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Why Is Chubb (CB) Up 7.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Chubb (CB - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Chubb due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Chubb's Q4 Earnings Beat Estimates, Premiums Up Y/Y
Chubb Limited reported fourth-quarter 2020 core operating income of $3.18 per share, which outpaced the Zacks Consensus Estimate by 10.8%. This outperformance was driven by higher premium revenues. The bottom line also improved 39.5% from the year-ago quarter.
The company’s results reflect lower catastrophe losses and improvement in premiums in the company’s North America and international businesses, which were partially offset by lower net investment income.
Quarter in Detail
Net premiums written improved 5.2% year over year to $8.4 billion in the quarter. Net premiums earned rose 6.2% to $8.4 billion. Net investment income was $847 million, down 1.3%.
Property and casualty (P&C) underwriting income was $969 million, up 81.8% from the year-ago quarter. Global P&C underwriting income excluding Agriculture was $933 million, up 67.8%.
Chubb incurred after-tax catastrophe loss of $271 million in the fourth quarter, plunging 23.2% year over year. Combined ratio improved 510 basis points (bps) on a year-over-year basis to 87.6% in the quarter under review.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 8.3% year over year to $3.7 billion. Combined ratio improved 480 bps to 77.8%. North America Personal P&C Insurance: Net premiums written climbed 2.5% year over year to $1.2 billion. Combined ratio improved 1100 bps to 88.6%.
North America Agricultural Insurance: Net premiums written declined 12.2% from the year-ago quarter to $242 million. Combined ratio improved 1490 bps to 90.5%.
Overseas General Insurance: Net premiums written rose 4.1% year over year to $2.4 billion. Combined ratio improved 70 bps to 92.4%.
Global Reinsurance: Net premiums written increased 14.4% from the year-ago quarter to $125 million. Combined ratio of 99.6% deteriorated 500 bps.
Life Insurance: Net premiums written were up 3% year over year to $640 million.
Financial Update
Cash balance of $1.7 billion as of Dec 31, 2020 increased 13.7% from the 2019-end level. Total shareholders’ equity increased 7.4% from the level at 2019 end to $59.4 billion as of Dec 31, 2020. Book value per share as of Dec 31, 2020 was $131.88, up 7.7% from the figure as of Dec 31, 2019. Core operating ROE was 10.7%. Operating cash flow was $2.54 billion in the quarter under consideration.
Share Repurchase Update
In the quarter, the company bought back shares worth $190 million.
Full-Year Update
Core operating income for the year came in at $7.31 per share, down 27.7% year over year. P&C net premiums written were $31.3 billion, up 4.8% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Chubb has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Chubb (CB) Up 7.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Chubb (CB - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Chubb due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Chubb's Q4 Earnings Beat Estimates, Premiums Up Y/Y
Chubb Limited reported fourth-quarter 2020 core operating income of $3.18 per share, which outpaced the Zacks Consensus Estimate by 10.8%. This outperformance was driven by higher premium revenues. The bottom line also improved 39.5% from the year-ago quarter.
The company’s results reflect lower catastrophe losses and improvement in premiums in the company’s North America and international businesses, which were partially offset by lower net investment income.
Quarter in Detail
Net premiums written improved 5.2% year over year to $8.4 billion in the quarter. Net premiums earned rose 6.2% to $8.4 billion. Net investment income was $847 million, down 1.3%.
Property and casualty (P&C) underwriting income was $969 million, up 81.8% from the year-ago quarter. Global P&C underwriting income excluding Agriculture was $933 million, up 67.8%.
Chubb incurred after-tax catastrophe loss of $271 million in the fourth quarter, plunging 23.2% year over year. Combined ratio improved 510 basis points (bps) on a year-over-year basis to 87.6% in the quarter under review.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 8.3% year over year to $3.7 billion. Combined ratio improved 480 bps to 77.8%.
North America Personal P&C Insurance: Net premiums written climbed 2.5% year over year to $1.2 billion. Combined ratio improved 1100 bps to 88.6%.
North America Agricultural Insurance: Net premiums written declined 12.2% from the year-ago quarter to $242 million. Combined ratio improved 1490 bps to 90.5%.
Overseas General Insurance: Net premiums written rose 4.1% year over year to $2.4 billion. Combined ratio improved 70 bps to 92.4%.
Global Reinsurance: Net premiums written increased 14.4% from the year-ago quarter to $125 million. Combined ratio of 99.6% deteriorated 500 bps.
Life Insurance: Net premiums written were up 3% year over year to $640 million.
Financial Update
Cash balance of $1.7 billion as of Dec 31, 2020 increased 13.7% from the 2019-end level. Total shareholders’ equity increased 7.4% from the level at 2019 end to $59.4 billion as of Dec 31, 2020. Book value per share as of Dec 31, 2020 was $131.88, up 7.7% from the figure as of Dec 31, 2019.
Core operating ROE was 10.7%. Operating cash flow was $2.54 billion in the quarter under consideration.
Share Repurchase Update
In the quarter, the company bought back shares worth $190 million.
Full-Year Update
Core operating income for the year came in at $7.31 per share, down 27.7% year over year. P&C net premiums written were $31.3 billion, up 4.8% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Chubb has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.