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Will Chubb (CB) Beat Estimates This Earnings Season?

We expect property and casualty insurer The Chubb CorporationCB to beat expectations when it reports third-quarter 2015 results on Oct 20, after the market closes.

Why a Likely Positive Surprise?

Our proven model shows that Chubb has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +3.57%. This is because the Most Accurate estimate of $2.03 is higher than the Zacks Consensus Estimate of $1.96.

The positive ESP is a meaningful indicator of a likely positive earnings surprise for the company.

Zacks Rank: Chubb sports a Zacks Rank #1 (Strong Buy). Note that stocks with a Zacks Rank of #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings.

The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What's Driving the Better-Than-Expected Earnings?

With consistent growth in the average renewal rate and probable stable retention ratio, Chubb is expected to report solid results in its Commercial Insurance segment for the third quarter. This will, in turn, add to bottom-line growth of the company.

On the other hand, gradual market improvement and strong premium increases from international business should boost its Personal Insurance segment growth in the quarter to be reported.

Also, a not so active catastrophe environment likely has aided better underwriting results in the to-be reported quarter.

Chubb delivered earnings surprises in the last four quarters, with an average beat of 7.62%.

Stocks to Consider

Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

The Travelers Companies, Inc. TRV has an Earnings ESP of +4.98% and a Zacks Rank #1. The company is scheduled to release third-quarter earnings on Oct 21.

Arch Capital Group Ltd. ACGL has an Earnings ESP of +4.26% and a Zacks Rank #2. The company is scheduled to report third-quarter earnings on Oct 28.

Axis Capital Holdings Ltd. AXS has an Earnings ESP of +1.18% and a Zacks Rank #2. The company is scheduled to release third-quarter earnings on Oct 27.

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CHUBB CORP (CB): Free Stock Analysis Report

TRAVELERS COS (TRV): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): 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.


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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