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6 Reasons Why You Should Retain Chubb (CB) in Your Portfolio
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Chubb Limited (CB - Free Report) is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance, lending specialized insurance products such as personal accident, supplemental health and life insurance to individuals.
Shares of this Zacks Rank #3 (Hold) insurer have gained 3.1% in a year, underperforming the industry’s rally of 15.8%.
The stock has seen the Zacks Consensus Estimate for current and next-year earnings being revised upward over the last 60 days. While 2018 estimates moved north by 1%, the consensus mark for 2019 was nudged up 1.4%. This upward estimate revision boosts analysts’ confidence in the stock.
Let’s focus on some factors that make Chubb a lucrative stock for greater returns.
Improving Top Line: The top line at Chubb soared by nearly 80% over the last five years owing to increased net premium earned and higher investment income. Factors like a compelling product suit, increased scale, efficiencies, strategic initiatives undertaken in the United States, Latin America and Asia should continue to drive growth for the stock.
Increasing Investment Income: Investment income has been improving over the last couple of years. Courtesy of a rising interest rate environment, the Fed has recently hiked the rate to 1.75%, indicating two more raises in 2018 and three in 2019. We expect this trend to continue in the long run. The company expects its quarterly investment income run rate in the range of $865-$875 million.
Strategic Initiatives: To ramp up its growth profile, the company has been pursuing various strategic initiatives like focusing on middle-market businesses, both domestic and international, reviewing underwriting actions in portfolios that do not meet its risk appetite as well as generating lower net premium. The company is also shoring up its Australian presence and consolidating its Asian footprint too.
Effective Capital Management: A strong capital position helped Chubb more than double its quarterly dividend since 2010. The company aims to achieve a 30% dividend payout ratio of its operating earnings. Also, it has a $1-billion worth share buyback authorization through 2018.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $10.75, representing a year-over-year climb of 33.9%.
For 2019, the Zacks Consensus Estimate for earnings per share stands at $11.27, translating to a year-over-year rise 4.8%.
Chubb has an expected long-term earnings per share growth rate of 10%.
Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers because of large variations in their earnings results from one quarter to the next — shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 1.25, falling below the industry average of 1.38.
Stocks to Consider
Some better-ranked property and casualty insurance stocks are Alleghany Corporation , Everest Re Group, Ltd. and Heritage Insurance Holdings, Inc. (HRTG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It came up with an average four-quarter beat of 5.16%.
Everest Re provides reinsurance and insurance products. It pulled off an average four-quarter positive earnings surprise of 10.86%.
Heritage Insurance provides personal and commercial residential insurance products. It delivered an average four-quarter beat of 14.66%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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6 Reasons Why You Should Retain Chubb (CB) in Your Portfolio
Chubb Limited (CB - Free Report) is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance, lending specialized insurance products such as personal accident, supplemental health and life insurance to individuals.
Shares of this Zacks Rank #3 (Hold) insurer have gained 3.1% in a year, underperforming the industry’s rally of 15.8%.
The stock has seen the Zacks Consensus Estimate for current and next-year earnings being revised upward over the last 60 days. While 2018 estimates moved north by 1%, the consensus mark for 2019 was nudged up 1.4%. This upward estimate revision boosts analysts’ confidence in the stock.
Chubb carries an impressive Growth Score of B.
Let’s focus on some factors that make Chubb a lucrative stock for greater returns.
Improving Top Line: The top line at Chubb soared by nearly 80% over the last five years owing to increased net premium earned and higher investment income. Factors like a compelling product suit, increased scale, efficiencies, strategic initiatives undertaken in the United States, Latin America and Asia should continue to drive growth for the stock.
Increasing Investment Income: Investment income has been improving over the last couple of years. Courtesy of a rising interest rate environment, the Fed has recently hiked the rate to 1.75%, indicating two more raises in 2018 and three in 2019. We expect this trend to continue in the long run. The company expects its quarterly investment income run rate in the range of $865-$875 million.
Strategic Initiatives: To ramp up its growth profile, the company has been pursuing various strategic initiatives like focusing on middle-market businesses, both domestic and international, reviewing underwriting actions in portfolios that do not meet its risk appetite as well as generating lower net premium. The company is also shoring up its Australian presence and consolidating its Asian footprint too.
Effective Capital Management: A strong capital position helped Chubb more than double its quarterly dividend since 2010. The company aims to achieve a 30% dividend payout ratio of its operating earnings. Also, it has a $1-billion worth share buyback authorization through 2018.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $10.75, representing a year-over-year climb of 33.9%.
For 2019, the Zacks Consensus Estimate for earnings per share stands at $11.27, translating to a year-over-year rise 4.8%.
Chubb has an expected long-term earnings per share growth rate of 10%.
Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers because of large variations in their earnings results from one quarter to the next — shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 1.25, falling below the industry average of 1.38.
Stocks to Consider
Some better-ranked property and casualty insurance stocks are Alleghany Corporation , Everest Re Group, Ltd. and Heritage Insurance Holdings, Inc. (HRTG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It came up with an average four-quarter beat of 5.16%.
Everest Re provides reinsurance and insurance products. It pulled off an average four-quarter positive earnings surprise of 10.86%.
Heritage Insurance provides personal and commercial residential insurance products. It delivered an average four-quarter beat of 14.66%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>