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Chubb (CB) Up 5.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Chubb (CB - Free Report) . Shares have added about 5.1% in that time frame, underperforming 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 drivers.
Chubb Q3 Earnings Surpass Estimates on Higher Premium
Chubb reported third-quarter 2023 core operating income of $4.95 per share, which outpaced the Zacks Consensus Estimate by 17.6%. This outperformance was driven by higher premium revenues and improved net investment income. The bottom line improved 58.1% from the year-ago quarter.
Chubb's results reflected higher premium revenue growth across most of the segments, improved underwriting income and lower catastrophe loss.
Quarter in Detail
Net premiums written improved 9.1% year over year to $13.1 billion in the quarter, which matched the Zacks Consensus Estimate, while our estimate was $13.5 billion.
Net premiums earned rose 9.9% to $12.7 billion. Our estimate was $11.2 billion.
Net investment income was $1.3 billion, up 34.2%. The Zacks Consensus estimate was pegged at $1.2 billion, while our estimate was pinned at $1 billion.
Property and casualty (P&C) underwriting income was $1.31 billion, which increased 83.8% from the year-ago quarter. Global P&C underwriting income, excluding Agriculture, was $1.2 billion, up 117.2%.
Chubb incurred a pre-tax P&C catastrophe loss of $0.6 billion, narrower than the year-ago catastrophe loss of $1.16 billion. The P&C combined ratio improved 470 basis points (bps) on a year-over-year basis to 88.4% in the quarter under review. The Zacks Consensus Estimate for the combined ratio was pegged at 90, while our estimate was 84.9.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 8.7% year over year to $5.1 billion, which was in line with both the Zacks Consensus Estimate and our estimate. The combined ratio improved 670 bps to 84.2%. The Zacks Consensus Estimate was pegged at 88.
North America Personal P&C Insurance: Net premiums written climbed 9.6% year over year to $1.5 billion. Our estimate was $1.4 billion. The combined ratio deteriorated 20 bps to 90.3%. The Zacks Consensus Estimate was pegged at 94.
North America Agricultural Insurance: Net premiums written decreased 11.7% from the year-ago quarter to $1.5 billion. Our estimate was $2 billion, while the Zacks Consensus Estimate was pegged at $1.8 billion. The combined ratio deteriorated 260 bps to 93.2%. The Zacks Consensus Estimate was pegged at 87.
Overseas General Insurance: Net premiums written rose 21.4% year over year to $3.2 billion. Our estimate was $2.8 billion. The combined ratio improved 150 bps to 87%.
Life Insurance: Net premiums written increased 14.9% year over year to $1.4 billion. Our estimate was $1.7 billion. The Life Insurance segment income was $288 million, up 14.8%. It includes earnings from Huatai and higher net investment income.
Financial Update
The cash balance of $2.6 billion, as of Sep 30, 2023, increased 28.5% from the 2022-end level. Total shareholders’ equity increased 13.8% from the level at 2022 end to $57.5 billion as of Sep 30, 2023.
Book value per share, as of Sep 30, 2023, was $128.37, up 5.3% from the figure as of Dec 31, 2022.
Core operating return on tangible equity expanded 710 bps year over year to 21.2%.
Operating cash flow was $4.68 billion in the quarter under consideration.
Capital Deployment
In the quarter, Chubb bought back shares worth $606 million and paid $352 million in dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Chubb has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Chubb belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Travelers (TRV - Free Report) , has gained 6.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Travelers reported revenues of $10.7 billion in the last reported quarter, representing a year-over-year change of +13.9%. EPS of $1.95 for the same period compares with $2.20 a year ago.
For the current quarter, Travelers is expected to post earnings of $4.97 per share, indicating a change of +46.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Travelers. Also, the stock has a VGM Score of B.
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Chubb (CB) Up 5.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Chubb (CB - Free Report) . Shares have added about 5.1% in that time frame, underperforming 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 drivers.
Chubb Q3 Earnings Surpass Estimates on Higher Premium
Chubb reported third-quarter 2023 core operating income of $4.95 per share, which outpaced the Zacks Consensus Estimate by 17.6%. This outperformance was driven by higher premium revenues and improved net investment income. The bottom line improved 58.1% from the year-ago quarter.
Chubb's results reflected higher premium revenue growth across most of the segments, improved underwriting income and lower catastrophe loss.
Quarter in Detail
Net premiums written improved 9.1% year over year to $13.1 billion in the quarter, which matched the Zacks Consensus Estimate, while our estimate was $13.5 billion.
Net premiums earned rose 9.9% to $12.7 billion. Our estimate was $11.2 billion.
Net investment income was $1.3 billion, up 34.2%. The Zacks Consensus estimate was pegged at $1.2 billion, while our estimate was pinned at $1 billion.
Property and casualty (P&C) underwriting income was $1.31 billion, which increased 83.8% from the year-ago quarter. Global P&C underwriting income, excluding Agriculture, was $1.2 billion, up 117.2%.
Chubb incurred a pre-tax P&C catastrophe loss of $0.6 billion, narrower than the year-ago catastrophe loss of $1.16 billion. The P&C combined ratio improved 470 basis points (bps) on a year-over-year basis to 88.4% in the quarter under review. The Zacks Consensus Estimate for the combined ratio was pegged at 90, while our estimate was 84.9.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 8.7% year over year to $5.1 billion, which was in line with both the Zacks Consensus Estimate and our estimate. The combined ratio improved 670 bps to 84.2%. The Zacks Consensus Estimate was pegged at 88.
North America Personal P&C Insurance: Net premiums written climbed 9.6% year over year to $1.5 billion. Our estimate was $1.4 billion. The combined ratio deteriorated 20 bps to 90.3%. The Zacks Consensus Estimate was pegged at 94.
North America Agricultural Insurance: Net premiums written decreased 11.7% from the year-ago quarter to $1.5 billion. Our estimate was $2 billion, while the Zacks Consensus Estimate was pegged at $1.8 billion. The combined ratio deteriorated 260 bps to 93.2%. The Zacks Consensus Estimate was pegged at 87.
Overseas General Insurance: Net premiums written rose 21.4% year over year to $3.2 billion. Our estimate was $2.8 billion. The combined ratio improved 150 bps to 87%.
Life Insurance: Net premiums written increased 14.9% year over year to $1.4 billion. Our estimate was $1.7 billion. The Life Insurance segment income was $288 million, up 14.8%. It includes earnings from Huatai and higher net investment income.
Financial Update
The cash balance of $2.6 billion, as of Sep 30, 2023, increased 28.5% from the 2022-end level. Total shareholders’ equity increased 13.8% from the level at 2022 end to $57.5 billion as of Sep 30, 2023.
Book value per share, as of Sep 30, 2023, was $128.37, up 5.3% from the figure as of Dec 31, 2022.
Core operating return on tangible equity expanded 710 bps year over year to 21.2%.
Operating cash flow was $4.68 billion in the quarter under consideration.
Capital Deployment
In the quarter, Chubb bought back shares worth $606 million and paid $352 million in dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Chubb has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Chubb belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Travelers (TRV - Free Report) , has gained 6.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Travelers reported revenues of $10.7 billion in the last reported quarter, representing a year-over-year change of +13.9%. EPS of $1.95 for the same period compares with $2.20 a year ago.
For the current quarter, Travelers is expected to post earnings of $4.97 per share, indicating a change of +46.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Travelers. Also, the stock has a VGM Score of B.