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Chubb Limited (CB - Free Report) reported third-quarter 2019 core operating income of $2.70 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The upside was driven by higher premium revenues. The bottom line improved 12% from the year-ago quarter.
The company also benefited from an improved pricing and underwriting environment as well as product, customer and distribution-related growth initiatives in the United States, Asia and Latin America.
Quarter in Detail
Net premiums written improved 6.3% year over year to about $8.6 billion in the quarter. Net premiums earned rose 5.3% to $8.3 billion.
Net investment income was $873 million, up 6.1%.
Property and casualty (P&C) underwriting income was $754 million, up 12.6% from the year-ago quarter. Global P&C underwriting income, which excludes Agriculture, was $753 million, up 27.7%.
Combined ratio improved 70 basis points (bps) to 90.2%, reflecting lower catastrophe losses and higher crop insurance losses.
Chubb reported after-tax catastrophe loss of $191 million in the third quarter, plunging 48.7% year over year.
North America Commercial P&C Insurance: Net premiums written increased 7.9% year over year to about $3.5 billion. Combined ratio deteriorated 110 bps to 86.9%.
North America Personal P&C Insurance: Net premiums written slipped 2.7% year over year to $1.3 billion. Combined ratio improved 1850 bps to 83.1%.
North America Agricultural Insurance: Net premiums written increased 6.2% from the year-ago quarter to $938 million. Combined ratio deteriorated 920 bps to 99.9%.
Overseas General Insurance: Net premiums written rose 7.1% year over year to $2.2 billion. Combined ratio deteriorated 20 bps to 90.5%.
Global Reinsurance: Net premiums written declined 14% from the year-ago quarter to $141 million. Combined ratio of 87.7% improved 560 bps.
Life Insurance: Net premiums written were up 8.5% year over year to $612 million on the back of growth in the Asian international life operations.
Financial Update
Cash balance of $1.5 billion as of Sep 30, 2019 increased 18.5% from 2018 end.
Total shareholders’ equity increased 8.5% from 2018 end to $54.6 billion as of Sep 30, 2019.
Book value per share was $120.33 as of Sep 30, 2019, up 9.8% from the Dec 31, 2018 figure.
Core operating ROE was 9.5%.
Operating cash flow was $2.2 billion in the quarter under consideration.
Share Repurchase Update
In the quarter, the company bought back shares worth $478 million.
Of the insurance industry players that have reported third-quarter results so far, the bottom-line figures of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate. However, The Travelers Companies, Inc. (TRV - Free Report) missed the mark.
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Chubb (CB) Q3 Earnings Beat Estimates, Premiums Rise Y/Y
Chubb Limited (CB - Free Report) reported third-quarter 2019 core operating income of $2.70 per share, which outpaced the Zacks Consensus Estimate by 2.3%. The upside was driven by higher premium revenues. The bottom line improved 12% from the year-ago quarter.
The company also benefited from an improved pricing and underwriting environment as well as product, customer and distribution-related growth initiatives in the United States, Asia and Latin America.
Quarter in Detail
Net premiums written improved 6.3% year over year to about $8.6 billion in the quarter. Net premiums earned rose 5.3% to $8.3 billion.
Net investment income was $873 million, up 6.1%.
Property and casualty (P&C) underwriting income was $754 million, up 12.6% from the year-ago quarter. Global P&C underwriting income, which excludes Agriculture, was $753 million, up 27.7%.
Combined ratio improved 70 basis points (bps) to 90.2%, reflecting lower catastrophe losses and higher crop insurance losses.
Chubb reported after-tax catastrophe loss of $191 million in the third quarter, plunging 48.7% year over year.
Chubb Limited Price, Consensus and EPS Surprise
Chubb Limited price-consensus-eps-surprise-chart | Chubb Limited Quote
Segment Update
North America Commercial P&C Insurance: Net premiums written increased 7.9% year over year to about $3.5 billion. Combined ratio deteriorated 110 bps to 86.9%.
North America Personal P&C Insurance: Net premiums written slipped 2.7% year over year to $1.3 billion. Combined ratio improved 1850 bps to 83.1%.
North America Agricultural Insurance: Net premiums written increased 6.2% from the year-ago quarter to $938 million. Combined ratio deteriorated 920 bps to 99.9%.
Overseas General Insurance: Net premiums written rose 7.1% year over year to $2.2 billion. Combined ratio deteriorated 20 bps to 90.5%.
Global Reinsurance: Net premiums written declined 14% from the year-ago quarter to $141 million. Combined ratio of 87.7% improved 560 bps.
Life Insurance: Net premiums written were up 8.5% year over year to $612 million on the back of growth in the Asian international life operations.
Financial Update
Cash balance of $1.5 billion as of Sep 30, 2019 increased 18.5% from 2018 end.
Total shareholders’ equity increased 8.5% from 2018 end to $54.6 billion as of Sep 30, 2019.
Book value per share was $120.33 as of Sep 30, 2019, up 9.8% from the Dec 31, 2018 figure.
Core operating ROE was 9.5%.
Operating cash flow was $2.2 billion in the quarter under consideration.
Share Repurchase Update
In the quarter, the company bought back shares worth $478 million.
Zacks Rank
Chubb currently 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
Of the insurance industry players that have reported third-quarter results so far, the bottom-line figures of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate. However, The Travelers Companies, Inc. (TRV - Free Report) missed the mark.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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