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Buffett to recruit investment chief

Chief executive Warren Buffett said he plans to hire a young investment manager to help succeed him at Berkshire Hathaway Inc as the insurance giant recorded a 29.2 percent jump in net income last year, helped by a lack of hurricanes.

To replace Buffett, Berkshire plans to split his job into chief executive officer and chief investment officer. The company's board of directors approved a plan in October to hire one or more candidates for the job of chief investment officer when Buffett can no longer do it.

Berkshire also reported on Thursday that the holding company made US$11.02 billion last year, or US$7,144 per share, up from US$8.53 billion, or US$5,538 per share, in 2005.

"Our most important business, insurance, benefited from a large dose of luck: Mother Nature, bless her heart, went on vacation," Buffett said in his annual letter to shareholders.

"After hammering us with hurricanes in 2004 and 2005 -- storms that caused us to lose a bundle on super-cat [catastrophe] insurance -- she just vanished. Last year, the red ink from this activity turned black, very black," he said.

Berkshire has said that it lost about US$3.4 billion to hurricanes Katrina, Rita and Wilma during 2005.

And last year Buffett said that Berkshire's insurance companies would charge more for megacatastrophe policies after the hurricane losses of 2005.

During the fourth quarter, which ended Dec. 31, Berkshire made US$3.58 billion, or US$2,323 per share. That is down 30.2 percent from the year-ago period when Berkshire made US$5.13 billion, or US$3,330 per share.

Berkshire's fourth-quarter 2005 results were helped by a one-time US$3.25 billion after-tax gain when its Gillette Co stock was exchanged for Proctor & Gamble Co stock.

The three analysts surveyed by Thomson Financial expected fourth-quarter earnings per share of US$1,452.36 on average and annual earnings per share of US$5,667.03 on average.

Buffett said last year that Berkshire's board had three outstanding internal candidates for chief executive, and the board knows "who should take over if I should die tonight."

Each of those candidates is significantly younger then the 76-year-old Buffett.

But the "Oracle of Omaha" said this year that Berkshire is not as well-prepared for a successor on the investment side of the business. He said those who might replace him on the investment side are too close to his own age to do it very long.

Lou Simpson, who manages Geico's investment portfolio would "fill in magnificently for a short period," Buffett said.

But Buffett also tried to reassure shareholders about his health.

"The good news: At 76, I feel terrific and, according to all measurable indicators, am in excellent health," Buffett said.

"It's amazing what Cherry Coke and hamburgers will do for a fellow," he said.

Berkshire's Class A shares are the most expensive US stock, and they have traded above US$100,000 a share since last fall. The stock gained US$410 on Thursday.
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