Warren Buffett’s Berkshire Hathaway Inc. disclosed a $6.7 billion interest in insurer Chubb Ltd., putting an end to months of speculation about its mysterious position in a financial corporation that had previously been buried in regulatory filings.
Buffett’s company had requested “confidential treatment” from the SEC in earlier filings to keep the position private while it was increasing the investment.
“Chubb is an attractive equity investment for Berkshire because it operates in a business Berkshire knows well: property-casualty insurance,” Cathy Seifert, a CFRA Research analyst who covers Berkshire, said in an email.
“Millions of people follow what Buffett does,” said David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business, explaining why Berkshire strives to maintain secrecy while accumulating significant assets. “Warren Buffett would be more sensitive to the issue than others.”
Buffett’s Berkshire Hathaway has extensive experience in the insurance market, owning companies such as Geico and National Indemnity. The billionaire investor has described Berkshire’s property-casualty insurance arm as the “core” of the firm, generating “float” that can subsequently be reinvested.
The conglomerate has also made investments in other insurance-related industries. Berkshire owns a stake in Aon Plc, a large broker, and has previously ventured on competitors such as Marsh & McLennan Companies.
Chubb is one of the largest property and liability insurers in the United States, with operations in 54 countries worldwide. Evan Greenberg, the company’s CEO, is the son of Maurice “Hank” Greenberg, the long-time CEO of American International Group Inc. Evan Greenberg established Chubb through the 2016 combination of Ace Ltd. and Chubb Corp., which resulted in a giant insurer that covers a wide range of risks, including cyber attacks and marine shipping.
Berkshire Hathaway’s cash pile hit a record $189 billion at the end of March. Buffett stated at the annual meeting that it was “a fair assumption” that it will reach $200 billion by the end of the quarter.
Funds with more than $100 million in assets must file reports on their holdings within 45 days after the end of each quarter, providing insight into the holdings of secretive money managers such as hedge funds and wealthy family offices.