CB

Chubb is a high-quality property & casualty underwriter executing well across the cycle. Revenue has grown every year from $40.9B (FY2021) to $59.4B (FY2025), and net income has recovered from the FY2022 trough of $5.25B to $10.3B (+11.2% YoY), with diluted EPS up 13.1% to $25.68 — faster than net income because the share count fell 2.6%. Returns are solid for an insurer: 14.0% ROE, a 17.4% net margin, and stockholders' equity up 15.2% to $73.8B with retained earnings up 13.6%. The balance sheet is sound: liabilities/equity of 2.61x is normal for a carrier holding loss reserves and float, debt is modest against $73.8B of equity, and capital return is aggressive — buybacks more than doubled to $3.69B and dividends rose to $1.50B, a combined ~4% return-of-capital yield on the $126B market cap.

Valuation is the crux of the call. At $323.40 the stock trades at 12.6x FY2025 EPS, 2.1x sales, and roughly 1.7x book ($126B cap / $73.8B equity) — undemanding for a franchise earning a mid-teens ROE and compounding book value at 15%. A best-in-class insurer that grows book value and buys back stock at these returns rarely deserves a sub-13x multiple for long; modest re-rating toward a low-teens-to-mid-teens multiple, layered on continued EPS growth, drives the upside, hence a ~$370 target (~14.4x EPS).