Chubb Limited CBis slated to report first-quarter 2018 results on Apr 24 after the market closes. Last quarter, the company delivered a positive earnings surprise of 37.23%.
Let’s see, how things are shaping up for this announcement.
Chubb’s first quarter underwriting results will be affected by the California mudslides (which occurred in early January).
Further, other net losses related to natural catastrophes to date globally in the first quarter, are projected at $60 million pretax.
It is important to mention here that such loss is attributable to commercial and personal property plus casualty insurance operations as well as reinsurance activities. The Zacks Consensus Estimate for the company’s combined ratio is pegged at 89%, a deterioration of 100 basis points from the year-ago quarter.
The Zacks Consensus Estimate for earnings is pegged at $2.24, reflecting a 9.7% year-over-year decrease.
Additionally, the company might have incurred increased expenses, mainly due to higher loss and loss expenses, policy acquisition costs, administrative expenses as well as policy benefits. This in turn will possibly weigh on the P&C insurer’s operating margin expansion.
However, higher net investment income is expected to have cushioned the company’s top line. In fact, the Zacks Consensus Estimate is pegged at $780 million, representing a rise of 4.7% on a year-over-year basis. This is mainly owing to the improved interest rates as well as better-than-expected private equity distributions. Also, the company expects its quarterly investment income run rate to range between $845 million and $855 million.
Moreover, the company is likely to report increased premiums in the soon-to-be-reported quarter, driven by an improved commercial property and casualty (P&C) pricing across its numerous business lines as well as a compelling product portfolio.
Strategic buyouts are expected to have contributed to this probable increase in premiums.
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 Earnings ESPand a bullish Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Chubb has an Earnings ESP of -0.17%. You can uncover the best stocks to buy or sell before they are reported with our https://www.zacks.com/premium/esp-buy?adid=zp_article_espfil...">Earnings ESP Filter.
Zacks Rank: Chubb carries a Zacks Rank #4 (Sell), which lowers the predictive power of ESP. We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.