Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the S&P 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest M&A in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.
Author: Paul R. La Monica

The stocks most affected by the election results will continue to track Trump's probability of winning, and then outperform/underperform in the days and weeks after the election ends.

The current U.S. presidential election is tight, with the outcome too close to call until the last moment. Investors must be prepared for this.

Wolfe Research's Chief Investment Strategist Chris Senyek has created two baskets of stocks based on the possibilities of Trump winning the presidency and the Republicans securing both the House and Senate. One basket is called "GOP Trifecta Long" and includes stocks that would benefit from a potential "red wave", while the other basket is called "GOP Trifecta Short" and contains stocks that may decline if Trump is elected president.

Following the first round of presidential debates on June 27, Biden's support significantly dropped, leading to a substantial increase in "pro-Trump" stocks. After Trump was shot on July 13, stocks that benefit from Republican policies further rose.

However, the situation has changed since Biden announced his withdrawal from the race on July 21. Between now and November, the situation may become more unstable. Senyek established the two stock baskets for the first time before Biden's withdrawal and before Vice President Kamala Harris became the Democratic presidential candidate, when the possibility of Republicans winning both chambers of Congress was high.

Senyek said: "As we approach November 5th, election day, we expect these two baskets to continue tracking Trump's likelihood of winning, and then outperforming/underperforming in the days and weeks following the election."

"The stocks in the "Republican Three Consecutive Wins Bulls" basket include industrial giants. $3M (MMM.US)$ and defense contractors.$General Dynamics (GD.US)$and leading companies in the oil services industry.$Halliburton (HAL.US)$and large financial companies. $Goldman Sachs (GS.US)$ and $Citigroup (C.US)$ These stocks are all expected to benefit from policies that promote U.S. manufacturing, domestic drilling, and relaxed banking regulations. Trump's company, Trump Media & Technology Group (DJT), as well as its subsidiary, Truth Social, is also in this basket.

The 'Republican Three Consecutive Victories Bullish' stock basket also includes the industry leader in the crypto sector, as well as online brokerage firms.$Coinbase (COIN.US)$ and online brokerage firms.$Robinhood (HOOD.US)$ The Republican campaign platform asserts that it will defend$Bitcoin (BTC.CC)$The right to mine and ensure that every American has the right to store their digital assets.

Currently, the polls show that Harris's support rate is ahead of Trump. In this case, what would investors do if they believe Harris will win the election?

Seineck said in an email to Barron's, "If Harris wins, even if there is a divided Congress, stocks in the 'bearish three consecutive victories of the Republican Party' basket will outperform in the days after the election." Seineck also pointed out that Wolfe Research did not create a 'Harris stock basket' because the firm expects that unless the Democratic Party takes control of both the House and the Senate, Harris will not make significant policy adjustments.

If Harris defeats Trump, which stocks in the 'bearish three consecutive victories of the Republican Party' basket are worth buying? Investors may consider buying renewable energy companies.$First Solar (FSLR.US)$ and $Clearway Energy-C (CWEN.US)$ , as well as $Dollar General (DG.US)$N/A.$Ralph Lauren (RL.US)$and $e.l.f. Beauty (ELF.US)$ stocks that may be negatively affected by Trump's harsh tariff policies.

Let's take another look$Tesla (TSLA.US)$Tesla and its competitors$Rivian Automotive (RIVN.US)$have been included in the "GOP Triple Short" basket. If Trump wins and cancels Biden's EV-friendly/support for alternative energy policies, electric vehicle stocks may be impacted.

However, Musk is a Trump supporter and recently had a conversation with Trump on his social media site, X. A Trump win may be bad news for Tesla, but Musk seems to have a long-term strategy. On July 16th, he posted on X, saying, "Cancel the subsidies, it will only be beneficial to Tesla."

During the earnings call a week later, Musk slightly changed his wording, admitting that a Trump win would have "some impact" on Tesla, but in the long run, canceling government support "would be devastating for our competitors" and "actually might be beneficial for Tesla".

Musk has a point. Since Biden assumed the presidency in January 2021, Tesla's stock price has dropped by over 20%. During Trump's presidency, Tesla surged by over 1600%.

Therefore, in the realm of politics, many CEOs are more concerned about the "green" than the "red" or "blue".

Editor / jayden