US Markets
Thursday, May 16th, 2024 4:48 pm EDT
Key Points
- Warren Buffett’s Berkshire Hathaway revealed its purchase of nearly 26 million shares of insurer Chubb, valued at $6.7 billion, making it Berkshire’s ninth largest holding.
- Following the announcement, Chubb’s shares surged nearly 7% in extended trading, and the stock has gained about 12% year to date.
- Berkshire Hathaway had kept this purchase confidential for two quarters, a rare move, sparking speculation about the secret stock, with some believing it might be a bank stock.
Warren Buffett’s Berkshire Hathaway has revealed a significant new stock acquisition in a recent regulatory filing, disclosing that it has purchased nearly 26 million shares of the Zurich-based insurer Chubb, valued at $6.7 billion. This investment has positioned Chubb as Berkshire’s ninth largest holding as of the end of March. Following the announcement, Chubb’s shares surged by nearly 7% in extended trading and have risen about 12% year to date. Chubb, originally acquired by Ace Limited in 2016 for $29.5 billion, is now led by CEO Evan Greenberg, the son of Maurice Greenberg, the former CEO of AIG.
Berkshire Hathaway has a robust presence in the insurance industry, owning companies such as auto insurer Geico and reinsurance giant General Re, along with numerous home and life insurance services. In 2022, Berkshire expanded its insurance portfolio by acquiring Alleghany for $11.6 billion. Recently, Berkshire exited positions in Markel and Globe Life, two other insurance firms.
Berkshire kept its purchase of Chubb confidential for two quarters, a rare move for the conglomerate. This confidentiality was maintained through a special exemption allowing the details to remain undisclosed. Speculation about the secret holding was rampant, with many assuming it might be a bank stock due to Berkshire’s increased cost basis in “banks, insurance, and finance” equity holdings, which saw a $1.4 billion rise in the first quarter following a $3.59 billion increase in the latter half of the previous year. The last instance of Berkshire requesting such confidentiality was in 2020 when it acquired stakes in Chevron and Verizon.
Berkshire’s strategic investment in Chubb underscores its ongoing commitment to the insurance sector and highlights its ability to identify and invest in valuable assets within the industry. The disclosure of this major holding also demonstrates Berkshire’s significant influence on the market, as evidenced by the immediate positive impact on Chubb’s stock price.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/15/warren-buffetts-berkshire-hathaway-reveals-insurer-chubb-as-confidential-stock-its-been-buying.html
