Royal succession is often marked by intrigue. Such seems the case at Berkshire Hathaway, where the efforts to line up a replacement for Chairman and CEO Warren Buffett are beginning resemble events at Elsinore Castle.
While there have been many names bandied about as to who will eventually assume oracular duties in Omaha, we now know it is not to be David Sokol, who resigned last week.
Sokol, chairman of several subsidiaries of Berkshire Hathaway, and widely regarded as Buffett’s dauphin, made the fatal mistake of making the boss look bad when purchased 96,060 shares of Lubrizol Corp. prior to that firm’s acquisition by Berkshire in March. While the Securities and Exchange Commission may ultimately find Sokol’s front-running legal, we can all regard it as sleazy and stupid.
With Sokol out of the running, much attention has turned to the men running Berkshire’s biggest unit, several of which are insurance operations. Buffett has been lavish in his praise of Ajit Jian, chairman of Berkshire Hathaway Assurance Corp., but published reports suggest that he is not all that interested in ascending to the throne. Tad Montross, chairman and CEO of General Re Corp., and GEICO CEO Tony Nicely, are also considered to be in mix.
But now, Barron’s columnist Andrew Bary, has thrown out another name—Buffett friend and Berkshire board member Bill Gates.
“While the hale and hearty Buffett seems intent on running Berkshire for as long as possible, the board will face a tough decision whenever Buffett gives up the job,” Bary writes. “Berkshire could tap its most prominent director, Bill Gates, Microsoft’s co-founder, to run the company on an interim basis if Buffett steps aside anytime soon.”
While Berkshire's succession drama makes for an interesting parlor game, it also sheds some light on the perception of insurance executives as business people. Despite the respective track records of Jain and Montross, Bary says the perception of them as insurance “lifers” may work against them. If successful insurance executives can’t receive recognition as true business leaders in Berkshire’s boardroom, it does not bode well elsewhere.
Bill Kenealy is a senior editor with Insurance Networking News.
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