On Sep 26, we upgraded our recommendation on the shares of
Cincinnati Financial Corp.
) to Outperform from Neutral, reflecting our optimism regarding
the company's growth prospects.
Cincinnati Financial has continuously witnessed improving
business conditions in Commercial line of business. This
improvement has been due to several growth initiatives as well as
a gradual increase in insurance rates.
Cincinnati Financial's Excess and Surplus line is also
performing well. The segment has been able to achieve rate
increases for the last 34 consecutive months, continuing at a low
double-digit range. We expect the trend to continue, given the
improving excess and surplus lines market.
A strong relationship with its agencies also bodes well for
Cincinnati Financial. The company made 140 appointments in 2012
and appointed 63 new agencies as of Jun 30th 2013. The company
now estimates that it will exceed its initial 2013 goal of 65
agencies by about 15. According to management, these new
agencies will bring in $5.0 billion of direct written premium by
Cincinnati Financial's strong balance sheet, low reliance on
debt and a disciplined capital management strategy also aids its
Cincinnati Financial has also maintained its tradition of
increasing dividend every year and has been doing so for the past
52 years. It is regular in buying back shares.
This Zacks Rank # 1 (Strong Buy) property and casualty insurer
has been witnessing an increase in earnings estimate over the
past 60 days. Earnings estimates for 2013 increased 15.3% to
$2.56 as both the analysts covering the stock pulled up their
estimates. The same for 2014 increased 4.3% to $2.43 over this
time frame as the same number of analysts tweaked their estimates
Other Stocks to Consider
CNA Financial Corp.
Global Indemnity plc
) carry favorable Zacks Rank #1 (Strong Buy) and look
CINCINNATI FINL (CINF): Free Stock Analysis
CNA FINL CORP (CNA): Free Stock Analysis
GLOBAL INDEMNTY (GBLI): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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