More praise for Ajit Jain from his boss Berkshire Hathaway's Warren Buffett
Over the weekend, Warren Buffett, Chairman and Chief Executive of Berkshire Hathaway, released his annual letter to shareholders. In it, he added to his frequent praise of Ajit Jain, who runs the Omaha, Nebraska based company’s insurance business.
“Much of our huge value creation in insurance,” Buffett wrote, “is attributable to Berkshire’s good luck in my 1986 hiring of Ajit Jain. We first met on a Saturday morning, and I quickly asked Ajit what his insurance experience had been. He replied, ‘None.’ I said, ‘Nobody’s perfect,’ and hired him. That was my lucky day: Ajit actually was as perfect a choice as could have been made. Better yet, he continues to be – 35 years later.”
Buffett, 91-years-old, has a net worth of $115 billion, almost all of it from his ownership of shares in Berkshire. In 2008, Buffett, who bought his first stock at age 11, was the richest person in America. So far, as part of his promise to donate more than 99% of his wealth, he has given more than $45 billion, mostly to the Gates Foundation, run by Microsoft founder Bill Gates and his ex-wife Melinda Gates, and foundations run by his three children.
Insurance is a key component of Berkshire which has a market value of $710 billion. Its other businesses range from Nebraska Furniture Mart and See’s candies to BNSF, the largest U.S. railroad, and BHE, the largest electric utility. It also has more than $350 billion in stock investments, with Apple accounting for nearly half of the total value of the stock holdings.
While “I sleep, Ajit (Jain) keeps thinking of new ways to add value to Berkshire,” Buffett wrote in his 1998 annual letter. Using the strength of Berkshire’s balance sheet, Jain set up its business for underwriting large insurance policies which few or no other competing companies are willing to underwrite. These policies cover potentially super-catastrophic events like damage from major earthquakes and hurricanes.
In his 34 years of managing Berkshire’s reinsurance operations, Jain “has been responsible for overseeing the assessment and pricing of many of the largest and most complex risks ever insured and as a result generating billions of dollars of capital for deployment” by Buffett, a 2021 company regulatory filing stated.
Jain’s “extraordinary discipline, of course, does not eliminate losses,” Buffett noted in his 2002 annual letter. “It does, however, prevent foolish losses. And that's the key: Just as is the case in investing, insurers produce outstanding long-term results primarily by avoiding dumb decisions, rather than by making brilliant ones.”
In 2019 and 2020, Ajit Jain, 70-years-old, received a salary and bonus totaling $19 million. His shares in Berkshire are worth $180 million.
In 2005, he set up the Jain Foundation, whose mission is to cure muscular dystrophies caused by dysferlin protein deficiency, which afflicts his son. So far, the Seattle-based foundation has invested more than $35 million dollars in research, drug development and patient support and education. In 2017, Jain donated Berkshire stock, worth $10,000, to the Indian Institute of Technology (IIT), Kharagpur. Jain has also reportedly donated to set up a technology center in the state of Odisha, India, in honor of his parents, but there is no official news release or mention of it.
Jain keeps a very low public profile, largely avoiding the media. For instance, in an email to a reporter who wanted to interview him, Jain wrote: "It is undoubtedly the case that any disappointment I have caused you by declining the interview is far less than the disappointment I would have caused you by granting it."
Jain was born in the state of Odisha, India, where his father was a government officer in the Indian Administration Service. Jain attended the Stewart School, which is managed by the local Christian diocese. In 1972, he earned a degree in mechanical engineering from IIT, Kharagpur. He then worked for IBM in India. In 1978, he earned an MBA from the Harvard Business School and joined McKinsey, the consulting company.
In the early 1980’s, he returned to India, where he got married. Moving back to the U.S., he left McKinsey to join Berkshire. Jain was introduced to Buffett by Mike Goldberg, his former boss at the consulting company, who was then running Berkshire’s insurance business.
Buffett advises university students “that they seek employment in (1) the field and (2) with the kind of people they would select, if they had no need for money,” he writes in this year’s annual letter. “Economic realities, I acknowledge, may interfere with that kind of search. Even so, I urge the students never to give up the quest, for when they find that sort of job, they will no longer be ‘working.’”
In 2020, while speaking at Berkshire’s annual general meeting, Buffett said, "I wrote to Jain's father after he worked for us for a few years, and said that 'if you've got another son like this, send him over from India because we'll own the world'."
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