Car Insurance Rates Skyrocketing: 10 Best Stocks to Buy

4. Chubb Limited (NYSE:CB)

Number of Hedge Fund Investors  in Q1 2024: 53

Chubb Limited (NYSE:CB) provides commercial and auto insurance products. Due to its scale, it operates in several insurance markets such as commercial insurance, cyber insurance, medical insurance, and others. The diversification offers Chubb Limited (NYSE:CB) a double edged sword since while it can benefit from rate increases in some sectors to offset rising costs and payouts in others, a presence in risky and changing markets like property leaves it vulnerable to large payouts too. Additionally, Chubb Limited (NYSE:CB)’s scale means that it has to offer and earn payouts from policies in scale if it is to keep costs low. An economic slowdown can affect business areas such as commercial auto insurance, and leave Chubb Limited (NYSE:CB)’s management struggling with low margins. The shares are up 19% year to date and could see tailwinds once interest rates start to drop.

Chubb Limited (NYSE:CB) is aware of these liabilities and it is restructuring some of its business to manage auto liabilities better. Here is what management shared during the Q2 2024 earnings call:

“No, casualty is growing, and it’s growing in the areas that we think we should be growing. And then, we have some areas, remember, in large account where we have been restructuring, in troubled classes and increasing retentions and we have accounts we’ve gotten off of or who have left us because of change of terms and all of that, it was worth about $50 million in the quarter. And that will run its string. It’s particularly auto liability related. And — but other than that, certain classes grew, some stayed flat, but overall casualty was up.”