A month has gone by since the last earnings report for Chubb (NYSE:CB). Shares have lost about 0.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Chubb due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Chubb Q3 Earnings Beat Estimates, Premiums Rise Y/Y
Chubb Limited reported third-quarter 2019 core operating income of $2.70 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The upside was driven by higher premium revenues. The bottom line improved 12% from the year-ago quarter.
The company also benefited from an improved pricing and underwriting environment as well as product, customer and distribution-related growth initiatives in the United States, Asia and Latin America.
Quarter in Detail
Net premiums written improved 6.3% year over year to about $8.6 billion in the quarter. Net premiums earned rose 5.3% to $8.3 billion.
Net investment income was $873 million, up 6.1%.
Property and casualty (P&C) underwriting income was $754 million, up 12.6% from the year-ago quarter. Global P&C underwriting income, which excludes Agriculture, was $753 million, up 27.7%.
Combined ratio improved 70 basis points (bps) to 90.2%, reflecting lower catastrophe losses and higher crop insurance losses.
Chubb reported after-tax catastrophe loss of $191 million in the third quarter, plunging 48.7% year over year.
Segment Update
North America Commercial P&C Insurance: Net premiums written increased 7.9% year over year to about $3.5 billion. Combined ratio deteriorated 110 bps to 86.9%.
North America Personal P&C Insurance: Net premiums written slipped 2.7% year over year to $1.3 billion. Combined ratio improved 1850 bps to 83.1%.
North America Agricultural Insurance: Net premiums written increased 6.2% from the year-ago quarter to $938 million. Combined ratio deteriorated 920 bps to 99.9%.
Overseas General Insurance: Net premiums written rose 7.1% year over year to $2.2 billion. Combined ratio deteriorated 20 bps to 90.5%.
Global Reinsurance: Net premiums written declined 14% from the year-ago quarter to $141 million. Combined ratio of 87.7% improved 560 bps.
Life Insurance: Net premiums written were up 8.5% year over year to $612 million on the back of growth in the Asian international life operations.
Financial Update
Cash balance of $1.5 billion as of Sep 30, 2019 increased 18.5% from 2018 end.
Total shareholders’ equity increased 8.5% from 2018 end to $54.6 billion as of Sep 30, 2019.
Book value per share was $120.33 as of Sep 30, 2019, up 9.8% from the Dec 31, 2018 figure.
Core operating ROE was 9.5%.
Operating cash flow was $2.2 billion in the quarter under consideration.
Share Repurchase Update
In the quarter, the company bought back shares worth $478 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -5.69% due to these changes.
VGM Scores
At this time, Chubb has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Chubb Limited (CB): Free Stock Analysis Report
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