Now, over the past couple of revolutions ’round the sun, our good friend Berkshire Hathaway (that’s BRK.A and BRK.B if you’re counting) has taken to selling off shares like a yard sale in a small town. This trend’s spurred quite the increase in their cash reserves, now sitting higher than the nose on a giraffe during a heat wave. And what’s more, it seems that ol’ Warren Buffett has decided to pause those buyback shenanigans for ’24, hinting that he thinks the market’s hotter than a two-dollar pistol.
You see, Mr. Buffett’s got this little saying: “Be fearful when others are greedy,” and judging by the rampant greed bubbling up in the S&P 500-trading at a jaw-dropping price-to-earnings ratio of 30-there’s more greed than sense afloat. But while those high numbers have some folks frothing at the mouth, ol’ Warren’s been dabbling in a few hidden gems that don’t quite billow with excitement.
One such treasure is Chubb (that’d be CB for you stock aficionados). Berkshire made its foray into this American-Swiss behemoth in the third quarter of 2023, steadily scooping up shares like a catfish at a fish fry, and it now owns a healthy $7.4 billion slice of that pie. That’s about a 6.8% stake-a nice little piece of the pie that constitutes 2.5% of Berkshire’s grand portfolio.
Now, Chubb ain’t exactly the class clown of the insurance world, but it’s a sturdy tree that’ll keep on growing whether it’s sunny or stormy. Let’s dive a little deeper into why this could be the rabbit that helps you pull in a bigger hat over the years.
So, what in tarnation does Chubb do?
Hailing from the fine city of Zurich, Switzerland, Chubb employs about 43,000 folks and digs its roots into 54 countries across the globe. This here company holds the title of the world’s largest publicly traded provider of property, supplemental, health, and casualty insurance-quite a mouthful, ain’t it? It once went by ACE Limited till it snagged the original Chubb in 2016 and decided to wear that name like a Sunday Best.
Now don’t go thinking that just because the economy’s a bit wobbly, folks are dashing to ditch their insurance. The big boys of the insurance world, like Chubb, can weather the storms because while people might skimp on a fancy dinner, they ain’t likely to cancel their car or home policy. It’s a good thing too, as Chubb has been hustling to expand beyond the good ol’ U.S. shores, clocking in a significant 43% of their revenue from foreign lands in 2024.
That’s why their consolidated net premiums have been on the up and up these last six years, even with all the ruckus caused by COVID-19 and other global shenanigans. Most of their earnings still stem from their tried-and-true property and casualty (P&C) insurance policies.
| Metric | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|
| Consolidated net premiums growth | 5.5% | 4.8% | 12% | 10.3% | 13.5% | 8.7% |
| Core operating income* per share growth | 7.1% | (27.7%) | 7.8% | 21.3% | 48.5% | (0.1%) |
Now let’s chat about Chubb’s P&C ratio. For the uninitiated, that’s a fancy way to know how well a company’s managing claims and expenses against the premiums earned. Chubb’s ratio stood at a commendable 86.6% this past year-well below the industry average of 96.6%. Now, a ratio below 100% keeps the lights on and the claims paid. Chubb’s prudent ways and a little help from modern-day sorcery called AI has allowed them to smooth out nudges of inefficiency.
Though their core operating income per share hiccupped a bit this year-thanks to one of those one-time tax windfalls-analysts are still betting on a pleasant compound annual growth of 8% in earnings per share from 2024 to 2027. That’s not too shabby for a stock that’s trading at a mere 12 times earnings. And let us not forget the small but mighty dividend, currently yielding 1.4%. With a low payout ratio of 16%, there’s plenty of wiggle room for future hikes to keep those dividends coming like sunshine after a rainstorm.
How Chubb Could Fill Your Pockets Over the Long Haul
Now, if you fancy yourself a high-flyer, Chubb stock might not set your heart racing in the next year or two, but it’s likely to inch ahead steadily. If they hit those analyst expectations, keeping up that sweet 8% EPS growth from 2027 to 2035, and if the wind blows favorably to elevate their valuations to around 15 times forward earnings, you could find yourself with a stock price that surges upward closer to $800 in a decade. Seems to me that’s why ol’ Buffett has kept his faith in Chubb, even while he’s trimmed at the edges of other Berkshire holdings. How’s that for a plan? 🤑
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2025-08-21 12:07