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Here's Why Investing in Chubb (CB) is a Prudent Move Now

Zacks Equity Research
·3 min read

Chubb Limited’s CB improving pricing, new business growth, high renewal rates, and sturdy financial position along with favorable growth estimates make it a good investment choice.

It has a decent earnings surprise history. Its bottom line beat estimates in three of the last four quarters, the average being 7.14%.

Zacks Rank & Price Performance

Chubb currently carries a Zacks Rank #2 (Buy). Quarter to date, the stock has gained 11.9%, outperforming the industry’s increase of 0.1%, the Finance sector’s rise of 0.7%, and the Zacks S&P 500 composite’s rise of 3.6%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $12.29, indicating a 68.1% increase from the year-ago reported figure. The consensus estimate for 2022 earnings is pegged at $13.58, indicating an increase of 10.5% from the year-ago reported figure. The long-term earnings growth rate is currently pegged at 10%, better than the industry average of 9.2%.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 8.7%, comparing favorably with the industry’s 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.

Estimate Revision

The Zacks Consensus Estimate for 2021 has moved 6.9% north while the same for 2022 has moved up 6.7% in the past 60 days, reflecting analyst optimism.

Style Score

The company has a favorable Value Score of B. This style score helps to identify undervalued stocks that have a long history of showing superior returns. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 are the best investment options.

Business Tailwinds

Being the world’s largest publicly traded property and casualty (P&C) insurer, its underwriting results have outperformed the average of its peers over the last 10 years.

Chubb has one of the largest product portfolios in the global insurance industry, helping it deliver continued premium growth. Sturdy commercial P&C businesses, new business, positive rate increases across most lines and regions as well as strong renewal retention will help it retain the momentum.

Chubb is looking to capitalize on the potential of middle-market businesses in cyber insurance that has immense room for growth.

Increased corporate bond call activity, higher private equity distributions, and increased dividends on public equities, adjusted pre-tax net investment income will likely improve in the long term. The company estimates the quarterly run rate to be about $900 million.

The insurer has a $5 billion share buyback authorization through June 2022 in its kitty.

Solid Dividend History

The company has been hiking dividends for the last 28 years. It has increased dividends at a seven-year (2014 – 2021) CAGR of 6.9%. Its yield of 1.7% is better than the industry average of 0.4%.

Strong Capital Position

Chubb boasts a strong capital position, with sufficient cash generation capabilities. Its balance sheet includes a $123 billion AA-rated portfolio of cash and investment assets. It has over $75 billion in capital, stemming from superior operating and investing performance

Other Stocks to Consider

Some other top-ranked stocks in the same space include American Financial Group AFG, Cincinnati Financial Corporation CINF, and Everest Re Group RE, all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group delivered an earnings surprise of 45.73% in the last reported quarter.

Cincinnati Financial delivered an earnings surprise of 80.81% in the last reported quarter.

Everest Re Group delivered an earnings surprise of 62.56% in the last reported quarter.


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Chubb Limited (CB) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Everest Re Group, Ltd. (RE) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

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Zacks Investment Research