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Chubb’s Performance in 4Q17: Earnings, Revenues

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Beating EPS estimates

Chubb (CB) has reported 4Q17 EPS (earnings per share) of $3.17, which exceeds analysts’ estimate by $0.88. The company’s core operating income in 4Q17 was $1.48 billion, and its net income was $1.53 billion. Both these numbers consist of provisional tax benefits amounting to $450 million, which is a result of the new tax reform legislation. However, these numbers also include a non-recurring expense of $50 million that is contributed to the Chubb Charitable Foundation.

Chubb had net income of $3.9 billion in 2017, while its core operating income was $3.8 billion. These numbers are inclusive of post-tax catastrophe losses that amounted to $2.2 billion.

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Chubb missed revenue estimates

Chubb’s revenues in 4Q17 were $6.5 billion, which missed Wall Street analysts’ estimate by $120 million. The new US tax reforms positively impacted its book value, leading to a rise of $450 million and negatively impacting its tangible book value, leading to a fall of $293 million.

The foreign currency fluctuations in 4Q17 had a negative impact on book value as well as tangible book value, leading to a decline by $390 million and $190 million, respectively. In 4Q17, the company’s operating cash flow stood at $1.1 billion.

Chubb’s dividend yield stood at 1.8% on an LTM (last 12-month) basis. However, its peers Allstate (ALL), Travelers (TRV), and American International Group (AIG) have dividend yields of 1.4%, 1.8%, and 2%, respectively, on an LTM basis.

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