Chubb (CB) Q2 Earnings Surpass Estimates, Premiums Up Y/Y

Chubb Limited CB reported second-quarter 2020 core operating loss of 56 cents per share, which is narrower than the Zacks Consensus Estimate of a loss of 66 cents per share. Notably, the company had reported core operating income of $2.60 per share in the prior-year quarter.

An after-tax charge related to the COVID-19 pandemic of $1.2 billion adversely impacted the quarterly results.

Quarter in Detail

Net premiums written inched up 0.1% year over year to nearly $8.4 billion in the quarter. Net premiums earned rose 3% year over year to $8.1 billion. The upside can primarily be attributed to rate increases in the company’s North America and international operations. However, growth in premiums has been partially offset by the pandemic, which impacted the company’s consumer business including accident and health, and travel and personal lines.

Net investment income was $827 million, down 3.7% year over year.

Property and casualty (P&C) reported underwriting loss of $929 million, against the year-ago underwriting income of $727 million. Global P&C underwriting loss excluding Agriculture was $960 million, which compares unfavorably with the year-ago underwriting income of $689 million.

Chubb incurred after-tax catastrophe loss of $1.5 billion in the second quarter, soaring 583.3% year over year.

Chubb Limited Price, Consensus and EPS Surprise

Chubb Limited Price, Consensus and EPS Surprise

Chubb Limited price-consensus-eps-surprise-chart | Chubb Limited Quote

Segmental Update

North America Commercial P&C Insurance: Net premiums written increased 5.3% year over year to $3.7 billion. Combined ratio deteriorated 3080 basis points (bps) to 117.3%.

North America Personal P&C Insurance: Net premiums written climbed 1.4% year over year to $1.3 billion. Combined ratio improved 150 bps to 88.8%.

North America Agricultural Insurance: Net premiums written declined 1.1% from the year-ago quarter to $461 million. Combined ratio deteriorated 170 bps to 91.8%.

Overseas General Insurance: Net premiums written of $2.02 billion declined 10.5% year over year. The downside is primarily due to the negative impact of the pandemic on particular P&C personal lines coverages and A&H and travel insurance. Combined ratio deteriorated 1630 bps to 107.1%.

Global Reinsurance: Net premiums written advanced 4.6% from the year-ago quarter to $207 million, primarily due to positive rate increases and new business written. Combined ratio improved 1110 bps to 76.6%.

Life Insurance: Net premiums written were up 7% year over year to $619 million.

Financial Update

Cash balance of $1.6 billion as of Jun 30, 2020 inched up 1.3% from the 2019-end level.

Total shareholders’ equity decreased 1% from the level at 2019 end to $54.8 billion as of Jun 30, 2020.

As of Jun 30, 2020, book value per share of $121.32 was down 0.9% from the figure as of Dec 31, 2019.

Operating cash flow was nearly $2 billion.

Zacks Rank & Performance of Other Insurers

Chubb carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurance industry players, which have reported second-quarter earnings so far, the bottom lines of The Progressive Corporation PGR, Cincinnati Financial Corporation CINF and First American Financial Corporation FAF beat the Zacks Consensus Estimate.

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