Warren Buffett plays down rumours he is ready to step down

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"No company comes close to Berkshire in being financially prepared for a $400 billion mega-cat", he wrote in the letter, adding: "Our unparalleled financial strength explains why other [property/casualty] insurers come to Berkshire - and only Berkshire - when they, themselves, need to purchase huge reinsurance coverages for large payments they may have to make in the far future".

Operating earnings, which excludes some fluctuations in investments and derivatives, slumped 24 percent to $3.3 billion during the fourth quarter compared to the same period a year earlier.

Berkshire on Saturday reported a record quarterly and annual profit, both of which received a $29.1 billion boost from the recent lowering of the US corporate income tax rate, which reduced its deferred tax liabilities.

In his annual letter to shareholders Saturday, Buffett mixed investment advice with details of how Berkshire's many businesses performed.

In its statement, Kraft Heinz said Buffett made a decision to step down "as he decreases his travel commitments".

Buffett is sitting on $116 billion of cash and bonds because he's struggled to find acquisitions at sensible prices. "Most wouldn't mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering". And Buffett is unwilling to load up on debt to finance deals at current prices.

Here's what to watch for in the latest letter from Buffett, 87, which is set for release online Saturday at 8 a.m.at Berkshire's home page http://www.berkshirehathaway.com/.

He said the conglomerate recorded a $29 billion paper gain because of the tax reforms Congress passed late previous year. Jain will now oversee all of the conglomerate's insurance businesses while Abel will oversee all of the conglomerate's non-insurance business operations. The 87-year old reiterated that while he's "never felt better", the company has a succession plan in the works. Many investors consider Abel, who is a decade younger than Jain, the frontrunner.

Buffett and Protégé both purchased a face amount of $500,000 in zero-coupon Treasury bonds that cost each of them $318,250 to fund the bet ten-years ago, according to the letter. Buffett challenged the asset manager to pick a group of hedge funds that it thought would beat an S&P 500 Index fund over 10 years.

Berkshire also owns clothing, furniture and jewelry firms. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.