Chubb Corporation (NYSE:CB)

Chubb Corporation is an American insurance company that provides products to businesses, institutions and organizations, as well as high net worth individuals. Chubb sells almost every type of insurance, even for unusual risks such as kidnapping/ransom & extortion. Chubb's commercial line sells property and casualty insurance to businesses and organizations (for multiple perils, including flood, fire, and wind). It also offers coverage for auto and marine accidents, as well as workers' compensation insurance.

Chubb is present in 28 countries in the world with approximately 78% of the business occurring in the United States. CB is the 11th largest U.S. provider of real estate and property and casualty insurance. Chubb has a real estate operation through a subsidiary called Bellemead Development Corporation, which is involved in commercial development in New Jersey and residential development in central Florida. Chubb Real Estate operations are currently in run-off, meaning the company is not currently undertaking any new business in this area. Chubb Financial Solutions sells financial products, primarily structured credit derivatives. Chubb Financial Solutions has also been in run-off since April 2003. 

Chubb outsources the distribution of its insurance products to independent agencies and brokers. In the United States, Chubb sells its products through approximately 5,000 independent insurance agencies and regularly accepts business from approximately 500 brokers.

CB's price/earnings ratio is particularly attractive, at only 8.90. The yield is also interesting at 2.80%. The average annual dividend growth is correct, at 7.52%, but lower than that of our portfolioThe company has managed to increase the income it pays to its shareholders for 46 consecutive years, which proves the solidity of its business model. With a distribution ratio of only 24.84%, the company still has a lot of room to continue increasing its dividend in the future, even in the event of a difficult passage.

CB is not very sensitive to market variations, with a beta of only 0.52. Volatility is also low, with 9.69%. Despite this decorrelation to the S&P 500 and this relatively low price fluctuation, CB shows a significantly better performance than the market over the long term. Let us even note a remarkable result during the famous "lost decade" that we are leaving behind us.

CB displays a $risk zero, meaning that a variation in the dollar is not in principle accompanied by a variation in the value of the security in CHF. The graph below clearly shows how the variation in USD of CB oscillates according to the USD/CHF, which allows for little impact on the value in CHF.

With a good yield, a conservative payout ratio, a decent track record of dividend increases, low volatility and low currency risk, CB is an interesting stock in more ways than one. The only downside is the average annual dividend growth. CB is not an immediate buy opportunity, but it is certainly a stock to watch closely.