Raymond James upgraded its valuation outlook for Chubb Corporation (NYSE:CB), boosting its price target to $380.00 from $340.00 and keeping a Strong Buy rating on the insurer's shares. The new target equates to roughly a 15% upside from Chubb's most recent price of $330.97, with the stock trading close to a 52-week high of $335.34 and delivering a 24.13% return over the past 12 months.
The analyst house pointed to net investment income (NII) as a material earnings driver for Chubb over the medium term, noting that reinvestment rates remain above the book yields on the company's portfolio. That dynamic underpins Raymond James' optimism and has led it to lift operating earnings per share forecasts for 2026 and 2027 to $26.50 and $28.50, respectively.
According to Raymond James, the revised EPS projections imply core operating return on equity (ROE) consistent with Chubb management's stated objective of achieving 14% or higher through 2027. The firm also cited management's plans to increase exposure to private and alternative investments. Raymond James expects annual operating income from private investments to expand from about $0.9 billion in fiscal 2025 to approximately $2 billion over the medium term.
Market data referenced by the analyst shows Chubb with a market capitalization of $129.44 billion and an overall financial health score of "GREAT" on InvestingPro. Raymond James' view is that the planned investment allocation shift will support earnings and be accretive to ROE as private investment income scales.
Raymond James' upgrade is set against a backdrop of upward revisions to earnings estimates by other analysts: InvestingPro data cited 10 analysts who recently raised their earnings expectations for the coming period. The firm's stance follows Chubb's reported fourth-quarter results, which exceeded consensus expectations.
In the fourth quarter, Chubb reported core operating income per share of $7.52 versus a consensus estimate of $6.72. The company reported a record low combined ratio of 81.2%, which Raymond James and others attributed to lower catastrophe losses and strong reserve development from prior periods. Net income per share rose 28% to $8.10, while property and casualty net premiums written increased 7.7% to $11.31 billion.
Market responses to the quarterly results included moves by other brokerages: Keefe, Bruyette & Woods raised its price target on Chubb to $373 from $355 and maintained an Outperform rating, citing expectations for lower core and catastrophe loss ratios. Citizens reiterated a Market Outperform rating with a $350 price target, pointing to Chubb's global footprint and long-term growth potential.
Raymond James' higher target and raised EPS forecasts reflect a view that investment income trends and a shift toward private assets will be substantive contributors to Chubb's medium-term financial performance. The firm explicitly links the expected increase in private investment operating income to improved earnings accretion and ROE alignment with management targets.
Key points
- Raymond James raised its Chubb price target to $380 from $340 and kept a Strong Buy rating; this implies roughly 15% upside from the current stock price of $330.97.
- The analyst increased 2026 and 2027 operating EPS estimates to $26.50 and $28.50, reflecting anticipated net investment income tailwinds and management's plan to expand private investment allocations.
- Chubb's fourth-quarter results beat estimates: core operating EPS of $7.52 versus $6.72 consensus, a record low combined ratio of 81.2%, net income per share up 28% to $8.10, and P&C net premiums written of $11.31 billion, up 7.7%.
Risks and uncertainties
- Execution risk around the shift to private and alternative investments - the benefits to operating income depend on successful allocation and performance of these assets. This affects the financials and investment management sectors.
- Insurance underwriting and catastrophe exposure remain variables - combined ratio improvements may reverse if catastrophe losses increase, impacting property and casualty insurance metrics.
- Analyst expectations and market valuations could change - revisions by other analysts or market shifts could alter price targets and investor sentiment across the insurance and broader financial sectors.