Ajit Jain is an extraordinaire manager: Buffett

Narayan Lakshman

Warren Buffett cannot seem to help himself. Yet again, in his famously folksy annual letter to Berkshire Hathaway shareholders, the company’s billionaire CEO lavished praise upon one of his managers above all others – Ajit Jain.
Mr. Jain (58), who heads some of the reinsurance businesses in the Berkshire Hathaway stable, first joined what is arguably one of the most successful investment companies ever more than two decades ago.

“A hugely important event in Berkshire’s history occurred on a Saturday in 1985. Ajit Jain came into our office in Omaha – and I immediately knew we had found a superstar,” Mr. Buffett said.

He has good reason to be pleased. Mr. Jain’s efficient liability and cost management in Berkshire’s reinsurance business has helped sustain the company’s meteoric share price rise from around $3,000 in the mid-1980s to its current level of close to $120,000, and a breathtaking compound annual growth rate of 20.3 per cent in its book value.

While the company suffered a rare decline in net worth of $11.5 billion during the 2008 global financial crisis, prompting Mr. Buffett to admit he “did some dumb things in investments”, it bounced back strongly with a $21.8 billion gain in net worth during 2009.

Mr. Jain was initially placed in the troubled reinsurance operation of National Indemnity. However, showing talent for managing risks in the niche area of mega-catastrophe coverage, he succeeded in building up the business into “a one-of-a-kind giant in the insurance world”.

Although Mr. Jain’s operations are staffed by only 30 people, Mr. Buffett explained, it regularly deals in billion-dollar limits including a $7.1 billion premium received for a single contract with Lloyds, the British banking major. “Throughout the world, he is known as the man to call when something both very large and unusual needs to be insured,” Mr. Buffett said.

It would appear that consistence performance at this high level may have won Mr. Jain this annual approbation from his CEO. This year Mr. Buffett said of Mr. Jain: “If Charlie [Munger, Berkshire vice-chairman], I and Ajit are ever in a sinking boat – and you can only save one of us – swim to Ajit.”

With the “Sage of Omaha” nearing 80 years of age and pressure to resolve the succession question growing, it may only be a matter of time before Mr. Jain is given a mandate to take over the reins of Berkshire Hathaway.