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Chubb Limited CB has shown consistent operational performance over the past few quarters thanks to its business activities, strong renewal retentions and better underwriting returns.
Growth projections
Zacks’ consensus estimate for earnings per share 2021 and 2022 is set at $ 11.41 and $ 12.60, indicating year-over-year increases of 56% and 10.3%, respectively.
Revision estimate
Zacks’ consensus estimate for 2021 and 2022 has moved 3.2% and 1.4% north, respectively in the past 30 days. This should inspire investor confidence in the stock.
History of surprise earnings
Chubb has a history of decent profit surprise. It has beaten estimates in three of the past four quarters and missed one quarter, averaging 5.35%.
Zacks Ranking and Price Performance
Chubb currently wears a Zacks Rank # 3 (Hold). In the past year, the stock is up 38.9% compared to the industry’s 42.1% increase.
Style note
The company has a favorable VGM score of B. The VGM score helps identify stocks with the most compelling value, the best growth, and the most promising momentum.
Business tail winds
As the world’s largest publicly traded property and casualty insurer, Chubb continues to experience strong premium income growth globally. We expect momentum to continue with its business operations, double-digit P&C rate increases and increasing technical margins, new business and high renewal retention.
Chubb expects to benefit from a strong commercial property and casualty pricing environment and to benefit from favorable underwriting terms over the long term.
Adjusted pre-tax investment income will continue to benefit from increased corporate bond calls. The quarterly execution rate is expected to be close to $ 900 million.
Although the property and casualty insurer had an active quarter for natural catastrophes due to winter storm claims, it remains focused on achieving a good combined ratio through improved risk-adjusted technical returns.
This insurer is highly rated by rating agencies for its financial strength. Its capital position was $ 74 billion at the end of the first quarter. In the first quarter of 2021, operating cash flow remained strong at $ 2.1 billion. In its efforts to manage risk on both sides of its balance sheet, it maintains underwriting discipline, manages accumulations of exposure and invests assets prudently.
In May 2021, its board of directors increased its quarterly cash dividend by 2.6%, reflecting the 28th consecutive year of dividend increases at Chubb. Its current dividend yield of 1.8% is above the industry average of 0.3%.
However, expenses have increased in recent years due to rising claims costs, administrative costs and policy benefits. A persistent increase in spending could weigh on its margins.
Actions to consider
Some higher ranked insurance actions in the same space are HCI Group, Inc. HCI, Cincinnati Financial Corporationn CINF and Alleghany Company Y. While HCI Group has a Zacks Rank # 1 (strong buy), Cincinnati Financial and Alleghany have a Zacks Rank # 2 (buy). You can see the full list of today’s Zacks # 1 Rank stocks here.
HCI Group’s net income has exceeded estimates in three of the past four quarters and missed the other, averaging 42.91%.
Cincinnati Financial has beaten estimates in three of the past four quarters and missed the other, with average earnings surprise of 17.63%.
Alleghany’s profits have beaten estimates in each of the past four quarters, averaging 128.63%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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