Cincinnati Financial 3Q profit falls 31 percent

Cincinnati Financial 3Q profit drops 31 percent as investment gains slide, operating profit up

• On 11:17 am EDT, Thursday October 29, 2009

CINCINNATI (AP) -- Insurance company Cincinnati Financial Corp. on Thursday posted a 31 percent profit decline in its third quarter its investment gains fell sharply, but operating profit shot up as the company had to pay out fewer catastrophe claims.

The company, which provides a broad range of insurance products but depends most on its property and casualty lines, said net income fell to $171 million, or $1.05 per share, for the three months ended Sept. 30 compared with $247 million, or $1.50 per share, a year ago.

Net realized investment gains contributed $75 million, or 46 cents per share, to the latest results compared with $173 million, or $1.05 per share, a year ago. The company last year sold off stocks and locked in gains ahead of the market plunge.

Operating earnings, which exclude investment gains, rose 31 percent to $96 million, or 59 cents per share, from $74 million, or 45 cents per share, a year earlier.

Revenue dropped 2 percent to $1 billion from $1.19 billion in the 2008 quarter.

Analysts polled by Thomson Reuters, on average, expect operating income of 42 cents per share on revenue of $892.3 million.

Net premiums written edged up to $730 million from $727 million, reflecting lower costs for reinsurance and new business offsetting lower market pricing and the slow economy.

Cincinnati Financial's combined ratio improved to 95.1 percent from 101.3 percent in the 2008 quarter. The figure reflects the sum of an insurance company's losses and expenses, with a ratio above 100 signifying that more money is going out to cover insured losses than is being taken in through premiums.

The improvement reflected an almost 90 percent drop in catastrophe losses to $6 million from $63 million a year ago. Last year, the company paid out record claims because of Hurricane Ike and wind storms in some of its key markets.

Cincinnati Financial shares gained 31 cents to $25.46, in morning trading. The stock has traded between $17.84 and $31.85 in the past 52 weeks and started the session down about 13 percent for the year.

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