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Cincinnati Financial (CINF) Q2 Earnings Top, Revenues Rise Y/Y

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Cincinnati Financial Corporation (CINF - Free Report) reported second-quarter 2021 operating income of $1.79 per share, which beat the Zacks Consensus Estimate by 80.8%. Moreover, the bottom line increased fourfold year over year.

The company’s results benefited from higher net written premiums, which boosted revenues across segments, lower expenses and improved combined ratio.

Cincinnati Financial Corporation Price, Consensus and EPS Surprise

Operational Update  

Total operating revenues in the quarter under review were $1.7 billion, up 7.3% year over year. This improvement was driven by higher premiums earned and increase in investment income.

Net written premiums increased 10% year over year to $1.7 billion, owing to premium growth initiatives and price increases.

Total benefits and expenses of Cincinnati Financial decreased 9.3% year over year to $1.4 billion, primarily due to lower insurance loss and contract holders’ benefits and interest expense.

Cincinnati Financial witnessed underwriting profit of $221 million against underwriting loss of $41 million in the year-earlier period.

Combined ratio — a measure of underwriting profitability — improved 1760 basis points (bps) year over year to 85.5%.

Quarterly Segment Update

Commercial Lines Insurance: Total revenues of $912 million grew 5% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $145 million surged 18-fold year over year. Combined ratio improved 1490 bps year over year to 84.2%, primarily due to lower catastrophe losses.

Personal Lines Insurance: Total revenues of $383 million rose 5% year over year owing to 5% increase in premiums earned. The segment reported underwriting profit of $29 million, against the year-ago loss of $43 million. Combined ratio improved 1960 bps year over year to 92.7%, primarily due to lower catastrophe losses.

Excess and Surplus Lines Insurance: Total revenues of $96 million rose 23% year over year, aided by 23% higher earned premiums. The segment’s underwriting profit was $10 million against the year-ago loss of $1 million. Combined ratio improved 1250 bps year over year to 89.5%, primarily due to more favorable reserve development on prior accident years.

Life Insurance: Total revenues were $126 million, up 5% year over year, aided by 8% higher investment income. Total benefits and expenses increased 5% year over year to $109 million due to higher contract holders’ benefits incurred.

Financial Update

As of Jun 30, 2021, cash and cash equivalents were $1 billion, up 11.4% from the 2020-end level.

As of Jun 30, 2021, Cincinnati Financial had total assets worth $29.7 billion, up nearly 7.7% from the level at 2020 end.

Long-term debt amounted to $789 million, up 0.1% from 2020 end.

Cincinnati Financial’s debt-to-capital ratio was 6.7% as of Jun 30, 2021, up 50 bps from the end of 2020.

As of Jun 30, 2021, Cincinnati Financial’s book value per share was at $73.57, up 9.7% from 2020 end.

Zacks Rank

Cincinnati Financial currently carries a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other P&C Insurers

Among other insurance industry players, which have reported second-quarter earnings so far, the bottom line of Everest Re Group, Ltd. , RLI Corp. (RLI - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat the respective Zacks Consensus Estimate.


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