Chubb Earnings: Underlying Results Hold Strong

Narrow-moat Chubb's reported fourth-quarter earnings were aided by a $1.1 billion one-time tax benefit related to a new income tax law in Bermuda. However, even excluding this impact, results largely held strong, with annualized return on equity coming in at 16%, or 24% on a core tangible basis. For the full year, ROE was 22% on a core tangible basis, excluding the tax impact. Like its peers, Chubb has been benefiting from a hard pricing environment, but we also think that relatively disciplined insurers like Chubb have more leverage to this type of market condition. We will maintain our $226 fair value estimate and see the shares as roughly fairly valued at the moment.