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Reasons Why Investors Should Retain Chubb Limited (CB) Stock

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Chubb Limited (CB - Free Report) is well-poised for growth on the back of new business, strong renewal retention, well performing commercial businesses and sufficient liquidity.

Growth Projections

The Zacks Consensus Estimate for Chubb’s 2023 earnings per share is pegged at $17.2, indicating year-over-year increase of 11.7%.

Northbound Estimate Revision

The Zacks Consensus Estimate for Chubb’s 2023 earnings has moved 0.5% north in the past seven days. This should instill investors' confidence in the stock.

Earnings Surprise History   

Chubb has a decent earnings surprise history, beating estimates in each of the last four quarters, the average being 11.75%.

Zacks Rank & Price Performance

Chubb currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 12.1%, outperforming the industry’s increase of 2.1%.

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Style Score

Chubb has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Being the world’s largest publicly traded property and casualty (P&C) insurer, Chubb continues to witness robust premium revenue growth globally. We expect the momentum to continue, driven by its commercial businesses, double-digit commercial P&C rate increases and expanding underwriting margins, new business and strong renewal retention.

A solid commercial business, continued commercial P&C rate increases, improving underwriting margins, new business and strong renewal retention should continue to support premium growth.

Chubb expects continued growth and margin improvement in 2022 as it capitalizes on favorable underwriting conditions for commercial P&C businesses globally.

Chubb intends to expand its presence in the Asia-Pacific region. The acquisition of the life and non-life insurance companies of Cigna Corporation in seven Asia-Pacific markets testifies this strategic effort. Chubb’s Asia-Pacific portfolio will increase to $7 billion in premiums from $4 billion at present. Chubb expects to realize in excess of $80 million of expense savings with one-time integration costs of about $100 million. Also, the insurer agreed to purchase an additional ownership interest in Huatai Group in China.

Riding on increasing interest rates and widening spreads, investment income should continue to rise. Chubb projects adjusted net investment income in the range of $1.4 million to $1.6 billion in the fourth quarter of 2022.

Chubb’s financial position remained strong with $63 billion in total capital. The insurer continues to remain liquid with cash and short-term investments of $6.7 billion at third-quarter end.

Chubb’s strong capital position with sufficient cash generation capabilities supports effective capital deployment.  This, in turn, has helped the insurer increase dividends for the last 29 years. The dividend yield is 1.5%, better than the industry average of 0.3%. At present, CB is left with $3.6 billion under its authorization.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are Root, Inc. (ROOT - Free Report) , Kinsale Capital Group, Inc. (KNSL - Free Report) and First American Financial Corporation (FAF - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 91.4%.

The Zacks Consensus Estimate for ROOT’s 2023 earnings indicates a  year-over-year increase of 23.9%.

Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. In the past year, KNSL has gained 22%.

The Zacks Consensus Estimate for KNSL’s 2023 earnings implies a  year-over-year rise of 22.6%.

First American has a solid track record of beating earnings estimates in each of the last six quarters. In the past year, FAF has lost 28.6%.

The Zacks Consensus Estimate for FAF’s 2023 earnings has moved 3.9% north in the past 60 days. 

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