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We are reiterating our Outperform recommendation on the shares of Cincinnati Financial Corp. (CINF - Analyst Report), following the first quarter earnings results. Cincinnati Financial reported a solid first quarter which included a 18% positive earnings surprise. Over the past four quarters this Zacks Rank #2 (Buy) insurer delivered an average positive surprise of 65%.
 
Why reiteration?
 
On Apr 24, Cincinnati Financial reported first-quarter operating earnings of 78 cents per share, exceeding the Zacks Consensus Estimate of 66 cents per share. Results were also 63% higher than the year-ago quarter’s earnings of $0.48. The earnings beat came on the back of increased underwriting profits from each of the three property casualty segments as well as better performance by the life insurance segment.
 
Revenue for Cincinnati Financial during the first quarter was $1.1 billion, up 12% year over year and ahead of the Zacks Consensus Estimate of $1.06 billion. 
 
Cincinnati Financial has been witnessing rising earnings estimates. Over the last 60 days, 2 of the 4 estimates were raised, pushing the Zacks Consensus Estimate by 6.2% to $2.23 for 2013. Estimates for 2014 rose 2.7% to $2.27 as the same number of estimates were raised over the same time frame. 
 
Cincinnati Financial is continuously witnessing improving business conditions in Commercial and Excess and Surplus lines insurance business. 
 
A strong relationship with its agencies also bodes well for Cincinnati Financial. 
 
However, Cincinnati Financial faces some headwinds in the form of a low interest rate environment and exposure to catastrophes. imparting volatility to the earnings.
 
Nevertheless, Cincinnati Financial’s solid capital position with low reliance on debt gives it an inherent strength. 
 
Other Stocks to Consider
 
Property and casualty insurers HCI Group Inc. (HCI - Snapshot Report), Hanover Insurance Group Inc.  (THG - Snapshot Report) and Montpelier Re Holdings Ltd. (MRH - Analyst Report) carry favorable Zacks Rank #1 (Strong Buy) and look impressive.

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