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By Jeremy Glaser and Greggory Warren, CFA | 04-25-2013 02:00 PM

Buffett's Succession Plan Should Have Little Downside

Although the public is still uncertain who will succeed the Oracle, the split-up of the chairman, CEO, and investment roles likely won't alter Berkshire's overall strategy.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. We're gearing up for the 2013 Berkshire Hathaway Annual Meeting. I'm here with Gregg Warren. He's one of our Berkshire analysts. We're going to look at succession planning, which has been one of the big questions surrounding Berkshire stock. Gregg, thanks for joining me.

Gregg Warren: Thanks for having me.

Glaser: So have we had any update on who's going to take over for Warren Buffett from the last time we had this discussion about a year ago?

Warren: There has not really been any update. I mean, last year they came out and basically said, the board and Warren have come to an agreement on who the candidate is, the person that they've decided should replace Warren in case he passes or decides to retire, and that they put that name in an envelope and they put it in the drawer. And that's really all we've heard. There is speculation about who it could be. 

Our bet is that it's probably Ajit Jain, who runs Berkshire Reinsurance. And just based on how Buffett has talked about Jain in the past, the fact that he points out that Jain has made tons of money for the firm, probably a lot more money than Buffett has over the years, the fact that he has a very firm understanding of risk and risk management, it sort of makes him kind of the ideal candidate in our minds for this capital-allocator-in-chief sort of role that Buffett wants to pass on to the next CEO. That doesn't mean that there aren't other people within the organization that could step into that role. We’ve got Tony Nicely over at GEICO. You've got Tad Montross at General Re, Matt Rose over at BNSF, and then Greg Abel at MidAmerican, just to name a few that could easily be put into that role should Jain decide not to take it or he is not the top candidate.

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