Chubb Earnings: Tailwinds Persist

Like its peers, Chubb is benefiting from tailwinds on both sides of the business, as favorable underwriting conditions and higher interest rates are buoying profitability across the P&C insurance space. We are pleased to see that the narrow-moat company is fully exploiting this situation, with an adjusted annualized tangible return on equity of 22% in the quarter. We will maintain our $245 fair value estimate and see shares as modestly overvalued. While we appreciate the strength of the near-term outlook, we view insurance as an inherently mean-reverting industry and think the current market valuation implies that favorable market conditions will persist for a longer period than we think is likely.