A month has gone by since the last earnings report for Chubb (NYSE:CB). Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Chubb due for a pullback? 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 drivers.
Chubb Q1 Earnings Beat
Chubb Limited reported first-quarter 2019 core operating income of $2.54 per share, which outpaced the Zacks Consensus Estimate of $2.49 by 2%.
The bottom line improved 8.5% from the year-ago quarter.
The quarter reflected solid premium growth and net investment income as well as lower cat loss.
Including one-time integration and merger-related expenses of 1 cent, amortization of fair value adjustment of acquired invested assets, long-term debt of 7 cents and net realized loss of 21 cents, net income of $2.25 per share declined 2.2% from the prior-year quarter.
Quarter in Detail
Net premiums written improved 2% year over year to about $7.6 billion in the quarter. Net premiums earned rose 1.6% year over year to $7.2 billion.
Net investment income was $836 million, up 3.7% from the comparable quarter last year.
Property and casualty underwriting income was $712 million, up 10.9% from the year-ago period. Combined ratio improved 90 basis points (bps) to 89.2%.
Chubb reported after-tax catastrophe loss of $201 million in the reported quarter, narrower than the year-ago quarter’s loss of $303 million.
Segment Update
North America Commercial P&C Insurance: Net premiums written increased 4.9% year over year to about $3 billion. Combined ratio deteriorated 40 bps to 86.6%.
North America Personal P&C Insurance: Net premiums written were up 0.8% year over year to $1.1 billion. Combined ratio improved 1270 bps to 91.5%.
North America Agricultural Insurance: Net premiums written increased 27.9% year over year to $55 million. The current accident year combined ratio, excluding catastrophe losses, was 83.9%, down 1620 bps, largely attributable to lower favorable expense adjustments in the current year.
Overseas General Insurance: Net premiums written rose 0.5% year over year to $2.4 billion. Combined ratio deteriorated 190 bps to 92.3%.
Global Reinsurance: Net premiums written increased 4.7% year over year to $168 million. Combined ratio of 76.8% deteriorated 730 bps from the year-ago period.
Life Insurance: Net premiums written were down 4.1% year over year to $900 million.
Financial Update
Cash balance of $1.3 billion as of Mar 31, 2019 increased 2.2% from 2018 end. Total shareholders’ equity increased 4.1% to $52.4 billion as of Mar 31, 2019.
Book value per share was $114.27 as of Mar 31, 2019, up 4.3% from the level as of Dec 31, 2018.
Core operating ROE was 9.2%.
Operating cash flow was $1.3 billion in the quarter under consideration.
Share Repurchase Update
In the reported quarter, the company bought back shares worth $367 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Chubb has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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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