Lord Lane of Horsell, who takes over as chairman, said Mr Buffett had a five-year rolling contract with the company. Lawyers are negotiating compensation which could in theory total five times his salary last year of pounds 334,000.
In addition to his salary in the year to November 1993, Mr Buffett received a pounds 338,000 pension contribution, including pounds 300,000 that was attributed to a cumulative shortfall in contributions to his fund.
Mr Buffett's contract ran counter to the guidelines of the Cadbury report on corporate governance, which recommends that contracts be for no more than three years.
The Association of British Insurers, the umbrella group for investing institutions, called recently for contracts to be limited to two years.
Mr Buffett said: 'It is with great regret that I am leaving ASH, but I believe that in the circumstances it was right for me to do so.'
Until a new chief executive is found the company will be run by a management committee, including Lord Lane, ASH's finance director and the chief executive of the UK operation.
One analyst said the sudden departure was surprising, but he added that Mr Buffett, a Canadian, was more interested in building up the US side of the business than in running the British side.
In July the interim dividend was passed despite a 43 per cent rise in first-half earnings per share. That followed a furore over a profits warning in October 1993 that forced company broker BZW to resign.
The profits warning came less than three months after ASH encouraged shareholders to take their interim dividend in shares by offering them 50 per cent more than the cash payment. The warning sent the shares tumbling 30p to 102p. Yesterday they closed 5p lower at 83p.
The company also announced figures for the nine months to August, which showed a 9 per cent increase in sales from continuing operations to pounds 122m and an increase in pre-tax profits from pounds 5.76m to pounds 8.38m.
Earnings per share rose from 1.8p to 4.2p.Reuse content