It has been about a month since the last earnings report for Chubb (CB). Shares have added about 5.9% 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 (CB) Q3 Earnings Top on Solid Underwriting, Premiums Up
Chubb Limited reported third-quarter 2018 core operating income of $2.41 per share, which outpaced the Zacks Consensus Estimate of $2.33 by 3.4%. Moreover, the bottom line rebounded from the year-ago loss of 13 cents.
The company witnessed premium growth in U.S. commercial P&C divisions and outstanding growth in international P&C business. Solid growth was reported at Overseas General operations.
Including one-time integration and merger-related expenses of 3 cents, amortization of fair value adjustment of acquired invested assets, a long-term debt of 9 cents and a net realized gain of 35 cents, net income of $2.64 per share reversed the prior-year net loss of 15 cents.
Quarter in Detail
Net premiums written improved 2.6% year over year to about $8.1 billion in the quarter under review. Net premiums earned inched up 1.3% to $7.9 billion.
Net investment income was $820 million, up 1.2% from the prior-year quarter.
Property and casualty underwriting income was $669 million, bouncing back from the year-earlier loss of $784 million. Combined ratio improved 2270 basis points (bps) to 90.9%.
Chubb reported after-tax catastrophe loss of $372 million in the quarter under review, narrower than the loss of $1,525 million a year ago.
North America Commercial P&C Insurance: Net premiums written increased 3.7% year over year to $3.2 billion, benefiting from higher premiums in the middle market and small commercial divisions. Combined ratio improved 2380 bps to 85.6%.
North America Personal P&C Insurance: Net premiums written grew 2% year over year to $1.2 billion. Combined ratio improved 2100 bps to 99.8%.
Overseas General Insurance: Net premiums written rose 5.8% year over year to $2.1 billion. Combined ratio improved 1130 bps to 90.3%.
North America Agricultural Insurance: Net premiums written decreased 4.5% year over year to $884 million. Combined ratio deteriorated 30 bps to 80.7%.
Global Reinsurance: Net premiums written declined 14.1% year over year to $164 million on higher reinstatement premiums collected in the prior year in relation with the 2017 natural catastrophes. Combined ratio of 86.7% improved from 187.4% in the year-ago period.
Life Insurance: Net premiums written slid 0.5% year over year to $956 million.
Cash balance of $1 billion as of Sep 30, 2018 improved 44.6% from 2017 end. Total shareholders’ equity slipped 0.5% to $50.9 million as of Sep 30, 2018.
Book value per share was $110.46 as of Sep 30, 2018, up 0.1% from the level as of Dec 31, 2017.
Core operating ROE was 8.7% in the quarter under consideration while operating cash flow was $1.7 billion.
Share Repurchase Update
In the reported quarter, the company bought back 2.8 million shares worth $379 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.07% due to these changes.
Currently, Chubb has an average Growth Score of C, 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 top 40% 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.
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.
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