Warren Buffett's Berkshire Hathaway Disclosed A Major Stake In Chubb — Valuing $6.7 billion

The long-awaited stock-related mystery has been revealed. American business owner and philanthropist Warren Buffett has finally unveiled his business's significant stake in a well-known insurance company. Here's all you need to know about Berkshire Hathaway's mystery stake. 

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Buffett, the CEO of Berkshire Hathaway, a multinational conglomerate holding company, has finally lifted the veil on his secretive stock purchase. Nearly a year ago, his business discreetly acquired a substantial amount of publicly traded stock, leaving the public to speculate. The mystery has now been solved. The stock was in Chubb Ltd., a diversified publicly traded insurance company. Berkshire Hathaway has added nearly 26 million shares to its impressive portfolio.

This mega stock purchase cost Berkshire Hathaway a whopping $6.7 billion, and at the time, Buffett had requested "confidential treatment" from the Securities and Exchange Commission (SEC) filings until the entire purchase was finalized. This move from Buffett is not particularly surprising, considering that his company has previously invested in insurance companies like Geico and National Indemnity. Since Berkshire Hathaway's purchase of stock, Chubb is now the ninth-largest holding in Berkshire's publicly traded portfolio and Berkshire is now the third-largest shareholder of Chubb's outstanding shares, which is 6.4%. 

So, why choose Chubb? 

Berkshire Hathaway's purchase of Chubb can be boiled down to two things: a history with the insurance company and a clever change in investment strategy.

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Yahoo Finance shared what Cathy Seifert, a CFRA Research analyst who covers Berkshire Hathaway, had to say about this investment strategy, "Chubb is an attractive equity investment for Berkshire because it operates in a business Berkshire knows well: property-casualty insurance." Yahoo Finance shared that Chubb's net written premiums have grown by 40% over the past three years and in 2023, the company saw a 32% growth in net investment income to $4.9 billion. 

Chubb is one of the world's largest publicly traded property and casualty companies. It was acquired by ACE Ltd. in 2016. The insurance company is currently led by Evan Greenberg, who used to be in charge of ACE and American International Group (AIG). 

In March this year, Chubb made the headlines as CNN revealed that the insurance company had underwritten the nearly $92 million appeal bond for former president Donald Trump for his E. Jean Carroll's defamation lawsuit. It was revealed that under the terms of the bond, Chubb would only secure the appeal of the $83.3 million judgment. A Chubb spokesperson then said, "Our surety division provides appeal bonds in the normal course of business." 

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Forbes reported that this purchase of Chubb was influenced by Todd Combs, the CEO of GEICO and the current investment manager at Berkshire Hathaway since 2010, who has a history with Chubb. Combs revealed in a 2023 "I am Home" podcast, "I owned a lot of Chubb." Before Combs joined Berkshire Hathaway, he had managed Castle Point Capital, which had a 6.3% investment in Chubb in its portfolio. In fact, Berkshire Hathaway has previously owned Chubb shares but not at this current large amount. Since Berkshire Hathaway's investment, Chubb's stock has jumped more than 8% in after-hours trading following the reveal of the investment, which illustrates Buffett's impressive investment prowess. 

Another reason Buffett's stake in Chubb happened is because of a change in investment strategy. Over the past several months, Berkshire Hathaway has focused on investing in financial companies and selling off its stock in companies dealing with consumer products. For example, Berkshire Hathaway sold off 10 million shares in tech giant Apple in February. Shares in the printer company HP were also trimmed by 80 million shares in the fourth quarter of 2023. 

Berkshire Hathaway has focused on financial companies like American Express and Bank of America.                 

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