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Cincinnati Financial (CINF) Q1 Earnings Top, Revenues Up Y/Y

Zacks Equity Research

Cincinnati Financial Corporation CINF reported first-quarter 2019 operating income of $1.05 per share, which beat the Zacks Consensus Estimate of 94 cents by 11.7%. Also, the bottom line improved 45.8% year over year.

The results reflect price increases and premium growth initiatives.

Including net realized investment gain of $3.17 per share, net income of $4.22 per share marked a reversal from the year-ago loss of 19 cents per share.

Cincinnati Financial Corporation Price, Consensus and EPS Surprise

Cincinnati Financial Corporation Price, Consensus and EPS Surprise | Cincinnati Financial Corporation Quote

Operational Update    

Total operating revenues in the quarter under review were $1.5 billion, up 5.7% year over year. This improvement was driven by 6% higher premiums earned and a 5% rise in investment income.

Total benefits and expenses of Cincinnati Financial increased 61.4% year over year to $1.3 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 490 basis points (bps) year over year to 93%.

Quarterly Segment Update

Commercial Lines Insurance: Total revenues of $811 million grew 12% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $76 million increased more than fivefold. Combined ratio improved 750 bps year over year to 90.8%.

Personal Lines Insurance: Total revenues of $345 million rose 6% year over year owing to 6% increase in premiums earned. The segment incurred underwriting loss of $4 million, narrower than $9 million loss incurred in the year-ago quarter. Combined ratio improved 190 bps year over year to 101.3%.

Excess and Surplus Lines Insurance: Total revenues of $64 million rose 14% year over year, aided by 13% higher earned premiums. The segment’s underwriting profit of $11 million dropped 39% year over year. Combined ratio deteriorated 1470 bps year over year to 83.5%.

Life Insurance: Total revenues were $100 million, 5% up year over year. Total benefits and expenses increased 11% year over year to $92 million.

Financial Update

As of Mar 31, 2019, Cincinnati Financial had total assets worth $23.4 billion, up 6.5% from the level at 2018 end.
 
Cincinnati Financial’s debt-to-capital ratio was 8.7% as of Mar 31, 2019, improved 80 bps from 9.5% at the end of 2018.

As of Mar 31, 2019, Cincinnati Financial’s book value per share was a record high of $52.88, up 9% year over year.

Zacks Rank

Cincinnati Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the property and casualty industry, RLI Corp RLI, The Progressive Corporation PGR and The Travelers Companies Inc. TRV beat the respective Zacks Consensus Estimate for earnings.

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