2010: Will National Indemnity's float continue to grow after Ajit Jain eventually retires?

CAROL LOOMIS: This question is from Jon Brandt of Ruane, Cunniff in New York City.

“You have emphasized many times how important Ajit Jain is to Berkshire and National Indemnities reinsurance operations. So I’m wondering whether you expect National Indemnities’ float to continue to grow or instead to unwind after he retires?”

Well, of course we don’t think —

WARREN BUFFETT: No.

CAROL LOOMIS: — Ajit will retire.

“Another way of asking that is whether National Indemnity has competitive advantages beyond Ajit, or is all of its value, above book value, tied up in Ajit and the runoff profits from the deals he has already put on the books?”

WARREN BUFFETT: His operation has competitive advantages that go beyond Ajit, but they have been developed by Ajit, and he has maximized them, and he knows how to use them in a way that’s far better, in my view, than anyone else in the world could.

But they don’t all go away. I mean, he has a cadre of about 30 people who are schooled in it, you know, in a way that would make the Jesuits look quite liberal, in terms of what they let their membership do.

Ajit — you can’t imagine a more disciplined operation than Ajit has. But Ajit cannot be replaced. On the other hand — well, I’ll state that absolutely, categorically — it would be a huge loss to Berkshire if anything happened to Ajit.

But it would not mean that the Berkshire Hathaway reinsurance operation would not continue to be an extremely special place that would do large deals that nobody else would do, that could think and act quickly in ways that virtually no other insurance organization can.

We’ve got something very special in that unit, and then we’ve got the most special of leaders in Ajit.

As to our float, every year I think our float has peaked. I never see how we can add to it. It’s up to 60 billion-plus now. And we have things like the Equitas deal that are runoffs.

Every day, in insurance, some of the float runs off, it’s just that we add additional amounts. And like I say, I was ready to quit, you know, at 20 billion and think, you know, that we’d reached the apex of it.

But it’s over 60 billion. Things keep happening.

Berkshire has become, in my view, the premiere insurance organization of the world, and we’ve got — a lot of good things come from that.

I don’t see how, with 60-odd billion of float, I don’t see how we can increase it significantly unless we would make some very significant acquisition. And I don’t rule that out, but there’s nothing imminent on that.

But we will not organically grow the float of Berkshire at a fast clip from here. It can’t be done. And we may fight to stay even.

But we may come up with something out of the blue. I mean, who would have known that Equitas was going to come along three years ago? There are various things that could happen of a positive nature.

But when I tell you about the value that Ajit has added to Berkshire, believe me, if anything, I’ve understated it.

Charlie?

CHARLIE MUNGER: Well, I agree with you, and I’ve got nothing to add.

WARREN BUFFETT: Well. (Laughter)