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NEW YORK Lou Simpson, who oversees investments at Geico Corp and was long considered a possible successor to Warren Buffett at Berkshire Hathaway Inc, is retiring at the end of the year, Berkshire said on Monday.
Simpson, 73, has worked for about 31 years at Geico, where he is president and chief executive of capital operations. He has worked under Buffett since Berkshire (BRKa.N)(BRKb.N) in 1996 bought what is now the third-largest U.S. auto insurer.
Buffett plans to take over Geico's $4 billion investment portfolio when Simpson retires. Berkshire ended June with $52.5 billion of equity investments, including at Geico.
"Lou Simpson is unique within Berkshire because he has been the only one other than Buffett with complete autonomy to make investment decisions," said Andy Kern, managing member of asset management firm Empirical Finance LLC in Dallas and author of the Buffett Ruminations blog.
The low-profile Simpson is "probably the most underappreciated member of the team among the general public because Buffett gets all the credit, and the blame, for Berkshire's stock holdings," Kern added.
The planned retirement of Simpson was reported earlier by the Chicago Tribune. Simpson works in that city.
In his February 2007 letter to shareholders, Buffett said Simpson had been his potential replacement to oversee Berkshire investments and would "fill in magnificently for a short period." But he said Simpson was just six years younger than he, so "a different answer" was needed for the long-term.
Two years earlier, Buffett called Simpson "a cinch to be inducted into the investment Hall of Fame," with average annual returns of 20.3 percent a year from 1980 to 2004, topping the Standard & Poor's 500's .SPX average 13.5 percent.
Buffett, Simpson and Geico Chief Executive Tony Nicely were not immediately available for comment.
Berkshire reports its equity investments and Geico's together, so it is not always possible to tell which investments are Buffett's and which are Simpson's.
Generally, Buffett makes larger investments, such as Coca-Cola Co (KO.N) and Wells Fargo & Co (WFC.N), although he told the Chicago newspaper that both men began investing in British food retailer Tesco Plc (TSCO.L) at the same time.
Buffett turns 80 next Monday. He has said that when he steps down from Berkshire, one person will succeed him as chief executive and one or more people will oversee its investments.
Vice Chairman Charlie Munger said last month that "it's a foregone conclusion" that Chinese investor Li Lu is likely to take over some investments, The Wall Street Journal said,
Buffett has transformed Berkshire since 1965 from a failing textile company into a $192 billion conglomerate with some 80 businesses and tens of billions of dollars of stocks.
In afternoon trading, Berkshire Class A shares were up $30 at $116,730, and Class B shares were up 10 cents at $77.83.
(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn)