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Will Chubb (CB) Pull Off a Surprise This Earnings Season?

Chubb Limited CB is slated to report fourth-quarter 2022 earnings on Jan 31, after market close. The insurer delivered an earnings surprise in each of the last four quarters, the average being 11.75%.

Factors to Consider

Premiums in the fourth quarter are expected to have benefited from strong premium retention, including both rate and exposure increases, new business across property, primary and excess casualty, commercial multiple peril and surety and renewal retention. The Zacks Consensus Estimate for net premiums earned is pegged at $10.5 billion, indicating an increase of 13% from the year-ago reported figure. We expect net premiums earned to be $9.7 billion.

The interest rate environment has started to improve. Insurers, being the direct beneficiaries of an improving rate environment, are likely to have gained.

Net investment income is likely to have benefited from rising interest rate environment and higher reinvestment rates on fixed maturities. Chubb projects adjusted net investment income in the fourth quarter to be in the range of $1.4 billion-$1.6 billion. We expect net investment income to be $965.3 million.

The Zacks Consensus Estimate for investment income is pegged at $965 million, indicating a 14.5% increase from the year-ago reported figure.

The top line is likely to have benefited from improved premium revenues as well as higher investment income. The Zacks Consensus Estimate for revenues is pegged at $11.6 billion, indicating an increase of 13.2% from the year-ago reported figure. We expect total revenues to be $11.2 billion.

Higher-than-expected cat losses are likely to have weighed on underwriting profitability and thus, combined ratio. The Zacks Consensus Estimate for combined ratio is pegged at 87, indicating a deterioration of 100 basis points from the year-ago reported figure.

Expenses are likely to have increased because of higher loss and loss expenses, policy benefits, policy acquisition costs, administrative expenses, interest expense, other expense, amortization of purchased intangible and Cigna integration expenses.

The continued share buyback is anticipated to have provided an additional boost to the bottom line.

The Zacks Consensus Estimate for fourth-quarter 2022 earnings of $4.22 per share indicates an increase of 10.7% from the year-ago quarter reported figure. We expect the bottom line to be $4.89 per share for the to-be-reported quarter.

What the Zacks Model Says

Our proven model predicts an earnings beat for Chubb this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Chubb has an Earnings ESP of +2.72%. This is because the Most Accurate Estimate of $4.33 is pegged higher than the Zacks Consensus Estimate of $4.22. 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

Chubb Limited Price and EPS Surprise
Chubb Limited Price and EPS Surprise

Chubb Limited price-eps-surprise | Chubb Limited Quote

Zacks Rank: Chubb currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

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

Arch Capital Group Ltd. ACGL has an Earnings ESP of +5.42% and a Zacks Rank of 3. The Zacks Consensus Estimate for Arch Capital’s fourth-quarter 2022 earnings is pegged at $1.34 per share, indicating an increase of 5.5% from the year-ago reported figure.

ACGL’s earnings beat estimates in three of the last four quarters and missed in the other one.

NMI Holdings Inc. NMIH has an Earnings ESP of +2.33% and a Zacks Rank of 3. The Zacks Consensus Estimate for NMI Holdings’ fourth-quarter 2022 earnings is pegged at 86 cents per share, indicating an increase of 17.8% from the year-ago reported figure.

NMIH’s earnings beat estimates in each of the four trailing quarters.

Everest Re Group, Ltd. RE has an Earnings ESP of +5.61% and a Zacks Rank of 3. The Zacks Consensus Estimate for Everest Re’s fourth-quarter 2022 earnings is pegged at $9.29 per share, indicating an increase of 1.9% from the year-ago reported figure.

RE’s earnings beat estimates in three of the last four quarters and missed in the other one.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Chubb Limited (CB) : Free Stock Analysis Report

Everest Re Group, Ltd. (RE) : Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

NMI Holdings Inc (NMIH) : Free Stock Analysis Report

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Zacks Investment Research