Chubb Ltd (CB) stock intrinsic value fair value estimate & owner earnings analysis

Chubb is one of the world's largest property and casualty insurers. It writes commercial and personal insurance in North America (including crop insurance), runs a large international insurance business across Europe, the Middle East and Africa, Asia and Latin America, a global reinsurance arm, and a life insurance business focused on Asia and Latin America. It owns about 87% of Huatai Group, a Chinese insurance and asset management company it took control of in July 2023; Chubb itself is a Swiss-domiciled, NYSE-listed company and Huatai is one operating piece of a global book. Chubb makes money two ways: underwriting profit (its combined ratio was 85.7% in 2025, 86.6% in 2024 and 86.5% in 2023, meaning it kept roughly 13-14 cents of every premium dollar before investment income) and investment income on a portfolio that reached about $169 billion at the end of 2025, producing $6.47 billion of net investment income that year. How we measure earnings. We start from operating cash flow and remove the cash that comes from growing claim reserves and other working-capital swings, subtract stock compensation, and remove the share belonging to outside owners of partly owned subsidiaries such as Huatai. Insurers spend little on physical assets, so we deduct nothing for capital spending. On that basis owner earnings were $22.58 per share in 2025, $19.63 in 2024 and $18.81 in 2023, against a low of $6.79 in 2020 and $8.22 in 2017. Because the per-share figures are distorted by premium growth and by a 14% fall in the share count since 2016, we anchor on owner earnings as a share of premiums earned. Over 2016-2025 that margin ranged from about 9.3% (2020) to 22.1% (2016), with a median of about 16.7%. Applied to 2025's $53.0 billion of earned premium ($132 per share), that gives a normal earning level of about $21.99 per share, slightly below 2025's $22.58. We use the full ten years because they include soft pricing, heavy catastrophe years, the 2020 shutdown and the recent hard market, so the anchor is not built on the peak. Growth credited. Owner earnings grew 15% in 2025; our base case year one is about $22.32, a decline from 2025, so we are not extrapolating the recent run. We credit only 1.5% a year of per-share growth, below the roughly 1.6% annual reduction in share count Chubb has achieved since 2016 through buybacks funded from its own earnings, and credit no premium growth, no margin improvement and no benefit from acquisitions not yet made. Because an insurance book renews every year and Chubb's underwriting record runs through many cycles, we let earnings continue at the year-ten level after year ten rather than fading them. Amortization of acquired intangibles (about $300 million a year) is added back in our earnings; those intangibles relate largely to renewal rights and distribution that the book continues to replace each year, so we did not build a separate decay into the cases. Debt. Chubb carries about $16.0 billion of long-term debt and $1.5 billion of short-term borrowings. For an insurer, borrowing and policy reserves are part of the operating machine and interest is already paid before our owner earnings, so we value earnings after interest and do not subtract the debt a second time; leverage is charged in the bear case instead. Base case: about $412 per share. Earnings start near $22.32 and rise to about $25.52 by year ten through buybacks only, then continue at that level. Bear case: about $271 per share. This is a full insurance-and-credit downturn built from Chubb's own worst years. Year one falls to the margin of 2017 (about $17.61 per share); year two combines the weak 2020 margin with an investment credit loss equal to 2% of the $169 billion portfolio after tax (about $6.72 per share, the kind of loss a high-quality bond book took in the 2008-2010 credit cycle), leaving about $5.55; year three stays at the 2020 margin (about $12.27); and afterward the business settles permanently 10% smaller than today at its 2021 margin (about $17.07 per share), with no buyback growth. The bear value exceeds tangible book value of roughly $121 per share because even in this case the underwriting franchise keeps producing profits on a book that reprices every year, and the 2017 and 2020 years it is built from were both profitable for Chubb. Bull case: about $476 per share. 2025's $22.58 is held as the starting level (the hard-market pricing and larger investment portfolio are already in place) and grows 3% a year through buybacks and the investment income on retained earnings, reaching about $30.35 in year ten. What could go wrong. The largest risks are a catastrophe year far beyond the $1.47 billion California wildfire loss of 2025, a broad reserve problem in long-tail casualty lines (Chubb already reported adverse development in commercial excess, umbrella and commercial auto in 2024, offset by favorable development elsewhere), a soft pricing cycle that lasts longer than our bear case, and regulatory or political risk in its China operations. If the true normal margin is the 14.3% average of 2017-2021 rather than our 16.7% median, and the book never grows again, the shares would be worth around $315; if the book also shrank 10%, around $283. Margin-of-safety price. We are fairly confident in the earnings level: it is drawn from ten years that include two genuinely bad ones, and the most recent three years all ran above it. The worst plausible outcome is a mega-catastrophe combined with a reserve charge and a credit loss in the same window; Chubb's diversified global book, its roughly $74 billion of shareholders' equity and its investment-grade balance sheet should let it survive that without wiping out shareholders, though it could cost several years of earnings. The price assumes about a five-year holding period, with a growing dividend paid along the way ($3.82 per share declared in 2025). From $165 a share, the base case implies about 22% a year over five years including dividends, and the bear case implies about 13% a year, which we consider adequate protection given how much of the bear outcome is already built from Chubb's own weakest years. The margin-of-safety price is $165.