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Chubb Limited (CB - Free Report) reported fourth-quarter 2017 core operating income of $3.17 per share, which surpassed the Zacks Consensus Estimate of $2.31 by 37.2%. Moreover, the bottom line improved 16.5% from the prior-year quarter.
D/B/A Chubb Limited New Price, Consensus and EPS Surprise
Although the quarter under review was affected by the two largest California wildfires in history, the company’s results still reflected optimism. The highlights of the quarter were bottom-line growth, driven by a one-time benefit from tax reform, stellar segmental underwriting performance (excluding catastrophe loss), improving commercial property and casualty (P&C) pricing in the company’s numerous business worldwide and a core operating return on equity (ROE) of 12%.
Including one-time integration and merger-related expenses of 12 cents, amortization of fair value adjustment of acquired invested assets and long-term debt of 9 cents and net realized gains of 31 cents, net income of $3.27 per share declined 4.1% from the year-ago quarter.
Full-Year Highlights
For 2017, Chubb reported core operating income per share of $8.03, outpacing the consensus mark by 11.5% but deteriorating 20.7% year over year.
Quarter in Detail
Net premiums written improved 1.6% year over year to about $7.1 million in the quarter. Net premiums earned increased 2.3% to $7.2 million.
Net investment income was $797 million, up 7.1% from a year ago.
Property and casualty underwriting income was $623 million, which plunged 21.6% from the year-ago quarter. This downside is attributable to the catastrophe loss incurred in the quarter. Combined ratio deteriorated 290 basis points (bps) to 90.7%.
Segment Update
North America Commercial P&C Insurance: Net premiums written declined 2.9% year over year to $2.9 billion. Combined ratio deteriorated 140 bps to 86.2%.
North America Personal P&C Insurance: Net premiums written increased 5.8% year over year to $1.1 billion. Combined ratio deteriorated 1920 bps to 107.5%.
Overseas General Insurance: Net premiums written rose 2.8% year over year to $2.2 billion. Combined ratio improved 630 bps to 101.6%.
North America Agricultural Insurance: Net premiums written skyrocketed 215% year over year to $126 million. Combined ratio came in at 24.4% against (25.4%) in the prior-year quarter.
Global Reinsurance: Net premiums written declined 7.9% year over year to $105 million. Combined ratio of 111.2% deteriorated 3170 bps from the year-ago quarter.
Life Insurance: Net premiums written improved 16.9% year over year to $943 million.
Financial Update
Cash balance was $728 million as of Dec 31 2017, down approximately 26.1% from the end of 2016. Total shareholders’ equity grew about 6% to $51.2 million as of Dec 31, 2017.
Book value per share was $110.32 as of Dec 31, 2017, up nearly 6.5% from year-end 2016.
Operating cash flow was $1.1 billion for the reported quarter.
Share Repurchase Update
Chubb spent $123 million to buy back 0.8 million shares in the quarter. For 2017, the company bought back 5.9 million shares worth $830 million.
Among other players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.
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Chubb (CB) Q4 Earnings Beat Estimates, Premiums Increase
Chubb Limited (CB - Free Report) reported fourth-quarter 2017 core operating income of $3.17 per share, which surpassed the Zacks Consensus Estimate of $2.31 by 37.2%. Moreover, the bottom line improved 16.5% from the prior-year quarter.
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
Although the quarter under review was affected by the two largest California wildfires in history, the company’s results still reflected optimism. The highlights of the quarter were bottom-line growth, driven by a one-time benefit from tax reform, stellar segmental underwriting performance (excluding catastrophe loss), improving commercial property and casualty (P&C) pricing in the company’s numerous business worldwide and a core operating return on equity (ROE) of 12%.
Including one-time integration and merger-related expenses of 12 cents, amortization of fair value adjustment of acquired invested assets and long-term debt of 9 cents and net realized gains of 31 cents, net income of $3.27 per share declined 4.1% from the year-ago quarter.
Full-Year Highlights
For 2017, Chubb reported core operating income per share of $8.03, outpacing the consensus mark by 11.5% but deteriorating 20.7% year over year.
Quarter in Detail
Net premiums written improved 1.6% year over year to about $7.1 million in the quarter. Net premiums earned increased 2.3% to $7.2 million.
Net investment income was $797 million, up 7.1% from a year ago.
Property and casualty underwriting income was $623 million, which plunged 21.6% from the year-ago quarter. This downside is attributable to the catastrophe loss incurred in the quarter. Combined ratio deteriorated 290 basis points (bps) to 90.7%.
Segment Update
North America Commercial P&C Insurance: Net premiums written declined 2.9% year over year to $2.9 billion. Combined ratio deteriorated 140 bps to 86.2%.
North America Personal P&C Insurance: Net premiums written increased 5.8% year over year to $1.1 billion. Combined ratio deteriorated 1920 bps to 107.5%.
Overseas General Insurance: Net premiums written rose 2.8% year over year to $2.2 billion. Combined ratio improved 630 bps to 101.6%.
North America Agricultural Insurance: Net premiums written skyrocketed 215% year over year to $126 million. Combined ratio came in at 24.4% against (25.4%) in the prior-year quarter.
Global Reinsurance: Net premiums written declined 7.9% year over year to $105 million. Combined ratio of 111.2% deteriorated 3170 bps from the year-ago quarter.
Life Insurance: Net premiums written improved 16.9% year over year to $943 million.
Financial Update
Cash balance was $728 million as of Dec 31 2017, down approximately 26.1% from the end of 2016. Total shareholders’ equity grew about 6% to $51.2 million as of Dec 31, 2017.
Book value per share was $110.32 as of Dec 31, 2017, up nearly 6.5% from year-end 2016.
Operating cash flow was $1.1 billion for the reported quarter.
Share Repurchase Update
Chubb spent $123 million to buy back 0.8 million shares in the quarter. For 2017, the company bought back 5.9 million shares worth $830 million.
Zacks Rank
Chubb carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>