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Chubb Limited (CB) Down 3.5% Since Earnings Report: Can It Rebound?

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It has been more than a month since the last earnings report for D/B/A Chubb Limited New (CB - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 Limited Q3 Loss Narrower Than Expected, Down Y/Y

Chubb Limited 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.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.

VGM Scores

At this time,Chubb Limited's stock has a poor Growth Score of F, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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