Insurance Rate Hikes Good News to Analyst
The battered insurance sector got some disaster relief Thursday when Salomon Smith Barney upgraded its rating on Chubb Corp. (CB) to “buy” from “neutral.”
Chubb’s stock climbed $6.06 to $66.88 on the NYSE.
Salomon analyst Ronald Frank said Warren, N.J.-based Chubb is raising rates without losing customers, a sign of better profits industrywide.
“Following an all-day visit to Chubb and conversations with other companies, we have become convinced that the rate recovery in standard commercial lines is significant and gathering momentum,” Frank said.
Other insurers also gained amid the strongest bond market rally in almost two months. Insurers, which are among the largest fixed-income investors, often benefit from a robust bond market.
American International Group Inc. (AIG) advanced $2.25 to $108.69 and Hartford Financial Services Group Inc. (HIG) jumped $2.50 to $46.38.
The Standard & Poor’s index of property and casualty insurers, which slid 29% last year amid a pricing war, rallied 3.4% despite the down market.