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Should You Retain Chubb Limited (CB) Stock in Your Portfolio?

Chubb Limited CB has been showing a consistent operational excellence over the past many quarters on the back of its strong commercial businesses, diversification of businesses, new business growth and strong renewal retentions.

Growth Projections

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $12.11 and $14.02, indicating year-over-year increase of 65.6% and 15.7%, respectively.

Estimate Revision

The Zacks Consensus Estimate for earnings for 2021 and 2022 has moved 1.4% and 1.7% north, respectively in the past 30 days. This should instill investors' confidence in the stock.

Earnings Surprise History

Chubb has a decent earnings surprise history, beating estimates in each of the last four quarters, the average being 10.60%.

Zacks Rank & Price Performance

Chubb currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 24.8% compared with the industry’s increase of 9.6%.

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Style Score

Chubb has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Being the world’s largest publicly traded property and casualty (P&C) insurer, Chubb continues to witness a robust premium revenue growth globally. We expect the momentum to continue, driven by its double-digit commercial lines growth, strong continued underlying margin expansion, strength of reserves and broad diversification of businesses, new business and strong renewal retentions.

Adjusted pre-tax investment income will continue to gain from higher income from private equity partnerships and increased dividends on public equities that resulted from a higher allocation to public equity securities. Chubb continues to expect quarterly run rate to be nearly $900 million.

Chubb is highly rated by the rating agencies for financial strength. Riding on solid underwriting discipline, managing exposure accumulations and conservative investment of assets, the insurer continues to manage risk on both sides of its balance sheet. This insurer continues to remain extremely liquid, with cash and short-term investments of $5.1 billion at the end of third quarter.

Chubb has a distinguished track record of success with 28 consecutive years of dividend increases and currently yields 1.7%, which is better than the industry average of 0.4%. In July 2021, the board has authorized a new one-time incremental share buyback program to return more value to investors, which will allow Chubb to spend up to $5 billion to repurchase its common stock through Jun 30, 2022.

Stocks to Consider

Some better ranked property and casualty insurers include First American Financial FAF, Cincinnati Financial Corporation CINF and Berkshire Hathaway (BRK.B). While First American sports a Zacks Rank #1 (Strong Buy), Cincinnati Financial and Berkshire carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

First American’s earnings surpassed estimates in each of the last four quarters, the average beat being 29.19%. In the past year, the insurer has rallied 56.6%. The Zacks Consensus Estimate for 2021 and 2022 has moved 1.5% and 2.5% north, respectively, in the past 30 days.

Solid performance of the commercial market, improved direct premium and escrow fees, and higher demand for title information products in data and analytics are likely to drive First American’s top-line growth.

Cincinnati Financial surpassed estimates in each of the last four quarters, the average earnings surprise being 40.05%. In the past year, CINF has rallied 53.6%. The Zacks Consensus Estimate for 2021 and 2022 has moved 0.9% and 5% north, respectively, in the past 30 days.

Cincinnati Financial is well poised to gain from premium growth initiatives, price increases and a higher level of insured exposures.

The bottom line of Berkshire Hathaway surpassed estimates in two of the last four quarters and missed the same in the other two, the average being 5.53%. In the past year, the insurer has rallied 23.6%. The Zacks Consensus Estimate for 2021 and 2022 has moved 0.08% and 1.5% north, respectively, in the past 30 days.

Berkshire Hathaway is expected to benefit from its growing Insurance business, Manufacturing, Service and Retailing, Finance and Financial Products segments, and strategic acquisitions.


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Chubb Limited (CB): Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
 
Cincinnati Financial Corporation (CINF): Free Stock Analysis Report
 
First American Financial Corporation (FAF): Free Stock Analysis Report
 
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