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Chubb (CB) Q3 Earnings Top on Solid Underwriting, Premiums Up

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Chubb Limited (CB - Free Report) 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.

Chubb Limited Price, Consensus and EPS Surprise

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.

Segment Update

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.

Financial Update

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.

Zacks Rank

Chubb carries a Zacks Rank #4 (Hold).

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 having reported third-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and MGIC Investment Corporation (MTG - Free Report) beat the respective Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) lagged the same.

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