Chubb Limited: A Top Insurance Stock for 2025

In the ever-evolving landscape of the insurance industry, Chubb Limited (NYSE:CB) has emerged as a standout performer in 2025. Despite facing challenges such as losses from wildfires earlier this year, Chubb has managed to maintain its position as one of the top insurance stocks to buy according to hedge funds. This article delves into Chubb's performance, the factors contributing to its standing, and the potential long-term impacts of tariff policies on its profitability and market position.

Chubb's performance in 2025 has been nothing short of impressive. The insurance industry, as a whole, has shown resilience, with leading ETFs like the SPDR S&P Insurance ETF and iShares US Insurance ETF surging nearly 6% and 8.60% year-to-date, respectively. In contrast, the S&P 500 index, which tracks large-cap stocks, has plunged over 8%. This indicates that insurance stocks, including Chubb, have been relatively resilient in the face of broader market volatility.

Chubb's financial metrics for the year ended December 31, 2024, are a testament to its strong performance. The company reported a record net income of $9.27 billion, up 2.7%, and core operating income of $9.20 billion. Excluding the prior year deferred tax benefit, net income and core operating income were up 16.8% and 11.5%, respectively. This financial strength is reflected in its return on equity (ROE) of 15.0% and core operating return on tangible equity (ROTE) of 21.6%.

Despite these positive indicators, hedge funds have decreased their holdings in Chubb by 195.9K shares in the last quarter. This reduction is notable, as it includes significant sell-offs by prominent hedge fund managers such as John A. Gunn of Dodge & Cox, Ray Dalio of Bridgewater Associates, LP, and John Armitage of Egerton Capital (UK) LLP. For instance, Ray Dalio sold out his entire holding in Chubb, which was valued at $6,588,373, representing 0.00% of his portfolio. Similarly, John Armitage sold out his holding valued at $41,103,493, which also represented 0.00% of his portfolio.

The decrease in hedge fund holdings could be attributed to several factors, including market uncertainty due to tariff policies and geopolitical conflicts. The Trump Administration's heavy tariffs, aimed at driving companies to invest in the domestic market, have created short-term disruption and increased market volatility. This uncertainty could raise business risks for insurers, as noted by Elizabeth Wooliston, the Underwriting Director at Lloyd’s Market Association. She highlighted that the end price of goods is likely to rise, which could impact insurers' 'value at risk' and lead to underinsurance for customers.

However, analysts at Keefe, Bruyette & Woods believe that insurers, including Chubb, should be able to overcome these challenges. They expect that insurers will have enough time to request rate increases, which state regulators are likely to approve. This optimism is supported by Chubb's strong financial performance and its ability to manage risks effectively. For example, Chubb's pre-tax net investment income was $5.93 billion, up 20.1%, and adjusted net investment income was $6.38 billion, up 19.3%. Both were records, indicating the company's robust investment strategy.

The potential long-term impacts of the tariff policies on Chubb Limited's profitability and market position are significant. According to Elizabeth Wooliston, the increased uncertainty and market volatility caused by tariffs could raise business risks for insurers. She noted, "There is no doubt we are living in unpredictable times, and even looking at a 12-month insurance contract could feel as if we are trying to predict a long way ahead." This uncertainty could lead to higher claim costs and increased underwriting risks, particularly in segments such as personal insurance, auto damage, commercial property, surety, and marine lines, which are expected to be hit harder by tariffs.

Analysts at Keefe, Bruyette & Woods believe that insurers like Chubb should be able to overcome these challenges by requesting rate increases, which state regulators are likely to approve. However, the long-term impact on profitability could still be significant if market uncertainty increases, as it could hurt the overall profitability of insurers. Chubb's reliance on investing its capital in various financial instruments could also be affected by market volatility, further impacting its profitability.

To adapt to these challenges, Chubb is likely to focus on managing its 'value at risk' and ensuring that brokers pay close attention to avoid underinsurance for their customers. The company may also need to request rate increases to offset the higher claim costs and increased underwriting risks. Additionally, Chubb could explore new opportunities in the market, such as expanding its product offerings or entering new geographic regions, to mitigate the impact of tariffs on its profitability and market position.

In conclusion, Chubb Limited's performance in 2025 has been strong, with record financial metrics and resilience in the face of market volatility. However, hedge funds have decreased their holdings, likely due to market uncertainty and the potential impact of tariffs on insurers. Despite these challenges, Chubb's financial strength and risk management capabilities position it well to navigate the current economic landscape. As an income-seeking investor, Chubb Limited remains a top insurance stock to consider for your portfolio.