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Chubb (CB) to Report Q2 Earnings: What's in the Offing?

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Chubb Limited (CB - Free Report) is slated to report second-quarter 2022 earnings on Jul 26, after market close. The insurer delivered an earnings surprise in each of the last four quarters, the average being 13.45%.

Factors to Consider

Premiums in the second quarter are expected to have benefited from positive rate increases, higher new business, increased exposure, higher renewal retention and growth in consumer lines and commercial property and casualty (P&C) lines across markets. The Zacks Consensus Estimate for net premiums earned is pegged at $9.6 billion.

The interest rate environment has started to improve. The second quarter itself saw two rate hikes.  Insurers, being beneficiaries of an improving rate environment, are poised to benefit.  Net investment income is likely to have benefited from higher income received from private equity partnerships and increased dividends on public equities. Chubb continue to estimate the adjusted net investment income run rate to be around $900 million in the quarter. The Zacks Consensus Estimate for investment income is pegged at $921 million, indicating a 4.2% increase from the year-ago reported figure.

The top line is likely to have benefited from improved premium revenues as well as higher investment income. The Zacks Consensus Estimate for revenues is pegged at $10.5 billion, indicating an increase of 0.5% from the year-ago reported figure.

Per Colorado State University (CSU), the 2022 above-average hurricane season may have 19 named storms, including nine hurricanes and four major hurricanes. This year’s hurricane season could be about 130% of the average season per CSU. The estimated insured losses in the United States from catastrophes in the second quarter could be more than $4 billion per analysts at Goldman Sachs, published in Reinsurance News. The Zacks Consensus Estimate for the combined ratio is pegged at 87, indicating a deterioration of 100 basis points from the year-ago reported figure of 86.

Expenses are expected to have risen on higher loss and loss expenses, policy acquisition costs and administrative expenses.

However, continued share buyback is likely to have aided the bottom line.

The Zacks Consensus Estimate for second-quarter 2022 earnings of $3.59 per share indicates a decrease of 0.8% from the year-ago quarter reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Chubb this time around. A stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. That is not the case below.

Earnings ESP: Chubb has an Earnings ESP of -1.23%. This is because the Most Accurate Estimate of $3.55 is pegged lower than the Zacks Consensus Estimate of $3.59. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Chubb Limited Price and EPS Surprise

Chubb Limited Price and EPS Surprise

Chubb Limited price-eps-surprise | Chubb Limited Quote

Zacks Rank: Chubb currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Argo Group (ARGO - Free Report) has an Earnings ESP of +2.98% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $1.12, indicating a decrease of 30% from the year-ago reported figure.

ARGO’s earnings beat estimates in each of the four trailing quarters.

Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $1.05, down 41.3% from the figure reported in the year-ago quarter.

CINF beat earnings estimates in each of the four trailing quarters.

CCC Intelligent Solutions (CCCS - Free Report) has an Earnings ESP of +4.35% and a Zacks Rank of 2. The Zacks Consensus Estimate for second-quarter 2022 earnings stands at 8 cents, indicating a decline of 99.5% from the year-ago reported figure.

CCCS beat earnings estimates in two of the last four reported quarters while missing the same in the other two.

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