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Chubb Limited (CB) Q2 Earnings Beat, Revenues Improve Y/Y

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Chubb Limited (CB - Free Report) reported second-quarter 2017 operating income of $2.50 per share, which surpassed the Zacks Consensus Estimate of $2.49 by 0.4%. Further, the bottom line improved 11% from $2.25 per share in the prior-year quarter.

Including one-time integration and merger-related expenses of 10 cents, amortization of fair value adjustment of acquired invested assets of 11 cents and long-term debt and net realized loss of 48 cents, net income skyrocketed about 80% year over year to $2.77 per share.

D/B/A Chubb Limited New Price, Consensus and EPS Surprise

 

D/B/A Chubb Limited New Price, Consensus and EPS Surprise | D/B/A Chubb Limited New Quote

Quarter in Details

Net premiums written declined nearly 0.8% year over year to about $7.5 million in the reported quarter. Net premiums earned decreased 2.3% to $7.2 million. Premiums were adversely affected due to purchase of reinsurance and merger related underwriting actions.

Net investment income was $770 million, up 9% from a year ago.

Property and casualty (P&C) underwriting income totaled $808 million, surging 33% year over year. The upside can be attributed to expense efficiencies from the merger and impressive combined ratios. Combined ratio improved 320 basis points (bps) to 88%.

Segment Update

North America Commercial P&C Insurance: Net premiums written declined 1.3% year over year to $3.2 million. Combined ratio improved 360 bps to 85.2%.

North America Personal P&C Insurance: Net premiums written increased 2% year over year to $1.2 million. Combined ratio improved 50 bps to 89.6%.

Overseas General Insurance: Net premiums written declined 1.2% year over year to $2.0 million. Combined ratio deteriorated 360 bps to 87.3%.

North America Agricultural Insurance: Net premiums written increased 7.5% year over year to $403 million. Combined ratio improved 260 bps to 93.3%.

Global Reinsurance: Net premiums written dropped nearly 17.4% year over year to $190 million. Combined ratio improved by 1960 bps to 60.2%.

Life Insurance: Net premiums written decreased 0.76% year over year to $523 million.

Financial Update

Cash balance was $1.3 million as of Jun 30 2017, up approximately 32% from the end of 2016. Total shareholders' equity grew about 4.3% from $48.3 million at year-end 2016.

Book value per share was $108.19 as of Jun 30, 2017, 4% from year-end 2016.

Operating cash flow was $627 million in the quarter.

Share Repurchase Update

Chubb spent $335 million to buy back 2.4 million shares in the quarter.

Update on Integration-Related Realized and Annualized Run-Rate Savings

Chubb now expects to achieve annualized run-rate savings of $875 million by the end of 2018. This is increased from $800 million guided earlier. Integration and merger-related expenses are projected at $903 million, up from $809 million.

Zacks Rank

Chubb currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Performance of Other Insurers

Among other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at Brown & Brown, Inc.(BRO and Fidelity National Financial, Inc. (FNF - Free Report) beat their respective Zacks Consensus Estimates, while The Progressive Corporation PGR - Free Report) ">(PGR - Free Report) missed the same.

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