Warren Buffett, the billionaire investor and CEO of Berkshire Hathaway, recently revealed in a regulatory filing that his conglomerate has purchased nearly 26 million shares of insurer Chubb, making it the company’s ninth largest holding with a stake worth $6.7 billion. The stock price of Chubb surged nearly 7% in extended trading after news of Berkshire’s stake was announced, and the stock has gained about 12% since the beginning of the year. Chubb was acquired by Ace Limited in 2016 for $29.5 billion, and the combined company adopted the Chubb name. The CEO of Chubb, Evan Greenberg, is the son of Maurice Greenberg, the former chairman and CEO of American International Group.
Berkshire Hathaway has a significant presence in the insurance industry, with investments in companies such as Geico, General Re, and a variety of home and life insurance services. The conglomerate also recently acquired insurance company Alleghany for $11.6 billion. Berkshire has exited positions in other insurance companies, such as Markel and Globe Life, in the same industry. The purchase of Chubb was kept confidential by Berkshire for three quarters, with the company being granted confidential treatment to withhold details of its stock holdings. This mystery purchase did not come up at Berkshire’s annual meeting in Omaha, leading to speculation among investors about the identity of the secret stock pick.
Many had anticipated that Berkshire’s secret purchase could be a bank stock, as the conglomerate’s cost basis for “banks, insurance, and finance” equity holdings had increased by $1.4 billion in the first quarter, following a $3.59 billion increase in the second half of the previous year. It is relatively uncommon for Berkshire to request confidential treatment for its stock holdings, with the last instance occurring when the company purchased shares of Chevron and Verizon in 2020. The reveal of Chubb as Berkshire’s secret pick sheds light on the company’s investment strategy and provides insight into Buffett’s decision making process.
The announcement of Berkshire’s significant investment in Chubb has reinforced the conglomerate’s reputation as a major player in the insurance industry. The stock market reacted positively to news of Berkshire’s stake in Chubb, with the stock price rising significantly in extended trading. The acquisition of Chubb adds another prominent name to Berkshire’s portfolio of investments in the insurance sector, further diversifying the conglomerate’s holdings and expanding its influence in the industry. The decision to invest in Chubb reflects Buffett’s confidence in the company’s prospects and his belief in its long-term growth potential.
Overall, Warren Buffett’s revelation of his secret stock pick as insurer Chubb highlights Berkshire Hathaway’s ongoing commitment to strategic investments in the insurance industry and its continuing success in identifying opportunities for growth and value creation. The purchase of Chubb further solidifies Berkshire’s position as a major player in the insurance sector and showcases Buffett’s expertise in identifying promising investments. The positive market response to news of Berkshire’s stake in Chubb underscores the confidence of investors in Buffett’s decision-making abilities and the potential for continued success for both Berkshire Hathaway and its newly acquired investment in Chubb.
