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: Emily Barry

After joining the "trillion-dollar club", Apple's market cap has stagnated and entered the longest consecutive decline in 15 years. $Berkshire Hathaway-A (BRK.A.US)$ $Berkshire Hathaway-B (BRK.B.US)$ The bullish trend of Apple's stocks has come to a halt, marking the longest consecutive decline in 15 years.

Before the recent drop, Berkshire Hathaway had a significant increase in stock price. In addition, one executive of the company recently sold Berkshire Hathaway stocks worth $0.139 billion. There are various reasons why company executives sell stocks, but investors sometimes use the price at which they sell to determine management's view of valuation.

On September 9, Berkshire Hathaway Vice Chairman Ajit Jain sold 200 shares of Berkshire Hathaway Class A stocks at an average price of $695,417.65. Filings disclosing this transaction on September 11 showed that Jain continued to hold 166 shares of Class A stocks through direct and indirect means, in addition to holding Class B stocks.

Berkshire Hathaway did not respond to MarketWatch's request for comment.

On Friday, September 13, Berkshire Hathaway Class A stocks fell by 0.5%, marking the eighth consecutive trading day of decline. According to Dow Jones Market Data, this is the longest continuous decline in Berkshire Hathaway Class A stocks since June 23, 2009.

However, it is necessary to consider the specific context when looking at the recent consecutive decline of Berkshire Hathaway. Firstly, in this recent eight-day decline, Berkshire Hathaway fell by 6.2%. The last time it experienced an eight-day decline was 15 years ago. However, in the eight trading days leading up to September 22, 2022, Berkshire Hathaway also had eight days of cumulative decline, with a decline of 6.4%, but not every trading day ended with a decline.

In addition, on one of the recent eight trading days, Berkshire Hathaway Class A stocks only fell by $6.6, which is very small compared to the closing price of $689,280 on that day.

Before the recent drop, Berkshire Hathaway had been rising for a long time. Looking at the recent price trend, the stock price may have risen too high. In the eight trading days leading up to September 3, Berkshire Hathaway had a continuous increase, pushing its market cap to surpass the $1 trillion mark for the first time. Berkshire Hathaway became the eighth US company to join the trillion-dollar club. However, the valuation later fell below $1 trillion.

Meanwhile, Berkshire Hathaway Class B stocks closed at $447.61 on Friday, marking a four-day consecutive decline.

Lately, Berkshire Hathaway has been taking frequent actions, including continued shareholding of Bank of America (BAC) stocks. After selling stocks, Berkshire Hathaway's cash reserves have grown. However, the company disclosed in August that it established a new position in ULTA Beauty (ULTA), a cosmetics retail stock, in the second quarter. According to James Shanahan, an analyst at Edward Jones, Berkshire Hathaway reduced its stock holdings by nearly 98 billion US dollars in the first half of this year, most of which were Apple (AAPL) stocks. Berkshire Hathaway bought approximately 4 billion US dollars worth of stocks in the first half of the year.

Shanahan said, "As of the end of June, Berkshire Hathaway's cash reserves increased to 277 billion US dollars, and selling stocks is one of the main reasons."

In the second half of the year, Berkshire Hathaway continues to sell stocks. Shanahan said, "Buffett said at the Berkshire Hathaway annual meeting that selling Apple stocks was due to tax reasons, and future tax rates may be higher. This may be the reason why Berkshire Hathaway continues to sell stocks since the end of the second quarter."

Shanahan believes that the future profitability of Berkshire Hathaway's subsidiary companies will be very strong, but he wrote in a report on August 28th, "We believe that the current stock price of Berkshire Hathaway has already reflected these bullish factors." At that time, the price of Berkshire Hathaway Class A shares was $691,350, and last Friday, the Class A shares closed at $671,750.

Editor/rice