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Cincinnati Financial (CINF) Q4 Earnings Miss, Dividend Up
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Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2022 operating income of $1.27 per share, which missed the Zacks Consensus Estimate by 0.7%. The bottom line decreased 35.5% year over year.
The insurer’s results benefited from improved earned premiums and investment income, partly offset by escalating costs, poor underwriting results and deteriorated combined ratio.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Total operating revenues in the quarter under review were $2.1 billion, which improved 11.7% year over year. This improvement was driven by higher earned premiums, other revenues and investment income. Also, the top line surpassed the consensus mark by 0.7%.
Net written premiums climbed 10% year over year to $1.7 billion, attributable largely to premium growth initiatives, price increases and a higher level of insured exposures. The figure is higher than our estimate of $1.6 billion.
Investment income, net of expenses increased 12% year over year to $208 million driven by growth in equity portfolio dividends and interest income. The figure is higher than our estimate of $196.1 million.
Total benefits and expenses of Cincinnati Financial increased 23.7% year over year to $1.8 billion, primarily because of higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses. The figure matched our estimate.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting profit of $93 million, which plunged 64% year over year. The figure is higher than our estimate of $68.2 million.
Combined ratio — a measure of underwriting profitability — deteriorated 1070 basis points (bps) year over year to 94.9%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $1 billion increased 10% year over year. This upside was primarily driven by solid premiums earned. The segment reported an underwriting profit of $13 million, which plunged 91% year over year. The combined ratio deteriorated 1370 bps year over year to 98.9%.
Personal Lines Insurance: Total revenues of $444 million advanced 12% year over year on account of a 12% increase in premiums earned. The segment reported an underwriting profit of $20 million, which decreased 75% from the prior-year quarter. The combined ratio deteriorated 1570 bps year over year to 95.7%.
Excess and Surplus Lines Insurance: Total revenues of $124 million grew 14% year over year, aided by 14% higher earned premiums. The segment’s underwriting profit decreased 79% year over year to $4 million. The combined ratio deteriorated 1310 bps year over year to 96.3%.
Life Insurance: Total revenues were $117 million, down 5% year over year due to 4% decline in earned premiums. Total benefits and expenses decreased 15% year over year to $95 million due to lower contract holders’ benefits incurred.
Financial Update
As of Dec 31, 2022, Cincinnati Financial had total assets worth $29.7 billion, down 5.3% from the level at 2021 end. Total debt amounted to $839 million as of Dec 31, 2022, down 0.5% from the 2021-end level.
Cincinnati Financial’s debt-to-capital ratio was 7.4% as of Dec 31, 2022, which deteriorated 140 bps from the end of 2021.
As of Dec 31, 2022, Cincinnati Financial’s book value per share was at $ 67.01, down 18% from 2021 end.
Dividend Update
The board of directors approved a dividend of 75 cents per share for the first quarter of 2023, reflecting a 9% increase. The dividend will be paid out on Apr 14 to shareholders of record as of Mar 17.
Full-Year Update
For 2022, operating income was $4.24 per share, which surpassed the Zacks Consensus Estimate of $4.21. The bottom line decreased 34% from the 2021-end figure.
Total revenues for the year amounted to $8 billion, which matched the consensus mark. The top line increased 11.1% year over year.
Chubb Limited (CB - Free Report) reported fourth-quarter 2022 core operating income of $4.05 per share, which missed the Zacks Consensus Estimate by 4%. However, the bottom line improved 6.3% from the year-ago quarter. Net premiums written improved 11.9% year over year to $10.2 billion in the quarter. The figure was higher than our estimate of $10 billion. Net premiums earned rose 13.2% to $10.6 billion. The figure was higher than our estimate of $9.7 billion.
Net investment income was $1 billion, increased 25%. The figure was higher than our estimate of $0.9 billion. Property and casualty underwriting income was $1.1 billion, down 11.4% from the year-ago quarter. Global P&C underwriting income, excluding Agriculture, was $1.2 billion, up 1.9%. Chubb incurred an after-tax catastrophe loss of $323 million in the fourth quarter, increased 31.8% year over year.
Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2022 operating income of $1.46 per share, which met the Zacks Consensus Estimate. The bottom line declined 6.4% from the year-ago quarter. Total revenues of $958 million increased 10.4% from the year-ago quarter’s figure, primarily driven by higher premiums earned. The top line missed the Zacks Consensus Estimate by 0.7%. On a year-over-year basis, net premium written increased 14% to $849.7 million, driven by renewal pure price increases, solid retention, new business and exposure growth.
Net investment income increased 1% year over year to $65.5 million because of decreased after-tax alternative investment income, partially offset by higher income from the fixed-income securities portfolio due to higher book yields. Net underwriting income, after-tax, dropped 15% to $36.4 million. The combined ratio deteriorated 160 bps on a year-over-year basis to 94.7, owing to higher catastrophe losses.
American Financial Group, Inc. (AFG - Free Report) delivered fourth-quarter 2022 core net operating earnings per share of $2.99, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line decreased 27.4% year over year. Total operating revenues amounted to $1.9 billion in the fourth quarter, which rose 9% year over year. The improvement can be attributed to growth in P&C insurance net earned premiums. The top line beat the Zacks Consensus Estimate by 13.3%.
P&C insurance net earned premiums of $1.6 billion climbed 11.8% year over year. Net investment income decreased 19.6% year over year to $168 million. The figure was lower than our estimate of $194.5 million. On a year-over-year basis, other income of $24 million decreased 44.2% in the quarter under review. Total costs and expenses of American Financial increased 20.6% year over year to $1.6 billion driven by higher P&C insurance losses & expenses and expenses of managed investment entities. The figure was higher than our estimate of $1.4 billion.
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Cincinnati Financial (CINF) Q4 Earnings Miss, Dividend Up
Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2022 operating income of $1.27 per share, which missed the Zacks Consensus Estimate by 0.7%. The bottom line decreased 35.5% year over year.
The insurer’s results benefited from improved earned premiums and investment income, partly offset by escalating costs, poor underwriting results and deteriorated 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 $2.1 billion, which improved 11.7% year over year. This improvement was driven by higher earned premiums, other revenues and investment income. Also, the top line surpassed the consensus mark by 0.7%.
Net written premiums climbed 10% year over year to $1.7 billion, attributable largely to premium growth initiatives, price increases and a higher level of insured exposures. The figure is higher than our estimate of $1.6 billion.
Investment income, net of expenses increased 12% year over year to $208 million driven by growth in equity portfolio dividends and interest income. The figure is higher than our estimate of $196.1 million.
Total benefits and expenses of Cincinnati Financial increased 23.7% year over year to $1.8 billion, primarily because of higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses. The figure matched our estimate.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting profit of $93 million, which plunged 64% year over year. The figure is higher than our estimate of $68.2 million.
Combined ratio — a measure of underwriting profitability — deteriorated 1070 basis points (bps) year over year to 94.9%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $1 billion increased 10% year over year. This upside was primarily driven by solid premiums earned. The segment reported an underwriting profit of $13 million, which plunged 91% year over year. The combined ratio deteriorated 1370 bps year over year to 98.9%.
Personal Lines Insurance: Total revenues of $444 million advanced 12% year over year on account of a 12% increase in premiums earned. The segment reported an underwriting profit of $20 million, which decreased 75% from the prior-year quarter. The combined ratio deteriorated 1570 bps year over year to 95.7%.
Excess and Surplus Lines Insurance: Total revenues of $124 million grew 14% year over year, aided by 14% higher earned premiums. The segment’s underwriting profit decreased 79% year over year to $4 million. The combined ratio deteriorated 1310 bps year over year to 96.3%.
Life Insurance: Total revenues were $117 million, down 5% year over year due to 4% decline in earned premiums. Total benefits and expenses decreased 15% year over year to $95 million due to lower contract holders’ benefits incurred.
Financial Update
As of Dec 31, 2022, Cincinnati Financial had total assets worth $29.7 billion, down 5.3% from the level at 2021 end. Total debt amounted to $839 million as of Dec 31, 2022, down 0.5% from the 2021-end level.
Cincinnati Financial’s debt-to-capital ratio was 7.4% as of Dec 31, 2022, which deteriorated 140 bps from the end of 2021.
As of Dec 31, 2022, Cincinnati Financial’s book value per share was at $ 67.01, down 18% from 2021 end.
Dividend Update
The board of directors approved a dividend of 75 cents per share for the first quarter of 2023, reflecting a 9% increase. The dividend will be paid out on Apr 14 to shareholders of record as of Mar 17.
Full-Year Update
For 2022, operating income was $4.24 per share, which surpassed the Zacks Consensus Estimate of $4.21. The bottom line decreased 34% from the 2021-end figure.
Total revenues for the year amounted to $8 billion, which matched the consensus mark. The top line increased 11.1% year over year.
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
Chubb Limited (CB - Free Report) reported fourth-quarter 2022 core operating income of $4.05 per share, which missed the Zacks Consensus Estimate by 4%. However, the bottom line improved 6.3% from the year-ago quarter. Net premiums written improved 11.9% year over year to $10.2 billion in the quarter. The figure was higher than our estimate of $10 billion. Net premiums earned rose 13.2% to $10.6 billion. The figure was higher than our estimate of $9.7 billion.
Net investment income was $1 billion, increased 25%. The figure was higher than our estimate of $0.9 billion. Property and casualty underwriting income was $1.1 billion, down 11.4% from the year-ago quarter. Global P&C underwriting income, excluding Agriculture, was $1.2 billion, up 1.9%. Chubb incurred an after-tax catastrophe loss of $323 million in the fourth quarter, increased 31.8% year over year.
Selective Insurance Group, Inc. (SIGI - Free Report) reported fourth-quarter 2022 operating income of $1.46 per share, which met the Zacks Consensus Estimate. The bottom line declined 6.4% from the year-ago quarter. Total revenues of $958 million increased 10.4% from the year-ago quarter’s figure, primarily driven by higher premiums earned. The top line missed the Zacks Consensus Estimate by 0.7%. On a year-over-year basis, net premium written increased 14% to $849.7 million, driven by renewal pure price increases, solid retention, new business and exposure growth.
Net investment income increased 1% year over year to $65.5 million because of decreased after-tax alternative investment income, partially offset by higher income from the fixed-income securities portfolio due to higher book yields. Net underwriting income, after-tax, dropped 15% to $36.4 million. The combined ratio deteriorated 160 bps on a year-over-year basis to 94.7, owing to higher catastrophe losses.
American Financial Group, Inc. (AFG - Free Report) delivered fourth-quarter 2022 core net operating earnings per share of $2.99, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line decreased 27.4% year over year. Total operating revenues amounted to $1.9 billion in the fourth quarter, which rose 9% year over year. The improvement can be attributed to growth in P&C insurance net earned premiums. The top line beat the Zacks Consensus Estimate by 13.3%.
P&C insurance net earned premiums of $1.6 billion climbed 11.8% year over year. Net investment income decreased 19.6% year over year to $168 million. The figure was lower than our estimate of $194.5 million. On a year-over-year basis, other income of $24 million decreased 44.2% in the quarter under review. Total costs and expenses of American Financial increased 20.6% year over year to $1.6 billion driven by higher P&C insurance losses & expenses and expenses of managed investment entities. The figure was higher than our estimate of $1.4 billion.