On March 26, 2014, we issued an updated research report on Chubb Corp. ( CB). The company expects cat loss in first quarter 2014 to be in the range of $150-$200 million. Property and casualty investment income after tax is also expected to decline by 4% to 6% in 2014.
On the back of cat loss expected in the first quarter of 2014, Chubb has witnessed a decline in earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for 2014 moved down by 2.7% to $7.22 as 11 of the 14 estimates moved south.
Nonetheless, Chubb boasts of a diversified product profile and has a niche market presence in the property and casualty industry.
Chubb’s Commercial insurance segment has been consistently reporting favorable earnings results. The segment has been witnessing low single-digit increase in average renewal rates for the past several quarters. Retention ratio stands at a stable level.
Chubb’s Personal Insurance segment is also witnessing a gradual market improvement. The segment has been experiencing an increase in net premium written for the past several quarters, led by strong premium increases from international business.
Chubb’s international business is also performing strongly and is an arsenal for its future growth.
Strong capital management in the form of regular share repurchases and continuous dividend increases for the past several years makes the stock a favorite among investors.
Earlier, the company reported fourth-quarter 2013 operating earnings of $2.07 per share, 4 cents ahead of the Zacks Consensus Estimate and up 13 times year over year. Earnings benefited from low claims paid during the quarter, growth in premiums and a lower share count. This helped the property and casualty insurer deliver positive earnings surprises in all of the last 4 quarters, registering an average beat of 16.3%.
Other Stocks to Consider
Chubb carries a Zacks Rank #3 (Hold).Other better-ranked stocks like Alleghany Corp. ( Y), AmTrust Financial Services, Inc. ( AFSI) and Atlas Financial Holdings, Inc. ( AFH), all with a Zacks Rank #1 (Strong Buy), are worth considering.