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Why is it Apt to Hold Chubb Limited (CB) in Your Portfolio?

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Shares of Chubb Limited (CB - Free Report) have outperformed the Zacks categorized Property and Casualty Insurance industry, year to date. The company also witnessed estimate revisions over the past 60 days. The Zacks Rank #3 (Hold) insurance insurer remains promising banking on a number of growth drivers.

An Outperformer: Chubb’s shares have surged 10.77% year to date, outperforming the Zacks categorized Property and Casualty Insurance industry’s growth of 5.69%. The shares have also outperformed the S&P 500, increasing 8.34% over the same time frame.


 

Positive Earnings Surprise History: Chubb has surpassed the Zacks Consensus Estimate in the last three quarters. The company’s average four-quarter surprise is +5.56%.

Positive Growth Projections: The Zacks Consensus Estimate for earnings is $10.35 for 2017 which reflects a year-over-year growth of 2.22%. For 2018, the Zacks Consensus Estimate for earnings is pegged at $10.68, representing year-over-year growth of 3.20%.

Chubb has long-term expected earnings per share growth of 10.0%.

Growth Drivers In Place: Post its merger with ACE Limited, the company enjoys a competitive edge with increased scale, efficiencies and balance sheet size, leading to a considerable value creation in future.

Chubb has been continually investing in growth initiatives that should pave way for long-term growth. Chubb expects initiatives – both organic and inorganic – undertaken in the U.S., Latin America and Asia to drive improvement. Organic initiatives include cyber insurance, capitalizing on the potential of middle-market businesses, doing away with businesses that do not meet its risk appetite and generating lower net premium.  Premiums continue to exhibit an improving trend on the back of organic initiatives and acquisitions.

Net investment income has started to exhibit improvement. With the Fed raising interest rates gradually (the Fed has recently raised rates – three hikes in three consecutive quarters), the company expects a quarterly investment income run rate to remain in the range of $830–$840 million.

Chubb effectively deploys its capital. It has more than doubled its quarterly dividend since 2010. The company has increased its dividend for straight 24 quarters. Chubb aims to achieve a dividend payout ratio of 30% of its operating earnings. The company also engages in share buybacks.  It has a $1 billion share repurchase program in place for 2017.

Stocks to Consider

Few better-ranked stocks from the insurance industry are Aon plc (AON - Free Report) , State National Companies, Inc. and Progressive Corp. (PGR - Free Report)

Progressive provides personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the U.S. The company has delivered positive surprises in two of the last four quarters with an average beat of 4.95%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

State National Companies provides property and casualty insurance in the U.S. The company has delivered positive surprises in two of last four quarters with an average beat of 20.54%. The stock flaunts a Zacks Rank #1.

Aon offers risk management services, insurance and reinsurance brokerage, human resource consulting and outsourcing services worldwide. The company has delivered positive surprises in two of the last four quarters with an average beat of 4.04%.The stock carries a Zacks Rank #2 (Buy).

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