Floating Berkshire

4 May 2009 By Richard Beales Follow @richardbeales1

The Sage of Omaha says the undisclosed candidates to succeed him as Berkshire Hathaway s investing supremo didn t do too well in 2008. That s perhaps forgivable. But their skill may not be the only key to Berkshire s future. The company s insurance bosses may be as important.

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Berkshire Hathaway, led by Warren Buffett, held its annual shareholders' meeting in Omaha, Nebraska on May 2. An estimated 35,000 shareholders attended.

Buffett, 78, has so far selected four possible candidates who might replace him as Berkshire's investment boss, but has not named them. At the annual meeting, he said: In terms of 2008 by itself, you would not say that they covered themselves with glory … But I didn't cover myself in glory either in 2008.

Over its 40plus years, Berkshire has increased its emphasis on inhouse businesses as opposed to investments. In his 2007 letter to shareholders, Buffett noted that the growth in pershare investments had slowed to an annualized 14.3% in 19932007, against 42.8% in 19651979. Pershare pretax earnings of noninsurance subsidiaries, meanwhile, grew 23.5% a year in 19932007, against 11.1% in 19651979.

The insurance float – the premiums held by Berkshire against future payouts – amounted to $58.5bn in 2008, compared with $18.5m in 1967 when the company first entered the insurance business.

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