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Chubb (CB) Provides Catastrophe Loss Estimates for Q3

Chubb Limited CB has evaluated pre-tax catastrophe loss stemming from Hurricanes Harvey and Irma as well as earthquakes in Mexico. Loss from Harvey is projected to be $650 million pre-tax or $520 million after tax. Loss from Irma is anticipated to be between $800 million and $950 million pre-tax or $640 million and $760 million after tax.

These losses are net of reinsurance, including reinstatement premiums and are attributable to commercial and personal property plus casualty insurance operations as well as reinsurance activities.

The Zacks Consensus Estimate for earnings in the third quarter is currently pegged at 46 cents per share, plummeting 84.1% year over year. We expect this estimate to move further south as analysts incorporate the catastrophe loss impact.

Being a property and casualty insurer, Chubb could not escape the vagaries of natural disasters inducing volatility in underwriting results. Through the first half of 2017, the company incurred $316 million in catastrophe losses. Nonetheless, expense efficiencies from the merger and impressive combined ratios help Chubb generate strong underwriting profitability.

Shares of Chubb have gained 7.6% year to date, thereby underperforming the industry’s increase of 10.7%. The Zacks Consensus Estimate for 2017 has moved down 21.7% while the same for 2018 has slipped 0.4% in the last 30 days. Calamities affecting underwriting results will possibly be a drag on the share price. Chubb carries a Zacks Rank #4 (Sell).

You can see _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recently, Assurant Inc. AIZ has estimated between $134 million and $140 million pre-tax of reportable catastrophe losses from Harvey and expects gross losses from Irma to exceed its retention of $125 million pre-tax. The Travelers Companies, Inc. TRV estimates pre-tax catastrophe loss from Harvey between $375 million and $750 million or $245 million and $490 million after-tax. HCI Group, Inc. HCI projects loss between $100 million and $300 million from Irma.

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