Opinions
David Driscoll
Chubb Limited
CB-N
HOLD
Jun 02, 2025
Stock price when the opinion was issued
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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.
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.
(Analysts’ price target is $302.57)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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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.
(Analysts’ price target is $303.43)
Combined ratios for P&C are in the 83% range, amongst the lowest of the group. (For every $1 of policy issued, they pay out only 83 cents in claims.) That 17 cent difference is free cashflow to them, which they invest in a short-medium bond portfolio. Very conservative, pricing has been good.
Because of it size, exposed to more of the catastrophic risk out there. Offsets that by about 90% by buying reinsurance for the policies they write.
Performance YTD is 8%, 10 years is 13%, 15 years is 15% (that should be the target over time). Likes insurance companies a lot more than banks right now, based on what may be coming with interest rates and loan refinancing in Canada and US.
Out of Switzerland, operating globally.