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Berkshire Hathaway has quietly built a $6.7bn position in New York-listed Chubb, one of the world’s biggest insurance companies, highlighting Warren Buffett’s continued interest in financial services, according to regulatory filings published on Wednesday.
Buffett’s conglomerate had been amassing a large minority stake in Chubb since last year, but regulators allowed Berkshire to keep the position confidential. The filing reflected its stake in Chubb as of March 31, having bought up 6.4 per cent of its outstanding share capital.
The insurance group has ridden a wave of rising commercial insurance prices that has sent its market value grow by three-quarters in the past five years to more than $100bn, putting it into a small club of mega-cap insurers that includes Germany’s Allianz and China Life.
News of the stake sent Chubb’s stock up 9 per cent by pre-market trading on Thursday.
Berkshire’s cash pile has swelled this year as Buffett has trimmed his stakes in stocks such as Apple that have historically buoyed his portfolio. Its cash position hit a record $189bn in the first quarter.
Institutional investment managers in the US that manage more than $100mn must report their holdings in regulatory filings. But they can request “confidential treatment” to omit certain positions.
Berkshire requested that exemption for at least one of its stocks in regulatory filings last year, which have since been amended to include its stake in Chubb.
Chubb — which provides products such as home, car and liability insurance — is headed by chief executive Evan Greenberg, who transformed the group when he struck the biggest deal in property and casualty insurance history back in 2015, reversing Zurich-based Ace into New York-listed Chubb. Today, the company employs about 40,000 people across more than 50 countries and territories.
Greenberg is the son of US insurance industry veteran Maurice “Hank” Greenberg, whose decades-long tenure at rival AIG made that group the world’s biggest insurer for a time.
In recent years, bets on insurance have brought their own set of risks. Natural catastrophes have created huge losses for property insurers, exacerbated by inflation, while Chubb, for instance, is one of the insurers on the hook for the collapse of Baltimore’s Key Bridge in March.
It is expected to send a $350mn payment to the US state of Maryland within weeks, although the company will ultimately only be responsible for a portion of that payout.
Berkshire, which recently held its annual meeting, has been selling more than buying lately as Buffett has struggled to find worthwhile investments at a time when the S&P 500 index is consistently hitting new highs on the back of strong economic data.
The revelation of Berkshire’s stake in Chubb comes as the conglomerate braces for a post-Buffett era. At the company’s annual meeting this month, Buffett laid out a sweeping role for Greg Abel, who will have the final decision on the firm’s investments.
Insurance is a huge part of the group under Berkshire executive Ajit Jain, including significant reinsurance operations and car insurer Geico. Buffett, known as the Oracle of Omaha, has also been a longtime investor in the financial services sector, having stakes in global payments provider Mastercard and Bank of America.
Additional reporting by Ian Smith
First appeared on www.ft.com