Cincinnati Financial Corporation CINF reported third-quarter 2019 operating income of $1.08 per share, which beat the Zacks Consensus Estimate by 16.1%. Also, the bottom line improved 28.6% year over year.
Notably, the results reflected price increases and premium growth initiatives.
Total operating revenues in the quarter under review were $1.6 billion, up 10.8% year over year. This improvement was driven by 11% higher premiums earned and a 5% rise in investment income.
Net written premiums increased 8% from the prior-year quarter, reflecting price increases and premium growth initiatives.
Total benefits and expenses of Cincinnati Financial increased 8.4% year over year to $1.4 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 260 basis points (bps) year over year to 94.2%.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Cincinnati Financial Corporation price-consensus-eps-surprise-chart | Cincinnati Financial Corporation Quote
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $835 million grew 4% year over year. This upside was primarily driven by solid premiums earned. Underwriting profit of $56 million surged 65% year over year. The combined ratio also improved 250 bps year over year to 93.4%.
Personal Lines Insurance: Total revenues of $355 million rose 5% year over year owing to 5% increase in premiums earned. The segment generated underwriting profit of $3 million, which marked a rebound from the year-ago loss of $9 million. The combined ratio improved 340 bps year over year to 99.6%.
Excess and Surplus Lines Insurance: Total revenues of $73 million rose 22% year over year, aided by 20% higher earned premiums. However, the segment’s underwriting profit of $12 million dropped 29% year over year. Moreover, the combined ratio deteriorated 1120 bps year over year to 83.2%.
Life Insurance: Total revenues were $107 million, up 6% year over year. Total benefits and expenses increased 10% year over year to $91 million.
As of Sep 30, 2019, cash and total investments were $19.1 billion, up 13.9% from 2018-end.
Total assets of $24.7 billion increased 12.8% from 2018-end.
Total debt amounted to $826 million, up 0.7% from 2018-end.
Cincinnati Financial’s debt-to-capital ratio was 8.1% as of Sep 30, 2019, improving 140 bps from the end of 2018.
As of Sep 30, 2019, its book value per share was at a record high of $57.37, up 19.3% from 2018-end.
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 Other P&C Insurers
Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies TRV missed the same.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
RLI Corp. (RLI) : Free Stock Analysis Report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research