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Chubb (CB) Q3 Earnings Lag Estimates, Premiums Improve Y/Y
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Chubb Limited (CB - Free Report) reported third-quarter 2020 core operating income of $2.00 per share, which missed the Zacks Consensus Estimate by 7.41%. Further, the bottom line plunged 25.9% year over year.
The company’s results reflect weak underwriting results and higher catastrophe losses, partly mitigated by improving premiums in the company’s North America and international businesses.
Quarter in Detail
Net premiums written increased 5.3% year over year to $9.1 billion in the quarter. Net premiums earned also rose 5.3% year over year to $8.8 billion. The improvement can primarily be attributed to new business growth and high renewal rates in the company’s North America and international operations. However, growth in premiums has been partially offset by the COVID-19 pandemic, which impacted premiums in the company’s global accident and health (A&H) and international personal lines businesses.
Pre-tax net investment income was $840 million, down 3.8% year over year.
Property and casualty (P&C) reported underwriting income of $392 million, which declined 48% year over year. Global P&C underwriting income excluding Agriculture was $327 million, which slumped 56.6% year over year.
Chubb incurred after-tax catastrophe losses of $797 million in the third quarter, which soared 317.3% year over year. This surge in catastrophe losses was primarily due to several global weather-related events and wildfires.
North America Commercial P&C Insurance: Net premiums written increased 9.4% year over year to $3.8 billion. Combined ratio deteriorated 500 basis points (bps) year over year to 91.9%.
North America Personal P&C Insurance: Net premiums written climbed 2.8% year over year to $1.3 billion. Combined ratio deteriorated 2040 bps to 103.5%.
North America Agricultural Insurance: Net premiums written improved 5% from the year-ago quarter to $986 million. Combined ratio improved 660 bps to 93.3%.
Overseas General Insurance: Net premiums written inched up 0.5% year over year to $2.2 billion. Combined ratio improved 110 bps to 89.4%.
Global Reinsurance: Net premiums written advanced 28.4% from the year-ago quarter to $181 million. Combined ratio deteriorated 3720 bps to 118.3%.
Life Insurance: Net premiums written slid 0.4% year over year to $610 million.
Financial Update
Cash balance of $1.7 billion as of Sep 30, 2020 improved 11.1% from the 2019-end level.
Total shareholders’ equity inched up 2% from the level at 2019 end to $56.4 billion as of Sep 30, 2020.
As of Sep 30, 2020, book value per share of $124.98 was up 2.1% from the figure as of Dec 31, 2019.
Of the insurance industry players, which have reported third-quarter results so far, earnings of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
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Chubb (CB) Q3 Earnings Lag Estimates, Premiums Improve Y/Y
Chubb Limited (CB - Free Report) reported third-quarter 2020 core operating income of $2.00 per share, which missed the Zacks Consensus Estimate by 7.41%. Further, the bottom line plunged 25.9% year over year.
The company’s results reflect weak underwriting results and higher catastrophe losses, partly mitigated by improving premiums in the company’s North America and international businesses.
Quarter in Detail
Net premiums written increased 5.3% year over year to $9.1 billion in the quarter. Net premiums earned also rose 5.3% year over year to $8.8 billion. The improvement can primarily be attributed to new business growth and high renewal rates in the company’s North America and international operations. However, growth in premiums has been partially offset by the COVID-19 pandemic, which impacted premiums in the company’s global accident and health (A&H) and international personal lines businesses.
Pre-tax net investment income was $840 million, down 3.8% year over year.
Property and casualty (P&C) reported underwriting income of $392 million, which declined 48% year over year. Global P&C underwriting income excluding Agriculture was $327 million, which slumped 56.6% year over year.
Chubb incurred after-tax catastrophe losses of $797 million in the third quarter, which soared 317.3% year over year. This surge in catastrophe losses was primarily due to several global weather-related events and wildfires.
Chubb Limited Price, Consensus and EPS Surprise
Chubb Limited price-consensus-eps-surprise-chart | Chubb Limited Quote
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 9.4% year over year to $3.8 billion. Combined ratio deteriorated 500 basis points (bps) year over year to 91.9%.
North America Personal P&C Insurance: Net premiums written climbed 2.8% year over year to $1.3 billion. Combined ratio deteriorated 2040 bps to 103.5%.
North America Agricultural Insurance: Net premiums written improved 5% from the year-ago quarter to $986 million. Combined ratio improved 660 bps to 93.3%.
Overseas General Insurance: Net premiums written inched up 0.5% year over year to $2.2 billion. Combined ratio improved 110 bps to 89.4%.
Global Reinsurance: Net premiums written advanced 28.4% from the year-ago quarter to $181 million. Combined ratio deteriorated 3720 bps to 118.3%.
Life Insurance: Net premiums written slid 0.4% year over year to $610 million.
Financial Update
Cash balance of $1.7 billion as of Sep 30, 2020 improved 11.1% from the 2019-end level.
Total shareholders’ equity inched up 2% from the level at 2019 end to $56.4 billion as of Sep 30, 2020.
As of Sep 30, 2020, book value per share of $124.98 was up 2.1% from the figure as of Dec 31, 2019.
Operating cash flow was $3.5 billion.
Zacks Rank & Performance of Other Insurers
Chubb 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, which have reported third-quarter results so far, earnings of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
Zacks’ 2020 Election Stock Report:
In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.
Check out the 2020 Election Stock Report >>