It has been about a month since the last earnings report for Chubb (NYSE:CB). Shares have added about 2.2% 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 catalysts.
Chubb's Earnings Beat Estimates in Q2, Decrease Y/Y
Chubb reported second-quarter 2019 core operating income of $2.60 per share, which outpaced the Zacks Consensus Estimate by 0.8%. The upside was driven by higher premium revenues. However, the bottom line dipped 3% from the year-ago quarter.
Quarter in Detail
Net premiums written improved 4.2% year over year to about $7.7 billion in the quarter. Net premiums earned rose 3% year over year to $7.29 billion.
Net investment income was $859 million, up 3.7% from the comparable quarter last year.
Property and casualty underwriting income was $727 million, down 11.7% from the year-ago period.
Combined ratio expanded 170 basis points (bps) to 90.1%.
Chubb reported after-tax catastrophe loss of $221 million in the reported quarter, wider than the year-ago quarter’s loss of $173 million.
Segment Update
North America Commercial P&C Insurance: Net premiums written increased 6% year over year to about $3.5 billion. Combined ratio expanded 150 bps to 86.5%.
North America Personal P&C Insurance: Net premiums written slipped 2% year over year to $1.3 billion. Combined ratio improved 170 bps to 90.3%.
North America Agricultural Insurance: Net premiums written increased 20.1% year over year to $466 million. The current accident year combined ratio excluding catastrophe losses was 89.6%, up 240 bps.
Overseas General Insurance: Net premiums written rose 2.7% year over year to $2.2 billion. Combined ratio deteriorated 190 bps to 90.8%.
Global Reinsurance: Net premiums written inched up 0.2% year over year. Combined ratio of 87.7% deteriorated 840 bps from the year-ago period.
Life Insurance: Net premiums written were up 2.5% year over year on the back of growth in the Combined Insurance North America supplemental accident and health business and growth in the Asian international life operations.
Financial Update
Cash balance of $1.3 billion as of Jun 30, 2019 increased 1.8% from 2018 end.
Total shareholders’ equity increased 6.9% from 2018-end level to $53.8 billion as of Jun 30, 2019.
Book value per share was $117.97 as of Jun 30, 2019, up 7.7% from the level as of Dec 31, 2018.
Core operating ROE was 9.3%.
Operating cash flow was $1.4 billion in the quarter under consideration.
Share Repurchase Update
In the reported quarter, the company bought back shares worth $376 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Chubb has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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