Chubb, an insurance favorite of Warren Buffett, is the IBD Stock Of The Day for Thursday. Chubb shares broke out above a buy point as insurance stocks rallied on Travelers earnings.
Early Thursday, Dow Jones component Travelers reported a 169% increase in earnings to $5.24 per share, easily beating FactSet estimates of $3.66 per share. Total revenue jumped 12% to $11.9 billion, outpacing expectations for $11.69 billion.
Net written premiums increased 8% to a record $11.32 billion, but were shy of views for $11.38 billion. Travelers noted that net written premiums for business insurance rose 9%, while personal insurance and bond and specialty insurance premiums both rose 7% for the quarter.
Travelers' catastrophe losses increased 10.5% to $939 million, driven by Hurricane Helene and "severe wind and hail storms in multiple states."
However, analysts anticipated an increase in storm losses. BofA on Oct. 10 noted that Q3 was an active quarter for global catastrophe events, but said it expects catastrophe losses to be "manageable" for property and casualty insurers, The Fly reported. The firm sees Hurricane Milton generating some losses in Q4 on the back of Hurricane Helene, although uncertainty remains about the extent of the damages. In its insurance preview, BofA lifted its price target on Chubb stock to 282 from 275 but kept an underperform rating on the shares.
For Chubb's Q3 results on Oct. 30, FactSet expects earnings to tick up to $4.98 per share from $4.95 the year prior. Analysts forecast revenue jumps 7.6% to $14.16 billion. Chubb's earning growth slowed over the last two quarters, to a 9% gain in Q2 from a 108% gain in Q4. The insurer averaged 16% revenue growth during that period.
Warren Buffett, Chummy With Chubb
Meanwhile, investment oracle Warren Buffett has added to his sizable stake in Chubb stock after taking out a position earlier this year. Buffett's Berkshire Hathaway owns a 6.34% stake in Chubb, worth nearly $6.9 billion with just over 27 million shares. Buffett's firm increased its CB stock holdings to 2.56% of its total portfolio, up from 2.03% according to the latest regulatory filings tracked by whalewisdom.com. Buffett first opened a $6.7 billion position in Chubb in mid-May, which prompted a breakout.
Apple, American Express and Bank of America are still Buffett's largest holdings, though Berkshire has slashed its Apple and BofA holdings in recent months. AAPL stock represents 31.2% of Berkshire Hathaway's total portfolio, AXP represents 13% and BAC accounts for about 11.5%.
Chubb Stock
Chubb stock swung 2.4% higher Thursday to clear a 294.18 buy point for a 10-week flat base.
The buy zone, which stretches 5% beyond the buy point, extends to 308.88.
On Wednesday, CB stock climbed 2%, rallying off its 21-day exponential moving average on Oct. 11
CB stock traded tightly for the five weeks leading into the start of October. Shares tumbled below its 50-day line on Oct. 7 as Hurricane Milton fears hit insurers briefly. But Chubb rebounded above that key level two days later.
Still, Chubb stock has rallied more than 32% this year and is trading at record highs.
TRV stock leapt 7.7% Thursday to lead the Dow Jones Industrial Average and gap out above a 243.48 buy point for a high handle or five-weeks-tight pattern next to a 21-week consolidation.
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