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Chubb Corp (CB) Valuation

View the full CB chart at Wikinvest

Company Profile (obtained from Google Finance): The Chubb Corporation (Chubb) is a holding company for a family of property and casualty insurance companies known as the Chubb Group of Insurance Companies (the P&C Group). The P&C Group is divided into three business units: Chubb Commercial Insurance, Chubb Specialty Insurance and Chubb Personal Insurance. Chubb Commercial Insurance offers a range of commercial insurance products, including coverage for multiple peril, casualty, workers’ compensation, and property and marine. Chubb Specialty Insurance offers a variety of specialized professional liability products for privately and publicly owned companies, financial institutions, professional firms and healthcare organizations. Chubb Specialty Insurance also includes the Company’s surety business. Chubb Personal Insurance offers products for individuals with fine homes and possessions who require more coverage choices and higher limits than standard insurance policies.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary:

  • Last updated 10/16/09
  • MG Value = $167
  • MG Opinion = Undervalued
  • Value based on 3% Growth = $79
  • Value based on 0% Growth = $46
  • Market-implied growth rate = 0.49%
  • PEmg = 9.48
  • Price to Book Ratio = 1.24

Key Data:

Balance Sheet – 6/30/2009

    • Total Debt    $3,975,000,000
    • Total Assets    $49,703,000,000
    • Intangible Assets    $0
    • Goodwill    $467,000,000
    • Total Liabilities    $35,199,000,000
    • Outstanding Shares    349,900,000

      Earnings Per Share – Diluted

      • 2009 (estimate)    $4.83
      • 2008    $4.92
      • 2007    $7.01
      • 2006    $5.98
      • 2005    $4.47
      • 2004    $4.01
      • 2003    $2.23
      • 2002    $0.64
      • 2001    $0.32
      • 2000    $2.00
      • 1999    $1.83

      Earnings Per Share – Modern Graham

      • 2009 (estimate)    $5.42
      • 2008    $5.57
      • 2007    $5.51
      • 2006    $4.33
      • 2005    $3.11
      • 2004    $2.24

      Valuation History:

      • 10/16/09 – Value $167, Actual Price $51.39, Undervalued & Defensive
      • 7/8/09 – Value $167, Actual Price $39.29, Undervalued & Defensive

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