Chubb Limited CB is well-poised for growth on compelling product portfolio, underwriting excellence, strategic growth initiatives global presence, and effective capital deployment.
Return on equity of 8.7% in the trailing twelve months was better than the industry average of 6.5%, reflecting the company’s efficiency in utilizing shareholders’ fund.
The company’s VGM Score of B is also encouraging. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Being one of the world’s largest providers of property and casualty insurance and reinsurance, exposure to cat events induces underwriting volatility. Nonetheless, Chubb’s superior underwriting expertise has helped the company produce combined ratio better than its peers over the last 10 years.
The stock carries an impressive Growth Score of B. Growth Score analyzes a company’s growth prospects.
The company has been increasing dividend for 27 straight years. Dividend yield of the company is 2.5%, higher than the industry average of 0.5%, making it an attractive investment option for yield-seeking investors. Notably, Chubb has more than doubled its quarterly dividend since 2010. Though it has $1.1 billion shares worth remaining under its share buyback authorization, the company has temporarily suspended share repurchases due to the pandemic.
This Zacks Rank #3 (Hold) company has a solid history of delivering positive earnings surprise in the last 15 reported quarters.
Chubb boasts a strong portfolio of products and services that drives improvement in premium growth. The company has been putting in efforts to capitalize on the potential of middle-market businesses, both domestic and international, with traditional core package as well as specialty product. Also, strategic acquisitions have improved premium writings in the recent times.
Moreover, its U.S. small commercial business has gained momentum and Chubb expects this business to have an annual run rate of premium that can be in the multi-billion dollar range in the next three to five years.
Further, its investment results should continue to benefit from growth in invested assets and solid cash flows. The company estimates adjusted net investment income run rate to be in the range of $885 million to $895 million. Chubb also bought a fair amount of high-quality equities and increased its exposure to investment-grade corporate bonds.
Chubb’s times interest earned ratio has been improving over the years. The improvement in this ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties. The company enjoys strong credit ratings from credit rating agencies.
Shares of Chubb have lost 20.4% year to date compared with the industry's decrease of 22.3%.
Stocks to Consider
Some better-ranked companies in the insurance industry are Kinsale Capital Group Inc KNSL, Palomar Holdings, Inc. PLMR, and Donegal Group Inc. DGICA.
Kinsale Capital provides casualty and property insurance products in the United States. Its earnings beat estimates in two of the last four quarters, the average positive surprise being 3.44%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Palomar Holdings provides specialty property insurance. The company surpassed estimates in two of the last four quarters, the average positive surprise being 10.93%.The stock carries a Zacks Rank #2.
Donegal Group provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company surpassed estimates in each of the last four quarters, the average positive surprise being 92.79%. The stock carries a Zacks Rank #2.
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Chubb Limited (CB) : Free Stock Analysis Report
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