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Cincinnati Financial Corp. Message Board

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  • CINF got hit unusually hard a couple quarters ago due to storm losses. I think it was something like 5x the normal loss claims for the season. The trailing PE should improve as that quarter rolls off and they raise premiums early in the new year. I planned to buy more shares in the mid-$20's but never pulled the trigger. Now at $30, I'm not adding more shares. Good company though.

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    • I assume you are referring to the massive storms that hit Alabama and Joplin, Missouri last spring. There was also a good hail storm that hit Ohio, and there were probably other events.

      If so, I think you need to ask yourself a couple questions.

      Those storms were not proprietary CINF storms, so presumably many other carriers would also severely why should CINF be affected any differently?

      And as has been mentioned here before, this catastrophe thing seems to be just so happens that last spring was unusually severe, but this is been yet another hit in a steady stream.

      Keep in mind, that the weather does not pick on one insurance company over another.

      The question is, why is CINF's PE relatively higher than its peers?

      I'd like another explanation, but the only one I can come up with is the dividend is propping up the price, even as earnings suffer. That explains both the numerator and the denominator.

      I contend that the CINF's high dividend yield is a measure of its inherent risk.

      That company is doing everything it can to preserve that dividend, including cutting benefits, limiting bonuses (except to those at the top who they need to keep their little party going).

      This is a very insular company and it doesn't seem like there is anyone out there who has truly peeked under the hood.

      Take a look. There's a bunch of silliness inside.

      • 1 Reply to investments10199
      • Looking back 4 years, their Q2 is always their heavy claim quarter: '08 was profitable, '09 had a slight loss, '10 was profitable, then '11 storms hit them with a big, atypical -.57 loss. This will roll off their TTM and the PE will improve (unless more bad weather related claims in '12). Now, that I've reviewed them again, I may pick a few more shares. Claims can be highly seasonal and variable, and insurance companies are often regional. They also insure each other, re-insurance, I believe. I just read a little about it, not an expert.

    • Look at history. They get hit every year by storm losses. They use that excuse 3 out of 4 quarters. You would think that by now they would do something to shift their book or charge adequate prices. Instead they appoint agents in the Colorado hail belt and in Texas.


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