Cincinnati Financial Corp.
(
CINF
) reported third quarter 2012 operating earnings of 64 cents per
share, substantially beating the Zacks Consensus Estimate of 41
cents. Earnings compared favorably with 13 cents reported in the
year-ago quarter.
Including net realized investment gains and losses, CINF reported
a net income of $111 million or 68 cents per share improving
significantly from $19 million or 11 cents per share in the
year-ago quarter. The quarter benefited from strong property
casualty underwriting.
Revenue for the quarter stood at $1.04 billion, up 10.0% year
over year. The increase in total revenue was primarily led by
higher premiums earned during the quarter.
Investment income came in at $132 million, climbing 2% from the
prior-year quarter.
Total benefits and expenses decreased 5.4% year over year to $883
million due to lower insurance loss and benefits.
Segment Results
The Commercial Lines Insurance segment recorded written premium
of $619 million, up 13.0% from the prior-year quarter, reflecting
growth in renewal written premium. Lower loss and loss expenses
led to underwriting profit of $60 million in contrast with an
operating loss of $44 million in the year-ago quarter.
Combined ratio, a measure of insurer's profitability, improved
1770 basis points year over year to 90.2%, owing to lower
catastrophe losses.
Premiums written in the Personal Lines Insurance segment
increased 14% year over year to $253 million, aided by a rise in
renewals as well as growth in new business written premium.
Despite a higher top line, the segment posted underwriting loss
of $12 million, compared with a loss of 38 million in the
prior-year quarter.
Premiums written in the Excess and Surplus Lines Insurance
segment amounted to $27 million, surging 23.0% year over year.
The elevation was largely driven by persistent increase in
average renewal price in the high-digit range.
Earned premiums in the Life Insurance segment fell 12% year over
year to $38 million on the back of an 80% decline in Universal
life insurance.
In the quarter under review, book value per share - a measure of
net worth - was recorded at $32.95, up 6% from December 31, 2011.
Peer Take
Cincinnati Financial closely competes with
The Chubb Corp.
(
CB
) and
The Travelers Companies Inc.
(
TRV
). Chubb reported third-quarter operating earnings of $1.98 per
share, significantly ahead of the Zacks Consensus Estimate of
$1.51 per share. Travelers reported earnings of $2.22 per share
in the third quarter of 2012, outshining the Zacks Consensus
Estimate of $1.61 per share.
Zacks Rank
Cincinnati Financial currently retains a Zacks #1 Rank, which
translates into a short-term Buy rating. However, we maintain a
long-term 'Neutral' recommendation on its shares.
(NOTE: We are reissuing this article to correct a mistake.
The original article, issued earlier today, October 26, 2012,
is no longer to be relied upon.)
CINCINNATI FINL (CINF): Free Stock Analysis
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