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Cincinnati Financial (CINF) Q3 Earnings Top, Revenues Up Y/Y

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Cincinnati Financial Corporation (CINF - Free Report) reported third-quarter 2019 operating income of $1.08 per share, which beat the Zacks Consensus Estimate by 16.1%. Also, the bottom line improved 28.6% year over year.

Notably, the results reflected price increases and premium growth initiatives.

Operational Update    

Total operating revenues in the quarter under review were $1.6 billion, up 10.8% year over year. This improvement was driven by 11% higher premiums earned and a 5% rise in investment income.

Net written premiums increased 8% from the prior-year quarter, reflecting price increases and premium growth initiatives.

Total benefits and expenses of Cincinnati Financial increased 8.4% year over year to $1.4 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 — improved 260 basis points (bps) year over year to 94.2%.

Cincinnati Financial Corporation Price, Consensus and EPS Surprise


Quarterly Segment Update

Commercial Lines Insurance: Total revenues of $835 million grew 4% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $56 million surged 65% year over year. The combined ratio also improved 250 bps year over year to 93.4%.

Personal Lines Insurance: Total revenues of $355 million rose 5% year over year owing to 5% increase in premiums earned. The segment generated underwriting profit of $3 million, which marked a rebound from the year-ago loss of $9 million. The combined ratio improved 340 bps year over year to 99.6%.

Excess and Surplus Lines Insurance: Total revenues of $73 million rose 22% year over year, aided by 20% higher earned premiums. However, the segment’s underwriting profit of $12 million dropped 29% year over year. Moreover, the combined ratio deteriorated 1120 bps year over year to 83.2%.

Life Insurance: Total revenues were $107 million, up 6% year over year. Total benefits and expenses increased 10% year over year to $91 million.

Financial Update

As of Sep 30, 2019, cash and total investments were $19.1 billion, up 13.9% from 2018-end.

Total assets of $24.7 billion increased 12.8% from 2018-end.

Total debt amounted to $826 million, up 0.7% from 2018-end.

Cincinnati Financial’s debt-to-capital ratio was 8.1% as of Sep 30, 2019, improving 140 bps from the end of 2018.

As of Sep 30, 2019, its book value per share was at a record high of $57.37, up 19.3% from 2018-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 P&C Insurers

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies (TRV - Free Report) missed the same.

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