We are reiterating our Outperform recommendation on the shares
The Chubb Corp.
), following the first quarter earnings results. Chubb reported a
solid first quarter which included a 23% positive earnings
surprise. Over the past four quarters this property and casualty
insurer delivered an average positive surprise of 52%.
On April 24, Chubb reported first-quarter operating earnings
of $566 million or $2.14 per share, significantly ahead of the
Zacks Consensus Estimate of $1.74 per share. Earnings also
increased 26% year over year from $469 million or $1.70 per share
in the first quarter of 2012. The earnings increase came on
the back of higher premium which was up across all the business
Chubb has been witnessing rising earnings estimates. Over the
last 60 days, most of the estimates moved north, pushing the
Zacks Consensus Estimate for 2013 by 7.9% to $7.07. The same for
2014 rose 2% to $6.94 as 7 of 15 estimates were raised over the
same time frame. The expected long term earnings growth is
Chubb is continuously witnessing improving business conditions
in Commercial and Personal lines insurance business. It is
experiencing a favorable rate increase along with a stable
Chubb's international business is also performing strongly and
is an arsenal to its future growth.
A strong capital management witnessed by regular share
repurchases and a continuous dividend increase for the past
several years makes the stock a favorite among
However, exposure to cat losses and low interest rate
environment are some of the headwinds.
Other Stocks to Consider
HCI Group Inc.
AXIS Capital Holdings Ltd.
Montpelier Re Holdings Ltd.
) carry favorable Zacks Rank #1 (Strong Buy) and look
AXIS CAP HLDGS (AXS): Free Stock Analysis
CHUBB CORP (CB): Free Stock Analysis Report
HOMEOWNERS CHCE (HCI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
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