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On Apr 3, 2013, shares of The Chubb Corporation (CB - Analyst Report) reached a 52-week high of $88.70.

At the end of February, the board of directors of Chubb approved a 7.3% increase in quarterly dividend. With the increased dividend of 44 cents, its dividend yield comes to 2.01%, better than the sector average of 1.69%. The board also approved a new $1.3 billion share repurchase program

Given a superior franchise and a significant presence in its niche market, Chubb is adequately poised to benefit from the expected turn in the insurance pricing cycle. The company has already started to witness growth in its Commercial and Personal lines segments. Its International business is growing rapidly and we expect it to fuel the long-term earnings. The long-term expected earnings growth rate for this stock is 9.3%.    

Chubb reported positive earnings surprise for all 4 quarters in 2012, with an average beat of 49.4%. Further, our proven model shows that this property and casualty insurer is likely to beat earnings in the first quarter of 2013 because it has a right combination of Positive Zacks ESP (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #2 (Buy). ESP or Earnings Surprise Prediction, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 8.28%. Chubb is scheduled to release its first-quarter results on Apr 25 after the market closes. The Zacks Consensus Estimate for the first quarter of 2013 is currently pegged at 77 cents.

However, the valuation of Chubb looks stretched. The shares are trading at a premium to peer group average both on a forward price-to-earnings basis, and on a price-to-book value basis. Moreover, return on equity of 8.9% is lower than the peer group average. The 1-year return from the stock is 26.5%, much above S&P’s return of 10.3%.   

Chubb presently carries a Zacks Rank #2 (Buy). Property and casualty insurers like AXIS Capital Holdings Ltd. (AXS - Analyst Report), Montpelier Re Holdings Ltd. (MRH - Analyst Report) and Arch Capital Group Ltd. (ACGL - Snapshot Report), among others, carry a Zacks Rank #1 (Strong Buy) and appear impressive.

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