear it will be Abel.

“There’s no horse race at all in these two fellows,” Buffett noted in answer to a question of whether the two are jockeying for position. “They know each other well. They like each other well. They both have their areas of specialty. I mean, Greg would not want to be running insurance and Ajit would not be running the other operations.They are extremely good at what they do. Those are two pretty different businesses. And they’re roughly equal businesses. There are more people on one side, but the insurance business generates over $100 billion of float in addition to having well over $100 billion invested in it in terms of net worth. So, there’s more or less parity of earning power and importance.”

Since according to Buffett “Ajit would not be running the other operations,” and Buffett has expanded Abel’s purview to all of Berkshire’s non-insurance businesses (a new CEO has been appointed to head Berkshire Hathaway Energy), everything points to Abel, 55, being the heir apparent for CEO.

As for other potential CEOs, Mathew Rose, executive chairman of BNSF Railway, no longer seems to be a candidate to take over the helm of Berkshire. Nor does Mark Donegan, CEO of Precision Castparts. The two executives lead two of Berkshire’s largest companies.

Buffett also revealed that Charlie Munger, who already had the title of vice chairman, would not be getting a new title, and was completely on board with sharing the title.

“It was his idea, actually, in terms of the title,” Buffett said. “I got about halfway through the first sentence, which is more than i usually get through with Charlie before he comes up with a better idea, and he just says, let’s just have three vice chairmen.”

2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Berkshire Hathaway Energy Charlie Munger Insurance Kraft Heinz Warren Buffett

Greg Abel and Ajit Jain Join Berkshire Board

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In a move that clearly foreshadows the next generation of Berkshire Hathaway leadership, Berkshire’s Board of Directors voted to increase the number of directors comprising the entire Board of Directors from twelve to fourteen. After making that move, Gregory E. Abel and Ajit Jain were then elected to serve as Directors to fill the resulting vacancies on the Board of Directors.

In connection with their election to the Board of Directors, Warren Buffett, Berkshire Hathaway’s Chairman and CEO, appointed Mr. Abel to be Berkshire Hathaway’s Vice Chairman – Non-Insurance Business Operations and Mr. Jain to be its Vice Chairman – Insurance Operations.

Mr. Abel joined Berkshire Hathaway Energy Company in 1992 and currently serves as its Chairman and CEO. Mr. Jain joined the Berkshire Hathaway Insurance Group in 1986 and currently serves as Executive Vice President of National Indemnity Company with overall responsibility for leading Berkshire’s reinsurance operations.

In March 2016, Buffett appointed Abel to the Board of Kraft Heinz, a move that showed his confidence in the 55-year-old manager.

For the time being, Buffett and Munger will continue in their existing positions, including being responsible for significant capital allocation decisions and investment activities.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Berkshire Hathaway Reinsurance Group Berkshire Hathaway Specialty Insurance Insurance

Berkshire Hathaway Turns Away From Reinsurance Business

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Berkshire Hathaway’s long term love affair with the reinsurance continues to wane. Over the past few years, Warren Buffett, Charlie Munger and Ajit Jain all have spoken about the changes in profitability in the reinsurance market.

The latest proof comes as Berkshire Hathaway has dropped to sixth in A.M. Best’s annual special report on the global reinsurance industry.

“The reinsurance business not as good as it once was and is unlikely to get better,” Charlie Munger said at the 2015 Berkshire Hathaway annual meeting. “Money has come in, not because they want to be in reinsurance, but because it’s an uncorrelated asset class. We’re in it for the long haul.”

“What we’ve seen from Berkshire Hathaway is that they recognize that reinsurance opportunities are not where they need to be from a pricing perspective,” A.M. Best Vice President Robert DeRose said. “They have pulled capacity back from that particular aspect of the market and they are building out insurance strategies.”

DeRose stated that Berkshire Hathaway is specifically building out that capacity through Berkshire Hathaway Specialty Insurance Co. Also, Berkshire Hathaway, through its General Reinsurance Corp. franchise, has entered into a five-year agreement under which Transatlantic Reinsurance Co. will serve as its exclusive underwriter for U.S. and Canadian property/casualty treaty reinsurance business.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Berkshire Hathaway Reinsurance Group Insurance Warren Buffett

Warren Buffett’s Greatest Insurance Investment

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What was Warren Buffett’s greatest insurance investment? Was it the purchase of GEICO? How about National Indemnity?

According to Buffett, it was none of those. It was the hiring of Ajit Jain.

In an interview with Best’s Review, Warren Buffett says he made one of his best investments when he chose Ajit Jain to run his reinsurance business nearly 30 years ago. Jain, who is considered one of the front-runners to succeed Buffett as the head of Berkshire Hathaway, is one of the insurance leaders profiled in the July issue.

Jain was hired by Buffett in 1986, and at the time he was 35-years-old and had little experience in the reinsurance business.

Today, Jain is one of Buffett’s most trusted managers, having built Berkshire Hathaway Reinsurance Group into a reinsurance insurance powerhouse with $44 billion in float.

In April, he was given additional duties overseeing Gen Re after CEO Tad Montross retired.

Sounds like a good investment indeed.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Insurance Warren Buffett

Buffett Throws Cold Water on Ajit Jain Rumors

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Two weeks ago rumors began flying that perhaps Warren Buffett had just signaled that Ajit Jain would be his successor as CEO of Berkshire Hathaway.

The rumors started when General Reinsurance Corp. Chairman and CEO Tad Montross announced that he would step down near the end of 2016.

Berkshire quickly announced that Ajit Jain, who already runs a large part of Berkshire’s reinsurance business, would add General Reinsurance to his portfolio.

Buffett watchers jumped on the news, speculating that the odds that Jain would someday take over Berkshire Hathaway had dramatically improved.

Not So Fast Says Buffett

Speaking at the 2016 Berkshire Hathaway annual meeting, Buffett threw cold water on the rumors. Buffett watchers, who hoped to divine the future of Berkshire’s leadership, got no help on their visit to the Oracle of Omaha.

Buffett noted that there are “no tea leaves to read in the fact that Ajit is supervising Gen Re from this time forward.”

While Buffett continues to emphasize that the conglomerate has a succession plan, and the Board is fully behind it, he is not going to reveal it to the public.

From his perspective, to do so would be to risk announcing a successor who might not take the job if a personal “situation” comes into play in the interim period. Buffett didn’t define that situation, but health is just one possible factor.

Speaking of health, Buffett, who at age 85 has no problem parrying five hours of questions at the annual meeting, also noted that the exact timing of succession is also an unknown. He doesn’t look to be interested in stepping down as he clearly loves what he is doing, and his recent $32.3 billion acquisition of aerospace manufacturer Precision Castparts shows he can still do it better than anyone else.

Buffett appeared to be in excellent health and spirits, and when asked if he had regrets for anything he wishes he could do over in life, he chuckled.

“I don’t think I would have started with a textile company,” he joked, referring to Berkshire Hathaway’s origins as a failing New England textile mill.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Berkshire Hathaway Reinsurance Group Charlie Munger Insurance Minority Stock Positions Stock Portfolio

Berkshire Cuts Munich Re Stake, Again

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Berkshire Hathaway continues to see the reinsurance business as a low return business and is pulling back from the sector in its own underwriting and in its ownership stake in other underwriters.

Berkshire has again cut its stake in Munich, Germany-based reinsurer Munich Re, this time from 9.7 percent to 4.6 percent. It previously cut its stake from 12 percent to just over 9 percent earlier in 2015.

Berkshire’s own reinsurance business has been less than stellar this year with Berkshire reporting$155 million in losses from storm damage on Australia’s east coast in the 2nd quarter of 2015.

Charlie Says

“The reinsurance business not as good as it once was and is unlikely to get better,” Charlie Munger said at the 2015 Berkshire Hathaway annual meeting. “Money has come in, not because they want to be in reinsurance, but because it’s an uncorrelated asset class. We’re in it for the long haul.”

Uncorrelated (also called non-correlated) asset classes are assets that move in the opposite direction of a particular asset class, thus helping investors reduce risk in exchange for lower upside performance.

Munger’s words were echoed by Ajit Jain, who is the head of Berkshire Hathaway Reinsurance. “What was a very lucrative business is no longer a very lucrative business going forward” Jain was quoted in The Wall Street Journal.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Berkshire Hathaway Reinsurance Group Insurance

Berkshire Rises in Reinsurance Ranks Even as Business Softens

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Berkshire has jumped ahead of SCOR SE into fourth place among the top 50 insurers in A. M. Best’s Global Reinsurance Segment Review.

Ahead of Berkshire are Munich Reinsurance Company, Swiss Re Ltd., and Hannover Rueckversicherung AG, in that order.

Lloyd’s of London’s international casualty reinsurance market dropped from fourth place to sixth. The rankings are based on premiums written in 2014.

Berkshire’s gross written premiums rose from $12.776 billion in 2013 to $14.919 billion in 2014.

Profits Harder to Come By

Through its Berkshire Hathaway Reinsurance Group, Berkshire provides reinsurance to Suncorp and Insurance Australia Group, and in the 2nd quarter of 2015 reported $155 million in losses from April and May storm damage on Australia’s east coast.

Buffett, Munger and Jain Cool on Reinsurance

Storms or no storms, Berkshire is not generating the profits it used to from reinsurance.

“The reinsurance business not as good as it once was and is unlikely to get better,” Charlie Munger said at the 2015 Berkshire Hathaway annual meeting. “Money has come in, not because they want to be in reinsurance, but because it’s an uncorrelated asset class. We’re in it for the long haul.”

“It’s a business whose prospects have turned for the worse and there’s not much we can do about it,” Warren Buffett said.

Uncorrelated (also called non-correlated) asset classes are assets that move in the opposite direction of a particular asset class, thus helping investors reduce risk in exchange for lower upside performance.

Buffett’s and Munger’s words were echoed by Ajit Jain, who is the head of Berkshire Hathaway Reinsurance.

“What was a very lucrative business is no longer a very lucrative business going forward,” Jain was quoted in early July in The Wall Street Journal.

Remaining Disciplined

Traditionally Berkshire has been a disciplined underwriter. Warren Buffett has always stressed that it is better to write fewer premiums in a given year than to give in to chasing short-term revenues that lead to long-term losses.

A recent survey of the Lloyd’s Market Association’s reinsurers found that 95% of survey respondents indicated a relaxation of reinsurance contract terms and conditions in the international casualty market. Additionally, 39% felt the loosening of contract terms was having a material impact on the amount of underwriter’s exposure.

Hopefully, Berkshire will remain disciplined and not fall into that trap.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.