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Will Cat Loss Weigh on Cincinnati Financial (CINF) Q1 Earnings?
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Cincinnati Financial Corporation (CINF - Free Report) is scheduled to report first-quarter 2023 earnings on Apr 27, after market close. The insurer delivered an earnings surprise in two of the last four quarters while missed the other two.
Factors to Note
CINF’s premiums are likely to have benefited from growth initiatives, increased exposure, better pricing, increased property casualty agency and new business written premiums, higher standard lines new business and higher premiums from Cincinnati Re. The Zacks Consensus Estimate for earned premium is pegged at $1.9 billion, rising 15.8% from the year-ago reported quarter’s figure. We expect earned premiums to be $1.8 billion.
Net investment income in the to-be-reported quarter is likely to have benefited from strong cash flow from operating activities, and higher dividend income and interest income owing to an improving interest rate environment. We expect investment income to be $196.3 million.
The Zacks Consensus Estimate for first-quarter revenues stands at $2 billion, in line with our estimate, suggesting an increase of 7.3% from the prior-year quarter.
Exposure to catastrophe events stemming from March storms is likely to have weighed on underwriting profitability. CINF estimates first-quarter cat loss to amount to $235 million, of which $171 million will be due to March storms.
While the commercial lines insurance segment will absorb $110 million in losses, the personal lines insurance segment will incur a loss of $115 million. The Excess and Surplus lines insurance segment, Cincinnati Re and Cincinnati Global Underwriting Ltd, will incur a loss of $1 million, $3 million and $6 million, respectively.
The catastrophe loss will lower the combined ratio by 1280 basis points (bps) in the first quarter.
CINF estimates Property Casualty combined ratio between 99% and 103% in the first quarter of 2023. The Zacks Consensus Estimate for the combined ratio at Property Casualty is pegged at 95.81, a deterioration of 1431 bps from the year-ago reported quarter.
Total benefits and expenses are likely to have increased mainly due to higher insurance losses and contract holders’ benefits and higher underwriting, acquisition and insurance expenses.
The Zacks Consensus Estimate for first-quarter earnings per share is pegged at 76 cents, indicating a decrease of 51.9% from the prior-year quarter. We expect the bottom line to be $1.11 per share for the to-be-reported quarter.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Cincinnati Financial this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. This is not the case, as you can see here.
Earnings ESP: Cincinnati Financial has an Earnings ESP of -11.32%. This is because the Most Accurate Estimate of 68 cents is pegged lower than the Zacks Consensus Estimate of 76 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cincinnati Financial Corporation Price and EPS Surprise
Zacks Rank: Cincinnati Financial currently carries a Zacks Rank #3.
Stocks to Consider
Here are three other insurance stocks you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Kinsale Capital Group (KNSL - Free Report) has an Earnings ESP of +1.07% and a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $2.24, implying an increase of 37.4% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
KNSL beat earnings estimates in the last four reported quarters.
Everest Re Group has an Earnings ESP of +3.43% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $12.01, indicating an increase of 16.5% from the year-ago reported figure.
RE beat earnings estimates in the last four reported quarters.
Chubb Limited (CB - Free Report) has an Earnings ESP of +6.31% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter 2023 earnings stands at $4.37, indicating an increase of 14.4% from the year-ago reported figure.
CB beat earnings estimates in three of the last four reported quarters, while missing the same in one.
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Will Cat Loss Weigh on Cincinnati Financial (CINF) Q1 Earnings?
Cincinnati Financial Corporation (CINF - Free Report) is scheduled to report first-quarter 2023 earnings on Apr 27, after market close. The insurer delivered an earnings surprise in two of the last four quarters while missed the other two.
Factors to Note
CINF’s premiums are likely to have benefited from growth initiatives, increased exposure, better pricing, increased property casualty agency and new business written premiums, higher standard lines new business and higher premiums from Cincinnati Re. The Zacks Consensus Estimate for earned premium is pegged at $1.9 billion, rising 15.8% from the year-ago reported quarter’s figure. We expect earned premiums to be $1.8 billion.
Net investment income in the to-be-reported quarter is likely to have benefited from strong cash flow from operating activities, and higher dividend income and interest income owing to an improving interest rate environment. We expect investment income to be $196.3 million.
The Zacks Consensus Estimate for first-quarter revenues stands at $2 billion, in line with our estimate, suggesting an increase of 7.3% from the prior-year quarter.
Exposure to catastrophe events stemming from March storms is likely to have weighed on underwriting profitability. CINF estimates first-quarter cat loss to amount to $235 million, of which $171 million will be due to March storms.
While the commercial lines insurance segment will absorb $110 million in losses, the personal lines insurance segment will incur a loss of $115 million. The Excess and Surplus lines insurance segment, Cincinnati Re and Cincinnati Global Underwriting Ltd, will incur a loss of $1 million, $3 million and $6 million, respectively.
The catastrophe loss will lower the combined ratio by 1280 basis points (bps) in the first quarter.
CINF estimates Property Casualty combined ratio between 99% and 103% in the first quarter of 2023. The Zacks Consensus Estimate for the combined ratio at Property Casualty is pegged at 95.81, a deterioration of 1431 bps from the year-ago reported quarter.
Total benefits and expenses are likely to have increased mainly due to higher insurance losses and contract holders’ benefits and higher underwriting, acquisition and insurance expenses.
The Zacks Consensus Estimate for first-quarter earnings per share is pegged at 76 cents, indicating a decrease of 51.9% from the prior-year quarter. We expect the bottom line to be $1.11 per share for the to-be-reported quarter.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Cincinnati Financial this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. This is not the case, as you can see here.
Earnings ESP: Cincinnati Financial has an Earnings ESP of -11.32%. This is because the Most Accurate Estimate of 68 cents is pegged lower than the Zacks Consensus Estimate of 76 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Cincinnati Financial Corporation Price and EPS Surprise
Cincinnati Financial Corporation price-eps-surprise | Cincinnati Financial Corporation Quote
Zacks Rank: Cincinnati Financial currently carries a Zacks Rank #3.
Stocks to Consider
Here are three other insurance stocks you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Kinsale Capital Group (KNSL - Free Report) has an Earnings ESP of +1.07% and a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $2.24, implying an increase of 37.4% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
KNSL beat earnings estimates in the last four reported quarters.
Everest Re Group has an Earnings ESP of +3.43% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at $12.01, indicating an increase of 16.5% from the year-ago reported figure.
RE beat earnings estimates in the last four reported quarters.
Chubb Limited (CB - Free Report) has an Earnings ESP of +6.31% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter 2023 earnings stands at $4.37, indicating an increase of 14.4% from the year-ago reported figure.
CB beat earnings estimates in three of the last four reported quarters, while missing the same in one.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.