There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

December 21, 2009 - Chubb Corp. (CB-NYSE) through its subsidiaries, provides property and casualty insurance to businesses and individuals. The company operates through three segments: Personal Insurance, Commercial Insurance, and Specialty Insurance.

The Commercial Insurance segment provides multiple peril, casualty, workers' compensation, property, and marine. It also writes insurance products for niche businesses.

The Specialty Insurance segment offers various professional liability products for privately and publicly owned companies, financial institutions, professional firms, and healthcare organizations, as well as the surety business. The company provides its products and services through independent insurance agents and brokers in the United States, Canada, Europe, Australia, Latin America, and Asia. The Chubb Corporation was founded in 1882 and is based in Warren, New Jersey.

Chubb is doing well again, after a year that saw earnings drop to $5.56 from $6.41 in 2007. This year, 24 analysts who cover the company have a consensus estimate of $5.94 but see earnings dip to $5.44 next year. For the fourth quarter, earnings should be $1.46, down from $1.58 in the same period last year. For the first quarter of next year, expect $1.42, about even with the $1.43 of this year's first period. Over the past 5 years, earnings have averaged annual increases of 11%. Over the next 5, analysts see an average annual gain of 8%.

The third quarter of this year is a good example of why earnings can be so volatile in this industry. Earnings from operations were up 67% compared to the same period last year, thanks to lower storm activity and fewer and less severe hurricanes. Due to lower payouts, the company earned $15 in pretax profits for every $100 that it insured. This higher profitability more than compensated for the decrease in net premiums earned and net investment income due to lower interest rates.

Management recently raised estimates for earnings for the full year in 2009, taking them to $5.90 - $6.00, up from $5.20 - $5.50 earlier in the year. Notice that the range is not only higher, but also closer, suggesting management is confident the numbers will be hit. And since the numbers are higher, it suggests the industry may be at the beginning of a cyclical improvement.

The reason for lower estimates next year is that losses related to natural catastrophes this year were very low compared to normal activity levels and most likely will change for the worse. Analsyts believe an increase in rates in 2010 is highly likely. The company feels things will go very well, having recently announced that it has a new stock buyback program which authorizes the purchase of 25 million shares.

Chubb should appeal to conservative investors because of its solid balance sheet and conservative underwriting standards. And there is a dividend that takes only 25% of earnings to pay. The annual rate is $1.40 for a yield of 2.9%. Ex-dividend date was Dec 18; pay date will be January 12, 2010. Furthermore, the stock has a very low beta of .52, meaning the stock, when compared to the S&P 500 index, moved up or down about 1/2 the amount of the index which suggests that volatility is much lower than most stocks.

More numbers: Trailing P/E is 9 while the Forward P/E is 8.8. Price to sales is 1.30. Price to Book is 1.06. Operating margin for the last 12 months was 22% while Profit margin was 15%. Return on equity was 13% while Return on assets was 3.44%. Total revenue was $12.59 billion. There's $2.65 billion in cash or $7.75 a share. Total debt is $3.98 billion or 20% of capital. Current ratio is .91. Book value per share is $45.43. There are 341.57 million shares outstanding with a float of 340.68 million. Institutions own 85% of the stock. Value Line awards the stock an A for Financial Strength.

- Company Web site: www.chubb.com

- Ted Allrich