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Cincinnati Financial Set to Grow on Strategic Initiatives

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Cincinnati Financial Corporation (CINF - Free Report) remains well-poised, given a solid performance of its Commercial Lines Property Casualty Insurance segment, stronger pricing, higher number of agencies and robust capital position.

Growth initiatives coupled with gradual increase in insurance rates have been aiding solid results in Commercial Lines Property Casualty Insurance segment. Also, the company remains optimistic about improved pricing for both its personal and commercial auto segments.

Appointing new agencies continues to be one of the key growth strategies to ramp up the company’s growth profile. Cincinnati Financial has plans to appoint 100 agencies for focusing on high net worth personal lines clients and will market only the company’s personal lines products in 2018.

Investment income, an important component of an insurer’s top line, has been growing despite a low interest rate environment. With more interest rates on the radar, we expect investment results to consistently improve.

Premium growth initiatives, price increases, higher level of insured exposures and a disciplined expansion of Cincinnati Re should continue to drive revenues for the company.

Cincinnati Financial enjoys healthy liquidity position banking on a steady cash flow. The company effectively deploys capital to enhance shareholder value. Its consistent dividend raises for the past 58 years is a record matched by only seven other publicly-traded companies in the United States. Also, the company has 15.5 million shares remaining under its authorization as of Jun 30, 2018.

However, the company has been witnessing a rise in its insurance loss and policyholder benefits as well as underwriting, acquisition and insurance expenses, limiting the desired margin expansion in turn.

Also, being a property and casualty insurer, the company is exposed to catastrophe loss that induces earnings volatility.

Stocks That Warrant a Look

Stocks in the Property and Casualty Insurance industry that deserve a glance are Alleghany Corporation (Y - Free Report) , American Financial Group, Inc. (AFG - Free Report) and The Navigators Group, Inc. (NAVG - Free Report) .

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It delivered an average four-quarter beat of 17.61%.

American Financial provides property and casualty insurance products in the United States. The company came up with an average four-quarter earnings surprise of 22.82%.

The Navigators Group underwrites marine, property and casualty as well as professional liability insurance products and services in the United States and internationally. The company came up with an average four-quarter earnings surprise of 19.54%.

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