OMAHA, Neb. – The board of Berkshire Hathaway Inc. has unanimously agreed on who will succeed founder and chairman Warren Buffett if, as he put it in his annual letter to shareholders Saturday, “I should die tonight.”
Buffett just won’t say who that is, at least publicly.
“We have three managers at Berkshire who are reasonably young and fully capably of being CEO,” Buffett said.
Buffett also said his board is prepared to oust him should the need arise “from my decay, particularly if this decay is accompanied by my delusionally thinking that I am reaching new peaks of managerial brilliance.”
However, the 75-year-old chairman said, “I feel terrific.”
Buffett is known around the world as the man who built a 1956 partnership of four relatives and three close friends into a holding company with total assets of $198.3 billion at the end of 2005. Berkshire owns furniture, carpet, jewelry and candy companies, restaurants, natural gas and corporate jet firms.
The question of Buffett’s successor has long been a topic of speculation. He has talked about the qualities necessary, but has not mentioned names. Barron’s magazine has pointed to five people fit for the job, including David Sokol, the top man at MidAmerican Energy Holdings Co., based in Des Moines, Iowa. Berkshire owns an 80.5 percent interest in the company, Buffett said Saturday.
Fitch Ratings once lowered its outlook on Berkshire Hathaway Inc.’s triple-A bond rating in part because his inevitable departure as chairman and chief executive would make it difficult for the company to sustain its current strategies.
Buffett told shareholders in his letter Saturday that the holding company’s net worth grew by $5.6 billion in 2005, which he dubbed a “decent” year.
That increased the book value – assets minus liabilities – of both classes of Berkshire stock 6.4 percent, beating the S&P gain of 4.9 percent for the year.
Berkshire rebounded from the hurricane losses of the third quarter by reporting net earnings of $5.13 billion for the fourth quarter on revenue of $25.37 billion. That compares with revenue of $20.53 billion and net earnings of $586 million in the third quarter.
The fourth-quarter figures were more than 50 percent higher than the same quarter a year ago, when Berkshire reported $3.34 billion in net earnings.
Berkshire estimated its losses to hurricanes Katrina, Rita and Wilma at $3.4 billion. Still, Buffett said, the insurance portion of Berkshire did well as whole.
Buffett said he and the managers of his General Re and National Indemnity reinsurance operations – companies that accept insurance risks from other insurers to spread out losses – know what to do about the financial fallout of violent weather in the future.
“We’ve concluded that we should now write mega-cat (megacatastrophe) policies only at prices far higher than prevailed last year.”
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