The experience with Gen Re has been more rocky. Shortly after Buffett agreed to buy the company in 1998 for $22 billion in stock, the reinsurer started racking up underwriting losses. More recently, the business has struggled to grow.

Premium revenue slumped about 7 percent to $2.78 billion in the first six months of the year from the same period in 2015. And while Berkshire’s annual reports don’t provide a detailed breakdown of Gen Re’s operational expenses, they show that its pretax underwriting gain fell by more than half from 2014 to $132 million last year. Float at the unit has been declining for more than a decade.

In part, that’s because the reinsurance business has gotten tougher, a fact that Buffett highlighted at recent annual meetings. A flood of capital into the industry is pushing down prices that companies like Gen Re can charge to help insurers shoulder their costliest claims. Wall Street has also been dreaming up ways to help clients offload insurance risk, putting additional pressure on rates. That’s caused Gen Re to hold off on writing some business.

Jain’s role was expanded this year to include Gen Re and he appointed Kara Raiguel as the unit’s chief executive officer, replacing Tad Montross. While Gen Re has publicly disclosed some consolidation plans, Jain’s memo suggest a deeper overhaul is in the works.

He outlined several measures to improve the company, starting with pay. Employees, he said, have an incentive to shun some potentially profitable business, because compensation is tied to margins rather than overall earnings.

“We are fortunate that Gen Re has so many employees that place the interests of the company above their personal interests,” he wrote. “But that doesn’t justify leaving a plan in place that puts that instinct under stress.”

Incentive pay

He proposed a compensation structure where bonuses are doled out more subjectively, and “rain makers” are rewarded at the expense of “below-average performers.” The plan would also be tied to growth in absolute dollars of profit.

Citing some of the ideas espoused by Berkshire Vice Chairman Charles Munger, Jain said Gen Re could become more efficient and increase earnings if different units were more autonomous. By running the business in silos, he wrote, managers could focus better on opportunities for growth.

Related: Buffett's Gen Re shuts operations in 6 locations worldwide

In another passage, he suggested Gen Re might be able to “sensibly” expand its business if it relaxed some of its constraints on terms and limits in the insurance contracts that it writes.

Jain also turned his attention to Gen Re’s organizational structure, highlighting a “gradual creep of corporate bureaucracy” and unnecessary complexity. Some of his prescriptions: Reduce the layers of management from six levels to four or three; overhaul the budget process; and cut travel and entertainment expenses for internal meetings.

‘Distaste for complexity’

“I happen to think that my distaste for complexity and bureaucracy is appropriate and ordinary, although others have called it rabid and overzealous,” he wrote.

He also addressed Gen Re’s traditional approach of selling coverage directly to clients, even as many carriers prefer to buy policies through brokers. Gen Re took a step toward working with those intermediaries when it agreed to a deal with Alleghany Corp.’s TransRe unit last month. Jain said there should be more opportunities to shift how Gen Re gets business, without harming its direct platform.

Then, he summed up the stakes: “I hope that by attacking these issues intelligently, we will have a shot at making a real dent in the expense-to-premium ratio,” he wrote. “If we can’t, we will need to explore other ways to do so.”

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