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Chubb (CB) to Report Q3 Earnings: What's in the Offing?

Chubb (CB) Q3 earnings likely to reflect impact of positive rate increases, exposure growth, strong renewal retention, and growth in new business written partially offset by cat loss.

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This story originally appeared on Zacks

Chubb Limited CB is slated to report third-quarter 2021 results on Oct 26, after market close. The company delivered an earnings surprise in three of the last four quarters and missed in the other one, the average being 7.14%.

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Factors to Consider

Premiums in the third quarter are expected to have benefited from positive rate increases, exposure growth, strong renewal retention, and growth in new business written across a number of retail and wholesale lines. The Zacks Consensus Estimate for net premiums written is pegged at $10.1 billion.



Sustained low reinvestment rates on new and reinvested assets are expected to weigh on investment results. However, increased corporate bond call activity and higher private equity distributions are expected to have limited the downside. Chubb estimates the adjusted net investment income run rate to be around $900 million. The Zacks Consensus Estimate for investment income is pegged at $931 million, indicating a 10.1% increase from the year-ago reported figure.



The Zacks Consensus Estimate for revenues is pegged at $10.4 billion, indicating an increase of 2.5% 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, and policy benefits and administrative expenses.



The third quarter of 2021 bore the brunt of Hurricane Ida and floods in Europe, which are likely to have weighed on underwriting profitability and combined ratio. The Zacks Consensus Estimate for underwriting income is pegged at $920 million.



Continued share buybacks are likely to have provided an additional upside to the bottom line.



The Zacks Consensus Estimate for third-quarter 2021 earnings of $2.61 per share indicates an increase of 30.5% from the year-ago quarter reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Chubb this time around. A stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. That is not the case below.



Earnings ESP: Chubb has an Earnings ESP of -10.73%. This is because the Most Accurate Estimate of $2.33 is pegged lower than the Zacks Consensus Estimate of $2.61. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Chubb Limited Price and EPS Surprise

Zacks Rank: Chubb currently carries a Zacks Rank #3.

Stocks to Consider

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



Cigna Corporation CI has an Earnings ESP of +2.19% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.



The Hartford Financial HIG has an Earnings ESP of +5.61% and a Zacks Rank #3.



MetLife MET has an Earnings ESP of +1.20% and a Zacks Rank of 3





 



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