Billionaire Warren Buffett is buying a ‘high-flying’ asset after significantly reducing his exposure to the US banking sector, a new report shows.
The renowned investor has sold $10.5 billion of Berkshire Hathaway’s stake in Bank of America since the summer, after selling all of the company’s positions in JPMorgan Chase and Wells Fargo in recent years.
Now, Buffett is turning his attention to a leading global insurance company that specializes in property and casualty coverage.
New filings with the SEC regulator show Buffett is steadily buying shares of Chubb (CB), reports The motley fool.
The company provides commercial and personal property and casualty insurance, as well as personal accident and supplemental health insurance, reinsurance and life insurance in 54 countries and territories.
Berkshire initially disclosed a position in Chubb in May and has committed $7.8 billion to the company as of June 30.
Stable cash flow, a wealthy customer base and interest benefits are some reasons why Buffett might dive into stocks.
One September report from consultancy giant Deloitte found that the general insurance sector is witnessing improved profitability due to significant premium increases, lower claim costs and higher investment returns.
However, the report warns of continued pressure from climate-related losses, new tax obligations and the complexity of changing customer expectations that are challenging operating models.
Shares of Chubb are up 22% so far this year, according to the company’s latest quarterly report to show net income reached $2.32 billion, up 13.8%, while core operating income reached $2.33 billion, up 14.3%.
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