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Chubb (CB) Boosts Shareholder Value, Ok's Buyback Program

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The board of directors of Chubb Limited (CB - Free Report) recently authorized a new one-time incremental share buyback program to return more value to investors. The latest authorization will allow the company to spend up to $5 billion to repurchase its common stock through Jun 30, 2022.

This marks the second authorization this year. In February 2021, the board approved an increase to the November 2020 share repurchase program of $1 billion to a total of $2.5 billion, effective through Dec 31, 2021. In the first quarter of 2021, the company bought back shares worth $519 million. Therefore, with the new authorization, the company now has $5.65 billion left under the buyback program.

The property and casualty insurer boasts one of the largest product portfolios in the global insurance industry. It is focusing on cyber insurance that has immense room for growth, putting in efforts to capitalize on the potential of middle-market businesses, both domestic and international, with traditional core package as well as specialty product. Improving pricing environment, new business growth and high renewal rates along with other positives should help it continue with effective capital deployment.

It has a strong capital position, with sufficient cash generation capabilities. Its underwriting and investment performance support strong operating cash flow. Such improvement in capital as well as liquidity position will not only allow the company to return more value to investors but also accelerate the company’s growth in the near term.

Not only share buybacks, Chubb also remains committed toward boosting shareholder value via dividend hikes. This property and casualty insurer has increased dividends at a seven-year (2014 – 2021) CAGR of 6.9%. It has increased dividends for 28 straight years, with the latest hike of 2.6% announced this year in May. Its dividend yield of 1.9% is higher than the industry average of 0.4%. Such initiatives not only reflect the operational and financial strength of the company but also make the stock attractive to yield-seeking investors.

Among other insurers that have resorted to returning capital to shareholders American Financial Group’s (AFG - Free Report) board of directors approved a special cash dividend of $2.00 per share. Unum Group (UNM - Free Report) hiked quarterly dividend by 5.3% while RLI Corp. (RLI - Free Report) increased dividend by 12%.

Zacks Rank and Share Price Movement

Chubb currently carries a Zacks Rank #3 (Hold). Shares of Chubb have gained 18.6% year to date compared with the industry’s increase of 29%. We expect premium growth, strategic initiatives and a robust capital position to further drive shares around in the near term.

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You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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