Is Todd Combs a Possible Successor to Warren Buffett as CEO of Berkshire Hathaway?

On December 23, Berkshire Hathaway announced that Todd Combs, one of Warren Buffett’s portfolio managers, will become CEO of its Geico automobile insurance business on January 1, 2020.  Todd Combs will likely be reporting to Ajit Jain,  who heads up all of Berkshire’s insurance operations.

This appointment represents a major increase in responsibility for Combs (48) and raises the possibility of his being considered as an eventual successor to Warren Buffett (89) as CEO of Berkshire.  Until now, it has been widely believed that Greg Abel (58) was the most likely candidate to succeed Buffett, with Ajit Jain (68) also under consideration.

Combs will continue in his role of portfolio manager for Berkshire, along with Ted Weschler (57), where each is currently managing $14 billion. Warren Buffett on many occasions has praised the performance of both Combs and Weschler.  Combs, a former hedge-fund manager, was hired by Buffett in 2010.

Combs has also led Berkshire’s involvement in its venture, along with its partners Amazon and JPMorgan Chase. to lower health-care costs for their employees. He also played a major role in Berkshire’s acquisitions of Precision Castparts Corp. and Duracell.  More recently, he made investments in financial-technology companies in emerging markets, StoneCo Ltd (Brazil) and Paytm (India).

Combs has previous experience in automobile insurance. He worked at Progressive Corp., a Geico competitor, earlier in his career.  Combs also sits on the board of directors of JPMorgan Chase.

Geico is the second largest U.S. personal car insurer by premium volume, behind only State Farm. The company wrote $26.49 billion in premiums, and reported $1.54 billion in pretax underwriting earnings in the first nine months of 2019 vs. $ 1.98 billion in 2018. This 22% decline in pretax underwriting earnings was attributed to increases in losses from claims and increases in advertising expenses, insurance premium taxes and employee-related costs, which reflected wage and staffing increases.

Although Greg Abel is currently considered to be the front runner to succeed Warren Buffett, another internal candidate such as Combs may emerge over time as his eventual successor.  If Buffett (89) can match Charlie Munger’s (95) longevity, and Combs succeeds in his additional responsibilities, then his relative youth as compared to the other current candidates would become a large advantage.  Charlie Munger will turn 96 on January 1.