On Jun 1, we issued an updated research report on the property and casualty insurer The Chubb Corp. CB.
Chubb’s boasts consistent operating profitability, while maintaining a superior risk-adjusted capital, a strong brand name, disciplined underwriting practices, a low debt level and a niche presence in its standard and specialty commercial and upscale personal insurance businesses. The company also has a global presence in specialty markets.
Despite incurring catastrophe loss in 2010–2012, Chubb has never deterred from profitability, reflecting its well-cushioned business. Led by profitable operations, the company also churns out strong operating cash flows.
The company’s capital strength is demonstrated by its low debt to tangible capital ratio. It also holds sufficient funds to cover annual holding company expenses.
Nevertheless, headwinds from competitive insurance markets and the constant threat of catastrophe losses persist. Exposure to catastrophe losses has always induced volatility to the company’s earnings.
During the last reported quarter, the company’s operating income of $1.57 per share beat the Zacks Consensus Estimate by 1.9% and improved 4.7% year over year.
Better-than-expected earnings came on the back of higher premium written in its Personal and Commercial lines of business partly offset by higher catastrophe loss. A lower share count due to share buyback also contributed to bottom-line growth.
Chubb carries a Zacks Rank #3 (Hold).
Better-ranked players in the space include Endurance Specialty Holdings Ltd. ENH, Markel Corp. MKL and State Auto Financial Corp. STFC. All these stocks carry a Zacks Rank #1 (Strong Buy).
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