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Chubb Lags Industry, Trades at a Premium: How to Play the Stock
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Chubb Limited (CB - Free Report) shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 1.69X is higher than the industry average of 1.44X.
It also has a Value Score of B. Back-tested results have shown that stocks with a solid Value Score and a favorable Zacks Rank are the most attractive and their returns are better.
With a capitalization of $115 billion, Chubb is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance and the largest publicly traded P&C insurer.
Image Source: Zacks Investment Research
CB shares are cheaper than those of other insurers, such as The Travelers Companies (TRV - Free Report) and The Allstate Corporation (ALL - Free Report) .
Chubb stock has risen 2.8% year to date, underperforming the industry and the sector but outperforming the Zacks S&P 500 composite’s return in the same time frame.
CB vs Industry, Sector & S&P 500 YTD
Image Source: Zacks Investment Research
CB shares are trading well above the 50-day moving average, indicating a bullish trend.
Mixed Analyst Sentiment
The Zacks Consensus Estimate for Chubb’s 2025 earnings implies a year-over-year decrease of 4.4%, while that for 2026 suggests a year-over-year increase of 16.8%.
The consensus estimate for 2025 earnings has moved 1.6% south in the past 30 days, while that for 2026 has moved 0.2% north in the same time frame.
CB’s Return on Capital
Return on equity in the trailing 12 months was 13.6%, better than the industry average of 8.3%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investments made over the same time frame. This reflects CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8.9%, better than the industry average of 7.3%.
Factors Impacting CB
Chubb remains focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. In its efforts to accelerate growth, Chubb is also making strategic investments in various initiatives.
Chubb pursues strategic mergers and acquisitions to diversify its portfolio, add capabilities and synergies and expand its geographic footprint. Recently, Chubb agreed to acquire the insurance businesses of Liberty Mutual in Thailand and Vietnam. Acquisitions have also improved premium revenues. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention. An impressive inorganic growth story helps to achieve a higher long-term return on equity.
Though the Fed has started lowering the interest rate, investment income should benefit from improving operating cash flow. Chubb expects quarterly adjusted net investment income to have a run rate between $1.67 billion and $1.75 billion over the next six months.
Chubb has a strong capital position and sufficient cash-generation capabilities, which support wealth distribution to shareholders and growth initiatives.
Being a P&C insurer, CB is exposed to catastrophe events, which induce volatility in underwriting profitability and affect the combined ratio. Given the uncertainty surrounding the magnitude of cat loss, higher losses could drain earnings.
Also, Chubb’s leverage and times interest earned compare unfavorably with the industry.
Average Target Price for CB Suggests an Upside
Based on short-term price targets offered by 22 analysts, the Zacks average price target is $302.77 per share. The average suggests a potential 6.6% upside from the last closing price.
Parting Thoughts
Chubb’s market-leading position, compelling portfolio, strong renewal retention, positive rate increases, solid capital position and better return on capital pave the way for long-term growth.
The insurer’s dividend history is impressive. It has increased dividends for 31 straight years and is set to hike it again this year by 6.5%. CB has a dividend yield of 1.3%, better than the industry average of 0.3%. As of Feb. 26, 2025, $1.5 billion remained in its share repurchase authorization.
However, given its premium valuation, a projected decline in the bottom line in 2025, and unfavorable leverage and times interest earned, we prefer to stay cautious on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Chubb Lags Industry, Trades at a Premium: How to Play the Stock
Chubb Limited (CB - Free Report) shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 1.69X is higher than the industry average of 1.44X.
It also has a Value Score of B. Back-tested results have shown that stocks with a solid Value Score and a favorable Zacks Rank are the most attractive and their returns are better.
With a capitalization of $115 billion, Chubb is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance and the largest publicly traded P&C insurer.
Image Source: Zacks Investment Research
CB shares are cheaper than those of other insurers, such as The Travelers Companies (TRV - Free Report) and The Allstate Corporation (ALL - Free Report) .
Chubb stock has risen 2.8% year to date, underperforming the industry and the sector but outperforming the Zacks S&P 500 composite’s return in the same time frame.
CB vs Industry, Sector & S&P 500 YTD
Image Source: Zacks Investment Research
CB shares are trading well above the 50-day moving average, indicating a bullish trend.
Mixed Analyst Sentiment
The Zacks Consensus Estimate for Chubb’s 2025 earnings implies a year-over-year decrease of 4.4%, while that for 2026 suggests a year-over-year increase of 16.8%.
The consensus estimate for 2025 earnings has moved 1.6% south in the past 30 days, while that for 2026 has moved 0.2% north in the same time frame.
CB’s Return on Capital
Return on equity in the trailing 12 months was 13.6%, better than the industry average of 8.3%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investments made over the same time frame. This reflects CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8.9%, better than the industry average of 7.3%.
Factors Impacting CB
Chubb remains focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. In its efforts to accelerate growth, Chubb is also making strategic investments in various initiatives.
Chubb pursues strategic mergers and acquisitions to diversify its portfolio, add capabilities and synergies and expand its geographic footprint. Recently, Chubb agreed to acquire the insurance businesses of Liberty Mutual in Thailand and Vietnam. Acquisitions have also improved premium revenues. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention. An impressive inorganic growth story helps to achieve a higher long-term return on equity.
Though the Fed has started lowering the interest rate, investment income should benefit from improving operating cash flow. Chubb expects quarterly adjusted net investment income to have a run rate between $1.67 billion and $1.75 billion over the next six months.
Chubb has a strong capital position and sufficient cash-generation capabilities, which support wealth distribution to shareholders and growth initiatives.
Being a P&C insurer, CB is exposed to catastrophe events, which induce volatility in underwriting profitability and affect the combined ratio. Given the uncertainty surrounding the magnitude of cat loss, higher losses could drain earnings.
Also, Chubb’s leverage and times interest earned compare unfavorably with the industry.
Average Target Price for CB Suggests an Upside
Based on short-term price targets offered by 22 analysts, the Zacks average price target is $302.77 per share. The average suggests a potential 6.6% upside from the last closing price.
Parting Thoughts
Chubb’s market-leading position, compelling portfolio, strong renewal retention, positive rate increases, solid capital position and better return on capital pave the way for long-term growth.
The insurer’s dividend history is impressive. It has increased dividends for 31 straight years and is set to hike it again this year by 6.5%. CB has a dividend yield of 1.3%, better than the industry average of 0.3%. As of Feb. 26, 2025, $1.5 billion remained in its share repurchase authorization.
However, given its premium valuation, a projected decline in the bottom line in 2025, and unfavorable leverage and times interest earned, we prefer to stay cautious on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.