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Chubb (CB) Stock Surges 24.3% in a Year: What's Driving It?

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·4 min read
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Shares of Chubb Limited CB have gained 24.3% in a year compared with the industry's increase of 17.1%. The Zacks S&P 500 composite has rallied 12.2% in the said time frame. With a market capitalization of $84.9 billion, the average volume of shares traded in the last three months was 1.9 million.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The rally was largely driven by strong renewal retentions, positive rate increases and sufficient liquidity.

The insurer has a decent earnings surprise history. Its bottom line beat estimates in each of the last four quarters, the average being 12.03%.

Chubb has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Will the Bull Run Continue?

Estimates for 2021 and 2022 have moved up nearly 3% and 1.5%, respectively, in the past 30 days, reflecting investors’ optimism.

The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $14.57 and $16.04, indicating year-over-year increase of nearly 16% and 10.1%, respectively.

Riding on solid commercial businesses, double-digit commercial P&C rate increases and expanding underwriting margins, new business and strong renewal retentions, Chubb expects the robust premium revenue growth to continue in the long run. The level of rate increases has remained robust and well in excess of loss costs. Chubb expects this trend to continue in the future.

A solid investment portfolio, along with positive operating cash flow, is expected to support growth in investment income. CB continues to expect the quarterly run rate to be approximately $900 million in 2022.

In the fourth quarter of 2021, the world’s largest publicly traded property and casualty (P&C) insurer agreed to take over the life and non-life insurance companies of Cigna Corporation in seven Asia-Pacific markets for $5.75 billion in cash. Chubb identified the Asia-Pacific region as a long-term growth area. Thus, the transaction is likely to boost Chubb’s A&H business as well as expand its Asia-based life insurance presence.

Chubb’s total capital position is $76.2 billion and is highly rated by the rating agencies for financial strength.

Banking on solid cash flow, Chubb has increased dividends at an eight-year CAGR (2014-2021) of 6.1%. The dividend yield is 1.6%, better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. At present, the insurer is left with $2.6 billion under its authorization.

Chubb currently carries a Zacks Rank #2 (Buy) and has an impressive Value Score of B. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.

Other Stocks to Consider

Some other top-ranked property and casualty insurers include Arch Capital Group ACGL, W.R. Berkley WRB and American Financial Group AFG. While Arch Capital and W.R. Berkley sport a Zacks Rank #1, American Financial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, ACGL has rallied 32.4%.

The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 2.9% and 1.6% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.53%. In the past year, WRB has rallied 32.6%.

The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 4.9% and 1.5% north, respectively, in the past 30 days. WRB’s expected long-term earnings growth rate is pegged at 9%.

The bottom line of American Financial surpassed earnings estimates in each of the last four quarters, the average being 39.58%. In the past year, the insurer has rallied 26.4%.

The Zacks Consensus Estimate for American Financial’s 2022 earnings has moved 0.5% north in the past seven days.


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Chubb Limited (CB) : Free Stock Analysis Report

W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

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

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

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