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Cincinnati Financial (CINF) Q4 Earnings Beat, Revenues Lag
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Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2018 operating income of 98 cents per share, beating the Zacks Consensus Estimate of 80 cents by 22.5%. Also, the bottom line improved 5.4% year over year, mainly on lower tax rates, higher revenues and solid segmental results.
Including net realized investment losses of $3.76 per share, the company incurred net loss of $2.78 against the year-ago quarter’s net income of $3.88.
Full-Year Highlights
For 2018, Cincinnati Financial delivered operating income of $3.35 per share, surpassing the Zacks Consensus Estimate by 5.7%. Moreover, the bottom line rose 22.3% from the year-ago quarter.
Moreover, total operating revenues of $5.8 billion grew 4% year over year.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Total operating revenues in the quarter under review were $1.5 billion, up 4.6% year over year. This improvement was driven by 4.8% higher premiums earned and a 3.2% rise in investment income. However, the top line missed the Zacks Consensus Estimate by 1.3%.
Total benefits and expenses of Cincinnati Financial increased 6.3% year over year to $1.3 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition and insurance expenses plus other operating expenses.
Combined ratio — a measure of underwriting profitability — deteriorated 100 basis points (bps) year over year to 93.9%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $813 million grew 1.9% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $55 million declined 5.2% from the year-ago quarter. Combined ratio deteriorated 50 bps year over year to 93.4%.
Personal Lines Insurance: Total revenues of $343 million rose 6.9% year over year owing to a substantial increase in premiums earned. The segment delivered an underwriting profit of $30 million, which soared 87.5% from the prior-year quarter. Combined ratio improved 380 bps year over year to 91.7%.
Excess and Surplus Lines Insurance: Total revenues of $61 million rose 8.9% year over year, aided by higher earned premiums. The segment’s underwriting profit of $15 million surged 36.4% year over year. Combined ratio improved 440 bps year over year to 75.4%.
Life Insurance: Total revenues of $100 million are unchanged from the year-ago quarter. Total benefits and expenses increased 13.1% year over year to $95 million.
Financial Update
As of Dec 31, 2018, Cincinnati Financial had total assets worth $21.9 billion, up 0.4% from the level at 2017 end.
Cincinnati Financial’s debt-to-capital ratio was 9.5% as of Dec 31, 2018, deteriorating 50 bps from 9% at the end of 2017.
As of Dec 31, 2018, Cincinnati Financial’s book value per share was $48.10, down 4.3% from the tally on Dec 31, 2017.
Dividend Update
During the fourth quarter, the board of directors approved a 5.7% dividend hike amounting to 56 cents per share. The dividend will be paid on Apr 15, 2019 to shareholders of record as of Mar 20, 2019. The hike reflects the company’s confidence in the success of its future strategies and marks the 59th consecutive year of increasing regular annual dividends.
Among other players from the same space having reported fourth-quarter earnings so far, the bottom-line figures of MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while The Progressive Corp.’s (PGR - Free Report) metric missed the same.
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From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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Cincinnati Financial (CINF) Q4 Earnings Beat, Revenues Lag
Cincinnati Financial Corporation (CINF - Free Report) reported fourth-quarter 2018 operating income of 98 cents per share, beating the Zacks Consensus Estimate of 80 cents by 22.5%. Also, the bottom line improved 5.4% year over year, mainly on lower tax rates, higher revenues and solid segmental results.
Including net realized investment losses of $3.76 per share, the company incurred net loss of $2.78 against the year-ago quarter’s net income of $3.88.
Full-Year Highlights
For 2018, Cincinnati Financial delivered operating income of $3.35 per share, surpassing the Zacks Consensus Estimate by 5.7%. Moreover, the bottom line rose 22.3% from the year-ago quarter.
Moreover, total operating revenues of $5.8 billion grew 4% year over year.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Cincinnati Financial Corporation Price, Consensus and EPS Surprise | Cincinnati Financial Corporation Quote
Operational Update
Total operating revenues in the quarter under review were $1.5 billion, up 4.6% year over year. This improvement was driven by 4.8% higher premiums earned and a 3.2% rise in investment income. However, the top line missed the Zacks Consensus Estimate by 1.3%.
Total benefits and expenses of Cincinnati Financial increased 6.3% year over year to $1.3 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition and insurance expenses plus other operating expenses.
Combined ratio — a measure of underwriting profitability — deteriorated 100 basis points (bps) year over year to 93.9%.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $813 million grew 1.9% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $55 million declined 5.2% from the year-ago quarter. Combined ratio deteriorated 50 bps year over year to 93.4%.
Personal Lines Insurance: Total revenues of $343 million rose 6.9% year over year owing to a substantial increase in premiums earned. The segment delivered an underwriting profit of $30 million, which soared 87.5% from the prior-year quarter. Combined ratio improved 380 bps year over year to 91.7%.
Excess and Surplus Lines Insurance: Total revenues of $61 million rose 8.9% year over year, aided by higher earned premiums. The segment’s underwriting profit of $15 million surged 36.4% year over year. Combined ratio improved 440 bps year over year to 75.4%.
Life Insurance: Total revenues of $100 million are unchanged from the year-ago quarter. Total benefits and expenses increased 13.1% year over year to $95 million.
Financial Update
As of Dec 31, 2018, Cincinnati Financial had total assets worth $21.9 billion, up 0.4% from the level at 2017 end.
Cincinnati Financial’s debt-to-capital ratio was 9.5% as of Dec 31, 2018, deteriorating 50 bps from 9% at the end of 2017.
As of Dec 31, 2018, Cincinnati Financial’s book value per share was $48.10, down 4.3% from the tally on Dec 31, 2017.
Dividend Update
During the fourth quarter, the board of directors approved a 5.7% dividend hike amounting to 56 cents per share. The dividend will be paid on Apr 15, 2019 to shareholders of record as of Mar 20, 2019. The hike reflects the company’s confidence in the success of its future strategies and marks the 59th consecutive year of increasing regular annual dividends.
Zacks Rank
Cincinnati Financial 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
Among other players from the same space having reported fourth-quarter earnings so far, the bottom-line figures of MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while The Progressive Corp.’s (PGR - Free Report) metric missed the same.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>