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Chubb Beats Q3 Earnings, Guides Up

Zacks Equity Research

Chubb Corp. ( CB) reported third-quarter operating earnings of $2.06 per share, way ahead of the Zacks Consensus Estimate of $1.84 per share. Earnings also increased 4% year over year.


Including after-tax realized investment gains and losses net income was $2.10 per share, up 6% year over year.


Net written premium for the reported quarter was up 4% year over year to $3.0 billion.


Property and casualty investment income after tax slumped 6% year over year to $280 million.


Chubb incurred catastrophe loss of $92 million, compared with $17 million in the year ago quarter. 


Combined ratio for the quarter improved 60 basis points year over year to 85.7%.


Book value per share, a measure of net worth, was $62.04, up 1.7% year over year.


Segment Update


At Chubb Commercial Insurance segment, net written premium increased 4% year over year to $1.3 billion during the reported quarter. The combined ratio improved by 200 basis points year over year to 85.2%.


Chubb Specialty Insurance’s net written premiums improved 5% year over year to $670 million due to higher premiums written in the professional liability lines. The combined ratio improved 960 basis points year over year to 82.3%. 


Chubb Personal Insurance segment’s net written premiums were up by 4% year over year to $1.1 billion. The increase was driven by higher premium from Homeowners as well as Personal Automobile. Due to catastrophes the combined ratio deteriorated by 550 basis points year over year to 88.3%. 


Capital Management


During the quarter Chubb repurchased 3.8 million shares of its common stock at a total cost of $326 million. The company had remaining authorization worth $433 million as of Sep 30, 2013.


2013 Guidance 


Management upped its 2013 earnings guidance after witnessing better than expected earnings for the first nine months of 2013. Chubb now expects earnings in the range of $7.90 to $8.00 per share, compared to the previous expectation of $7.30 to $7.50 per share. The company also expects 259 million average diluted shares outstanding for the year which remains unchanged from the previous guidance.


Chubb carries a Zacks Rank #2 (Buy). 


Our Take


Chubb has been posting favorable earnings performance for the past several quarters. The company is benefitting from hardening insurance rates coupled with lower losses. We expect the company maintain its positive earnings trends as insurance pricing continues to improve. 


Other stocks


Among other property and casualty players, Cincinnati Financial Corp. ( CINF) with Zacks Rank #1(Strong Buy), The Travelers Companies, Inc. ( TRV) and Assurant Inc. ( AIZ) both with Zacks Rank #2 (Buy) reported third quarter earnings ahead of the Zacks Consensus Estimates.

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Read the Full Research Report on TRV
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Read the Full Research Report on CINF

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