Date
21 October 2017
Warren Buffett says his insurance operations chief Ajit Jain (above) has made more money for shareholders than anyone else. Photo: Reuters
Warren Buffett says his insurance operations chief Ajit Jain (above) has made more money for shareholders than anyone else. Photo: Reuters

Who is Ajit Jain and why is he so important to Warren Buffett?

Billionaire investor Warren Buffett once joked that if he and Ajit Jain were adrift in a rowboat in a dangerous sea, the priority should be on saving Jain’s life. Ajit Jain, who handles Berkshire’s insurance operations, has been widely considered as Buffett’s successor.

The billionaire investor has given high praise of Ajit in an interview with Economic Times. “The most valuable person at Berkshire is Ajit Jain and… he has a brother in India. I keep trying to bring him over, I wrote to his parents, and I said if you have got another one over there, send him to me,” he said.

Buffett explained that insurance is the most important business of Berkshire, and its investors should be thankful to Jain, who made more money for shareholders than anyone else.

Berkshire has hired two young fund managers — Todd Combs, 46 and Ted Weschler, 55. And Li Lu, 51, a Chinese-American investor and hedge fund manager, is also a close aide of Buffett. But he has been particularly effusive with his praise for Jain recently. That might be a sign that Jain is a top candidate to succeed Buffett.

Jain graduated from the Indian Institute of Technology in 1972 with a degree in mechanical engineering. He moved to the US in the late 1970s to earn an MBA from Harvard Business School. After leaving McKinsey & Co., he joined the insurance unit of Berkshire in 1986 and was promoted to president in charge of the insurance operations since 2012.

The topic of who’s going to be the next Berkshire chairman has been discussed for more than a decade. In fact, both Ted Weschler and Todd Combs are once considered possible candidates to replace Buffett, since most believe his heir would be a star fund manager.

However, Buffett has repeatedly noted that the achievement of Berkshire was mainly contributed by the private insurance business, which brings stable profit and provides low-cost funds for making investment. Therefore, an outstanding fund manager may not be competent enough to lead the insurance business.

By contrast, Jain built the insurance operators from scratch. In a letter to Berkshire shareholders in 1999, Buffett wrote: “In Ajit, we have an underwriter equipped with the intelligence to properly rate most risks; the realism to forget about those he can’t evaluate; the courage to write huge policies when the premium is appropriate; and the discipline to reject even the smallest risk when the premium is inadequate. It is rare to find a person possessing any one of these talents. For one person to have them all is remarkable.”

Buffett said Jain made more money for shareholders than anyone else. ““Nobody would possibly replace Ajit Jain if he were to leave or retire,” he added.

Also, Ajit would offer special insight into the India market. India is one of the most important emerging markets. “India should be right at the top. It’s such a big market and I will just call up Ajit and I will ask him for a little background on whatever I’m going to do and then I will go right out to the airport and get on the plane,” he said.

The full article appeared in the Hong Kong Economic Journal in Chinese on May 17

Translation by Raymond Tsoi

[Chinese version 中文版]

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RT/RA

Hong Kong Economic Journal columnist

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