Cincinnati Financial and its Units Get Rated by A.M. Best
Cincinnati Financial Corporation CINF and its units recently received rating action from the credit rating giant A.M. Best. The rating agency affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of The Cincinnati Insurance Company and its affiliates – The Cincinnati Indemnity Company, The Cincinnati Casualty Company and The Cincinnati Specialty Underwriters – collectively known as The Cincinnati Insurance Companies (“CIC”).
Concurrently, the rating giant affirmed the Long-Term ICR of “a-” and the Long-Term Issue Credit Ratings (Long-Term IR) of the Zacks Rank #3 (Hold) P&C insurer, which is also the parent company. The outlook of the above-mentioned credit ratings remained stable.
The ratings affirmation of CIC represents the outstanding risk-adjusted capitalization and historically conservative loss reserving standards, which in turn, have led to significant favorable development of prior accident-year loss reserves. In addition, the ratings represent the units’ solid bottom-line performance in recent years. This apart, the ratings indicate the robust distribution network in CIC’s targeted regional markets, which focuses on the development of solid, long-term relationships with local independent insurance agencies.
However, CIC’s earnings performance in the earliest year of the recent five-year period compared with the commercial lines peers with same ratings will partially offset the positive rating factors.
The ratings outlook represents CIC’s capability to face the variability displayed by the underwriting and operational performance of the same. The variability is a result of the affiliates’ excellent risk-adjusted capitalization and the rating giant’s faith of management’s initiatives toward continued improvement in underwriting and operational performance.
Notably, shares of Cincinnati Financial gained 33.2%, outperforming the Zacks categorized Property and Casualty industry’s growth of 22.6%, year to date. Solid improvement in the top line and the bottom line resulted in the outperformance. Robust premium and investment income performance were particularly responsible for the outperformance.
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company write more business, going forward.
Stocks to Consider
Some better-ranked stocks from the same space include Alleghany Corporation Y, NMI Holdings, Inc. NMIH and Arch Capital Group Ltd. ACGL. Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany Corporation deals with P&C reinsurance and insurance businesses in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 20.52%.
NMI Holdings offers private mortgage guaranty insurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 62.80%.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
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CINCINNATI FINL (CINF): Free Stock Analysis Report
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