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Chubb (CB) Q2 Earnings Beat on Better Underwriting Results
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Chubb Limited (CB - Free Report) reported second-quarter 2018 core operating income of $2.68 per share, which outpaced the Zacks Consensus Estimate of $2.63 by 1.9%. Moreover, the bottom line increased 7.2% from the prior-year period on improved underwriting as well as investment results.
Further, the company witnessed premium growth with solid performances in most businesses on a global basis including its U.S. commercial and personal lines divisions as well as Asia and Latin America P&C operations, both of which, generated double-digit growth.
Including one-time integration and merger-related expenses of 2 cents, amortization of fair value adjustment of acquired invested assets, a long-term debt of 11 cents and a net realized gains of 19 cents, net income of $2.76 per share dipped 0.4% from the year-ago quarter.
Quarter in Detail
Net premiums written improved 5.7% year over year to about $8 billion in the quarter under review. Net premiums earned increased 5.9% to $7.7 billion.
Adjusted net investment income was $890 million, up 4% from the prior-year quarter.
Property and casualty underwriting income was $824 million, up nearly 2% from the year-earlier period. Combined ratio deteriorated 40 basis points (bps) to 88.4%.
Chubb reported after-tax catastrophe loss of $173 million in the quarter under review, increasing 13.8% from the same period last year.
Integration expenses, net of tax amounted to $10 million, down 80% from the year-ago quarter.
Segment Update
North America Commercial P&C Insurance: Net premiums written increased 3.9% year over year to $3.3 billion, benefiting from higher premiums in the middle-market and small commercial divisions. Combined ratio deteriorated 20 bps to 85%.
North America Personal P&C Insurance: Net premiums written increased 6.4% year over year to $1.3 billion. Combined ratio improved 100 bps to 88.6%.
Overseas General Insurance: Net premiums written rose 9.6% year over year to $2.2 billion. Combined ratio deteriorated 160 bps to 88.9%.
North America Agricultural Insurance: Net premiums written declined 3.7% year over year to $388 million. Combined ratio improved 540 bps to 87.9%.
Global Reinsurance: Net premiums written grew 3.7% year over year to $197 million. Combined ratio of 79.3% deteriorated 1910 bps from the comparable quarter last year.
Life Insurance: Net premiums written improved 14.1% year over year to $957 million.
Financial Update
Cash balance of $1 billion as of Jun 30, 2018 improved 37.4% from 2017 end. Total shareholders’ equity slipped 0.4% to $50.9 million as of Jun 30, 2018.
Book value per share was $109.97 as of Jun 30, 2018, down 0.3% from year-end 2017. This fall was attributable to realized and unrealized loss of $407 million in the company's investment portfolio, driven by rising interest rates. Moreover, a favorable foreign currency movement contributed to the downside.
Core operating ROE was 9.8% in the quarter under consideration while operating cash flow was $1.6 billion.
Share Repurchase Update
In the reported quarter, the company bought back 2.4 million shares worth $324 million.
Among other players from the insurance industry having reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
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Chubb (CB) Q2 Earnings Beat on Better Underwriting Results
Chubb Limited (CB - Free Report) reported second-quarter 2018 core operating income of $2.68 per share, which outpaced the Zacks Consensus Estimate of $2.63 by 1.9%. Moreover, the bottom line increased 7.2% from the prior-year period on improved underwriting as well as investment results.
Chubb Limited Price, Consensus and EPS Surprise
Chubb Limited Price, Consensus and EPS Surprise | Chubb Limited Quote
Further, the company witnessed premium growth with solid performances in most businesses on a global basis including its U.S. commercial and personal lines divisions as well as Asia and Latin America P&C operations, both of which, generated double-digit growth.
Including one-time integration and merger-related expenses of 2 cents, amortization of fair value adjustment of acquired invested assets, a long-term debt of 11 cents and a net realized gains of 19 cents, net income of $2.76 per share dipped 0.4% from the year-ago quarter.
Quarter in Detail
Net premiums written improved 5.7% year over year to about $8 billion in the quarter under review. Net premiums earned increased 5.9% to $7.7 billion.
Adjusted net investment income was $890 million, up 4% from the prior-year quarter.
Property and casualty underwriting income was $824 million, up nearly 2% from the year-earlier period. Combined ratio deteriorated 40 basis points (bps) to 88.4%.
Chubb reported after-tax catastrophe loss of $173 million in the quarter under review, increasing 13.8% from the same period last year.
Integration expenses, net of tax amounted to $10 million, down 80% from the year-ago quarter.
Segment Update
North America Commercial P&C Insurance: Net premiums written increased 3.9% year over year to $3.3 billion, benefiting from higher premiums in the middle-market and small commercial divisions. Combined ratio deteriorated 20 bps to 85%.
North America Personal P&C Insurance: Net premiums written increased 6.4% year over year to $1.3 billion. Combined ratio improved 100 bps to 88.6%.
Overseas General Insurance: Net premiums written rose 9.6% year over year to $2.2 billion. Combined ratio deteriorated 160 bps to 88.9%.
North America Agricultural Insurance: Net premiums written declined 3.7% year over year to $388 million. Combined ratio improved 540 bps to 87.9%.
Global Reinsurance: Net premiums written grew 3.7% year over year to $197 million. Combined ratio of 79.3% deteriorated 1910 bps from the comparable quarter last year.
Life Insurance: Net premiums written improved 14.1% year over year to $957 million.
Financial Update
Cash balance of $1 billion as of Jun 30, 2018 improved 37.4% from 2017 end. Total shareholders’ equity slipped 0.4% to $50.9 million as of Jun 30, 2018.
Book value per share was $109.97 as of Jun 30, 2018, down 0.3% from year-end 2017. This fall was attributable to realized and unrealized loss of $407 million in the company's investment portfolio, driven by rising interest rates. Moreover, a favorable foreign currency movement contributed to the downside.
Core operating ROE was 9.8% in the quarter under consideration while operating cash flow was $1.6 billion.
Share Repurchase Update
In the reported quarter, the company bought back 2.4 million shares worth $324 million.
Zacks Rank
Chubb carries a Zacks Rank #3 (Hold). 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 having reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>