Chubb Corp: Now a Strong Buy on Upward Estimate Revisions

On Jan 14, Zacks Investment Research upgraded Chubb Corp. (CB) by two notches to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The property and casualty insurer delivered positive surprises in three of the trailing four quarters, with an average beat of 0.68%.

Given a consistent operating over several quarters, the stock has seen upward revisions in its earnings estimates. Over the last 90 days, the Zacks Consensus Estimate for 2014 moved up 4.5% to $7.50 . For 2015, Zacks Consensus Estimates are up 0.5% to $7.78 over the same time frame. The expected long-term earnings growth is 6.4%.

Chubb enjoys a 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 in 24 out of 27 reported quarters.

Delving into the company’s segments, Commercial Insurance has generally impressed with its earnings. The segment has been witnessing a low single-digit increase in average renewal rates for the past several quarters. Also, 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 future growth.

Strong capital management witnessed by regular share repurchases and continuous dividend increase over past many years make the stock a favorite among investors.

Other Stocks to Consider

Investors interested in the property and casualty industry may look at Arch Capital Group Ltd. (ACGL), The Allstate Corporation (ALL) and Federated National Holding Company (FNHC). Each of these stocks sports a Zacks Rank #1.