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Cincinnati Financial (CINF) Q2 Earnings & Revenues Beat

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Cincinnati Financial Corporation (CINF - Free Report) reported second-quarter 2020 operating income of 44 cents per share, which beat the Zacks Consensus Estimate by 7.3%. However, the bottom line decreased 48.2% year over year.

The company’s results reflected higher net written premiums, which boosted revenues across all its segments, offset by higher catastrophe losses and expenses.

Cincinnati Financial Corporation Price, Consensus and EPS Surprise

 Cincinnati Financial Corporation Price, Consensus and EPS Surprise

Operational Update   

Total operating revenues in the quarter under review were $1.7 billion, up 6.8% year over year. This improvement was driven by higher premiums earned and increase in investment income. Revenues surpassed the Zacks Consensus Estimate by 0.8%.

Net written premiums increased 6% year over year to $1.6 billion, owing to an increase in agency renewal written premiums and other written premiums.

Total benefits and expenses of Cincinnati Financial increased 13.4% year over year to $1.6 billion, primarily due to higher insurance loss and contract holders’ benefits, increased underwriting, acquisition and insurance expenses plus interest expense and other operating expenses.

Cincinnati Financial witnessed underwriting loss of $41 million against underwriting gain of $48 million in the year-earlier period, primarily due to higher catastrophe losses of $231 million and $65 million of pandemic-related loss and expense effects.

Combined ratio — a measure of underwriting profitability — deteriorated 660 basis points (bps) year over year to 103.1%.

Quarterly Segment Update

Commercial Lines Insurance: Total revenues of $871 million grew 5.7% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $8 million dropped 33.3% year over year. Combined ratio deteriorated 50 bps year over year to 99.1%.

Personal Lines Insurance: Total revenues of $365 million rose 4.6% year over year owing to 5% increase in premiums earned. The segment reported underwriting loss of $43 million, against the year-ago profit of $5 million. Combined ratio deteriorated 1340 bps year over year to 112.3%.

Excess and Surplus Lines Insurance: Total revenues of $78 million rose 16% year over year, aided by 16% higher earned premiums. The segment’s underwriting loss was $1 million against the year-ago profit of $17 million. Combined ratio deteriorated 2590 bps year over year to 102%.

Life Insurance: Total revenues were $120 million, up 14% year over year, aided by 18% higher earned premiums. Total benefits and expenses increased 9.5% year over year to $104 million due to higher contract holders’ benefits incurred and underwriting expenses.

Financial Update

As of Jun 30, 2020, Cincinnati Financial had total assets worth $25.5 billion, up nearly 0.2% from the level at 2019 end.

Cincinnati Financial’s debt-to-capital ratio was 8.9% as of Jun 30, 2020, up 120 bps from end of 2019.

As of Jun 30, 2020, Cincinnati Financial’s book value per share was at $57.56, down 5% from 2019 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, which have reported second-quarter results so far, earnings of The Progressive Corporation (PGR - Free Report) , First American Financial Corporation (FAF - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.

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