Chubb (CB) Q3 Earnings Top Estimates on Higher Earned Premium

RLI TRV CB PGR

Chubb Limited (CB - Free Report) reported third-quarter 2022 core operating income of $3.17 per share, which outpaced the Zacks Consensus Estimate by about 4.9% but missed our estimate of $5.11. The bottom line also improved 20.1% from the year-ago quarter.

Chubb's results reflect record investment results, underwriting income and premium revenue growth across all the segments.

Quarter in Detail

Net premiums written improved 14.4% year over year to $12 billion in the quarter. The figure was higher than our estimate of $11.6 billion. Net premiums earned rose 15.3% to $11.5 billion. The figure was higher than our estimate of $11.1 billion.

Adjusted net investment income was a record $1.05 billion, up 12.1%. The figure was higher than our estimate of $986.1 million.

Property and casualty (P&C) underwriting income was a record $710 million, up 15% from the year-ago quarter. The figure was lower than our estimate of $1.5 billion. Chubb incurred pre-tax catastrophe losses of $1.2 billion, with $975 million from Hurricane Ian.

The combined ratio improved 30 basis points (bps) on a year-over-year basis to a record 93.1% in the quarter under review.

Segmental Update

North America Commercial P&C Insurance: Net premiums written increased 8.1% year over year to $4.7 billion. The figure matched our estimate. The combined ratio deteriorated 80 bps to 90.9%.

North America Personal P&C Insurance: Net premiums written climbed 7.1% year over year to $1.4 billion. The figure was higher than our estimate of $1.3 billion. The combined ratio improved 420 bps to 90.1%.

North America Agricultural Insurance: Net premiums written increased 21.8% from the year-ago quarter to $1.7 billion. The figure matched our estimate. The combined ratio deteriorated 70 bps to 90.6%.

Overseas General Insurance: Net premiums written rose 1.9% year over year to $2.6 billion. The figure was lower than our estimate of $2.9 billion. The combined ratio improved 370 bps to 88.5%.

Global Reinsurance: Net premiums written increased 19.5% from the year-ago quarter to $265 million. The figure was higher than our estimate of $263.7 million. The combined ratio of 148.4% deteriorated 2700 bps.

Life Insurance: Net premiums written more than doubled year over year to $1.3 billion. The figure was higher than our estimate of $627.8 million.

Financial Update

The cash balance of $2.1 billion, as of Sep 30, 2022, increased 28.3% from the 2021-end level. Total shareholders’ equity decreased 20.2% from the level at 2021 end to $47.6 billion as of Sep 30, 2022.

Book value per share, as of Sep 30, 2022, was $114.79, down 18% from the figure as of Dec 31, 2021. Core operating return on equity expanded 120 bps year over year to 9.4%. Operating cash flow was $3.43 billion in the quarter under consideration.

Capital Deployment

In the quarter, CB bought back shares worth $685 million and paid $346 million in dividends. It returned $1.03 billion in capital to shareholders.

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 P&C Insurers

Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the same.

Travelers’s third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.

Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter.  The combined ratio improved 40 bps year over year to 98.2.

RLI Corp.’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues increased 15.3% year over year to $312.7 million. The top line, however, missed the Zacks Consensus Estimate by 1.3%.

Gross premiums written increased 13.3% year over year to $403.8 million. This uptick can be attributed to the solid performance of Casualty (up 3.3%), Surety (up 12%) and Property segments (up 39.8%). Net investment income increased 19.2% year over year to $21.3 million.

Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.

Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.

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