Buffett’s Succession Plan Is Down to Two

Who might succeed Warren Buffett became clearer Wednesday.

Buffett’s investment vehicle, Berkshire Hathaway, named Gregory E. Abel and Ajit Jain as vice chairmen. Abel is the chief executive and chairman of Berkshire’s energy unit and will become vice chairman of the conglomerate’s non-insurance businesses. Jain, the longtime head of Berkshire’s vast reinsurance operations, will serve as vice chairman of Berkshire’s insurance operations.

“It’s part of a movement toward succession over time,” Buffett said in an interview on CNBC. “They are the two key figures at Berkshire. This would have made sense five years ago, too. They both have Berkshire in their blood. They love the company. They know their operations like the back of their hand. So it’s very good for Berkshire. And it’s even better for me.”

Who Berkshire would pick to succeed Buffett as chief executive has long been on the minds of investors. Buffett has kept his succession plan closely guarded, though in recent years, a clearer picture has emerged.

Buffett has said that his responsibilities — chairman, chief executive and chief investment officer — would be split into three once he departs. His son Howard will be chairman. Todd Combs and Ted Weschler, the two investment managers that Berkshire hired in recent years, will be the chief stock pickers.

Who would take over as chief executive has remained the big question. In a 2011 filing with the Securities and Exchange Commission, Berkshire said there were “four current Berkshire subsidiary managers who are capable of being CEO.”

Four years later, Charlie Munger, Berkshire’s vice chairman, praised Abel and Jain in a shareholder letter, saying “in some important ways, each is a better business executive than Buffett.” That set off speculation that the race to succeed Buffett was down to two.

Wednesday’s announcement confirmed that.