Berkshire Holdings CB and AXP Post Record Q3: Time to Buy?

Chubb Limited (CB) reported diluted earnings per share of $7.30, up 4.4% year over year, with revenue of $16.8 billion, up 4.3%. For the first nine months of the year, net income and core operating income reached record levels at $8.02 billion and $8.6 billion, respectively. Net investment income in the quarter hit nearly $1.8 billion, up from $1.65 billion, driven by rising interest rates and a favorable fixed-income environment. Despite higher catastrophe losses of $705 million, Chubb maintained a strong property and casualty combined ratio of 84%, indicating efficient claims management.

American Express (AXP) reported record third-quarter revenue of $20.1 billion, up 8% year over year, and diluted EPS of $5.42, up 31%. However, revenue slightly missed Wall Street estimates due to the exit of some co-branded partnerships with small businesses. Amex also announced a 5% workforce reduction to streamline operations and better leverage artificial intelligence. Management raised full-year EPS guidance to $18.30–$18.60, up from the prior range of $17.30–$17.90. Credit metrics remained benign, with loan losses and delinquencies declining or flat.

Both companies are significant holdings in Berkshire Hathaway's equity portfolio. Chubb accounts for 3.4% of the portfolio, while American Express is the second-largest holding at 13.4%. Berkshire has owned Amex since the 1990s and has not sold a single share since completing its purchase of 151.6 million shares.

Berkshire Hathaway, now led by new CEO Greg Abel, continues to maintain a concentrated portfolio with large positions in high-quality companies. Abel has indicated that the investment approach will remain consistent with Buffett's strategy.

The record results from Chubb and Amex underscore the resilience and profitability of these businesses, even as they face challenges such as higher catastrophe losses and workforce restructuring.

For Chubb, the record nine-month results demonstrate the company's ability to generate consistent profits through its insurance underwriting and investment activities. The strong combined ratio of 84% means Chubb is retaining a healthy portion of premiums after paying claims, which is a key indicator of underwriting profitability. Rising interest rates have boosted net investment income, and the company's partnership with KKR added a $460 million realized gain. These factors position Chubb well for continued growth, making it an attractive addition to a portfolio.

American Express's record revenue and raised guidance signal confidence in its business model, which focuses on premium customers with strong credit profiles. The 31% EPS growth and benign credit metrics highlight the company's ability to maintain profitability even in a challenging economic environment. The workforce reduction, while costly upfront, is expected to improve efficiency and leverage AI, potentially driving future margin expansion. Amex's closed-loop payments network and annual fee income provide a durable competitive advantage that few peers can match.

Berkshire's continued holding of these stocks, especially Amex with no shares sold in decades, reflects strong conviction in their long-term prospects. The new CEO's commitment to the concentrated strategy suggests that these positions will remain core holdings, providing a vote of confidence for investors.

For investors seeking quality stocks with record earnings and strong fundamentals, Chubb and American Express offer compelling opportunities. Both companies have demonstrated resilience and growth, and their inclusion in Berkshire's portfolio adds a layer of credibility.

However, investors should consider risks: Chubb faces increasing catastrophe losses due to climate change, and Amex's revenue miss and restructuring could lead to short-term volatility. Nonetheless, the long-term outlook for both remains positive.