$Chubb(CB.US) is a global leading insurance group. Headquartered in Zurich, Switzerland, its business covers 54 countries and regions, making it one of the largest publicly traded property and casualty insurance companies by market capitalization. It is the largest commercial insurer in the U.S. and a component of the S&P 500 index.

Performance

After the U.S. market closed on July 22, the company released its Q2 performance.

In Q2 2025, net income reached $2.97 billion, up 33.1% YoY, core operating income hit a record $2.48 billion, up 12.9% YoY. EPS was $6.14, up 14.1% YoY, exceeding analysts' expectations of $5.84. The combined ratio for the quarter was 85.6%, slightly higher than the expected 85.2% but better than 86.8% YoY, reflecting stronger underwriting profitability.

Net premiums reached $14.196 billion, slightly above the consensus estimate of $14.16 billion.

By policy source: a. Property and casualty net premiums were $12.39 billion, up 5.2% (5.8% in constant dollars), while analysts had expected $12.58 billion. Global property and casualty net premiums (excluding agriculture) were $11.66 billion, up 5.8% (6.4% in constant dollars). b. Life insurance net premiums were $1.8 billion, up 14.1% (17.3% in constant dollars).

By business segment: North America property and casualty net premiums grew 4.5%, with commercial lines up 4.1% (combined ratio 83.5%, above the expected 80.8%), personal lines up 9.1%, and agriculture down 3.3% (impacted by commodity price declines). Overseas composite insurance grew 8.5% YoY, with a combined ratio of 90.3%, higher than 88.2% YoY and the expected 86%.

Buffett's Favorite Stock

Buffett began building a position in Chubb in Q3 2023, initially acquiring 8.14 million shares. By Q1 2025, Chubb had become Berkshire Hathaway's ninth-largest holding, with 27.03 million shares worth approximately $8.164 billion.

I. Global Acquisitions to Expand Business

In 2022, Chubb completed the acquisition of Cigna's life and non-life insurance businesses in multiple Asian markets. In 2023, it increased its controlling stake in China's Huatai Financial Group to nearly 70%, later raising it to 85.5% in 2024. In 2024, it acquired pet insurance provider Healthy Paws to expand in niche markets with strong growth potential. The same year, the property and casualty insurer acquired Catalyst Aviation Insurance, a Melbourne-based managing general agent specializing in general aviation insurance for the Australian market. In March 2025, Chubb acquired Liberty Mutual's non-life insurance operations in Taiwan and Vietnam.

These acquisitions aim to expand the company's U.S. and overseas operations, diversify its portfolio, and gradually increase income to create long-term shareholder value.

II. Stable Premium Income and Shareholder Returns

The company's premium income is stable, with 2024 net premiums at $51.47 billion, up 8.7% YoY. Q2 net premiums were $14.196 billion, up 6.3% YoY and 12.2% QoQ. Property and casualty insurance dominates Chubb's product mix, contributing ~87.3% of Q2 premiums, while life insurance accounted for only 12.7%, making it less affected by pandemics and economic fluctuations.

Chubb delivers steady shareholder returns, with ROE of 8.2% in Q1 and 17.6% in Q2, annualizing to 12.9% for H1, reflecting recovery from the negative impact of California wildfires.

On buybacks: From 2019 to 2024, the company repurchased 75.9 million shares for $13.01 billion (~11% of current market cap). In Q1 2025, Chubb spent $385 million to repurchase 1.3 million shares. In Q2 2025, total capital returned to shareholders was $1.06 billion, including $676 million in share repurchases (average price $289.12/share) and $388 million in dividends.

III. Strong Risk Management

Chubb has its own fire brigade and engineering teams to help clients prevent and mitigate losses, reducing risk at the source while controlling costs. Even amid rising catastrophe losses and inflation, the company's underwriting performance remains stable and resilient, with a 10-year average combined ratio of 89.8%, far better than peers' 97.8%.

In 2024 and Q1/Q2 2025, Chubb's combined ratios were 85.6%, 99.8%, and 85.6%, respectively. The unusually high Q1 ratio was mainly due to California wildfires, but remained below 100% (i.e., the company still profited), while most U.S. insurers reported underwriting losses. For example, Travelers Companies (TRV) recorded an underwriting loss of $305 million, or a combined ratio of 102.5%.

IV. Strong Investment Income

Q2 adjusted investment income reached $1.69 billion, up 7.9% YoY. Per the 2024 annual report, 89% of total investment assets are fixed income, with the remaining 11% in alternative investments including private equity and credit. As assets grow, the company plans to increase its allocation to less liquid private investments from 11% to 15%. It locks in high coupons with long-term bonds while using short-term bonds for flexibility amid Fed rate decisions. 83% of fixed-income holdings are BBB+ or higher, with low default risk.

78% of fixed-income investments mature within 10 years, compared to peers like AIA (69% fixed income, 72% >10-year, 99% BBB+), and Manulife (78.5% fixed income, 60% >10-year, 96% BBB+). Chubb's liquidity is stronger, making it more agile in the coming rate-cut cycle.

Wall Street Ratings

Per TipRanks, as of pre-Q2 earnings, 6 'Buy', 7 'Hold', and 2 'Sell' ratings, averaging a 'Moderate Buy' with a $313 target. Consensus range is $285-$335, including:

Thanks to better-than-expected Q2 results, Chubb's shares rose 1.17% after hours.

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