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: Philip van Dorn

There are many methods to categorize stocks, including by industry, market cap, and style — growth stocks or value stocks. Analysts at jefferies financial believe that in the early stages of Trump's second term, the returns on growth stocks will surpass those of value stocks.

Growth stocks refer to companies with significant revenue and profit growth. Due to their rapid expansion, growth stocks usually have higher pe or pb ratios, and thus typically exhibit strong momentum effects. Value stocks refer to more mature companies with slower growth rates, many of which belong to cyclical industries. Compared to growth stocks, value stocks generally have lower pe or pb ratios, and some value investors focus on their dividends.

To support the view that growth stocks will perform better in the early stages of Trump's second term, jefferies financial's global head of algo strategy, Desh Peramunetilleke, made the following points:

• Peramunetilleke expects that Trump's first term will repeat, describing it as "a bifurcated story, where growth stocks perform well in the early stages of Trump's term, while the remaining phases are dominated by quality stocks and low-risk stocks."

• As the usa economy grows "normally," Peramunetilleke expects growth stocks to "diminish the appeal of cyclical stocks." He adds, "The slowdown in global trade growth and the restrained oil prices may weigh on csi commodity equity index, cyclical stocks, and value stocks."

• Peramunitali wrote in the report: "The relative pe of growth stocks is about 20% lower than the five-year peak."

• Recent adjustments by analysts to the revenue or profit expectations of growth stocks exceed those of value stocks.

s&p 500 growth index and s&p 500 value index.

In order to filter growth stocks in$S&P 500 Index (.SPX.US)$the s&p 500 growth index (S&P 500 Growth Index) can be a starting point. All indices mentioned in this article are compiled by s&p dow jones indices.

s&p dow jones indices compiles several style indices that categorize stocks into growth or value stocks using different methods. Investors can check index compilation methods on the company's website.

Each company in the s&p 500 index receives a growth score and a value score annually.

The growth score considers the following points:

• The change in eps over three years divided by the current stock price.

• Three-year growth rate of sales per share.

• The momentum reflected in the stock price changes over 12 months.

The value score examines the pb, pe, and p/s.

According to the method of S&P Dow Jones Indices, about 34% of the stocks in the s&p 500 index are included in the "hybrid basket," meaning they are "neither purely growth-oriented nor purely value-oriented." In addition, with the weighting method, there are currently 233 companies in the s&p 500 growth index and 437 companies in the s&p 500 value index, with dozens of stocks included in both indices.

Screening of the s&p 500 pure growth index.

S&P Dow Jones Indices has also compiled some "pure" style indices, which have no overlap, and stocks are weighted according to style scores rather than market cap.

There are 66 stocks in the s&p 500 pure growth index, one way to invest in all these stocks collectively is to hold them. $Rydex ETF Trust S&P 500 Pure Growth ETF (RPG.US)$ 。

Returning to Pelham Unified's view that growth stocks have a significantly lower pe compared to value stocks, the chart below shows the price changes of the s&p 500 pure growth index relative to the s&p 500 pure value index over the past five years:

Currently, the price of the s&p 500 pure growth index is 24% lower than the five-year high set in July 2020 relative to the price of the s&p 500 pure value index.

Among the brokerage analysts surveyed by FactSet, of the 66 component stocks in the s&p 500 pure growth index, 10 stocks have majority ratings of 'buy' or equivalent ratings, with the highest potential for price appreciation over the next 12 months:

Editor/Rocky