Here's Why Hold Strategy is Appropriate for Chubb Limited (CB)
Chubb Limited CB has been in investors’ good books owing to new business, strong renewal retention, well-performing commercial businesses and sufficient liquidity.
The consensus estimate for 2023 and 2024 earnings is pegged at $17.40 and $19.13, indicating a 14.1% and 9.9% increase from the year-ago reported figure, driven by 8.2% and 5.9% higher revenues of $48.1 billion and $50.9 billion, respectively.
Northbound Estimate Revision
The Zacks Consensus Estimate for Chubb’s 2023 earnings has moved 1.2% north in the past 60 days. This should instill investors' confidence in the stock.
Earnings Surprise History
Chubb has a decent earnings surprise history, beating estimates in three of the last four quarters and missing in one, the average being 6.61%.
Zacks Rank & Price Performance
Chubb currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 10.8% compared with the industry’s decrease of 11.8%.
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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.
Being the world’s largest publicly traded property and casualty (P&C) insurer, Chubb continues to witness robust premium revenue growth globally. We expect the momentum to continue, driven by its commercial businesses, double-digit commercial P&C rate increases and expanding underwriting margins, new business and strong renewal retention.
A solid commercial business, continued commercial P&C rate increases, improving underwriting margins, new business and strong renewal retention should continue to support premium growth.
Chubb has always considered acquisition as an effective strategy for inorganic growth and global expansion. It closed 17 acquisitions over the past 15 years. Chubb has acquired the life and non-life insurance companies of Cigna Corporation in seven Asia-Pacific markets. The addition will boost Chubb’s A&H business as well as expand its Asia-based life insurance presence. With this addition, Asia-Pacific's share of Chubb's global portfolio will grow to nearly $7 billion in premium, representing about 18% of the total company premiums.
Riding on increasing interest rates and widening spreads, investment income should continue to rise. Chubb projects quarterly adjusted net investment income in the range of $1.135 billion to $1.155 billion.
Chubb’s solid underlying performance produced strong operating cash flow in 2022. Chubb’s financial position remained strong with $63 billion in total capital. The insurer continues to remain liquid with cash and short-term investments of $6.7 billion at the quarter's end.
Chubb’s strong capital position with sufficient cash generation capabilities supports effective capital deployment. This, in turn, has helped the insurer increase dividends for the last 29 years. The dividend yield is 1.7%, better than the industry average of 0.3%. At present, CB is left with $3.01 billion under its authorization.
Stocks to Consider
Some top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, Everest Re Group, Ltd. RE and Kinsale Capital Group, Inc. KNSL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 and 2024 has moved 5% and 0.3%, north, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.50 and $8.50, indicating a year-over-year increase of 29% and 13.3%, respectively. In the past year, AXS has lost 6.7%.
Everest Re beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating a year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 17.3%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 24.3%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.
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Chubb Limited (CB) : Free Stock Analysis Report
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