UPDATE: Deutsche Bank Downgrades Chubb on Emerging Data

In a report published Monday, Deutsche Bank analyst Joshua Shanker downgraded Chubb CB from Buy to Hold, and lowered the price target from $94.00 to $83.00.

In the report, Deutsche Bank noted, “Our downgrade comes in part due to emerging data that price increases have reached their apex, but also due to the fact that the emerging higher beta risk trade has caused P&C insurers to become an increasing source of funds to buy lending financials and life insurers. We expect BVPS multiple contraction and growing book value to neutralize each other, causing the stock to trade sideways. Some 2Q12 earnings reports indicate modest rate deceleration as insurance buyers wince at being asked to pay for a third-year price increase. Further, rate declines in property-cat reinsurance at 6/1 may be passed onto the customer next year. While Chubb continues to report commercial rate increases in the 8%+ range, it comes at the cost of an 83% persistency rate and a 0.7-to-1 new-to-lost business ratio. The rate increases seem to heavily rely on Chubb culling its book.”

Chubb closed on Friday at $87.07.