Chubb: Undervalued Insurance Giant with Strong Ratings and Large Float

Chubb is a global insurance giant with a market capitalization of over $100Bln and high ratings for capital strength. With over $120Bln in float, it is one of the largest insurance companies in the world. Despite its strong position, Chubb is undervalued and selling at a discount compared to its peers. It is considered a blue-chip company, behind only Berkshire Hathaway.

Chubb (NYSE:CB), a global insurance giant, has been making headlines due to its strong financial performance and undervalued stock price. With a market capitalization north of $100 billion and high ratings for capital strength, Chubb is one of the largest insurance companies in the world, boasting over $120 billion in float. Despite its robust position, Chubb is currently selling at a discount compared to its peers, making it an attractive opportunity for long-term investors.

The insurance industry, known for its resilience and stability, has been facing a soft market for the past few quarters, with year-on-year premium growth turning negative. However, Chubb has shown remarkable resilience, maintaining a strong first half of 2025 with net income essentially flat and return metrics holding up well. The company's book value per share has increased to $174, up from $160 at the end of 2024.

Valuation metrics indicate that Chubb is currently trading at a discount. The stock price has declined by approximately 3% year-to-date, falling from $300 to $267, despite the company's strong fundamentals. Chubb's investment portfolio, valued at $158 billion, when divided by 399 million shares, gives a value of $396 per share, or about 1.5 times the current share price. This indicates that the company's investment portfolio is perpetually funded by float and underwriting profits, providing shareholders with a premium.

Berkshire Hathaway's recent acquisition of 27 million shares of Chubb, at an average price of $246 per share in Q1 2024 and $256 in Q2, has also been a significant endorsement of Chubb's intrinsic value. Berkshire Hathaway's purchases were made under SEC-authorized confidentiality, and the company has continued to buy shares despite the softening premium environment. This suggests that Berkshire Hathaway believes Chubb's intrinsic value is higher than its current market price.

However, there are risks to consider. Chubb's geographic and business lines diversification is commendable, but risks can still arise, particularly in the area of cyber threats. Additionally, the company's CEO succession plan is a risk that needs to be managed. Evan Greenberg, Chubb's current CEO, is 70 years old and has been instrumental in the company's M&A strategy but will eventually want to retire.

In conclusion, Chubb's strong underwriting discipline, robust capital position, and undervalued stock price make it an attractive investment opportunity for long-term investors. The company's growth runway seems almost unlimited, as GDP continues to march on, and new clients will arise, especially in developing economies. Despite the current soft market, Chubb's strong fundamentals and Berkshire Hathaway's endorsement make it a compelling investment.

References:
[1] https://seekingalpha.com/article/4806887-chubb-overachiever-selling-at-discount