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On Wednesday, Chubb Corporation (NYSE:CB), a $116 billion market cap insurance giant, received a reaffirmed Market Outperform rating and a $325.00 price target from JMP, following the release of its first-quarter earnings. The insurance giant reported an operating earnings per share (EPS) of $3.68, surpassing JMP’s estimate of $3.32 and the consensus of $3.23. According to InvestingPro analysis, Chubb appears undervalued at its current price of $290.42, trading at an attractive P/E ratio of 12.8x. The outperformance was attributed to a stronger underlying property and casualty (P&C) combined ratio of 82%, compared to the 84% estimated, and lower-than-expected catastrophe losses, which totaled $1,641 million against an estimated $1,780 million. Notably, $1.3 billion of these losses were due to the California Wildfires.
Chubb’s favorable prior-period reserve development also exceeded JMP’s expectations, coming in at $255 million versus the $165 million estimated. Net investment income (NII) was slightly lower at $1,670 million, against the $1,698 million projected. The company’s P&C net written premium (NWP) growth matched forecasts, with a 5% increase at constant foreign exchange rates, close to the 5.5% JMP anticipated.
The insurer’s book value per share as of March 31 stood at $164, which not only beat JMP’s estimate of $162 but also marked a 3% rise from December 31. Chubb’s share repurchase for the quarter was $385 million, falling short of the expected $500 million.
Chubb’s CEO, Evan Greenberg, shared his positive outlook on the company’s future, particularly highlighting the strength in the commercial P&C underwriting market. He noted growth in large account admitted and excess and surplus (E&S) property sectors, while also pointing out the firm conditions in the casualty market in response to the loss-cost environment. Greenberg described the underwriting conditions for middle market and small commercial segments as favorable across property and casualty lines.
However, Greenberg also expressed concerns regarding the broader economic climate, citing uncertainty and confusion over the U.S. government’s trade policies. He emphasized that these issues are affecting business and consumer confidence, as well as the country’s international reputation. He warned that the likelihood of a recession has significantly increased and that higher inflation seems inevitable, though the extent remains uncertain. Despite these challenges, Chubb maintains a defensive beta of 0.48, suggesting lower volatility compared to the broader market. For deeper insights into Chubb’s valuation and future prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s competitive position and growth drivers.
In other recent news, Chubb Limited has announced its intention to acquire Liberty Mutual’s property and casualty insurance operations in Thailand and Vietnam. These units generated approximately $275 million in net premiums written in 2024, and the transaction is expected to close by late 2025 to early 2026, pending regulatory approvals. Additionally, Chubb has completed a share capital reduction following the cancellation of over 7.5 million treasury shares, reflecting the company’s ongoing capital management strategy.
Analysts at Keefe, Bruyette & Woods have maintained an Outperform rating for Chubb, with a price target of $329, citing strong financial reserves and projected reserve releases. Evercore ISI also continues to hold a positive outlook on Chubb, reiterating its Outperform rating with a $313 price target, noting the robustness of the company’s reserves. In another development, HSBC upgraded Chubb’s stock rating from Hold to Buy, increasing the price target to $323, highlighting Chubb’s effective management of insurance cycles and strategic growth in reinsurance.
These recent developments underscore Chubb’s strategic maneuvers in the insurance market, including potential mergers and acquisitions, and reflect analyst confidence in the company’s strong financial performance and market positioning.
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