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Chubb Limited (CB) to Report Q3 Earnings: What's in Store?

Chubb Limited CB is slated to report third-quarter 2020 results on Oct 27, after market close. The company delivered earnings surprise of 215.15% in the last reported quarter.

Factors to Consider

Premiums in the third quarter are expected to have benefited from better pricing across almost all business lines, renewal retention, business growth, expanded product portfolio and increased scale. However, given the pandemic, the company expects reduced premiums in the to-be- reported quarter.

A sustained low interest rate environment is expected to weigh on investment results. However, growth in invested assets and solid cash flows is expected to have limited the downside. Chubb estimates adjusted net investment income run rate to be in the range of $850 million to $860 million. The Zacks Consensus Estimate for investment income is pegged at $853 million, indicating 2.3% decline from the year-ago reported figure.

The Zacks Consensus Estimate for revenues is pegged at $9.5 billion, indicating an upside of about 3% from the year-ago reported figure.

Total benefits and expenses are likely to have increased mainly due to loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits. Chubb estimates increase in insurance claims from the COVID-19 pandemic to weigh on operating income.

The third quarter of a year generally bears the brunt of catastrophes as the hurricane season typically starts in June and lasts through November, gathering strength in August and September. Being a property and casualty Chubb’s exposure to cat loss is likely to have weighed on underwriting profitability.

The Zacks Consensus Estimate for third-quarter 2020 indicates a decline of 20% from the year-ago quarter reported figure.

Chubb Limited Price and EPS Surprise

  Chubb Limited Price and EPS Surprise

Chubb Limited price-eps-surprise | Chubb Limited Quote

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Chubb this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case as you can see below.

Earnings ESP: Chubb has an Earnings ESP of -3.32%. This is because both the Most Accurate Estimate of $2.09 is pegged lower than the Zacks Consensus Estimate of $2.16. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Chubb currently carries a Zacks Rank of 4 (Sell).

Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Arch Capital Group ACGL has an Earnings ESP of +4.00% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Watford Holdings WTRE has an Earnings ESP of +70.13% and a Zacks Rank #3.

CNO Financial CNO has an Earnings ESP of +2.52% and a Zacks Rank of 2.

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CNO Financial Group, Inc. (CNO): Free Stock Analysis Report
 
Chubb Limited (CB): Free Stock Analysis Report
 
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Watford Holdings Ltd. (WTRE): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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