Chubb Holds Niche in Market with Rising Insurance Rates – Analyst Blog

On Sep 3 we issued an updated research report on property and
casualty insurer
The Chubb Corp.

(
CB

). The company’s second-quarter 2014 earnings of $1.70 per share
widely missed the Zacks Consensus Estimate of $1.90. Earnings also
declined 4% year over year.

Chubb’s second-quarter results were affected by catastrophe and
non-catastrophe losses related to severe weather in the United
States. An unusually high level of Homeowners’ and Commercial fire
losses added to the company’s woes.

Nonetheless, Chubb boasts a diversified product profile and has
a niche presence in the property and casualty industry.

Chubb’s Commercial Insurance segment has consistently impressed
with its earnings. The segment has been witnessing rate increases
for the past several quarters. Retention ratio stands at a stable
level. 

Chubb’s Personal Insurance is also witnessing a gradual market
improvement. Net premium written in this segment has been
increasing over several quarters, led by strong premium increases
from international business.

Chubb’s international business is also performing strongly and
is an arsenal for its future growth.

Strong capital management witnessed by regular share repurchases
and continued dividend increase over several years makes the stock
a favorite among investors. 

However, exposure to cat losses and a low interest rate
environment are some of the headwinds. 

Chubb has been witnessing a decline in earnings estimates
following a weak second quarter results. Over the last 60 days, the
Zacks Consensus Estimate for 2014 has moved down 4.2% to $6.99 as
12 of the 13 estimates were revised downward. For 2015, 9 of 13
estimates moved down, lowering the Zacks Consensus Estimate by 0.8%
to $7.74 per share. 

Stocks to Consider

Chubb carries a Zacks Rank # 3 (Hold). Better-ranked stocks
include Endurance Specialty Holdings Ltd. (
ENH

), AmTrust Financial Services, Inc. (
AFSI

) and Federated National Holding Co. (
FNHC

). All these stocks sport a Zacks Rank #1 (Strong Buy).

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CHUBB CORP (CB): Free Stock Analysis Report

FEDERATED NATL (FNHC): Free Stock Analysis
Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis
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ENDURANCE SPLTY (ENH): Free Stock Analysis
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