Why Chubb is a Good Buy Now - Analyst Blog

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On June 25, Zacks Investment Research upgraded U.S. property and casualty insurer The Chubb Corp. ( CB ) to Zacks Rank #2 (Buy).

Why the Upgrade?

Driven by a consistent strong operating performance reported by Chubb over several quarters, the stock has seen an upward revision in its earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for 2014 moved up 0.7% to $7.33. For 2015, the Zacks Consensus Estimate moved up 0.5% to $7.80 per share over the  same time frame. The expected long-term earnings growth is 9.7%.


Chubb enjoys competitive advantage within its specialty and upscale personal insurance businesses. The company's niche market position is reflected in its consistent earnings outperformance made evident by positive surprises for 22 straight quarters, barring the last in which the bottom line matched the Zacks Consensus Estimate.

Delving into the company's segments, Commercial Insurance has consistently impressed with its earnings. The segment has been witnessing a low single-digit increase in average renewal rates for the past several quarters. Retention ratio stands at a stable level.

Chubb's Personal Insurance is also witnessing a gradual market improvement. Net premium written in this segment has been increasing over several quarters, led by strong premium increases from international business.

The strength in Chubb's international business is in fact its arsenal for its future growth.

Strong capital management witnessed by regular share repurchases and continuous dividend increase over several years makes the stock a favorite among investors. During the first quarter, the company hiked its quarterly dividend by 13.6% to 50 cents per share. It was Chubb's 32nd consecutive annual dividend increase.

Investors interested in property and casualty industry may look at Endurance Specialty Holdings Ltd. ( ENH ), Federated National Holding Company ( FNHC ) and AmTrust Financial Services, Inc. ( AFSI ). All these stocks hold a Zacks Rank #1 (Strong Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CHUBB CORP (CB): Free Stock Analysis Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ENDURANCE SPLTY (ENH): Free Stock Analysis Report

FEDERATED NATL (FNHC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: CB , AFSI , ENH , FNHC

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