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Chubb (CB) Q1 Earnings Beat Estimates on Solid Underwriting
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Chubb Limited (CB - Free Report) reported first-quarter 2017 operating income of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.44 by 1.6%. Also, the bottom line improved 9.7% from $2.26 per share in the prior-year quarter.
The improvement was driven by sturdy P&C underwriting and improved net investment income.
Including one-time integration and merger-related expenses of 24 cents, amortization of fair value adjustment of acquired invested assets and long-term debt and net realized gains of 11 cents, net income skyrocketed 138.1% year over year to $2.31 per share.
Quarter in Details
Net premiums written jumped 11.9% year over year to about $6.7 billion in the reported quarter. Net premiums earned increased 2.6% to $6.8 billion. Premiums benefitted from strong business retentions and growth in new business.
Net investment income was $745 million, up 10.5% from a year ago.
Property and casualty (P&C) underwriting income totaled $783 million, up 28% year over year. The upside was supported by expense efficiencies from the merger and impressive combined ratios. However, higher natural catastrophe losses and a one-time reserve charge related to the change in the Ogden discount rate in the U.K were partial offsets. Combined ratio improved 250 basis points (bps) to 87.5%.
D/B/A Chubb Limited New Price, Consensus and EPS Surprise
North America Commercial P&C Insurance: Net premiums written soared 19% year over year to $2.7 billion. Combined ratio improved 130 bps to 84.8%.
North America Personal P&C Insurance: Net premiums written increased 13% year over year to $984 million. Combined ratio improved 1330 bps to 84.2%.
Overseas General Insurance: Net premiums written jumped 7.8% year over year to $2.2 billion. Combined ratio deteriorated 390 bps to 84.2%.
North America Agricultural Insurance: Net premiums written decreased 4.7% year over year to $61 million. Combined ratio improved 600 bps to 74.6%.
Global Reinsurance: Net premiums written dipped 1% year over year to $199 million. Combined ratio deteriorated 510 bps to 82.1%.
Life Insurance: Net premiums written increased 1.6% year over year to $524 million.
Financial Update
Cash balance was $1.1 billion as of Mar 31, 2017, down approximately 7.9% from the end of 2016. Total shareholders' equity grew about 1.7% from $49.2 billion at year-end 2016.
Book value per share was $105.35 as of Mar 31, 2017, up 1.7% from year-end 2016.
Operating cash flow was $1 billion in the quarter.
Share Repurchase Update
Chubb spent $140 million to buy back 1 million shares in the quarter. Subsequent to the first quarter, the company repurchased another $60 million worth shares.
Among the other players from the insurance industry that have reported their first-quarter earnings so far, the bottom line at Brown & Brown Inc. (BRO - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
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Chubb (CB) Q1 Earnings Beat Estimates on Solid Underwriting
Chubb Limited (CB - Free Report) reported first-quarter 2017 operating income of $2.48 per share, which surpassed the Zacks Consensus Estimate of $2.44 by 1.6%. Also, the bottom line improved 9.7% from $2.26 per share in the prior-year quarter.
The improvement was driven by sturdy P&C underwriting and improved net investment income.
Including one-time integration and merger-related expenses of 24 cents, amortization of fair value adjustment of acquired invested assets and long-term debt and net realized gains of 11 cents, net income skyrocketed 138.1% year over year to $2.31 per share.
Quarter in Details
Net premiums written jumped 11.9% year over year to about $6.7 billion in the reported quarter. Net premiums earned increased 2.6% to $6.8 billion. Premiums benefitted from strong business retentions and growth in new business.
Net investment income was $745 million, up 10.5% from a year ago.
Property and casualty (P&C) underwriting income totaled $783 million, up 28% year over year. The upside was supported by expense efficiencies from the merger and impressive combined ratios. However, higher natural catastrophe losses and a one-time reserve charge related to the change in the Ogden discount rate in the U.K were partial offsets. Combined ratio improved 250 basis points (bps) to 87.5%.
D/B/A Chubb Limited New Price, Consensus and EPS Surprise
D/B/A Chubb Limited New Price, Consensus and EPS Surprise | D/B/A Chubb Limited New Quote
Segment Update
North America Commercial P&C Insurance: Net premiums written soared 19% year over year to $2.7 billion. Combined ratio improved 130 bps to 84.8%.
North America Personal P&C Insurance: Net premiums written increased 13% year over year to $984 million. Combined ratio improved 1330 bps to 84.2%.
Overseas General Insurance: Net premiums written jumped 7.8% year over year to $2.2 billion. Combined ratio deteriorated 390 bps to 84.2%.
North America Agricultural Insurance: Net premiums written decreased 4.7% year over year to $61 million. Combined ratio improved 600 bps to 74.6%.
Global Reinsurance: Net premiums written dipped 1% year over year to $199 million. Combined ratio deteriorated 510 bps to 82.1%.
Life Insurance: Net premiums written increased 1.6% year over year to $524 million.
Financial Update
Cash balance was $1.1 billion as of Mar 31, 2017, down approximately 7.9% from the end of 2016. Total shareholders' equity grew about 1.7% from $49.2 billion at year-end 2016.
Book value per share was $105.35 as of Mar 31, 2017, up 1.7% from year-end 2016.
Operating cash flow was $1 billion in the quarter.
Share Repurchase Update
Chubb spent $140 million to buy back 1 million shares in the quarter. Subsequent to the first quarter, the company repurchased another $60 million worth shares.
Zacks Rank
Chubb currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..
Performance of Other Stocks
Among the other players from the insurance industry that have reported their first-quarter earnings so far, the bottom line at Brown & Brown Inc. (BRO - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>