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Here's Why You Should Hold Chubb (CB) in Your Portfolio
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Chubb Limited (CB - Free Report) is aided by strong P&C, International Life business and record net investment income. The pursuit of buyouts and a solid financial position are other tailwinds.
Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $17.62 and $19.40, indicating a 15.6% and 10.1% increase from the year-ago reported figure, driven by 5.6% each year on higher revenues of $46.9 billion and $49.5 billion, respectively.
Earnings Surprise History
Chubb has a decent earnings surprise history, beating estimates in three of the last four quarters and missing once, the average being 4.7%.
Zacks Rank & Price Performance
Chubb currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 6.7% against the industry’s growth of 2.2%.
Image Source: Zacks Investment Research
Key Drivers
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 business, consumer P&C business and International Life 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 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. This addition helped the Life Insurance segment more than double its premium revenues and will continue to aid margins in the future. With this addition, Asia-Pacific's share of Chubb's global portfolio will grow by nearly $7.3 billion, representing about 23% of the company’s total premiums.
Net Investment income rose 34.7% in the first quarter of 2023. Riding on increasing interest rates and widening spreads, investment income should continue to rise.
Chubb’s solid underlying performance produced strong operating cash flow in the first quarter. Chubb’s financial position remained strong, with $67.7 billion in total capital. The insurer continues to remain liquid with cash and short-term investments of $6 billion at the quarter's end.
Chubb’s strong capital position and sufficient cash generation capabilities support 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 0.4%. It bought back shares worth $428 million in the first quarter. At present, CB is left with $1.2 billion under its authorization.
There is a factor that investors should keep a careful eye on.
The P&C insurer has been experiencing an increase in expenses primarily due to higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits over the last few years.Such expenses continue to weigh on the margin expansion. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
HCI Group beat estimates in three of the last four quarters and missed once, the average being 308.8%. The Zacks Consensus Estimate for 2024 has moved 60% north in the past 30 days.
The Zacks Consensus Estimate for HCI’s 2024 earnings per share is pegged at $3.2, indicating a year-over-year increase of 45.5%.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.37 and $12.41, indicating a year-over-year increase of 33% and 19.7%, respectively.
RLI Corp beat estimates in each of the last four quarters, the average being 43.5%.
The Zacks Consensus Estimate for RLI’s 2023 earnings per share is pegged at $4.88, indicating a year-over-year increase of 4.1%. The same for 2023 revenues indicates 15.2% growth from the past year’ reported figure.
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Here's Why You Should Hold Chubb (CB) in Your Portfolio
Chubb Limited (CB - Free Report) is aided by strong P&C, International Life business and record net investment income. The pursuit of buyouts and a solid financial position are other tailwinds.
Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $17.62 and $19.40, indicating a 15.6% and 10.1% increase from the year-ago reported figure, driven by 5.6% each year on higher revenues of $46.9 billion and $49.5 billion, respectively.
Earnings Surprise History
Chubb has a decent earnings surprise history, beating estimates in three of the last four quarters and missing once, the average being 4.7%.
Zacks Rank & Price Performance
Chubb currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 6.7% against the industry’s growth of 2.2%.
Image Source: Zacks Investment Research
Key Drivers
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 business, consumer P&C business and International Life 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 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. This addition helped the Life Insurance segment more than double its premium revenues and will continue to aid margins in the future. With this addition, Asia-Pacific's share of Chubb's global portfolio will grow by nearly $7.3 billion, representing about 23% of the company’s total premiums.
Net Investment income rose 34.7% in the first quarter of 2023. Riding on increasing interest rates and widening spreads, investment income should continue to rise.
Chubb’s solid underlying performance produced strong operating cash flow in the first quarter. Chubb’s financial position remained strong, with $67.7 billion in total capital. The insurer continues to remain liquid with cash and short-term investments of $6 billion at the quarter's end.
Chubb’s strong capital position and sufficient cash generation capabilities support 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 0.4%. It bought back shares worth $428 million in the first quarter. At present, CB is left with $1.2 billion under its authorization.
Chubb has a favorable VGM Score of B.
Key Concerns
There is a factor that investors should keep a careful eye on.
The P&C insurer has been experiencing an increase in expenses primarily due to higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits over the last few years.Such expenses continue to weigh on the margin expansion. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks from the P&C insurance industry are HCI Group, Inc. (HCI - Free Report) , Kinsale Capital Group, Inc. (KNSL - Free Report) and RLI Corp. (RLI - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group beat estimates in three of the last four quarters and missed once, the average being 308.8%. The Zacks Consensus Estimate for 2024 has moved 60% north in the past 30 days.
The Zacks Consensus Estimate for HCI’s 2024 earnings per share is pegged at $3.2, indicating a year-over-year increase of 45.5%.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.8%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.37 and $12.41, indicating a year-over-year increase of 33% and 19.7%, respectively.
RLI Corp beat estimates in each of the last four quarters, the average being 43.5%.
The Zacks Consensus Estimate for RLI’s 2023 earnings per share is pegged at $4.88, indicating a year-over-year increase of 4.1%. The same for 2023 revenues indicates 15.2% growth from the past year’ reported figure.