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Chubb (CB) Up 2.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Chubb (CB - Free Report) . Shares have added about 2.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Chubb Q3 Earnings Surpass Expectations on Solid Underwriting
Chubb Limited reported third-quarter 2024 core operating income of $5.72 per share, which beat the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year.
Chubb's results reflect strong performance in North America P&C, Overseas General and Life Insurance divisions, solid underwriting income and improved investment income, partially offset by a higher level of catastrophe.
Quarter in Detail
Net premiums written improved 5.5% year over year to $13.8 billion in the quarter. Our estimate and the Zacks Consensus Estimate were both pegged at $14.3 billion.
Pre-tax net investment income was $1.5 billion, up 14.7% year over year. The figure matched both the Zacks Consensus Estimate as well as our estimate. Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year.
Property and casualty (P&C) underwriting income was $1.4 billion, up 11.7% year over year. The Zacks Consensus Estimate was pegged at $1.1 billion. Global P&C underwriting income, excluding Agriculture, was $1.3 billion, up 10.2%.
Chubb incurred a pre-tax P&C catastrophe loss, net of reinsurance and including reinstatement premiums of $765 million, which was wider than the year-ago catastrophe loss of $670 million. The pre-tax P&C catastrophe loss included $250 million from Hurricane Helene.
The P&C combined ratio improved 70 basis points (bps) on a year-over-year basis to 87.7% in the quarter under review. The Zacks Consensus Estimate for the combined ratio was pegged at 90.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 7.2% year over year to $5.5 billion. Our estimate was $5.3 billion. The combined ratio deteriorated 230 bps to 86.5%, reflecting due to higher catastrophe losses and lower favorable prior period development, partially offset by a better current accident year excluding catastrophe losses results. Our estimate was 87.9.
North America Personal P&C Insurance: Net premiums written climbed 10% year over year to $1.6 billion. Our estimate was $1.6 billion. The combined ratio improved 900 bps to 81.3%, reflecting lower catastrophe losses, higher favorable prior period development, and better current accident year excluding catastrophe losses results. Our estimate was 96.2.
North America Agricultural Insurance: Net premiums written decreased 9.3% from the year-ago quarter to $1.4 billion, primarily due to lower commodity prices. Our estimate was $1.5 billion. The combined ratio improved 280 bps to 90.4%. Our estimate was 75.2%.
Overseas General Insurance: Net premiums written jumped 4.9% year over year to $3.3 billion. Our estimate and the Zacks Consensus Estimate were both pegged at $3.5 billion. The combined ratio improved 100 bps to 86% due to lower catastrophe losses and higher favorable prior period development. Our estimate was 88.3.
Global Reinsurance: Net premiums written jumped 34.8% year over year to $352 million. Our estimate was $293.6 million. The combined ratio deteriorated 1,310 bps to 94.4%. Our estimate was 116.9.
Life Insurance: Net premiums written increased 6.8% year over year to $1.6 billion. Our estimate was $2 billion.
The Life Insurance segment income was $284 million, up 2.3% in constant dollars, with International Life up 9.1%. The Zacks Consensus Estimate was pegged at $312 million.
Financial Update
The cash balance of $2.6 billion, as of Sept. 30, 2024, increased 2.1% from the 2023-end level. Total shareholders’ equity grew 10% from the level at 2023-end to $70.1 billion as of Sept. 30, 2024. Book value per share, as of Sept. 30, 2024, was $163.16, up 11.1% from the figure as of Dec. 31, 2023.
Core operating return on tangible equity expanded 50 bps year over year to 21.7%. Operating cash flow was $4.32 billion in the quarter under consideration, while adjusted operating cash flow was $4.55 billion.
Capital Deployment
In the quarter, Chubb bought back shares worth $413 million and paid $369 million in dividends.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -5% due to these changes.
VGM Scores
Currently, Chubb has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Chubb is part of the Zacks Insurance - Property and Casualty industry. Over the past month, RLI Corp. (RLI - Free Report) , a stock from the same industry, has gained 15.1%. The company reported its results for the quarter ended September 2024 more than a month ago.
RLI Corp. reported revenues of $426.18 million in the last reported quarter, representing a year-over-year change of +21.6%. EPS of $1.31 for the same period compares with $0.61 a year ago.
For the current quarter, RLI Corp. is expected to post earnings of $0.93 per share, indicating a change of -39.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -20.6% over the last 30 days.
RLI Corp. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Chubb (CB) Up 2.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Chubb (CB - Free Report) . Shares have added about 2.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Chubb Q3 Earnings Surpass Expectations on Solid Underwriting
Chubb Limited reported third-quarter 2024 core operating income of $5.72 per share, which beat the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year.
Chubb's results reflect strong performance in North America P&C, Overseas General and Life Insurance divisions, solid underwriting income and improved investment income, partially offset by a higher level of catastrophe.
Quarter in Detail
Net premiums written improved 5.5% year over year to $13.8 billion in the quarter. Our estimate and the Zacks Consensus Estimate were both pegged at $14.3 billion.
Pre-tax net investment income was $1.5 billion, up 14.7% year over year. The figure matched both the Zacks Consensus Estimate as well as our estimate.
Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year.
Property and casualty (P&C) underwriting income was $1.4 billion, up 11.7% year over year. The Zacks Consensus Estimate was pegged at $1.1 billion. Global P&C underwriting income, excluding Agriculture, was $1.3 billion, up 10.2%.
Chubb incurred a pre-tax P&C catastrophe loss, net of reinsurance and including reinstatement premiums of $765 million, which was wider than the year-ago catastrophe loss of $670 million. The pre-tax P&C catastrophe loss included $250 million from Hurricane Helene.
The P&C combined ratio improved 70 basis points (bps) on a year-over-year basis to 87.7% in the quarter under review. The Zacks Consensus Estimate for the combined ratio was pegged at 90.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 7.2% year over year to $5.5 billion. Our estimate was $5.3 billion. The combined ratio deteriorated 230 bps to 86.5%, reflecting due to higher catastrophe losses and lower favorable prior period development, partially offset by a better current accident year excluding catastrophe losses results. Our estimate was 87.9.
North America Personal P&C Insurance: Net premiums written climbed 10% year over year to $1.6 billion. Our estimate was $1.6 billion. The combined ratio improved 900 bps to 81.3%, reflecting lower catastrophe losses, higher favorable prior period development, and better current accident year excluding catastrophe losses results. Our estimate was 96.2.
North America Agricultural Insurance: Net premiums written decreased 9.3% from the year-ago quarter to $1.4 billion, primarily due to lower commodity prices. Our estimate was $1.5 billion. The combined ratio improved 280 bps to 90.4%. Our estimate was 75.2%.
Overseas General Insurance: Net premiums written jumped 4.9% year over year to $3.3 billion. Our estimate and the Zacks Consensus Estimate were both pegged at $3.5 billion. The combined ratio improved 100 bps to 86% due to lower catastrophe losses and higher favorable prior period development. Our estimate was 88.3.
Global Reinsurance: Net premiums written jumped 34.8% year over year to $352 million. Our estimate was $293.6 million. The combined ratio deteriorated 1,310 bps to 94.4%. Our estimate was 116.9.
Life Insurance: Net premiums written increased 6.8% year over year to $1.6 billion. Our estimate was $2 billion.
The Life Insurance segment income was $284 million, up 2.3% in constant dollars, with International Life up 9.1%. The Zacks Consensus Estimate was pegged at $312 million.
Financial Update
The cash balance of $2.6 billion, as of Sept. 30, 2024, increased 2.1% from the 2023-end level. Total shareholders’ equity grew 10% from the level at 2023-end to $70.1 billion as of Sept. 30, 2024. Book value per share, as of Sept. 30, 2024, was $163.16, up 11.1% from the figure as of Dec. 31, 2023.
Core operating return on tangible equity expanded 50 bps year over year to 21.7%. Operating cash flow was $4.32 billion in the quarter under consideration, while adjusted operating cash flow was $4.55 billion.
Capital Deployment
In the quarter, Chubb bought back shares worth $413 million and paid $369 million in dividends.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -5% due to these changes.
VGM Scores
Currently, Chubb has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Chubb is part of the Zacks Insurance - Property and Casualty industry. Over the past month, RLI Corp. (RLI - Free Report) , a stock from the same industry, has gained 15.1%. The company reported its results for the quarter ended September 2024 more than a month ago.
RLI Corp. reported revenues of $426.18 million in the last reported quarter, representing a year-over-year change of +21.6%. EPS of $1.31 for the same period compares with $0.61 a year ago.
For the current quarter, RLI Corp. is expected to post earnings of $0.93 per share, indicating a change of -39.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -20.6% over the last 30 days.
RLI Corp. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.