We are reiterating our Neutral recommendation on
), following the fourth quarter earnings release. Chubb reported
a solid fourth quarter which included a 134.8% positive earnings
surprise. Though the company performed reasonably well in its
property and casualty lines of business, strong and persistent
growth across the board was lacking.
CHUBB CORP (CB): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
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Quarterly premium growth at Chubb Commercial Insurance was flat.
The segment was, however, able to produce underwriting
profitability due to disciplined risk selection and the
compounding effect of overall rate increases.
Chubb Personal Insurance is also witnessing a gradual market
improvement. The segment has been witnessing an increase in net
premium written from the past several quarters, led by strong
premium increases from international business.
However, Chubb Specialty Insurance business has been suffering
from rate reductions over the past several years. We believe
earnings from this segment to remain under pressure over the near
The company also remains substantially exposed to catastrophe
loss due to its business concentration in the Northeast. The
fourth quarter earnings also suffered from Sandy which was the
largest catastrophe in the company's history, both in terms of
the number of claims and the cost on net reinsurance basis.
Nevertheless, this Zacks Rank # 2 (Buy) property and casualty
insurer is maintaining a strong capital position, as evidenced by
the new share repurchase program announced during the fourth
quarter earnings release.
Following the earnings release over the last 30 days, 12 of 16
estimates moved north pushing the Zacks Consensus Estimate for
the first quarter 2013 by 6.4% to $1.67. For full year
2013, 14 of 19 estimates were revised upward over the same time
frame. The Zacks Consensus Estimate for 2013 moved up by 4.8% to
$6.56, within the company guidance of $6.40 -$6.80per share.
Cincinnati Financial Corp.
First American Financial Corp.
), among other property and casualty insurer, are, carrying Zacks
Rank #1 (Strong Buy) and are worth considering.