A.M. Best Co. has upgraded the outlook of the issuer credit
ratings (ICR) of all property and casualty subsidiaries of
The Chubb Corporation
) to positive from stable. Additionally, A.M. Best reiterated the
financial strength ratings (FSR) of these subsidiaries at "A++"
and ICRs at "aa+." The outlook for FSR remains stable.
Alongside, A.M. Best reiterated ICRs on The Chubb Corporation at
"aa-" and also affirmed AMB-1+ on The Chubb Corporation's
commercial paper. The outlook for ICR was updated to positive
from stable. Apart from these rating affirmations, A.M. Best
maintained FSR of "A++" and CSR of "aa+" on Chubb Atlantic
The rating affirmations and upgraded outlook are validated by The
Chubb Corporation's strong underwriting and operating
performances. The company has solid risk-based
Moreover, The Chubb Corporation has consistently outperformed
its industry peers in specialty and upscale personal insurance
businesses, which gives it a unique competitive edge. The Chubb
Corporation's positive rating outlooks are also driven by its
leading position as an insurer in the United States and its
worldwide presence in the specialty markets.
The Chubb Corporation reported fourth-quarter 2013 operating
earnings of $2.07 per share, 4 cents ahead of the Zacks Consensus
Estimate, and up 13 times year over year. Underwriting income
jumped to $430 million from underwriting loss of $332 million.
The Chubb Corporation's underwriting results remained strong
despite the recent impacts from catastrophes and the challenges
of a competitive market. Moreover, the company's well diversified
book of business has resulted in risk-adjusted capitalization. It
also benefited from higher total returns from invested assets and
higher operating and underwriting cash flows.
However, The Chubb Corporation's strong underwriting results have
been consistently limited by catastrophe losses and tough market
competition. Anticipating catastrophe losses, Chubb Corporation
has lowered its 2014 earnings per share guidance, which is
expected to hover around $7.10 and $7.40.
The Chubb Corporation's strong operating as well as underwriting
performance may result in further positive ratings for the
company. However, if operating performance or risk-adjusted
capitalization fails to reach A.M. Best's expectations, the
rating affirmations could be affected.
Rating affirmations or upgrades from credit rating agencies play
an important part in retaining investor confidence in the stock
along with maintaining credit worthiness in the market.
Therefore, rating downgrades adversely affect the business, apart
from increasing the costs of future debt issuances. We believe
that strong ratings will help The Chubb Corporation retain
investor confidence and help it write more businesses going
The Chubb Corporation presently carries a Zacks Rank #3 (Hold).
Other firms worth mentioning in the same space include
AmTrust Financial Services, Inc.
Fidelity National Financial, Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
AMTRUST FIN SVC (AFSI): Free Stock Analysis
CHUBB CORP (CB): Free Stock Analysis Report
FIDELITY NAT FI (FNF): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
To read this article on Zacks.com click here.