Chubb Limited (CB) Q4 Earnings: Catastrophe Loss To Hurt?
Zacks Investment Research | Jan 25, 2018 08:21PM ET
Chubb Limited (NYSE:CB) is slated to report fourth-quarter 2017 results on Jan 30 after the market closes. Last quarter, the company delivered a positive earnings surprise of 50.00%.
Let’s see, how things are shaping up for this announcement.
Chubb’s fourth-quarter underwriting results will be affected by the California wildfires. The company has projected catastrophe loss from the same at nearly $249 million after-tax. While from all other natural catastrophe events, net insured loss is estimated at $34 million after-tax. Such losses are attributable to commercial and personal property plus casualty insurance operations as well as reinsurance activities. The Zacks Consensus Estimate for combined ratio in the to-be-reported period is pegged at 89%, a deterioration of 120 basis points from the year-ago quarter.
Moreover, such losses will render volatility to the company’s earnings. The Zacks Consensus Estimate is pegged at $2.30, reflecting a year-over-year decline of 15.4%.
Premiums earned have likely reduced in the soon-to-be-reported quarter due to the company’s inability to generate enough underwriting returns. The Zacks Consensus Estimate for net premiums earned is pegged at $6.6 billion, representing a fall of 6.8% on a year-over year basis.
Additionally, the company might have incurred higher expenses, mainly due to higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits. This in turn will weigh on the Chubb’s operating margin expansion.
Nonetheless, the company is anticipated to have witnessed higher net investment income in the yet-to-be-reported quarter. In fact, the Zacks Consensus Estimate for the metric is pegged at $773 million, translating to an increase of 3.9% on a year-over-year basis. This is mainly because of improving rate environment. Also, the company expects its quarterly investment income run rate to range between $845 and $855 million.
Earnings Whispers
Our proven model does not conclusively show that Chubb is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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