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Chubb (CB) Up 0.1% Since Last Earnings Report: Can It Continue?

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  • CB

A month has gone by since the last earnings report for Chubb (CB). Shares have added about 0.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Chubb due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Chubb Q3 Earnings Top Estimates, Premiums Improve Y/Y

Chubb Limited reported third-quarter 2021 core operating income of $2.64 per share, which beat the Zacks Consensus Estimate by 6.45%. Further, the bottom line increased 32% year over year.

The company’s results reflect improvement in premiums in most segments and higher net investment income, partly offset by higher catastrophe losses.

Quarter in Detail

Net premiums written increased 15.8% year over year to $10.5 billion in the quarter. Net premiums earned rose 14.1% year over year to $10 billion. Pre-tax net investment income was $866 million, up 3.1% year over year.

Property and casualty (P&C) reported underwriting income was $617 million, which increased 57.5% year over year. Global P&C underwriting income excluding Agriculture was $482 million, which increased 47.5% year over year.

Chubb incurred after-tax catastrophe losses of $943 million in the third quarter, which increased 18.3% year over year.

Segmental Update

North America Commercial P&C Insurance: Net premiums written increased 15.6% year over year to $4.4 billion. The combined ratio improved 180 basis points (bps) year over year to 90.1%.

North America Personal P&C Insurance: Net premiums written climbed 1.2% year over year to $1.3 billion. The combined ratio improved 920 bps to 94.3%.

North America Agricultural Insurance: Net premiums written improved 43.6% from the year-ago quarter to $1.4 billion. The combined ratio improved 340 bps to 89.9%.

Overseas General Insurance: Net premiums written increased 15.9% year over year to $2.6 billion. The combined ratio deteriorated 280 bps to 92.2%.

Global Reinsurance: Net premiums written increased 22.3% from the year-ago quarter to $221 million. The combined ratio deteriorated 310 bps to 121.4%.

Life Insurance: Net premiums written slid 0.2% year over year to $609 million.

Financial Update

Cash balance of $1.6 billion as of Sep 30, 2021 decreased 7.3% from the 2020-end level. Total shareholders’ equity declined 0.2% from the level at 2020 end to $59.3 billion as of Sep 30, 2021.

As of Sep 30, 2021, book value per share of $137.67 was up 4.4% from the figure as of Dec 31, 2020. Operating cash flow was $3.32 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Chubb has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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