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Cincinnati Financial Corporation (CINF - Free Report) reported second-quarter 2022 operating income of 65 cents per share, which missed the Zacks Consensus Estimate by 38.1%. The bottom line decreased 64% year over year.
Cincinnati Financial’s results reflected improved revenues and higher investment income, partly offset by underwriting loss and deteriorated combined ratio.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Total operating revenues in the quarter under review were $1.9 billion, which improved 11.2% year over year. This improvement was driven by higher earned premiums and investment income. Also, the top line surpassed the consensus mark by 2.2%.
Net written premiums climbed 15% year over year to $1.9 billion, attributable to premium growth initiatives, price increases and a higher level of insured exposure. Investment income, after-tax, increased 11% year over year to $164 million, owing to growth in equity portfolio dividends and growth in interest income from fixed-maturity securities.
Total benefits and expenses of Cincinnati Financial increased 30.8% year over year to $1.8 billion, primarily due to higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting loss of $52 million against an underwriting income of $221 million in the year-earlier period.
The combined ratio — a measure of underwriting profitability — deteriorated 1770 basis points (bps) year over year to 103.2.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $995 million increased 9% year over year. This upside was primarily driven by 9% premiums earned. Underwriting loss was $62 million against underwriting income of $145 million in the year-earlier period. The combined ratio deteriorated 2210 bps year over year to 106.3.
Personal Lines Insurance: Total revenues of $414 million increased 8% year over year on account of an 8% increase in premiums earned. Underwriting loss was $49 million against underwriting income of $29 million in the year-earlier period. The combined ratio deteriorated 1940 bps year over year to 112.1.
Excess and Surplus Lines Insurance: Total revenues of $124 million grew 29% year over year, aided by 31% higher earned premiums. Underwriting profit improved 90% year over year to $19 million. The combined ratio improved 440 bps year over year to 85.1.
Life Insurance: Total revenues were $119 million, down 6% year over year, due to 4% lower earned premiums. Total benefits and expenses decreased 16% year over year to $92 million due to lower contract holders’ benefits and underwriting expenses incurred.
Financial Update
As of Jun 30, 2022, Cincinnati Financial had total assets worth $29.2 billion, down 6.9% from the level at 2021 end.
Total debt was $789 million as of Jun 30, 2022, unchanged from the 2021-end level. Cincinnati Financial’s debt-to-capital ratio was 7.3% as of Jun 30, 2022, down 130 bps from the end of 2021.
As of Jun 30, 2022, Cincinnati Financial’s book value per share was $66.30, down 18.9% from 2021 end.
Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.
Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
AXIS Capital Holdings posted second-quarter 2022 operating income of $1.74 per share, beating the Zacks Consensus Estimate by about 13%. However, the bottom line decreased 13% year over year. Total operating revenues of $1.4 billion beat the Zacks Consensus Estimate by 5.5%. The top line rose 7.8% year over year on higher net premiums earned.
Net investment income decreased 20.2% year over year to $92.2 million, primarily attributable to lower gains from other investments. AXIS Capital’s underwriting income of about $117 million decreased 21.3% year over year. The combined ratio deteriorated 280 basis points (bps) to 93.4.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.
RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
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Cincinnati Financial (CINF) Q2 Earnings Miss, Revenues Beat
Cincinnati Financial Corporation (CINF - Free Report) reported second-quarter 2022 operating income of 65 cents per share, which missed the Zacks Consensus Estimate by 38.1%. The bottom line decreased 64% year over year.
Cincinnati Financial’s results reflected improved revenues and higher investment income, partly offset by underwriting loss 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
Total operating revenues in the quarter under review were $1.9 billion, which improved 11.2% year over year. This improvement was driven by higher earned premiums and investment income. Also, the top line surpassed the consensus mark by 2.2%.
Net written premiums climbed 15% year over year to $1.9 billion, attributable to premium growth initiatives, price increases and a higher level of insured exposure.
Investment income, after-tax, increased 11% year over year to $164 million, owing to growth in equity portfolio dividends and growth in interest income from fixed-maturity securities.
Total benefits and expenses of Cincinnati Financial increased 30.8% year over year to $1.8 billion, primarily due to higher insurance losses and contract holders’ benefits and underwriting, acquisition and insurance expenses.
In its property & casualty (P&C) insurance business, Cincinnati Financial witnessed an underwriting loss of $52 million against an underwriting income of $221 million in the year-earlier period.
The combined ratio — a measure of underwriting profitability — deteriorated 1770 basis points (bps) year over year to 103.2.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $995 million increased 9% year over year. This upside was primarily driven by 9% premiums earned. Underwriting loss was $62 million against underwriting income of $145 million in the year-earlier period. The combined ratio deteriorated 2210 bps year over year to 106.3.
Personal Lines Insurance: Total revenues of $414 million increased 8% year over year on account of an 8% increase in premiums earned. Underwriting loss was $49 million against underwriting income of $29 million in the year-earlier period. The combined ratio deteriorated 1940 bps year over year to 112.1.
Excess and Surplus Lines Insurance: Total revenues of $124 million grew 29% year over year, aided by 31% higher earned premiums. Underwriting profit improved 90% year over year to $19 million. The combined ratio improved 440 bps year over year to 85.1.
Life Insurance: Total revenues were $119 million, down 6% year over year, due to 4% lower earned premiums. Total benefits and expenses decreased 16% year over year to $92 million due to lower contract holders’ benefits and underwriting expenses incurred.
Financial Update
As of Jun 30, 2022, Cincinnati Financial had total assets worth $29.2 billion, down 6.9% from the level at 2021 end.
Total debt was $789 million as of Jun 30, 2022, unchanged from the 2021-end level. Cincinnati Financial’s debt-to-capital ratio was 7.3% as of Jun 30, 2022, down 130 bps from the end of 2021.
As of Jun 30, 2022, Cincinnati Financial’s book value per share was $66.30, down 18.9% from 2021 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 Some Other P&C Insurers
Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.
Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
AXIS Capital Holdings posted second-quarter 2022 operating income of $1.74 per share, beating the Zacks Consensus Estimate by about 13%. However, the bottom line decreased 13% year over year. Total operating revenues of $1.4 billion beat the Zacks Consensus Estimate by 5.5%. The top line rose 7.8% year over year on higher net premiums earned.
Net investment income decreased 20.2% year over year to $92.2 million, primarily attributable to lower gains from other investments. AXIS Capital’s underwriting income of about $117 million decreased 21.3% year over year. The combined ratio deteriorated 280 basis points (bps) to 93.4.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.
RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.