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Is a Beat in Store for Chubb Limited (CB) in Q4 Earnings?
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Chubb Limited (CB - Free Report) is poised to continue its earnings beat streak in the fourth quarter of 2023. The results are scheduled to be released on Jan 30, after market close.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) of $5.07 is indicative of a 25.2% increase from the year-ago quarter’s reported earnings of $4.05 per share. The consensus estimate for revenues is pegged at $12.9 billion, suggesting a rise of 10.4% from the year-ago quarter’s reported figure.
Chubb Limited’s earnings beat estimates in three of the trailing four quarters, missing once, the average surprise being 6.5%. This is depicted in the graph below.
Our proven model predicts an earnings beat for Chubb Limited this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP: Chubb Limited has an Earnings ESP of +1.27%. This is because the Most Accurate Estimate of $5.13 is pegged higher than the Zacks Consensus Estimate of $5.07. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chubb Limited currently carries a Zacks Rank #3.
Before we get into what to expect for the to-be-reported quarter in detail, it is worth taking a look at CB’s third-quarter performance.
Q3 Earnings Rewind
In the third quarter of 2023, core operating income of $4.95 per share outpaced the Zacks Consensus Estimate by 17.6%. This outperformance was driven by higher premium revenues and improved net investment income. Chubb Limited's results reflected higher premium revenue growth across most of the segments, improved underwriting income and lower catastrophe loss.
Now, let us see how things have shaped up prior to the fourth-quarter earnings announcement.
Factors to Note
Growing property and casualty (P&C) business, particularly in Asia, strong renewal retention, positive rate increases, new business, growth in life premiums and Cigna's business in Asia are likely to have aided Chubb Limited’s premium in the to-be-reported quarter. CB’s commercial and consumer P&C businesses in North America and internationally, as well as its Life business, are expected to have witnessed a strong performance. The Zacks Consensus Estimate for net premiums earned is pegged at $11.3 billion, indicating an increase of 7.4% from the year-ago reported figure.
The company’s personal lines business in Latin America is expected to have witnessed improvement due to the growing Mexican auto portfolio. Auto insurance, which was challenged for most of 2023, is expected to have recovered as rate increases and stabilization in repair costs provide some relief. Per November 2023 U.S. CPI data, repair costs increased 12.7% compared with 23.1% in January 2023. This trend is expected to continue in 2024, resulting in improved margins.
The top line is likely to have benefited from better premium revenues as well as higher investment income. Net investment income is expected to have benefited from higher reinvestment rates. In the fourth quarter, Chubb Limited projects adjusted net investment income in the range of $1.435-$1.45 billion.
Underwriting profit is likely to have benefited from better pricing, increased exposure and favorable prior period reserve development. The Zacks Consensus Estimate for the combined ratio is pegged at 86, indicating an improvement of 200 basis points from the year-ago reported figure. The continued share buybacks are anticipated to have provided an additional boost to the bottom line.
However, expenses are likely to have increased because of higher losses and loss expenses, policy benefits, policy acquisition costs, administrative expenses, interest expenses and amortization of purchased intangibles.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Finance space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for Coinbase’s bottom line for the to-be-reported quarter suggests a 95.1% year-over-year improvement. COIN beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 63%.
Marsh & McLennan Companies, Inc. (MMC - Free Report) has an Earnings ESP of +0.60% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Marsh’s bottom line for the to-be-reported quarter indicates an 8.8% year-over-year increase. Furthermore, the consensus mark for MMC’s revenues is pegged at $5.5 billion, suggesting 9.9% growth from a year ago. MMC beat earnings estimates in each of the past four quarters, with an average surprise of 6.5%.
Brookfield Asset Management Ltd. (BAM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Brookfield Asset Management’s bottom line for the to-be-reported quarter indicates 9.7% growth from the year-ago period. BAM beat earnings estimates twice in the past four quarters and missed on the other two occasions, with an average surprise of 0.2%.
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Is a Beat in Store for Chubb Limited (CB) in Q4 Earnings?
Chubb Limited (CB - Free Report) is poised to continue its earnings beat streak in the fourth quarter of 2023. The results are scheduled to be released on Jan 30, after market close.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) of $5.07 is indicative of a 25.2% increase from the year-ago quarter’s reported earnings of $4.05 per share. The consensus estimate for revenues is pegged at $12.9 billion, suggesting a rise of 10.4% from the year-ago quarter’s reported figure.
Chubb Limited’s earnings beat estimates in three of the trailing four quarters, missing once, the average surprise being 6.5%. This is depicted in the graph below.
Chubb Limited Price and EPS Surprise
Chubb Limited price-eps-surprise | Chubb Limited Quote
What Our Quantitative Model Predicts
Our proven model predicts an earnings beat for Chubb Limited this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP: Chubb Limited has an Earnings ESP of +1.27%. This is because the Most Accurate Estimate of $5.13 is pegged higher than the Zacks Consensus Estimate of $5.07. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chubb Limited currently carries a Zacks Rank #3.
Before we get into what to expect for the to-be-reported quarter in detail, it is worth taking a look at CB’s third-quarter performance.
Q3 Earnings Rewind
In the third quarter of 2023, core operating income of $4.95 per share outpaced the Zacks Consensus Estimate by 17.6%. This outperformance was driven by higher premium revenues and improved net investment income. Chubb Limited's results reflected higher premium revenue growth across most of the segments, improved underwriting income and lower catastrophe loss.
Now, let us see how things have shaped up prior to the fourth-quarter earnings announcement.
Factors to Note
Growing property and casualty (P&C) business, particularly in Asia, strong renewal retention, positive rate increases, new business, growth in life premiums and Cigna's business in Asia are likely to have aided Chubb Limited’s premium in the to-be-reported quarter. CB’s commercial and consumer P&C businesses in North America and internationally, as well as its Life business, are expected to have witnessed a strong performance. The Zacks Consensus Estimate for net premiums earned is pegged at $11.3 billion, indicating an increase of 7.4% from the year-ago reported figure.
The company’s personal lines business in Latin America is expected to have witnessed improvement due to the growing Mexican auto portfolio. Auto insurance, which was challenged for most of 2023, is expected to have recovered as rate increases and stabilization in repair costs provide some relief. Per November 2023 U.S. CPI data, repair costs increased 12.7% compared with 23.1% in January 2023. This trend is expected to continue in 2024, resulting in improved margins.
The top line is likely to have benefited from better premium revenues as well as higher investment income. Net investment income is expected to have benefited from higher reinvestment rates. In the fourth quarter, Chubb Limited projects adjusted net investment income in the range of $1.435-$1.45 billion.
Underwriting profit is likely to have benefited from better pricing, increased exposure and favorable prior period reserve development. The Zacks Consensus Estimate for the combined ratio is pegged at 86, indicating an improvement of 200 basis points from the year-ago reported figure. The continued share buybacks are anticipated to have provided an additional boost to the bottom line.
However, expenses are likely to have increased because of higher losses and loss expenses, policy benefits, policy acquisition costs, administrative expenses, interest expenses and amortization of purchased intangibles.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Finance space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Coinbase Global, Inc. (COIN - Free Report) has an Earnings ESP of +160.61% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coinbase’s bottom line for the to-be-reported quarter suggests a 95.1% year-over-year improvement. COIN beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 63%.
Marsh & McLennan Companies, Inc. (MMC - Free Report) has an Earnings ESP of +0.60% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Marsh’s bottom line for the to-be-reported quarter indicates an 8.8% year-over-year increase. Furthermore, the consensus mark for MMC’s revenues is pegged at $5.5 billion, suggesting 9.9% growth from a year ago. MMC beat earnings estimates in each of the past four quarters, with an average surprise of 6.5%.
Brookfield Asset Management Ltd. (BAM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Brookfield Asset Management’s bottom line for the to-be-reported quarter indicates 9.7% growth from the year-ago period. BAM beat earnings estimates twice in the past four quarters and missed on the other two occasions, with an average surprise of 0.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.