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Cincinnati Financial (CINF) Q1 Earnings Beat on Premium Growth
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Cincinnati Financial Corporation (CINF - Free Report) reported first-quarter 2023 operating income of 89 cents per share, which beat the Zacks Consensus Estimate by 30.9% and our estimate of 61 cents. However, the bottom line decreased 43.7% year over year.
Total operating revenues in the quarter under review were $2,135 million, which beat the Zacks Consensus Estimate by 5.4% and our estimate of $1,820.8 million. The top line improved 13.5% year over year. This improvement was driven by higher earned premiums, other revenues and investment income.
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
Net written premiums climbed 6% year over year to $2,019 million, attributable largely to premium growth initiatives, a higher level of insured exposures and price increases. However, the figure was lower than our estimate of $2,080 million.
Investment income, net of expenses, increased 14% year over year to $210 million, driven by growth in equity portfolio dividends and interest income. The figure is higher than our estimate of $196.3 million.
Total benefits and expenses of Cincinnati Financial increased 25.7% year over year to $1,973 million, primarily because of higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses. The figure came in higher than our estimate of $1,698.6 million.
In its property & casualty insurance business, Cincinnati Financial witnessed an underwriting loss of $10 million, which plunged by a huge margin year over year. However, the figure was narrower than our estimate of $22.4 million underwriting loss.
Combined ratio — a measure of underwriting profitability — deteriorated 1080 basis points (bps) year over year to 100.7%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $1,057 million increased 10% year over year. This metric beat the Zacks Consensus Estimate by 1.7% and our estimate by a significant margin. This upside was primarily driven by solid premiums earned. The segment reported an underwriting loss of $2 million, which plunged by a significant margin year over year. The combined ratio deteriorated 810 bps year over year to 100.4%.
Personal Lines Insurance: Total revenues of $465 million rose 15% year over year due to a 15% increase in premiums earned. Total revenues beat the Zacks Consensus Estimate by 5% and our estimate by a significant margin. The segment reported an underwriting loss of $57 million, which declined significantly from the prior-year quarter. The combined ratio deteriorated 2860 bps year over year to 112.5%.
Excess and Surplus Lines Insurance: Total revenues of $127 million grew 12% year over year, aided by 13% higher earned premiums. The metric missed the Zacks Consensus Estimate by 0.9% and our estimate by a significant margin. The segment’s underwriting profit decreased 19% year over year to $13 million. The combined ratio deteriorated 400 bps year over year to 89.9%.
Life Insurance: Total revenues were $125 million, up 6% year over year due to a 3% rise in earned premiums and a 7% rise in investment income. Total revenues beat the Zacks Consensus Estimate by 15.7% and our estimate by a significant margin. Total benefits and expenses increased 5% year over year to $101 million due to higher contract holders’ benefits incurred.
Financial Update
As of Mar 31, 2023, Cincinnati Financial had total assets worth $30,474 million, up from $29,732 million at 2022-end. The total debt remained flat year over year at $839 million.
Cincinnati Financial’s debt-to-capital ratio was 7.2% as of Mar 31, 2023, which improved 20 bps from 2022-end.
As of Mar 31, 2023, Cincinnati Financial’s book value per share was $ 68.33, up 1.7% from 2022-end.
The Travelers Companies, Inc. (TRV - Free Report) reported first-quarter 2023 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41.
However, the bottom line decreased 2.6% year over year. The year-over-year decline reflects higher catastrophe losses and lower net favorable prior-year reserve developments. However, a higher underlying underwriting gain and higher net investment income partially offset the same.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 and our estimate of $1.50. The bottom line declined 20.7% year over year.
Net premiums written were $16.1 billion in the quarter, rising 22% from $13.2 billion a year ago and beating our estimate of $14.6 billion.Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion.
W.R. Berkley Corporation’s (WRB - Free Report) first-quarter 2023 operating income of $1 per share missed the Zacks Consensus Estimate by about 16%. The bottom line declined 9.1% year over year and missed our estimate of $1.19.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth fueling continued strong underwriting performance, and a surge in investment income.
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Cincinnati Financial (CINF) Q1 Earnings Beat on Premium Growth
Cincinnati Financial Corporation (CINF - Free Report) reported first-quarter 2023 operating income of 89 cents per share, which beat the Zacks Consensus Estimate by 30.9% and our estimate of 61 cents. However, the bottom line decreased 43.7% year over year.
Total operating revenues in the quarter under review were $2,135 million, which beat the Zacks Consensus Estimate by 5.4% and our estimate of $1,820.8 million. The top line improved 13.5% year over year. This improvement was driven by higher earned premiums, other revenues and investment income.
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
Net written premiums climbed 6% year over year to $2,019 million, attributable largely to premium growth initiatives, a higher level of insured exposures and price increases. However, the figure was lower than our estimate of $2,080 million.
Investment income, net of expenses, increased 14% year over year to $210 million, driven by growth in equity portfolio dividends and interest income. The figure is higher than our estimate of $196.3 million.
Total benefits and expenses of Cincinnati Financial increased 25.7% year over year to $1,973 million, primarily because of higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses. The figure came in higher than our estimate of $1,698.6 million.
In its property & casualty insurance business, Cincinnati Financial witnessed an underwriting loss of $10 million, which plunged by a huge margin year over year. However, the figure was narrower than our estimate of $22.4 million underwriting loss.
Combined ratio — a measure of underwriting profitability — deteriorated 1080 basis points (bps) year over year to 100.7%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $1,057 million increased 10% year over year. This metric beat the Zacks Consensus Estimate by 1.7% and our estimate by a significant margin. This upside was primarily driven by solid premiums earned. The segment reported an underwriting loss of $2 million, which plunged by a significant margin year over year. The combined ratio deteriorated 810 bps year over year to 100.4%.
Personal Lines Insurance: Total revenues of $465 million rose 15% year over year due to a 15% increase in premiums earned. Total revenues beat the Zacks Consensus Estimate by 5% and our estimate by a significant margin. The segment reported an underwriting loss of $57 million, which declined significantly from the prior-year quarter. The combined ratio deteriorated 2860 bps year over year to 112.5%.
Excess and Surplus Lines Insurance: Total revenues of $127 million grew 12% year over year, aided by 13% higher earned premiums. The metric missed the Zacks Consensus Estimate by 0.9% and our estimate by a significant margin. The segment’s underwriting profit decreased 19% year over year to $13 million. The combined ratio deteriorated 400 bps year over year to 89.9%.
Life Insurance: Total revenues were $125 million, up 6% year over year due to a 3% rise in earned premiums and a 7% rise in investment income. Total revenues beat the Zacks Consensus Estimate by 15.7% and our estimate by a significant margin. Total benefits and expenses increased 5% year over year to $101 million due to higher contract holders’ benefits incurred.
Financial Update
As of Mar 31, 2023, Cincinnati Financial had total assets worth $30,474 million, up from $29,732 million at 2022-end. The total debt remained flat year over year at $839 million.
Cincinnati Financial’s debt-to-capital ratio was 7.2% as of Mar 31, 2023, which improved 20 bps from 2022-end.
As of Mar 31, 2023, Cincinnati Financial’s book value per share was $ 68.33, up 1.7% from 2022-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 Property and CasualtyInsurers
The Travelers Companies, Inc. (TRV - Free Report) reported first-quarter 2023 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41.
However, the bottom line decreased 2.6% year over year. The year-over-year decline reflects higher catastrophe losses and lower net favorable prior-year reserve developments. However, a higher underlying underwriting gain and higher net investment income partially offset the same.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 and our estimate of $1.50. The bottom line declined 20.7% year over year.
Net premiums written were $16.1 billion in the quarter, rising 22% from $13.2 billion a year ago and beating our estimate of $14.6 billion.Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion.
W.R. Berkley Corporation’s (WRB - Free Report) first-quarter 2023 operating income of $1 per share missed the Zacks Consensus Estimate by about 16%. The bottom line declined 9.1% year over year and missed our estimate of $1.19.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth fueling continued strong underwriting performance, and a surge in investment income.