RBC Capital provided a review of Chubb Limited (NYSE:CB), noting that it is well-positioned for the next phase of pricing. According to the analysts, the company is a best-in-class underwriter who prices for risk and return, not growth and consistently reserves conservatively – critical attributes when pricing is adequate and more critical should pricing begin to wane.
Management commented that the pricing environment remains strong as the market transitions to reinsurance led hard-market from an insurer-led one. The company noted a 51.3% cumulative rate increase since the beginning of 2019 and showed every intention of maintaining rate increases at or above loss cost inflation going forward.
The capital return has been good and the analysts see an ROE in the low to mid-teens with recent accretive acquisitions and rising investment income key drivers in addition to already strong underwriting margins. The analysts raised their price target to $250 from $230 while maintaining their Outperform rating.