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Chubb Limited (CB) Q3 Loss Narrower Than Expected, Down Y/Y

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Chubb Limited (CB - Free Report) reported third-quarter 2017 operating loss of 13 cents per share, narrower than the Zacks Consensus Estimate of a loss of 26 cents. Loss compared unfavorably with earnings of $2.88 in the year-ago quarter.

The quarter largely suffered due to three consecutive hurricanes and two successive earthquakes, having induced the company to incur loss. Catastrophe losses were $1.5 billion or $3.27 per share in the quarter.

Including one-time integration and merger-related expenses of 8 cents, amortization of fair value adjustment of acquired invested assets of 11 cents and net realized gains of 17 cents, net loss of 15 cents per share compared unfavorably with $2.88 per share earned in the year-ago quarter.

Quarter in Detail

Net premiums written improved 4.3% year over year to about $7.9 million in the quarter. Net premiums earned increased 1.3% to $7.8 million. Premiums benefited from one-time unearned premium reserve (UPR) transfer in 2016 were partially offset by merger-related underwriting actions.

Net investment income was $893 million, up 7.5% from a year ago.

Property and casualty underwriting loss was $784 million compared with underwriting income of $1 billion in the year-ago quarter. This loss is attributable to huge catastrophe loss incurred in the quarter. Combined ratio deteriorated 2480 basis points (bps) to 110.8%.

Segment Update

North America Commercial P&C Insurance: Net premiums written declined 0.7% year over year to $3.1 billion. Combined ratio deteriorated 2340 bps to 109.6%.

North America Personal P&C Insurance: Net premiums written increased 18.1% year over year to $1.2 billion. Combined ratio deteriorated 3640 bps to 120.8%.

Overseas General Insurance: Net premiums written increased 1.2% year over year to $2 billion. Combined ratio deteriorated 2040 bps to 101.6%.

North America Agricultural Insurance: Net premiums written increased 9.1% year over year to $926 million. Combined ratio deteriorated 150 bps to 90.4%.

Global Reinsurance: Net premiums written surged 45.8% year over year to $191 million. Combined ratio of 187.4% deteriorated from 66.3% in the year-ago quarter.

Life Insurance: Net premiums written increased 1.3% year over year to $539 million.

Financial Update

Cash balance was $1.1 billion as of Sep 30 2017, up approximately 13.6% from the end of 2016. Total shareholders’ equity grew about 4.6% to $50.4 million as of Sep 30, 2017.

Book value per share was $108.74 as of Sep 30, 2017, up nearly 5% from year-end 2016.

Operating cash flow was $1.8 billion in the quarter.

Share Repurchase Update

Chubb spent $232 million to buy back 1.6 million shares in the quarter.

Zacks Rank

Chubb currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.

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