Ajit Jain : Warren Buffet's Terrific Manager

Describing him as one of Berkshire Hathaway’s terrific managers, billionaire investor Warren Buffett has said that Ajit Jain insures risks that “no one else has the desire or the capital to take on”.

Showering accolades, Buffett asked shareholders to “bow deeply” if they happen to see Jain at the annual meeting.

India-origin Jain, who has been associated with Buffett for nearly three decades, has long been speculated to be a potential candidate to succeed the octogenarian investor at Berkshire Hathaway. Jain runs the Reinsurance Group, one of the most profitable ventures of the conglomerate.

Noting that Berkshire’s outstanding economics exist only because of some terrific managers, Buffett said that Jain 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 insurance business. Yet he never exposes Berkshire to risks that are inappropriate in relation to our resources,” Buffett wrote in his annual letter to shareholders released on March 1.

Starting from 1985, Jain has created an insurance business with float of $35 billion and a significant cumulative underwriting profit, a feat that no other insurance CEO has come close to matching, the famed investor noted.

“He (Jain) has thus added a great many billions of dollars to the value of Berkshire. If you meet Ajit (Jain) at the annual meeting, bow deeply,” Buffett said.

Famed for his investment decisions, Buffett said that his group is more conservative in avoiding risk than most large insurers.

For example, if the insurance industry should experience a $250 billion loss from some mega-catastrophe -– a loss about triple anything it has ever experienced -– Berkshire as a whole would likely record a significant profit for the year because it has so many streams of earnings.

“All other major insurers and reinsurers would meanwhile be far in red, with some facing insolvency,” the letter said.

Last year, Berkshire saw an increase of $22.8 billion in its net worth, after accounting for $1.3 billion that was used for repurchasing stocks.

Taking a shot at CEOs who said they were faced with uncertainty in terms of capital allocation decisions last year, Buffett said that he did not share their fears.

“At Berkshire, we didn’t share their fears, instead spending a record $9.8 billion on plant and equipment in 2012, about 88 per cent of it in the United States.

“That’s 19 per cent more than we spent in 2011, our previous high. Charlie and I love investing large sums in worthwhile projects, whatever the pundits are saying,” the letter said.