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Will Catastrophe Losses Impact Chubb's (CB) Q3 Earnings?
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Chubb Limited (CB - Free Report) is slated to report third-quarter 2017 results on Oct 26, after the market closes. Last quarter, the company delivered a positive earnings surprise of 0.40%. Let’s see how things are shaping up for this announcement.
Factors to be Considered This Quarter
Chubb’s third quarter underwriting results will be affected by strings of cat events. Chubb has projected catastrophe losses from Hurricane Harvey is estimated to be nearly $520 million after-tax, whereas from Irma, it is expected to range between $640 million and $760 million after-tax. Such losses are attributable to commercial and personal property plus casualty insurance operations as well as reinsurance activities. The Zacks Consensus Estimate for combined ratio is currently pegged at 101%, a deterioration of 980 basis points from the year-ago quarter.
Premiums earned likely have reduced in the soon-to-be-reported quarter due to the company’s inability to generate enough underwriting returns. The Zacks Consensus Estimate for net premiums earned is currently pegged at $7.2 billion, reflecting a decline of 2.8% on a year-over year basis.
Additionally, the company might have incurred higher expenses, mainly due to higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits. This in turn will weigh on the P&C insurer’s operating margin expansion.
However, higher net investment income and continued share buybacks have likely cushioned the company’s bottom line. In fact, the Zacks Consensus Estimate for the third quarter of 2017 is currently pegged at a loss of 26 cents, compared to the earnings of $2.88 in the year-ago quarter. Also, the company expects its quarterly investment income run rate to range between $830 and $840.
Earnings Whispers
Our proven model does not conclusively show that Chubb is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Chubb has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 26 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Chubb carries a Zacks Rank #4 (Sell), which fails to increase the predictive power of ESP.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the insurance industry with the right combination of elements to come up with an earnings beat this quarter are as follows:
Lincoln National Corporation (LNC - Free Report) has an Earnings ESP of +0.05% and also holds a Zacks Rank of 2. The company is slated to report third-quarter earnings on Nov 1.
American Equity Investment Life Holding Company (AEL - Free Report) has an Earnings ESP of +0.40% and holds a Zacks Rank of 2. The company is set to report third-quarter earnings on Nov 6.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Will Catastrophe Losses Impact Chubb's (CB) Q3 Earnings?
Chubb Limited (CB - Free Report) is slated to report third-quarter 2017 results on Oct 26, after the market closes. Last quarter, the company delivered a positive earnings surprise of 0.40%. Let’s see how things are shaping up for this announcement.
Factors to be Considered This Quarter
Chubb’s third quarter underwriting results will be affected by strings of cat events. Chubb has projected catastrophe losses from Hurricane Harvey is estimated to be nearly $520 million after-tax, whereas from Irma, it is expected to range between $640 million and $760 million after-tax. Such losses are attributable to commercial and personal property plus casualty insurance operations as well as reinsurance activities. The Zacks Consensus Estimate for combined ratio is currently pegged at 101%, a deterioration of 980 basis points from the year-ago quarter.
Premiums earned likely have reduced in the soon-to-be-reported quarter due to the company’s inability to generate enough underwriting returns. The Zacks Consensus Estimate for net premiums earned is currently pegged at $7.2 billion, reflecting a decline of 2.8% on a year-over year basis.
Additionally, the company might have incurred higher expenses, mainly due to higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits. This in turn will weigh on the P&C insurer’s operating margin expansion.
However, higher net investment income and continued share buybacks have likely cushioned the company’s bottom line. In fact, the Zacks Consensus Estimate for the third quarter of 2017 is currently pegged at a loss of 26 cents, compared to the earnings of $2.88 in the year-ago quarter. Also, the company expects its quarterly investment income run rate to range between $830 and $840.
Earnings Whispers
Our proven model does not conclusively show that Chubb is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Chubb has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 26 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
D/B/A Chubb Limited New Price and EPS Surprise
D/B/A Chubb Limited New Price and EPS Surprise | D/B/A Chubb Limited New Quote
Zacks Rank: Chubb carries a Zacks Rank #4 (Sell), which fails to increase the predictive power of ESP.
We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the insurance industry with the right combination of elements to come up with an earnings beat this quarter are as follows:
Prudential Financial (PRU - Free Report) is set to report third-quarter earnings on Nov 1 with an Earnings ESP of +0.07% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lincoln National Corporation (LNC - Free Report) has an Earnings ESP of +0.05% and also holds a Zacks Rank of 2. The company is slated to report third-quarter earnings on Nov 1.
American Equity Investment Life Holding Company (AEL - Free Report) has an Earnings ESP of +0.40% and holds a Zacks Rank of 2. The company is set to report third-quarter earnings on Nov 6.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>