Market Overview

Argus Expects Solid Returns From Insurer Chubb, But Says Shares Are Fairly Valued

Argus Expects Solid Returns From Insurer Chubb, But Says Shares Are Fairly Valued

Specialty insurer and reinsurer Chubb Ltd (NYSE: CB), formed from ACE Ltd.'s acquisition of Chubb Corp. in January 2016, is poised to generate solid returns over time, thanks to a "strong management team, healthy balance sheet and strong brand," according to Argus. 

The Analyst

Analyst John Staszak initiated coverage of Chubb with a Hold rating.

The Thesis

Notwithstanding rising costs, Chubb is likely to benefit in 2018 from a more favorable underwriting environment, improving economic conditions and a lower U.S. corporate tax rate, Staszak said in a Friday note.

Last year's high catastrophe losses are expected to normalize in the coming quarters, leading to a stronger combined ratio for Chubb, the analyst said. 

"Management noted that retention rates remain strong, and that premiums continue to rise modestly both in the U.S. and in international markets." 

Argus expects the combined entity to benefit from substantial cost and revenue synergies and strong international diversification.

The sell-side firm estimates earnings per share of $11 for 2018 and $11.70 for 2019.

"Our long-term earnings growth rate estimate is 8 percent," Staszak said.

Chubb shares are trading at 12.3 times the company's 2018 earnings per share estimate and are fairly valued, the analyst said. The shares trade at a discount to the average 13 times multiple seen over the past three years, the firm added.

The Price Action

Chubb shares are down over 1 percent over the past year.

Related Links:

A First-Time Homeowners Mini-Guide To Insurance

UBS Gets Bullish On Insurance Stocks

Latest Ratings for CB

Feb 2019Credit SuisseDowngradesNeutralUnderperform
Feb 2019Raymond JamesMaintainsOutperformOutperform
Jan 2019Compass PointInitiates Coverage OnBuy

View More Analyst Ratings for CB
View the Latest Analyst Ratings

Posted-In: Argus insurance John StaszakAnalyst Color Initiation Analyst Ratings Best of Benzinga


Related Articles (CB)

View Comments and Join the Discussion!

Latest Ratings

DRIBank of AmericaReiterates130.0
PVACNorthland SecuritiesUpgrades0.0
NKEWells FargoMaintains80.0
DRIWells FargoMaintains120.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Trader Essentials
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Tigress Financial Takes Bullish Stance On Intel, Names Multiple Catalysts For Chipmaker

HC Wainwright: Why The Upside Potential For Palatin Technologies Is Nearly Fivefold