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Cincinnati Financial (CINF) Misses on Q1 Earnings & Revenues

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Cincinnati Financial Corporation (CINF - Free Report) reported first-quarter 2018 operating income of 72 cents per share, which missed the Zacks Consensus Estimate of 82 cents by 12.2%. Nonetheless, the bottom line improved 22% year over year, mainly on higher revenues and a solid segmental performance.

Cincinnati Financial Corporation Price, Consensus and EPS Surprise

 

Cincinnati Financial Corporation Price, Consensus and EPS Surprise | Cincinnati Financial Corporation Quote

 

Including net realized investment loss of 91 cents per share, the company’s net loss came in at 19 cents versus the net income of $1.21 in the year-ago quarter.

Operational Update    

Total operating revenues in the quarter under review were $1.4 billion, up 3.8% year over year. The revenue growth was driven by 4.3% higher premiums earned and a 0.7% rise in investment income. However, the top line missed the Zacks Consensus Estimate by 0.6%.

Total benefits and expenses of Cincinnati Financial increased 2.2% year over year to $1.3 billion, primarily due to higher underwriting, acquisition and insurance expenses plus insurance loss and contract holders’ benefits.

Combined ratio — a measure of underwriting profitability — improved 180 basis points (bps) year over year to 97.9%.

Cincinnati Financial had 1,724 agency relationships as of Mar 31, 2018 compared with 1,643 as of Mar 31, 2017.

Quarterly Segment Update

Commercial Lines Insurance: Total revenues of $792 million grew 1.3% year over year. This upside was primarily driven by an increase in premiums earned as well as fee revenues. The company delivered an underwriting profit of $15 million against the year-ago loss of $2 million. Combined ratio also improved 210 bps year over year to 98.3%.

Personal Lines Insurance: Total revenues of $326 million rose 7.9% year over year owing to a noticeable increase in premiums earned. The segment incurred an underwriting loss of $9 million, narrower than the year-ago loss of $15 million. Moreover, combined ratio improved 230 bps year over year to 103.2%.

Excess and Surplus Lines Insurance: Total revenues of $56 million increased 16.7% year over year. The segment’s underwriting profit of $18 million remained flat year over year. Combined ratio deteriorated 650 bps year over year to 68.8%.

Life Insurance: Total revenues of $99 million declined 2.9% year over year. Total benefits and expenses increased 1.2% year over year to $83 million.

Financial Update

As of Mar 31, 2018, Cincinnati Financial had total assets worth $21.5 billion, up 1.7% from the 2017-end level.

Cincinnati Financial’s debt-to-capital ratio was 9.3% as of Mar 31, 2018, reflecting a slight deterioration from 9.0% at the end of 2017.

As of Mar 31, 2018, Cincinnati Financial’s book value per share was $48.42, down 3.7% from Dec 31, 2017.

Zacks Rank

Cincinnati Financial carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the same space, which have already reported first-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) outpaced the respective Zacks Consensus Estimate while The Travelers Companies, Inc. (TRV - Free Report) missed the same.

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