Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2019 operating income of $1.23 per share, beating the Zacks Consensus Estimate by 10.8%. Also, the bottom line improved 25.5% year over year on the back of higher revenues.
Operational Update
Total operating revenues in the quarter under review were $1.6 billion, up 8.8% year over year. This improvement was driven by 9% higher premiums earned and a 4% rise in investment income.
Net written premiums increased 11% from the prior-year quarter, reflecting price increases and premium growth initiatives.
Total benefits and expenses of Cincinnati Financial increased 6.2% year over year to $1.4 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition and insurance expenses.
Combined ratio — a measure of underwriting profitability — improved 230 basis points (bps) year over year to 91.6%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $854 million grew 5% year over year. This upside was primarily boosted by solid premiums earned. Underwriting profit of $97 million surged 76.4% year over year as well. The combined ratio also contracted 460 bps year over year to 88.8%.
Personal Lines Insurance: Total revenues of $359 million rose 5% year over year owing to 5% increase in premiums earned. The segment generated underwriting profit of $4 million, plunging 87% year over year. The combined ratio expanded 760 bps year over year to 99.3%.
Excess and Surplus Lines Insurance: Total revenues of $76 million climbed 25% year over year, aided by 25% higher earned premiums. However, the segment’s underwriting profit of $13 million dropped 13% year over year.
Moreover, the combined ratio expanded 750 bps year over year to 82.9%.
Life Insurance: Total revenues were $106 million, up 6% year over year.
Full-Year Update
For the full year, total operating income came in at $4.20 per share, up 25% year over year. Total revenues for the year resulted in $7.9 billion, up 47% year over year.
Financial Update
As of Dec 31, 2019, cash and invested assets were $20.5 billion, up 17% from the 2018-end level.
Total assets of $25.4 billion increased 15.8% from the figure at 2018 end.
Total debt amounted to $827 million, up 0.9% from the number at 2018 end.
Cincinnati Financial’s debt-to-capital ratio was 7.7% as of Dec 31, 2019, contracting 180 bps from the number at 2018 end.
As of Dec 31, 2019, its book value per share was at $60.55, up 26% from the figure at 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 Insurers
Among other players from the insurance industry having already reported fourth-quarter earnings, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat estimates while that of Principal Financial (PFG - Free Report) met the mark.
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Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2019 operating income of $1.23 per share, beating the Zacks Consensus Estimate by 10.8%. Also, the bottom line improved 25.5% year over year on the back of higher revenues.
Operational Update
Total operating revenues in the quarter under review were $1.6 billion, up 8.8% year over year. This improvement was driven by 9% higher premiums earned and a 4% rise in investment income.
Net written premiums increased 11% from the prior-year quarter, reflecting price increases and premium growth initiatives.
Total benefits and expenses of Cincinnati Financial increased 6.2% year over year to $1.4 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition and insurance expenses.
Combined ratio — a measure of underwriting profitability — improved 230 basis points (bps) year over year to 91.6%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $854 million grew 5% year over year. This upside was primarily boosted by solid premiums earned. Underwriting profit of $97 million surged 76.4% year over year as well. The combined ratio also contracted 460 bps year over year to 88.8%.
Personal Lines Insurance: Total revenues of $359 million rose 5% year over year owing to 5% increase in premiums earned. The segment generated underwriting profit of $4 million, plunging 87% year over year. The combined ratio expanded 760 bps year over year to 99.3%.
Excess and Surplus Lines Insurance: Total revenues of $76 million climbed 25% year over year, aided by 25% higher earned premiums. However, the segment’s underwriting profit of $13 million dropped 13% year over year.
Moreover, the combined ratio expanded 750 bps year over year to 82.9%.
Life Insurance: Total revenues were $106 million, up 6% year over year.
Full-Year Update
For the full year, total operating income came in at $4.20 per share, up 25% year over year. Total revenues for the year resulted in $7.9 billion, up 47% year over year.
Financial Update
As of Dec 31, 2019, cash and invested assets were $20.5 billion, up 17% from the 2018-end level.
Total assets of $25.4 billion increased 15.8% from the figure at 2018 end.
Total debt amounted to $827 million, up 0.9% from the number at 2018 end.
Cincinnati Financial’s debt-to-capital ratio was 7.7% as of Dec 31, 2019, contracting 180 bps from the number at 2018 end.
As of Dec 31, 2019, its book value per share was at $60.55, up 26% from the figure at 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 Insurers
Among other players from the insurance industry having already reported fourth-quarter earnings, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat estimates while that of Principal Financial (PFG - Free Report) met the mark.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
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 >>
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