Christine Poole Chubb Limited CB-N PAST TOP PICK Jul 15, 2024

A number of P&C insurers in the US pulled back post-hurricane. Great run over last 18 months. Technically, not broken. Sector probably does pretty well going forward. Cream of the crop in the sector.

Clear channel of higher highs and higher lows from mid-2022. Upward trend in the 200-day MA is starting to accelerate. Sees 7-8% earnings growth. Not as exciting as NVDA, but a good financial name  to own. IFC is the comparable in Canada.

Likes this segment in P&C. Represents value. Will do well in falling interest rate environment, though some interest rate yields moving higher, which has affected this type of name. 

Based in US, but being a more international P&C insurer gives it lots of opportunities for growth. Excellent combined ratio. 

Looks good right now, taking a pause. Chart looks great, now in a consolidation phase (very normal). Very tight trading range around $285-290. Touching $280, which is short-term support, a good sign for taking a position. Your exit strategy should kick in if drops below $275. Dividend is a bonus, so you can afford to hold before it goes up again.

Once it hits $300-310, you know it's going higher and can build on your position.

62% of premiums are in the US and the rest international, so they have global exposure. They are growing life insurance in Asia. They have a good track record in assessing risk, then generate investment income through a large bond portfolio and private equity investments. Berkshire announced a stake in CB earlier this year. Trades at a reasonable 12x forward PE.

The 4th-largest P&C insurer in the world. They do well underwriting and in investing as well. Their combined ratio is 86%, impressive. They also make money on their bond holdings. Berkshire Hathaway owns a large position. Also, CB is low-volatility and defensive.

CB is a large property and casualty insurance company, which has shown disciplined underwriting and risk management over the years, leading to its large scale and strong profitability. It pays a yield of 1.4%, it has grown its sales and earnings at a 10.6% and 22.4% five-year CAGR, respectively. Forward growth is expected to be strong, and it has increased by 18% over the past year. It trades at a 12X forward earnings, and overall we would be quite comfortable with CB as a defensive play.
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He'd buy today. Off highs. Benefits from positive bond market. Strong risk management. Fourth largest in world, largest P&C. Great combined ratio.

Catastrophes tend to give pricing power to P&C insurers. Very fine combined ratio (or, in other words, its margins). Makes about a 15% margin on its underwriting. Invests ~$127B of premiums to great advantage in the bond market. Steady. Yield is 1.3%.

Very defensive. Insurance pricing has not slowed because of all the catastrophes happening. Their combined ratio is 84%. He likes that they invest in bonds, not stocks, so they will survive a correction and grow their dividend. Most bonds are 1-5 years, so will benefit from rate cuts.