We are reiterating our Outperform recommendation on The Chubb Corp.
(CB - Analyst Report
), reflecting our continued optimism about the company’s growth prospects. Chubb carries a Zacks Rank #2 (Buy)
Chubb boasts of a diversified product profile and has a niche market presence in the property and casualty industry.
Chubb’s Commercial insurance segment has been consistently reporting favorable earnings results. The segment has been witnessing low-single-digits increase in average renewal rates over the past several quarters. Retention ratio stands at a stable level.
Chubb’s Personal Insurance segment is also witnessing a gradual market improvement. The segment has been witnessing an increase in net premium written from the past several quarters, led by strong premium increases from international business
Chubb’s international business is also performing strongly to very adequately support its future growth.
Strong capital management witnessed by regular share repurchases and a continuous dividend increase for the past several years makes the stock a favorite among investors.
However, exposure to cat losses and low interest rate environment are some of the headwinds.
Chubb has been also witnessing rising earnings estimates. Over the last 30 days, the Zacks Consensus Estimate for 2013 moved up by 2.3% to $7.56 as 6 of the 12 estimates moved north. The same for 2014 rose 0.3% to $7.26 as 1of 16 estimates were raised over the same time frame. The expected long term earnings growth is 10.5%.
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