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Here's Why You Should Retain Chubb (CB) in Your Portfolio

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Chubb Limited (CB - Free Report) is well-poised for growth, riding on global presence, compelling product portfolio and a sturdy capital position. The expected long-term earnings growth rate is pegged at 10%, better than the industry average of 8.8%.

The Zacks Consensus Estimate for 2020 and 2021 earnings has moved up 2.5% and 0.5%, respectively in the past 30 days, reflecting analysts’ optimism.  Chubb has a stellar record of delivering positive earnings surprise over the last several quarters. Its operating earnings grew 68% in the last 11 years (2009-2019), better than its peers’ average of 40% over the same time.

Average return on equity (2010–2019) was 10.6%, better than the peer average of 8.9%, reflecting efficient utilization of shareholders money.

Chubb boasts leading commercial and high net worth insurer in the United States with substantial operations in Asia and Latin America growing at high single to double-digit rates. Its net premiums written grew 143% in the last 11 years (2009-2019), better than its peers’ average of 1% over the same time. Given its compelling product portfolio, solid retention, improved pricing, prudent underwriting, and solid global presence, we expect the momentum to continue. It is well poised to capitalize on the potential of middle-market businesses, both domestic and international, with traditional core package as well as specialty product.

This Zacks Rank #3 (Hold) property and casualty insurer remains focused on delivering industry-leading combined ratio, leveraging its underwing prudence. Its combined ratio is about 800 bps better than its peers’ average over past 10 years.

Chubb continues to grow its invested assets. About 93% of Chubb’s investment portfolio is in fixed income securities that have helped the company stabilize its book yield without increasing overall portfolio risk. The company expects strong cash flow to continue to support net investment income and estimates adjusted net investment income run rate to be in the range of $850 million to $860 million.

Chubb’s effective capital management strategy supports the efficient use of capital and helps to generate solid return on equity significantly in excess of its cost of equity. It envisions double-digit return on equity over time.

Given its operational strength, the company has increased its dividend for 27 straight years, currently yielding 2.6%, better than the industry average of 0.5%, which makes the stock an attractive pick for yield-seeking investors.

Chubb boasts a strong capital position, with sufficient cash generation capabilities. It enjoys strong credit ratings attributable to its financial strength.

Shares of Chubb have lost 18.8% year to date, compared with the industry's decline of 6.6%.

Stocks to Consider

Some better-ranked companies in the insurance industry are Donegal Group (DGICA - Free Report) , The Allstate Corporation (ALL - Free Report) and Fidelity National Financial (FNF - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group delivered an earnings surprise of 134.62% in the last-reported quarter.

Allstate came up with an earnings surprise of 74.47% in the last-reported quarter.

Fidelity National delivered an earnings surprise of 53.52% in the last-reported quarter.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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