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Cincinnati Financial (CINF) Q3 Earnings Beat, Revenues Miss
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Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2018 operating income of 84 cents per share, beating the Zacks Consensus Estimate of 75 cents by 12%. Also, the bottom line improved 44.8% year over year, mainly on higher revenues, a favorable underwriting performance and solid segmental results.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Including net realized investment gains of $2.20 per share and other non-recurring items of 34 cents, the company’s net income came in at $3.38, which skyrocketed 454.1% from the year-ago quarter’s level.
Operational Update
Total operating revenues in the quarter under review were $1.5 billion, up 3.7% year over year. This improvement was driven by 4.1% higher premiums earned and a 0.7% rise in investment income. However, the top line missed the Zacks Consensus Estimate by 2.1%.
Total benefits and expenses of Cincinnati Financial inched up 1.1% year over year to $1.3 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition as well as insurance expenses.
Combined ratio — a measure of underwriting profitability — improved 250 basis points (bps) year over year to 96.8%.
Cincinnati Financial had 1,741 agency relationships as of Sep 30, 2018 compared with 1,704 as of Sep 30, 2017.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $806 million grew 1.6% year over year. This upside was primarily driven by higher premiums earned. The company delivered an underwriting profit of $34 million, which declined 12.8% from the year-ago quarter. Combined ratio deteriorated 70 bps year over year to 95.9%.
Personal Lines Insurance: Total revenues of $339 million rose 7.6% year over year owing to a substantial increase in premiums earned. The segment incurred an underwriting loss of $9 million, remaining unchanged from the year-ago quarter’s loss. Combined ratio improved 10 bps year over year to 103%.
Excess and Surplus Lines Insurance: Total revenues of $60 million rose 13.2% year over year, aided by higher earned premiums. The segment’s underwriting profit of $17 million surged 30.8% year over year. Combined ratio improved 280 bps year over year to 72%.
Life Insurance: Total revenues of $101 million grew 4.1% year over year. Total benefits and expenses decreased 2.4% year over year to $83 million.
Financial Update
As of Sep 30, 2018, Cincinnati Financial had total assets worth $22.5 billion, up 2.9% from the level at 2017 end.
Cincinnati Financial’s debt-to-capital ratio was 8.9% as of Sep 30, 2018, reflecting a marginal improvement from 9% at the end of 2017.
As of Sep 30, 2018, Cincinnati Financial’s book value per share was $51.22, up 1.8% from the tally on Dec 31, 2017.
Among other players from the insurance industry, which have already reported third-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc.’s (TRV - Free Report) outpaced the respective Zacks Consensus Estimate, while RLI Corp.’s (RLI - Free Report) earnings missed the same.
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Cincinnati Financial (CINF) Q3 Earnings Beat, Revenues Miss
Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2018 operating income of 84 cents per share, beating the Zacks Consensus Estimate of 75 cents by 12%. Also, the bottom line improved 44.8% year over year, mainly on higher revenues, a favorable underwriting performance and solid segmental results.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Cincinnati Financial Corporation Price, Consensus and EPS Surprise | Cincinnati Financial Corporation Quote
Including net realized investment gains of $2.20 per share and other non-recurring items of 34 cents, the company’s net income came in at $3.38, which skyrocketed 454.1% from the year-ago quarter’s level.
Operational Update
Total operating revenues in the quarter under review were $1.5 billion, up 3.7% year over year. This improvement was driven by 4.1% higher premiums earned and a 0.7% rise in investment income. However, the top line missed the Zacks Consensus Estimate by 2.1%.
Total benefits and expenses of Cincinnati Financial inched up 1.1% year over year to $1.3 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition as well as insurance expenses.
Combined ratio — a measure of underwriting profitability — improved 250 basis points (bps) year over year to 96.8%.
Cincinnati Financial had 1,741 agency relationships as of Sep 30, 2018 compared with 1,704 as of Sep 30, 2017.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $806 million grew 1.6% year over year. This upside was primarily driven by higher premiums earned. The company delivered an underwriting profit of $34 million, which declined 12.8% from the year-ago quarter. Combined ratio deteriorated 70 bps year over year to 95.9%.
Personal Lines Insurance: Total revenues of $339 million rose 7.6% year over year owing to a substantial increase in premiums earned. The segment incurred an underwriting loss of $9 million, remaining unchanged from the year-ago quarter’s loss. Combined ratio improved 10 bps year over year to 103%.
Excess and Surplus Lines Insurance: Total revenues of $60 million rose 13.2% year over year, aided by higher earned premiums. The segment’s underwriting profit of $17 million surged 30.8% year over year. Combined ratio improved 280 bps year over year to 72%.
Life Insurance: Total revenues of $101 million grew 4.1% year over year. Total benefits and expenses decreased 2.4% year over year to $83 million.
Financial Update
As of Sep 30, 2018, Cincinnati Financial had total assets worth $22.5 billion, up 2.9% from the level at 2017 end.
Cincinnati Financial’s debt-to-capital ratio was 8.9% as of Sep 30, 2018, reflecting a marginal improvement from 9% at the end of 2017.
As of Sep 30, 2018, Cincinnati Financial’s book value per share was $51.22, up 1.8% from the tally on Dec 31, 2017.
Zacks Rank
Cincinnati Financial 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
Among other players from the insurance industry, which have already reported third-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc.’s (TRV - Free Report) outpaced the respective Zacks Consensus Estimate, while RLI Corp.’s (RLI - Free Report) earnings missed the same.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>