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Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2022 operating income of 73 cents per share, which beat the Zacks Consensus Estimate by 2.8% but missed our estimate of $1.06. The bottom line decreased 43% year over year.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Cincinnati Financial’s results reflected higher premiums and investment income, partly offset by higher expenses and deteriorated combined ratio.
Total operating revenues in the quarter under review were $2.1 billion, which improved 12.2% year over year. This improvement was driven by higher earned premiums and investment income, net of expenses. The top line missed the consensus mark by 0.09%. The figure was lower than our estimate of $2.3 billion.
Net written premiums climbed 14% year over year to $1.7 billion, attributable to premium growth initiatives, price increases and a higher level of insured exposures.
Total investment income, after-tax, increased 8% year over year to $163 million, owing to growth in equity portfolio dividends and an increase in interest income from fixed-maturity securities.
Total benefits and expenses of Cincinnati Financial increased 24.1% year over year to $1.9 billion, primarily due to higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses. The figure exceeded our estimate of $1.8 billion.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting loss of $66 million against an underwriting income of $121 million in the year-earlier period.
The combined ratio — a measure of underwriting profitability — deteriorated 1130 basis points (bps) year over year to 103.9.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $1 billion increased 11% year over year. This upside was primarily driven by 11% increase in premiums earned. Underwriting income was $11 million decreased 94% year over year. The combined ratio deteriorated 1840 bps year over year to 99.
Personal Lines Insurance: Total revenues of $432 million increased 11% year over year on account of an 11% increase in premiums earned. Underwriting loss was $18 million compared with an underwriting loss of $10 million in the year-earlier period. The combined ratio deteriorated 180 bps year over year to 104.5.
Excess and Surplus Lines Insurance: Total revenues of $126 million grew 19% year over year, aided by 19% higher earned premiums. Underwriting profit improved 28.5% year over year to $9 million. The combined ratio improved 20 bps year over year to 93.9.
Life Insurance: Total revenues were $117 million, down 2.5% year over year. Total benefits and expenses decreased 13.3% year over year to $91 million due to lower contract holders’ benefits incurred.
Financial Update
As of Sep 30, 2022, Cincinnati Financial had total assets worth $28.2 billion, down 10.1% from the level at 2021 end.
Long-term debt was $789 million as of Sep 30, 2022, unchanged from the 2021-end level. Cincinnati Financial’s debt-to-capital ratio was 8.1% as of Sep 30, 2022, down 210 bps from the end of 2021.
As of Sep 30, 2022, Cincinnati Financial’s book value per share was $60.01, down 26.6% from 2021 end.
Zacks Rank
Cincinnati Financial currently carries a Zacks Rank #4 (Sell).
Of the insurance industry players that have reported third-quarter results so far, Kinsale Capital Group, Inc. (KNSL - Free Report) , Everest Re Group, Ltd. and Arch Capital Group Ltd. (ACGL - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Kinsale Capital delivered third-quarter 2022 net operating earnings of $1.64 per share, which outpaced the Zacks Consensus Estimate by 15.5%. The bottom line improved 3.1% year over year. Total revenues rose about 31.5% year over year to about $217 million. The top line, however, missed the Zacks Consensus Estimate by 1.4%.
Gross written premiums of $284.1 million rose 43.8% year over year, driven by strong submission flow from brokers and a favorable pricing environment. Net written premiums climbed 38.2% year over year to $235.9 million in the quarter. Net investment income increased 71.2% year over year to $13.9 million in the quarter.
Everest Re Group’s third-quarter 2022 operating loss per share of $5.28 was narrower than the Zacks Consensus Estimate of a loss of $5.89 but wider than the year-ago loss of $1.34. Everest Re’s total operating revenues of $3.2 billion increased 9.5% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.2%.
Gross written premiums improved 6.3% year over year to $3.7 billion, largely driven by double-digit growth in the Insurance segment. However, it missed our estimate of $3.9 billion. Net investment income was $151 million, down 48.5% year over year.
Arch Capital Group reported third-quarter 2022 operating income per share of 28 cents per share, which beat the Zacks Consensus Estimate by 16.7%. The bottom line, however, decreased 62.2% year over year. Gross premiums written improved 20.4% year over year to $3.9 billion.
Net premiums written climbed 31.2% year over year to $2.7 billion on higher premiums written across its Insurance and Reinsurance segments. Net investment income increased 45.9% year over year to $128.6 million and beat our estimate of $94.2 million.
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Cincinnati Financial (CINF) Q3 Earnings Top, Revenues Rise Y/Y
Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2022 operating income of 73 cents per share, which beat the Zacks Consensus Estimate by 2.8% but missed our estimate of $1.06. The bottom line decreased 43% year over year.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Cincinnati Financial Corporation price-consensus-eps-surprise-chart | Cincinnati Financial Corporation Quote
Operational Update
Cincinnati Financial’s results reflected higher premiums and investment income, partly offset by higher expenses and deteriorated combined ratio.
Total operating revenues in the quarter under review were $2.1 billion, which improved 12.2% year over year. This improvement was driven by higher earned premiums and investment income, net of expenses. The top line missed the consensus mark by 0.09%. The figure was lower than our estimate of $2.3 billion.
Net written premiums climbed 14% year over year to $1.7 billion, attributable to premium growth initiatives, price increases and a higher level of insured exposures.
Total investment income, after-tax, increased 8% year over year to $163 million, owing to growth in equity portfolio dividends and an increase in interest income from fixed-maturity securities.
Total benefits and expenses of Cincinnati Financial increased 24.1% year over year to $1.9 billion, primarily due to higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses. The figure exceeded our estimate of $1.8 billion.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting loss of $66 million against an underwriting income of $121 million in the year-earlier period.
The combined ratio — a measure of underwriting profitability — deteriorated 1130 basis points (bps) year over year to 103.9.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $1 billion increased 11% year over year. This upside was primarily driven by 11% increase in premiums earned. Underwriting income was $11 million decreased 94% year over year. The combined ratio deteriorated 1840 bps year over year to 99.
Personal Lines Insurance: Total revenues of $432 million increased 11% year over year on account of an 11% increase in premiums earned. Underwriting loss was $18 million compared with an underwriting loss of $10 million in the year-earlier period. The combined ratio deteriorated 180 bps year over year to 104.5.
Excess and Surplus Lines Insurance: Total revenues of $126 million grew 19% year over year, aided by 19% higher earned premiums. Underwriting profit improved 28.5% year over year to $9 million. The combined ratio improved 20 bps year over year to 93.9.
Life Insurance: Total revenues were $117 million, down 2.5% year over year. Total benefits and expenses decreased 13.3% year over year to $91 million due to lower contract holders’ benefits incurred.
Financial Update
As of Sep 30, 2022, Cincinnati Financial had total assets worth $28.2 billion, down 10.1% from the level at 2021 end.
Long-term debt was $789 million as of Sep 30, 2022, unchanged from the 2021-end level. Cincinnati Financial’s debt-to-capital ratio was 8.1% as of Sep 30, 2022, down 210 bps from the end of 2021.
As of Sep 30, 2022, Cincinnati Financial’s book value per share was $60.01, down 26.6% from 2021 end.
Zacks Rank
Cincinnati Financial currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other P&C Insurers
Of the insurance industry players that have reported third-quarter results so far, Kinsale Capital Group, Inc. (KNSL - Free Report) , Everest Re Group, Ltd. and Arch Capital Group Ltd. (ACGL - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Kinsale Capital delivered third-quarter 2022 net operating earnings of $1.64 per share, which outpaced the Zacks Consensus Estimate by 15.5%. The bottom line improved 3.1% year over year. Total revenues rose about 31.5% year over year to about $217 million. The top line, however, missed the Zacks Consensus Estimate by 1.4%.
Gross written premiums of $284.1 million rose 43.8% year over year, driven by strong submission flow from brokers and a favorable pricing environment. Net written premiums climbed 38.2% year over year to $235.9 million in the quarter. Net investment income increased 71.2% year over year to $13.9 million in the quarter.
Everest Re Group’s third-quarter 2022 operating loss per share of $5.28 was narrower than the Zacks Consensus Estimate of a loss of $5.89 but wider than the year-ago loss of $1.34. Everest Re’s total operating revenues of $3.2 billion increased 9.5% year over year on higher premiums earned. The top line, however, missed the consensus estimate by 2.2%.
Gross written premiums improved 6.3% year over year to $3.7 billion, largely driven by double-digit growth in the Insurance segment. However, it missed our estimate of $3.9 billion. Net investment income was $151 million, down 48.5% year over year.
Arch Capital Group reported third-quarter 2022 operating income per share of 28 cents per share, which beat the Zacks Consensus Estimate by 16.7%. The bottom line, however, decreased 62.2% year over year. Gross premiums written improved 20.4% year over year to $3.9 billion.
Net premiums written climbed 31.2% year over year to $2.7 billion on higher premiums written across its Insurance and Reinsurance segments. Net investment income increased 45.9% year over year to $128.6 million and beat our estimate of $94.2 million.