Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2019 operating income of $1.08 per share, which beat the Zacks Consensus Estimate by 16.1%. Also, the bottom line improved 28.6% year over year.
Notably, the results reflected price increases and premium growth initiatives.
Operational Update
Total operating revenues in the quarter under review were $1.6 billion, up 10.8% year over year. This improvement was driven by 11% higher premiums earned and a 5% rise in investment income.
Net written premiums increased 8% from the prior-year quarter, reflecting price increases and premium growth initiatives.
Total benefits and expenses of Cincinnati Financial increased 8.4% year over year to $1.4 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition and insurance expenses plus other operating expenses.
Combined ratio — a measure of underwriting profitability — improved 260 basis points (bps) year over year to 94.2%.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $835 million grew 4% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $56 million surged 65% year over year. The combined ratio also improved 250 bps year over year to 93.4%.
Personal Lines Insurance: Total revenues of $355 million rose 5% year over year owing to 5% increase in premiums earned. The segment generated underwriting profit of $3 million, which marked a rebound from the year-ago loss of $9 million. The combined ratio improved 340 bps year over year to 99.6%.
Excess and Surplus Lines Insurance: Total revenues of $73 million rose 22% year over year, aided by 20% higher earned premiums. However, the segment’s underwriting profit of $12 million dropped 29% year over year. Moreover, the combined ratio deteriorated 1120 bps year over year to 83.2%.
Life Insurance: Total revenues were $107 million, up 6% year over year. Total benefits and expenses increased 10% year over year to $91 million.
Financial Update
As of Sep 30, 2019, cash and total investments were $19.1 billion, up 13.9% from 2018-end.
Total assets of $24.7 billion increased 12.8% from 2018-end.
Total debt amounted to $826 million, up 0.7% from 2018-end.
Cincinnati Financial’s debt-to-capital ratio was 8.1% as of Sep 30, 2019, improving 140 bps from the end of 2018.
As of Sep 30, 2019, its book value per share was at a record high of $57.37, up 19.3% from 2018-end.
Zacks Rank
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 that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies (TRV - Free Report) missed the same.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2019 operating income of $1.08 per share, which beat the Zacks Consensus Estimate by 16.1%. Also, the bottom line improved 28.6% year over year.
Notably, the results reflected price increases and premium growth initiatives.
Operational Update
Total operating revenues in the quarter under review were $1.6 billion, up 10.8% year over year. This improvement was driven by 11% higher premiums earned and a 5% rise in investment income.
Net written premiums increased 8% from the prior-year quarter, reflecting price increases and premium growth initiatives.
Total benefits and expenses of Cincinnati Financial increased 8.4% year over year to $1.4 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition and insurance expenses plus other operating expenses.
Combined ratio — a measure of underwriting profitability — improved 260 basis points (bps) year over year to 94.2%.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $835 million grew 4% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $56 million surged 65% year over year. The combined ratio also improved 250 bps year over year to 93.4%.
Personal Lines Insurance: Total revenues of $355 million rose 5% year over year owing to 5% increase in premiums earned. The segment generated underwriting profit of $3 million, which marked a rebound from the year-ago loss of $9 million. The combined ratio improved 340 bps year over year to 99.6%.
Excess and Surplus Lines Insurance: Total revenues of $73 million rose 22% year over year, aided by 20% higher earned premiums. However, the segment’s underwriting profit of $12 million dropped 29% year over year. Moreover, the combined ratio deteriorated 1120 bps year over year to 83.2%.
Life Insurance: Total revenues were $107 million, up 6% year over year. Total benefits and expenses increased 10% year over year to $91 million.
Financial Update
As of Sep 30, 2019, cash and total investments were $19.1 billion, up 13.9% from 2018-end.
Total assets of $24.7 billion increased 12.8% from 2018-end.
Total debt amounted to $826 million, up 0.7% from 2018-end.
Cincinnati Financial’s debt-to-capital ratio was 8.1% as of Sep 30, 2019, improving 140 bps from the end of 2018.
As of Sep 30, 2019, its book value per share was at a record high of $57.37, up 19.3% from 2018-end.
Zacks Rank
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 that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies (TRV - Free Report) missed the same.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on RLI - FREE
Get the latest research report on TRV - FREE
Get the latest research report on CINF - FREE
Get the latest research report on PGR - FREE