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Berkshire Hathaway reveals secret minority stake in insurer Chubb

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Berkshire Hathaway has quietly built a $6.7 billion position in New York-listed Chubb, one of the world’s largest insurance companies, underscoring Warren Buffett’s continued interest in financial services, according to reports. regulatory documents published Wednesday.

Buffett’s conglomerate had acquired a significant minority stake in Chubb since last year, but regulators allowed Berkshire to keep that position confidential. The filing reflects its stake in Chubb as of March 31, after repurchasing 6.4 percent of its outstanding share capital.

The insurance group has ridden a wave of rising commercial insurance prices that has grown its market value by three-quarters over the past five years to more than $100 billion, putting it in a small club of large-cap insurers which includes German Allianz and China Life.

News of the stake sent Chubb shares up 9 percent Thursday before trading.

Berkshire’s cash flow has swelled this year as Buffett reduced his stakes in stocks such as Apple that have historically supported his portfolio. Its cash flow hit a record $189 billion in the first quarter.

In the United States, institutional investment managers managing more than $100 million must report their holdings in regulatory filings. But they can request “confidential treatment” to omit certain positions.

Berkshire requested this exemption for at least one of its holdings in regulatory filings last year, which have since been amended to include its stake in Chubb.

Chubb – which offers products including home, auto and liability insurance – is led by CEO Evan Greenberg, who transformed the group when it secured the largest deal in property and casualty insurance history in 2015, toppling Zurich, New York-based Ace. – listed Chubb. Today, the company employs approximately 40,000 people in more than 50 countries and territories.

Greenberg is the son of U.S. insurance industry veteran Maurice “Hank” Greenberg, whose decades-long tenure at rival AIG made that group the world’s largest insurer for a time.

In recent years, betting on insurance has brought its share of risks. Natural disasters have created huge losses for property insurers, exacerbated by inflation, while Chubb, for example, was one of the insurers grappling with the collapse of Baltimore’s Key Bridge in March.

It is expected to send a $350 million payment to the US state of Maryland within weeks, although the company will ultimately only be responsible for part of that payment.

Berkshire, which recently held its annual meeting, has been selling more than buying lately as Buffett struggles to find attractive 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 prepares for a post-Buffett era. At the company’s annual meeting this month, Buffett outlined an important role for Greg Abel, who will have the final decision on the company’s investments.

Insurance is a big part of the group led by Berkshire chief Ajit Jain and includes major reinsurance operations and auto insurer Geico. Buffett, known as the Oracle of Omaha, is also a long-time investor in the financial services sector, owning stakes in global payments provider Mastercard and Bank of America.

Additional reporting by Ian Smith

News Source : www.ft.com
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