Cincinnati Financial (CINF) Q3 Earnings Miss, Revenues Up Y/Y
Cincinnati Financial Corporation CINF reported third-quarter 2020 operating income of 39 cents per share, which missed the Zacks Consensus Estimate by 4.9%. The bottom line also declined 63.9% year over year.
The company’s results reflected weak underwriting results, higher catastrophe losses and elevated costs, partly offset by higher revenues.
Total operating revenues in the quarter under review were $1.7 billion, up 5% year over year. This improvement was driven by higher premiums earned and increase in investment income. However, the top line missed the Zacks Consensus Estimate by 0.5%.
Net written premiums increased 3% year over year to $1.4 billion, owing to price hikes and premium growth initiatives. Investment income improved 4% year over year to $167 million driven by improved dividends in stock portfolio and higher interest from bond portfolio.
Total benefits and expenses of Cincinnati Financial increased 14.7% year over year to $1.6 billion, primarily due to higher insurance loss and contract holders’ benefits.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed underwriting loss of $51 million against underwriting profit of $83 million in the year-earlier period.
Combined ratio — a measure of underwriting profitability — deteriorated 940 basis points (bps) year over year to 103.6%.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $866 million grew 4% year over year. This upside was primarily driven by solid premiums earned. The segment reported underwriting loss of $20 million against underwriting profit of $56 million in the prior-year period. Combined ratio deteriorated 900 bps year over year to 102.4%.
Personal Lines Insurance: Total revenues of $368 million rose 4% year over year owing to 4% increase in premiums earned. The segment reported underwriting loss of $2 million, against the year-ago profit of $3 million. Combined ratio deteriorated 110 bps year over year to 100.7%.
Excess and Surplus Lines Insurance: Total revenues of $82 million rose 12% year over year, aided by 14% higher earned premiums. The segment’s underwriting profit dropped 8% year over year to $11 million. Combined ratio deteriorated 350 bps year over year to 86.7%.
Life Insurance: Total revenues were $114 million, up 7% year over year, aided by 3% higher earned premiums and 5% increased investment income. Total benefits and expenses increased 1% year over year to $92 million due to higher contract holders’ benefits incurred.
As of Sep 30, 2020, Cincinnati Financial had total assets worth $26.4 billion, up 3.8% from the level at 2019 end. Total debt amounted to $911 million as of Sep 30, 2020, up 10.2% from 2019-end level.
Cincinnati Financial’s debt-to-capital ratio was 8.5% as of Sep 30, 2020, up 80 bps from end of 2019.
As of Sep 30, 2020, Cincinnati Financial’s book value per share was at $60.57, up 0.03% from 2019 end.
Cincinnati Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Of the insurance industry players, which have reported third-quarter results so far, earnings of The Progressive Corporation PGR, The Travelers Companies, Inc. TRV and RLI Corp. RLI beat the respective Zacks Consensus Estimate.
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