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Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2021 operating income of $1.28 per share, which beat the Zacks Consensus Estimate by 11.3%. The bottom line also increased more than a three-fold 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
Total operating revenues in the quarter under review were $1.8 billion, up 9.5% year over year. This improvement was driven by higher premiums earned, and an increase in investment income and other revenues. The top line beat the Zacks Consensus Estimate by 11.8%.
Net written premiums increased 10% year over year to $1.5 billion, owing to premium growth initiatives and price increases. Investment income improved 7.2% year over year to $179 million, driven by an increase in stock portfolio dividends and bond interest income.
Total benefits and expenses of Cincinnati Financial decreased 0.7% year over year to $1.6 billion, primarily due to lower insurance loss and contract holders’ benefits.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting profit of $121 million against an underwriting loss of $51 million in the year-earlier period.
Combined ratio — a measure of underwriting profitability — improved 1100 basis points (bps) year over year to 92.6%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $931 million grew 8% year over year. This upside was primarily driven by solid premiums earned. The segment reported an underwriting profit of $182 million against an underwriting loss of $20 million in the prior-year period. The combined ratio improved 2180 bps year over year to 80.6%.
Personal Lines Insurance: Total revenues of $389 million rose 6% year over year owing to 6% increase in premiums earned. The segment reported an underwriting loss of $10 million, wider than the year-ago loss of $2 million. The combined ratio deteriorated 200 bps year over year to 102.7%.
Excess and Surplus Lines Insurance: Total revenues of $106 million rose 29% year over year, aided by 28% higher earned premiums. The segment’s underwriting profit dropped 36.4% year over year to $7 million. The combined ratio deteriorated 740 bps year over year to 94.1%.
Life Insurance: Total revenues were $120 million, up 5% year over year, aided by 1% higher earned premiums and 5% increased investment income. Total benefits and expenses increased 14% year over year to $105 million due to higher contract holders’ benefits.
Financial Update
As of Sep 30, 2021, Cincinnati Financial had total assets worth $29.9 billion, up 8.6% from the level at 2020 end. Total debt amounted to $848 million as of Sep 30, 2021, up 0.7% from the 2020-end level.
Cincinnati Financial’s debt-to-capital ratio was 6.7% as of Sep 30, 2021, down 50 bps from end of 2020.
As of Sep 30, 2021, Cincinnati Financial’s book value per share was $73.49, up 10% from 2020 end.
Of the insurance industry players, which have reported third-quarter results so far, earnings of Arch Capital Group Ltd. (ACGL - Free Report) , Chubb Limited (CB - Free Report) and Selective Insurance Group, Inc. (SIGI - Free Report) beat the respective Zacks Consensus Estimate.
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Cincinnati Financial (CINF) Q3 Earnings & Revenues Beat
Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2021 operating income of $1.28 per share, which beat the Zacks Consensus Estimate by 11.3%. The bottom line also increased more than a three-fold 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
Cincinnati Financial Corporation price-consensus-eps-surprise-chart | Cincinnati Financial Corporation Quote
Operational Update
Total operating revenues in the quarter under review were $1.8 billion, up 9.5% year over year. This improvement was driven by higher premiums earned, and an increase in investment income and other revenues. The top line beat the Zacks Consensus Estimate by 11.8%.
Net written premiums increased 10% year over year to $1.5 billion, owing to premium growth initiatives and price increases. Investment income improved 7.2% year over year to $179 million, driven by an increase in stock portfolio dividends and bond interest income.
Total benefits and expenses of Cincinnati Financial decreased 0.7% year over year to $1.6 billion, primarily due to lower insurance loss and contract holders’ benefits.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting profit of $121 million against an underwriting loss of $51 million in the year-earlier period.
Combined ratio — a measure of underwriting profitability — improved 1100 basis points (bps) year over year to 92.6%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $931 million grew 8% year over year. This upside was primarily driven by solid premiums earned. The segment reported an underwriting profit of $182 million against an underwriting loss of $20 million in the prior-year period. The combined ratio improved 2180 bps year over year to 80.6%.
Personal Lines Insurance: Total revenues of $389 million rose 6% year over year owing to 6% increase in premiums earned. The segment reported an underwriting loss of $10 million, wider than the year-ago loss of $2 million. The combined ratio deteriorated 200 bps year over year to 102.7%.
Excess and Surplus Lines Insurance: Total revenues of $106 million rose 29% year over year, aided by 28% higher earned premiums. The segment’s underwriting profit dropped 36.4% year over year to $7 million. The combined ratio deteriorated 740 bps year over year to 94.1%.
Life Insurance: Total revenues were $120 million, up 5% year over year, aided by 1% higher earned premiums and 5% increased investment income. Total benefits and expenses increased 14% year over year to $105 million due to higher contract holders’ benefits.
Financial Update
As of Sep 30, 2021, Cincinnati Financial had total assets worth $29.9 billion, up 8.6% from the level at 2020 end. Total debt amounted to $848 million as of Sep 30, 2021, up 0.7% from the 2020-end level.
Cincinnati Financial’s debt-to-capital ratio was 6.7% as of Sep 30, 2021, down 50 bps from end of 2020.
As of Sep 30, 2021, Cincinnati Financial’s book value per share was $73.49, up 10% from 2020 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 third-quarter results so far, earnings of Arch Capital Group Ltd. (ACGL - Free Report) , Chubb Limited (CB - Free Report) and Selective Insurance Group, Inc. (SIGI - Free Report) beat the respective Zacks Consensus Estimate.