He has managed to attract the attention of business giants like Warren Buffett and investors from all over the world. Let’s talk Chubb, One of the most important global players in the insurance industry, with operations in 54 countries, offering a wide range of products in the property, casualty, accident and health sectors.
When investors learned in May that Warren Buffett’s Berkshire Hathaway had added Chubb to its portfolio, putting it alongside giants like Apple, American Express and Coca-Cola, the insurer became the new hot stock.
Buffett’s Search for a ‘Moat’: What That Means
Berkshire bought nearly 26 million shares of the Zurich-based insurance group in the third quarter of last year, worth $6.7 billion. The package makes the insurer Berkshire’s ninth-largest holding.
The acquisition sent Chubb shares to an all-time high. While Buffett doesn’t explain why he buys or sells a particular stock when it’s launched, his past observations give some idea of what he looks for, including companies that are seen as having a “moat” that competitors can’t match or reach.
“In business, I look for The economic castle is protected by an insurmountable “moat”.Buffett mentioned Geico Insurance Company in his 1995 letter to shareholders.
The 94-year-old investor, known as the Oracle of Omaha, has a love for the insurance industry. Geico, Represented by a friendly green reptile and General Re.
Now it’s Chubb’s turn. The interest has been good for the company’s stock, which has risen more than 13% this year. Today, Berkshire Hathaway is Chubb’s largest shareholder and Greenberg is the second-largest. CEO Hank Greenberg explained the key to Chubb’s success is the overall growth of the insurance industry.
What did the Oracle of Omaha see in Chubb?
CEO Evan Greenberg (son of the legendary 99-year-old former CEO) said it was not the 1.4% annual dividend that mattered, but the steady growth of the insurance company over the years. Greenberg also confirmed the insurance industry’s continued success.
“We are a growing company. We have grown earnings by double digits over the last few years, and looking ahead, we will continue to see strong earnings growth,” said Greenberg, who also highlighted the multiple revenue streams the insurer brings in both the U.S. and abroad. “We are well diversified: P&C and underwriting segments are our revenue generators. Given that interest rates have risen and are higher than they have been in decades, our investment assets are another revenue generator,” he said. “In the first quarter, pre-tax investment income increased more than 25% to $1.39 billion, while adjusted net investment income increased 23% to $1.48 billion.”
Finally, Greenberg noted that “life insurance business in Asia continues to grow.”
We are a global company, with more than 40 percent of our business outside the U.S. We are the largest commercial insurer in the U.S., and 20 percent of our business is in Asia.”