• Buffett makes his stake in Chubb public
• Shares built up in secret
• Chubb fits Berkshire
In the first quarter of 2024 there were once again a series of adjustments in the portfolio of Warren Buffett’s investment company Berkshire Hathaway. Investors paid particular attention to a previously unknown position that the star investor had entered into in recent months. The investment has so far gone under the radar because Buffett was allowed to keep it confidential with the permission of the US Securities and Exchange Commission (SEC).
Chubb: Swiss insurer in focus
The latest 13-F filing solved the mystery: the new Buffett investment is Chubb, an insurance company from Switzerland.
At the end of March there were a total of 26 million Chubb shares in Berkshire’s portfolio, meaning the US financial group holds 6.4 percent of all outstanding shares. The value of the investment was $6.7 billion as of the reporting date.
Chubb operates as a property and casualty insurer and is traded on Wall Street. Originally founded in the USA, the company has been in Swiss hands since it was taken over by its competitor ACE Limited. Business is going solid, with the company earning a total of $2.14 billion in the first quarter – around 13.3 percent more than in the same period last year. According to the quarterly report, consolidated net written premiums amounted to $12.2 billion, an increase of 14.1 percent. Property and casualty insurance increased by 12.4 percent, and in life insurance the company recorded an increase of 26.3 percent.
Chubb CEO Evan G. Greenberg was pleased with the numbers: “We started the year with a simply outstanding quarter. Core operating income rose double-digit, driven by an increase in P&C insurance revenue of over 15% at a reported combined ratio. Quota. […] “We achieved double-digit premium growth globally with strong results in our commercial and personal P&C businesses as well as life insurance in Asia,” he said.
Chubb matches Buffett
With its stake in Chubb, Berkshire has strengthened its core business, the insurance division, where the conglomerate already has enormous holdings in GEICO and General Re, for example. After Buffett’s previously secret position was revealed, the first comments were made about a possible complete takeover of Chubb. Cathy Seifert, an analyst at CFRA Research, said in an email cited by Reuters: “Chubb is an attractive investment for Berkshire because it operates in a business that Berkshire knows well: property and casualty insurance.” . She wouldn’t speculate on whether Berkshire might buy Chubb outright, but said the new Buffett investment’s focus on specialty commercial insurance and protecting high-value homeowners “would fit well into Berkshire’s insurance and reinsurance portfolio.”
Chubb becomes a dividend payer
Neither Berkshire nor Chubb commented on the new financial ties between the two companies, although Chubb did release a new announcement to its investors announcing that it would raise its dividend for the 31st year in a row. Accordingly, the distribution will increase by 5.8 percent to $3.64 per year (US$0.91 per quarter).
This was probably good news for the avowed dividend fan Warren Buffett, as he is estimated to earn around six billion US dollars in 2024 from dividend payments alone. Chubb’s distribution is not yet included in this calculation.
Chubb shares rose by 7.4 percent after Buffett’s entry was announced, and on Thursday they rose another 4.7 percent on the NYSE. And on Friday, investors are expected to continue to be confident about Buffett’s latest investment: in trading, the Chubb share rose by a further 0.74 percent to $266.84.
Editorial staff finanzen.net
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