Chubb Beats on Q2 Earnings, Improves Y/Y on High Premiums - Analyst Blog

The Chubb Corporation CB reported second-quarter 2015 operating income of $2.08 per share, which surpassed the Zacks Consensus Estimate by 11.2% and improved 22% year over year.

The better-than-expected earnings came on the back of higher premiums written in its Personal and Commercial lines of business, partly offset by a higher catastrophe loss. A lower share count due to share buy backs also contributed to bottom-line growth.

 

The Chubb Corporation - Earnings Surprise | FindTheBest

 

 

Including post tax realized investment gains, net income was $2.14 per share, up from $2.03 in the year-ago quarter.

Net written premiums for the reported quarter rose 3% year over year to $3.3 billion. While Chubb registered a 6% rise in premiums from its U.S. business, premiums declined 9% outside the U.S. Property and Casualty investment income after taxes came in at $318 million, down 5.4% year over year.

Chubb’s underwriting income of $428 million rose almost 54% year over year due to increased premiums and a decrease in loss and loss expenses, and deferred policy acquisition costs.

Combined ratio for the quarter improved 450 basis points (bps) year over year to 85.5%.

Book value per share, which is a measure of net worth, was $70.12, up almost 2.2% year over year.    

Segment Update

At Chubb’s Personal Insurance segment, net written premiums increased 2% year over year to $1.2 billion during the reported quarter. Combined ratio decreased 320 bps year over year to 89.5%. Within the segment, net written premiums for Homeowners, increased 4%, Personal Automobile decreased 3% and Other Personal lines remained in line with the year-ago quarter.

The Commercial Insurance segment’s net written premiums rose 5% year over year to $1.4 billion, primarily driven by higher premiums in Casualty, Workers followed by Property and Marine insurance. Combined ratio improved 610 bps year over year to 87.2%.

Chubb's Specialty Insurance net written premiums remained flat year over year at $656 million, primarily due to flattish premiums from its Professional Liability and Surety segments. Combined ratio, however, improved 350 bps year over year to 75.2%.

Capital Management

During the reported quarter, Chubb repurchased 2.8 million shares of its common stock for $278 million.

Business Update

At the end of the second quarter, Chubb entered into an agreement with ACE Limited ACE pertaining to which, the latter will acquire Chubb. The transaction is valued at $62.93 in cash and 0.6019 per ACE common share for each share of Chubb common stock. The deal is pending regulatory approvals and is slated to close in the first quarter of 2016.

Zacks Rank

Currently, Chubb carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

The Travelers Companies Inc. TRV posted operating earnings of $2.52 per share in the second quarter of 2015, which beat the Zacks Consensus Estimate by 18.9%. Earnings improved 31% year over year.

Progressive Corp.’s PGR earnings per share for the second quarter of 2015 came in at 54 cents, in line with the Zacks Consensus Estimate. Earnings were up 20% year over year on higher premiums.

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