Fitch Ratings has affirmed the ratings of property and
The Chubb Corporation
) with a stable outlook. As a part of the yearly rating action,
the agency reiterated the "AA-" issuer default rating and "A+"
senior debt ratings of the company.
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Concurrently, Fitch reiterated the insurer financial strength of
"AA" of Chubb's property/casualty insurance subsidiaries.
Fitch's recent rating action comes on the back of Chubb's
consistent operating profitability, maintenance of superior
risk-adjusted capital and a conservative investment portfolio.
The rating agency acknowledges Chubb's 13th position (on the
basis of net premiums written in 2011) in the property and
casualty market in the U.S. It also views the company's
international operations to be a significant contributor to
overall earnings over the long term. Currently, its international
operations comprise approximately 1/4th of the company's revenue.
Combined ratio, which measures profitability of an insurance
company, also signals underwriting profitability for Chubb. Over
the past five years, Chubb's combined ratio averaged 89.9%
through first nine months of 2012. The company also managed
to post a decent return on equity, averaging 14.1% during the
same time period.
The rating agency however, expects the company's fourth quarter
earnings to be adversely affected by losses caused by hurricane
Sandy. The company expects net pretax losses of $880 million or
$570 million after tax. Notwithstanding the losses incurred on
account of Sandy, Fitch expects the company to still report a
significant operating profit in full year 2012.
Fitch also took into account the capital level and was
comfortable with Chubb's debt ratio of 20.2% as of Sep. 30, 2012.
The possibility of the company defaulting on its creditors is
very low with the company's sufficient interest coverage ratio of
In terms of capital flexibility, the company is favorably poised
with a cash balance of approximately $2.2 billion at September
30, 2012 along with significant amount of dividend expected from
Going forward, sustained solid operating performance, strong
risk-adjusted capitalization and reduced catastrophe exposure
might translate into positive ratings for Chubb. On the contrary,
if revenue, profitability and capital levels are hurt, Chubb
might face rating downgrades.
The Travelers Companies Inc.
W.R. Berkley Corp.
) also carry an investment grade rating from Fitch.
The stock currently retains a Zacks Rank, # 3. The company
is expected to release fourth quarter earnings on Jan 31,