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Chubb (CB) to Report Q2 Earnings: Is a Beat in the Cards?

Zacks Equity Research

Chubb Limited CB is slated to report second-quarter 2019 results on Jul 23 after market close. The company has a stellar record of delivering positive earing surprise in the last 11 quarters.

Let’s see how things are shaping up for this announcement.

The company’s leadership position, expanded product portfolio, increased scale, and improved commercial property and casualty pricing and prudent underwriting are expected to boost premiums.  It is expected to witness policy renewal and new business volume growth.

Strategic buyouts are expected to add to the upside. The Zacks Consensus Estimate for net premiums written is pegged at $8.1 billion.

Continued focus on capitalizing on growth opportunities in its North American business along with prudent management of risk is likely to aid the business.

Overseas General Insurance segment is expected to benefit from its middle–market and small commercial business.

A benign catastrophe environment is likely to aid underwriting profitability. The Zacks Consensus Estimate for underwriting income is pegged at $783 million while that for combined ratio is pegged at 89%.

Improved interest rate environment is also expected to aid investment results in the to-be-reported quarter. The company estimates quarterly adjusted net investment income between $880 million and $890 million. The Zacks Consensus Estimate for investment income is pegged at $883 million, indicating an upside of 7.5% year over year.

Expenses may rise due to higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits. However, expense management is likely to lead to combined ratio improvement in the to-be-reported quarter. The Zacks Consensus Estimate for combined ratio is pegged at 89%, indicating an improvement of 100 basis points year over year.

Sustained buyback should provide additional boost to the bottom line.

The Zacks Consensus Estimate for earnings stands at $2.58, implying a decline of 3.7% from the year-ago quarter.

What Our Quantitative Model States

Our proven model shows that Chubb is likely to beat on earnings in the to-be-reported quarter. This is because the stock has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Chubb has an Earnings ESP +1.52%. This is because the Most Accurate Estimate of $2.62 is higher than the Zacks Consensus Estimate of $2.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Chubb Limited Price and EPS Surprise

Chubb Limited Price and EPS Surprise
Chubb Limited Price and EPS Surprise

Chubb Limited price-eps-surprise | Chubb Limited Quote

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Zacks Rank: Chubb carries a Zacks Rank #3, which increases the predictive power of ESP.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

RenaissanceRe Holdings Ltd. RNR is set to report second-quarter earnings on Jul 23 and has an Earnings ESP of +2.16%. The company has a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

W.R. Berkley Corporation WRB has an Earnings ESP of +13.27% and is a Zacks #3 Ranked player. The company is slated to announce second-quarter earnings on Jul 23.

Arch Capital Group Ltd. ACGL has an Earnings ESP of +2.83% and a Zacks Rank of 2. The company is anticipated to release second-quarter earnings on Jul 29.

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Chubb Limited (CB) : Free Stock Analysis Report
 
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
 
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
 
RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
 
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Zacks Investment Research