Jain's Promotion Alters Berkshire Succession Debate

While we were surprised to see wide-moat

While we've long noted that General Re and BHRG have the luxury of walking away from business when pricing is bad (without making cuts to their operations), we've also noted that there are limits to how long that might be the case. With the company seeing reinsurance as probably unattractive for another decade, it makes sense to have Jain oversee Berkshire's entire operation, especially if there are duplicate efforts that can be streamlined. That's not to say that we expect to see major cuts in these operations, but with Jain overseeing both General Re and BHRG, the firm should be able to continue focusing on profitability over growth, which is what an insurer should be doing in a poor pricing environment.

With Jain's responsibilities expanding beyond BHRG to include General Re and Berkshire's foray into specialty insurance, we're not sure what to think about his availability as Berkshire's next CEO. As insurance is still such a complex and integral part of Berkshire's operations, we think it make more sense for Jain to stay put and for Greg Abel, who has had more experience with mergers and acquisitions and operations during his time running Berkshire Hathaway Energy, to fill the CEO role once Warren Buffett leaves the scene.

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