CINF Beats EPS, Rev Up Y/Y

Cincinnati Financial Corp. (CINF - Analyst Report) reported fourth quarter 2012 operating earnings of $1.11 per share, substantially beating the Zacks Consensus Estimate of 50 cents. Earnings were also up substantially 32% year over year. The earnings beat came on the back of increased property casualty underwriting profits.

Full year 2012 operating income was $2.40 per share, up more than three fold from 73 cents per share in the year ago period.

Revenue for the quarter stood at $1.07 billion, up 12.0% year over year and ahead of the Zacks Consensus Estimate of $1.04 billion. The increase in total revenue was primarily led by higher premiums earned.

Investment income came in at $136 million, climbing 3% from the prior-year quarter.

Segment Results

The Commercial Lines Insurance segment recorded written premium of $588 million, up 8.0% from the prior-year quarter, due to higher renewal written premiums. Lower loss and loss expenses led to underwriting profit of $107 million up 15% year over year.

Combined ratio, a measure of insurer’s profitability, improved 100 basis points year over year to 82.9% due to favorable prior accident year reserve development partly offset by higher catastrophe losses.

Premiums written in the Personal Lines Insurance segment increased 13% year over year to $222 million, aided by a rise in renewals as well as growth in new business written premium. Underwriting profit was $46 million, compared with $1 million in the prior-year quarter.

Premiums written in Excess and Surplus Lines Insurance segment amounted to $27 million, surging 50.0% year over year. The increase was primarily due to the renewal of many accounts for the first time.

Earned premiums in the Life Insurance segment increased 14% year over year to $48 million led by an increase in premium from both Universal life insurance as well as Term Life insurance products. .

Book value per share – a measure of net worth – as on Dec 31, 2012 was recorded at $33.48, up 8% from Dec 31, 2011.

The company had 1,408 agency relationships at Dec 31, 2012, compared with 1,312 agency relationships at year-end 2011. The company appointed 140 new agencies, exceeding the initial full-year target of approximately 130.

Cincinnati Financial currently retains a Zacks Rank #3 (Hold). Other players from the same industry such as The Chubb Corp. (CB - Analyst Report) and The Travelers Companies Inc. (TRV - Analyst Report) and The Allstate Corp. (ALL - Analyst Report), all reported earnings ahead of the Zacks Consensus Estimate despite incurring loss from Sandy.