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CB Lags Industry, Trades at a Premium: What Should Investors Do Now?
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Key Takeaways
CB's strong renewal retention and compelling dividend history poise it well for sustained long-term growth.
Chubb enhances its core and specialty product offerings for long-term expansion.
Solid capital position enables CB to fund growth initiatives and return capital to shareholders.
Shares of Chubb Limited (CB - Free Report) have gained 1.1% in the past year, underperforming the industry, the Zacks S&P 500 composite and the Finance sector’s growth of 7.9%, 19% and 18.3%, respectively.
The insurer has a market capitalization of $108.04 billion. The average volume of shares traded in the last three months was 1.8 million.
Image Source: Zacks Investment Research
CB’s Expensive Valuation
The insurer’s shares are trading at a price-to-book value of 1.45, higher than the industry average of 1.42. Shares of The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) , and Arch Capital Group Ltd. (ACGL - Free Report) are also trading at a multiple higher than the industry average.
CB’s Growth Projection Encourages
The Zacks Consensus Estimate for Chubb’s 2025 revenues is pegged at $59.41 billion, implying a year-over-year improvement of 5.6%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 17.8% and 6.3%, respectively, from the corresponding 2025 estimates.
Optimist Analyst Sentiment on CB
Nine of the 11 analysts covering the stock have raised estimates for 2025 and five analysts have raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 earnings has moved up 1.4% in the past 30 days, and for 2026, the same has moved north 0.2% in the same time frame.
Image Source: Zacks Investment Research
Target Price Reflects Potential Upside
Based on short-term price targets offered by 20 analysts, the Zacks average price target is $303.25 per share. The average indicates a potential 11.8% upside from the last closing price.
Image Source: Zacks Investment Research
Impressive Earnings Surprise History of CB
Chubb’s bottom line surpassed earnings estimates in each of the last four quarters, the average being 10.85%.
CB’s Favorable Return on Capital
Return on equity in the trailing 12 months was 12.3%, better than the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investments made over the same time frame. This reflects CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8%, better than the industry average of 5.8%.
Factors Benefiting CB Stock
Chubb remains focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. In its efforts to accelerate growth, Chubb is also making strategic investments in various initiatives.
Chubb pursues strategic mergers and acquisitions to diversify its portfolio, add capabilities and synergies, and expand its geographic footprint. Recently, Chubb agreed to acquire the insurance businesses of Liberty Mutual in Thailand and Vietnam. Acquisitions have also improved premium revenues. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention. An impressive inorganic growth story helps to achieve a higher long-term return on equity.
Though the Fed has started lowering the interest rate, investment income should benefit from improved operating cash flow. Chubb expects the quarterly adjusted net investment income to have a run rate between $1.72 billion and $1.74 billion in third-quarter 2025.
Chubb has a strong capital position and sufficient cash-generation capabilities, which support wealth distribution to shareholders and growth initiatives.
Being a P&C insurer, CB is exposed to catastrophe events, which induce volatility in underwriting profitability and affect the combined ratio. Given the uncertainty surrounding the magnitude of cat loss, higher losses could drain earnings.
Also, Chubb’s leverage and times interest earned compare unfavorably with the industry.
End Notes
Chubb’s market-leading position, compelling portfolio, strong renewal retention, positive rate increases, solid capital position and better return on capital pave the way for long-term growth.
The insurer’s dividend history is impressive. It has increased dividends for 31 straight years and is set to hike them again this year by 6.5%. CB has a dividend yield of 1.43%, better than the industry average of 0.2%.
Image: Bigstock
CB Lags Industry, Trades at a Premium: What Should Investors Do Now?
Key Takeaways
Shares of Chubb Limited (CB - Free Report) have gained 1.1% in the past year, underperforming the industry, the Zacks S&P 500 composite and the Finance sector’s growth of 7.9%, 19% and 18.3%, respectively.
The insurer has a market capitalization of $108.04 billion. The average volume of shares traded in the last three months was 1.8 million.
Image Source: Zacks Investment Research
CB’s Expensive Valuation
The insurer’s shares are trading at a price-to-book value of 1.45, higher than the industry average of 1.42. Shares of The Travelers Companies, Inc. (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) , and Arch Capital Group Ltd. (ACGL - Free Report) are also trading at a multiple higher than the industry average.
CB’s Growth Projection Encourages
The Zacks Consensus Estimate for Chubb’s 2025 revenues is pegged at $59.41 billion, implying a year-over-year improvement of 5.6%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 17.8% and 6.3%, respectively, from the corresponding 2025 estimates.
Optimist Analyst Sentiment on CB
Nine of the 11 analysts covering the stock have raised estimates for 2025 and five analysts have raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 earnings has moved up 1.4% in the past 30 days, and for 2026, the same has moved north 0.2% in the same time frame.
Image Source: Zacks Investment Research
Target Price Reflects Potential Upside
Based on short-term price targets offered by 20 analysts, the Zacks average price target is $303.25 per share. The average indicates a potential 11.8% upside from the last closing price.
Image Source: Zacks Investment Research
Impressive Earnings Surprise History of CB
Chubb’s bottom line surpassed earnings estimates in each of the last four quarters, the average being 10.85%.
CB’s Favorable Return on Capital
Return on equity in the trailing 12 months was 12.3%, better than the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investments made over the same time frame. This reflects CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8%, better than the industry average of 5.8%.
Factors Benefiting CB Stock
Chubb remains focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. In its efforts to accelerate growth, Chubb is also making strategic investments in various initiatives.
Chubb pursues strategic mergers and acquisitions to diversify its portfolio, add capabilities and synergies, and expand its geographic footprint. Recently, Chubb agreed to acquire the insurance businesses of Liberty Mutual in Thailand and Vietnam. Acquisitions have also improved premium revenues. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention. An impressive inorganic growth story helps to achieve a higher long-term return on equity.
Though the Fed has started lowering the interest rate, investment income should benefit from improved operating cash flow. Chubb expects the quarterly adjusted net investment income to have a run rate between $1.72 billion and $1.74 billion in third-quarter 2025.
Chubb has a strong capital position and sufficient cash-generation capabilities, which support wealth distribution to shareholders and growth initiatives.
Being a P&C insurer, CB is exposed to catastrophe events, which induce volatility in underwriting profitability and affect the combined ratio. Given the uncertainty surrounding the magnitude of cat loss, higher losses could drain earnings.
Also, Chubb’s leverage and times interest earned compare unfavorably with the industry.
End Notes
Chubb’s market-leading position, compelling portfolio, strong renewal retention, positive rate increases, solid capital position and better return on capital pave the way for long-term growth.
The insurer’s dividend history is impressive. It has increased dividends for 31 straight years and is set to hike them again this year by 6.5%. CB has a dividend yield of 1.43%, better than the industry average of 0.2%.
However, given its premium valuation and unfavorable leverage and times interest earned, we prefer to stay cautious on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.