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Chubb SWOT & PESTLE Analysis

ID : 52560453| Jun 2019| 15 pages

COMPANY PROFILE -Chubb

Business Sector :Insurance

Operating Geography :North America, United States, Global

About Chubb :

Chubb is the world’s largest publicly traded property and casualty (P&C) insurer, with total assets of $167.7 billion as on FY 2018. Chubb has established its global presence with local operations in 54 countries and territories. Chubb Limited, the Swiss-incorporated holding company of the Chubb Group of Companies, and its direct and indirect subsidiaries is headquartered in Zurich, Switzerland. The company leads globally in providing traditional and specialty P&C coverage for industrial commercial and mid-market companies. It is the leading commercial lines insurer in the U.S. and the largest financial lines writer globally. Apart from providing accident and health insurance globally, the company leads as personal lines insurer for America’s successful individuals and families. Other products include P&C reinsurance and international life insurance focused on Asia. Chubb Limited, the parent company, is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index.
In Jan 2016, ACE Limited completed its Acquisition of Chubb by paying approximately $29.5 billion in cash and stock to become the world’s largest publicly traded P&C insurance company. ACE Limited, immediately after acquisition, adopted the name “Chubb” globally, and, from the very next day, the company was listed in the New York Stock Exchange under the symbol “CB”.
Chubb's mission statement as per its website is "Committed to being a leader in the global insurance and reinsurance market by always conducting business in a consistent, disciplined and focused manner."

Chubb Revenue :


Gross premiums written
$37,968 million - FY ended December 31, 2018 (y-o-y growth of 4%)
$36,376 million - FY ended December 31, 2017

Competitive Analysis of Chubb

SWOT
PESTLE
The SWOT analysis of Chubb is presented below:
Strengths
Weaknesses
1. Vast geographical market coverage
2. Market leadership across business segments
3. Strong underwriting expertise
4. Exhaustive product mix
5. Consumer driven innovation
6. Focus on operational excellence
1. Decreasing market share and per unit revenue
2. Major dependence on US market
3. Less focus on customer driven services
4. Improper financial structure
Opportunities
Threats
1. Changing customer preferences and government regulations
2. Expanding global economy to increase insurance market
3. Uncovered global market
4. E-commerce to provide new growth opportunities
5. Focus on cyber insurance segment
1. Intense competition in insurance business
2. Fluctuating exchange rate
3. Rise in fraud and default incidents
4. Shortage of skills requirement
5. Evolving privacy and data security regulations
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Detailed SWOT Analysis of Chubb

 

Strength

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Weakness

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Opportunity

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Threat

1. Intense competition in insurance business: Chubb has many tough competitors such as AIG, Travelers, Zurich Insurance, Liberty Mutual and Prudential Financial among which AIG is the biggest rival followed by Travelers. Various new technologies and product developments by a few competitors of the industry can pose a threat to Chubb as customer are more attracted to these new technologies, which will result a loss to competitors, decreasing Chubb’s overall market share. Increase in number of competitors results in decrease in relative number of suppliers and hence bargaining power of supplier increases, resulting in high costs to inputs. Threat of new entrants is always there since US has moderate entry barriers in the market and hence new competitors can penetrate into the market with new and innovative products to capture market shares. Increase in competition leads to downward pressure on prices, resulting in reduction in revenue. Identical products from competitor’s act as a substitute for the products of Chubb creating a sense of ‘threats from substitutes’.

2. Fluctuating exchange rate: As Chubb operates in 54 different countries worldwide with 54 different currencies; the exchange rate of each of these currencies is different to that of the parent country, United States. Though US dollar is much more stable as compared to other currencies, the exchange rate keeps on fluctuating for the other countries and this affects Chubb as the company conducts sales internationally, while its suppliers are local. Because of the presence of multiple currencies, financial decision making framework becomes far more complicated. Cash flow of subsidiaries operating in other countries may vary significantly to that of parent due to different exchange rates, different risk profiles and different economic and political environment. These constraints can cause deviations in the target capital structure and creates a gap in availability of cash at different subsidiaries. There is a constant movement of capital between parent and subsidiaries that require a constant conversion of one currency to another, that same amount of transaction would differ in value during conversion depending upon that particular exchange rate at that very time of transaction. Chubb is still being able to manage these problems because of its exceptional financial strength.

3. Rise in fraud and default incidents: Insurance frauds are very common these days where people cheat insurance companies out of money by adopting various forms of fraud. Some of the common forms of fraud are stolen cars, car accidents, car damage, health insurance billing fraud, unnecessary medical procedures, staged home fires, storm fraud, abandoned house fire, social engineering attack, fake deaths, renter’s insurance etc. just to name a few. Insurance companies suffer loss of billions of dollars for these fraudulent activities. The costs due to frauds are later on passed on to the bill-paying consumers by increasing the amount the pay for their premiums. When premium amount increases, insurance companies face loss of customers who are not willing to pay excess amounts and switch to companies having cheaper premium amounts. One such example is The Brick Warehouse LP vs Chubb Insurance Company case of Canada (2017), where fraudulent emails, in the form of social engineering attack, were sent to company employees who eventually acted on them by transferring money from the insured's account. For this case, court was held, where coverage under the Fund Transfer Fraud policy was denied since the victim knew or accepted the instructions given to its bank, rather than by means of third party instructions, impersonating the insured, which was covered by the policy.

4. Shortage of skills requirement: From the Chubb reviews of ‘glassdoor.com’ provided by former and current employees of Chubb, it can be estimated that Chubb has presently high employee turnover rates due to work overload and lack of adequate training, which results in high dissatisfaction and low morale of the employees. Compared to the total workload present in the company, the number to workers is less than adequate, which leads to heavy workloads, imposed on every employee. This leads good talents and skills leaving the company and the company can face shortage of good talents in upcoming years. The decision making framework is highly centralized because of which team decisions needs to get approved by the central officials and this results more time consumptions and reduced innovation. This diminishes the employee morale due to presence of dominant and political organization culture which eventually leads to layoffs of good talent. The company can counter this threat by introducing more diversification in the workforce, which will help the company to procure good talent from different parts of the world and fulfil the shortages of skills requirement.

The remaining section of “Threat” is available only in the 'Complete Report' on purchase.

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Chubb Analysis Report

1. Chubb Company Website - https://www.chubb.com/us-en/

2. Chubb Q1 Report 2019 - http://s1.q4cdn.com/677769242/files/doc_presentations/2019/05/Chubb-Corporate-Presentation-First-Quarter-2019.pdf

3. Chubb Company Profile 2018 - http://s1.q4cdn.com/677769242/files/doc_financials/2018/q4/Chubb-Limited-Company-Profile-Year-End-2018.pdf

4. Chubb Annual Report 2018 - http://s1.q4cdn.com/677769242/files/doc_financials/2019/AGM/Chubb-Limited-2018-Annual-Report.pdf

5. Chubb Annual Report 2018 - https://s1.q4cdn.com/677769242/files/doc_financials/2018/AGM/Chubb_Limited_2017_Annual_Report.pdf

Copyrights and Disclaimer

Chubb SWOT and PESTLE analysis has been conducted by Abhik Verma and reviewed by senior analysts from Barakaat Consulting.

Copyright of Chubb SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Chubb SWOT & PESTLE Analysis
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