Chubb Limited (CB): Navigating Catastrophes and Growth in 2025

Chubb Limited (CB) has long been a bellwether in the global insurance sector, but its first-quarter 2025 results underscored both the resilience of its business model and the volatility inherent in its industry. While the California wildfires delivered a $1.64 billion pre-tax blow to its bottom line, Chubb’s underlying performance—driven by premium growth, disciplined underwriting, and robust investments—suggests the company is positioning itself to capitalize on long-term trends even amid short-term turbulence.

Q1 2025: A Mixed Start, But Underlying Strengths Shine Through

Chubb’s net income fell 37.9% year-over-year (YoY) to $1.33 billion in Q1 2025, with the California wildfires accounting for nearly $1.64 billion in catastrophe losses. These losses widened its property and casualty (P&C) combined ratio to 95.7% from 86.0% in 2024. However, management emphasized that underlying underwriting momentum remains strong, with the current accident year combined ratio excluding catastrophes improving to 82.3%—a 1.4-percentage-point improvement over Q1 2024.

Premium growth also provided a bright spot. Total net premiums rose 3.5% YoY to $12.65 billion, with constant-dollar growth (excluding currency effects) hitting 5.7%. North America’s adjusted premium growth (excluding one-time items) reached 6.4%, while Overseas General premiums grew 6.5% in constant dollars, led by Asia and Latin America. Life Insurance premiums surged 10.3% in constant dollars, driven by strong demand for annuities and protection products.

Strategic Priorities: Tech, Acquisitions, and Shareholder Returns

Chubb’s CEO, Evan Greenberg, highlighted three pillars of its growth strategy:
1. Technology Investment: Chubb is spending $1.1–1.2 billion annually on modernizing legacy systems and enhancing AI-driven analytics. This has helped it maintain the lowest expense ratio in the P&C sector.
2. Geographic Expansion: The acquisition of Liberty Mutual’s operations in Thailand and Vietnam added $275 million in annual premiums, positioning Chubb as the fourth-largest P&C insurer in Thailand.
3. Shareholder Returns: Chubb returned $751 million to shareholders in Q1 via buybacks ($385 million) and dividends ($366 million), with a dividend growth rate of 5.81%.

Analyst View: Upside Potential Amid Risks

Analysts remain cautiously optimistic. As of April 2025, the average price target for Chubb was $301.06, with the stock trading at $282.66—a 6.5% discount to expectations. Key growth projections include:
- EPS Growth: Analysts forecast 19.49% EPS growth for FY 2025 compared to the S&P 500’s 14.15% estimate.
- Premium Momentum: North America’s 6.4% adjusted premium growth and Overseas General’s 6.5% constant-dollar growth suggest continued expansion.

The Risks: Wildfires, Recession, and Trade Policy

Chubb’s challenges are not trivial. The CEO flagged three key risks:
1. Catastrophe Volatility: The California wildfires highlighted the unpredictability of weather-related losses, which could recur.
2. Economic Uncertainty: Greenberg noted a “substantial rise in recession odds,” which could dampen demand for insurance and slow premium growth.
3. Trade Policy: U.S. trade policies, particularly around tariffs and geopolitical tensions, create uncertainty for global operations.

Why Chubb’s Long-Term Outlook Remains Strong

Despite these risks, Chubb’s fundamentals are solid. Its book value hit an all-time high of $164.01 per share in Q1, fueled by $825 million in after-tax realized/unrealized gains. The company’s P&C underwriting income excluding catastrophes rose 12.2% YoY, and its core operating ROTE (return on tangible equity) of 13.0% remains healthy for the sector.

The insurance industry’s broader trends also favor Chubb. Non-life insurers are projected to see ROE rise to 10.7% by 2025, while embedded insurance (e.g., bundling coverage with real estate purchases) could add $722 billion in premiums by 2030—a market Chubb is actively targeting through acquisitions.

Conclusion: A Stock for the Long Game

Chubb Limited (CB) is a story of resilience and strategic discipline. While Q1’s catastrophic losses clouded near-term results, its premium growth, underwriting discipline, and tech investments position it well for sustained EPS expansion. Analysts’ price targets suggest a potential 6.5% upside from current levels, and its $301 average target reflects confidence in its ability to navigate macroeconomic headwinds.

However, investors must weigh this optimism against the risks. Chubb’s reliance on global growth and exposure to weather events means it is not immune to volatility. Still, with a dividend yield of 1.3% and a track record of shareholder returns, Chubb offers a compelling mix of stability and growth potential for investors with a long-term horizon.

In the words of CEO Greenberg: “Volatility is inherent to insurance, but so is our ability to adapt.” For now, the data supports that bet.