Cincinnati Financial Reports Third-Quarter 2024 Results
CINCINNATI, Oct. 24, 2024 /PRNewswire/ -- Cincinnati Financial Corporation (NASDAQ:CINF) today reported:
Third-quarter 2024 net income of $820 million, or $5.20 per share, compared with a net loss of $99 million, or $0.63 per share, in the third quarter of 2023, after recognizing a $645 million third-quarter 2024 after-tax increase in the fair value of equity securities still held.
Third-quarter 2024 non-GAAP operating income* of $224 million, or $1.42 per share, compared with $261 million, or $1.66 per share, in the third quarter of last year. The decrease of $37 million, or 14%, was primarily due to an $86 million increase in after-tax catastrophe losses.
$919 million increase in third-quarter 2024 net income, compared with third-quarter 2023, primarily due to the after-tax net effect of a $956 million increase in net investment gains.
$88.32 book value per share at September 30, 2024, up $11.26 since year-end.
17.8% value creation ratio for the first nine months of 2024, compared with 4.4% for the same period of 2023.
Financial Highlights
(Dollars in millions, except per share data)
Three months ended September 30,
Nine months ended September 30,
2024
2023
% Change
2024
2023
% Change
Revenue Data
Earned premiums
$ 2,297
$ 2,033
13
$ 6,524
$ 5,894
11
Investment income, net of expenses
258
225
15
745
655
14
Total revenues
3,320
1,811
83
8,799
6,657
32
Income Statement Data
Net income (loss)
$ 820
$ (99)
nm
$ 1,887
$ 660
186
Investment gains and losses, after-tax
596
(360)
nm
1,187
67
nm
Non-GAAP operating income*
$ 224
$ 261
(14)
$ 700
$ 593
18
Per Share Data (diluted)
Net income (loss)
$ 5.20
$ (0.63)
nm
$ 11.97
$ 4.17
187
Investment gains and losses, after-tax
3.78
(2.29)
nm
7.53
0.42
nm
Non-GAAP operating income*
$ 1.42
$ 1.66
(14)
$ 4.44
$ 3.75
18
Book value
$ 88.32
$ 67.72
30
Cash dividend declared
$ 0.81
$ 0.75
8
$ 2.43
$ 2.25
8
Diluted weighted average share outstanding
157.7
156.9
1
157.7
158.2
0
*
The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures section defines and reconciles measures presented in this release that are not based on U.S. Generally Accepted Accounting Principles.
Forward-looking statements and related assumptions are subject to the risks outlined in the company's safe harbor statement.
Insurance Operations Highlights
97.4% third-quarter 2024 property casualty combined ratio, increased from 94.4% for the third quarter of 2023.
17% growth in third-quarter net written premiums, including price increases, premium growth initiatives and a higher level of insured exposures.
$406 million third-quarter 2024 property casualty new business written premiums, up 30%. Agencies appointed since the beginning of 2023 contributed $41 million or 10% of total new business written premiums.
$20 million third-quarter 2024 life insurance subsidiary net income, down $5 million compared with the third quarter of 2023, and 4% growth in third-quarter 2024 term life insurance earned premiums.
Investment and Balance Sheet Highlights
15% or $33 million increase in third-quarter 2024 pretax investment income, including a 21% increase in bond interest income and a 1% decrease in stock portfolio dividends.
Three-month increase of 5% in fair value of total investments at September 30, 2024, including a 10% increase for the bond portfolio and a 1% decrease for the stock portfolio.
$5.379 billion parent company cash and marketable securities at September 30, 2024, up 11% from year-end 2023.
Financial Strength to Serve PolicyholdersStephen M. Spray, president and chief executive officer, commented: "We responded to 20 weather-related catastrophes across the U.S. in the third quarter, including Hurricane Helene, which swept through 11 states at the end of September. Our hearts go out to these communities and their residents who are trying to put lives, homes and businesses back together. Confident in our financial strength, our field claims associates can shine, responding in person, paying claims and delivering fair, fast and empathetic service.
"Those catastrophes added 13 points to our combined ratio for the quarter, just above our 5-year third-quarter average of 12.2%, bringing our combined ratio to 97.4%. As evidence of our ongoing focus on increasing product and geographic diversification, fine-tuning pricing precision and applying our underwriting expertise, our nine-month underwriting profit improved 53%, growing to $228 million compared to $149 million for the first nine months of 2023. Our combined ratio for the year through September 30 is 96.5%, comfortably within our target long-term average range of 92% to 98%.
"Investment income for the third quarter also grew, rising 15% to $258 million, driven by a 21% increase in bond interest income. Our investment professionals regularly trim or exit equity positions as they work to keep our investment portfolio optimized to balance near-term income generation with long-term book value growth potential. During the quarter we had $959 million in net sales of equity securities and $672 million in net purchases of fixed-maturity securities. This does not signal a change to our investment strategy. We will continue to hold both significant equity and bond portfolios."
Stability for Agents"As we've visited with agents during the third quarter, they shared how they appreciate our responsiveness and our stability as we offer them options for new business opportunities even through the market turbulence of the past year. Our associates working with the independent agents who represent us are answering the call, crafting risk management solutions that showcase our expertise across every segment of our business.
"In the first nine months of 2024, property casualty net written premiums topped $7 billion, up 14% compared with the first nine-months last year, a new record. We continued to write healthy amounts of both new and renewal business, with commercial lines growing 8%, personal lines at 30% and excess and surplus lines at 15%."
Value for Shareholders"At September 30, our book value per share again reached a record high, increasing 15% since December 31, 2023, to $88.32. Consolidated cash and total investments climbed to nearly $30 billion. Our value creation ratio, which considers the dividends we pay as well as our growth in book value, was 17.8% for the first nine months, ahead of our 10% to 13% average annual target for this measure."
Insurance Operations Highlights
Consolidated Property Casualty Insurance Results
(Dollars in millions)
Three months ended September 30,
Nine months ended September 30,
2024
2023
% Change
2024
2023
% Change
Earned premiums
$ 2,217
$ 1,957
13
$ 6,284
$ 5,661
11
Fee revenues
3
3
0
9
8
13
Total revenues
2,220
1,960
13
6,293
5,669
11
Loss and loss expenses
1,499
1,261
19
4,181
3,840
9
Underwriting expenses
659
587
12
1,884
1,680
12
Underwriting profit
$ 62
$ 112
(45)
$ 228
$ 149
53
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Loss and loss expenses
67.6 %
64.4 %
3.2
66.5 %
67.8 %
(1.3)
Underwriting expenses
29.8
30.0
(0.2)
30.0
29.7
0.3
Combined ratio
97.4 %
94.4 %
3.0
96.5 %
97.5 %
(1.0)
% Change
% Change
Agency renewal written premiums
$ 1,795
$ 1,549
16
$ 5,321
$ 4,727
13
Agency new business written premiums
406
313
30
1,159
867
34
Other written premiums
92
95
(3)
520
532
(2)
Net written premiums
$ 2,293
$ 1,957
17
$ 7,000
$ 6,126
14
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year before catastrophe losses
57.0 %
57.7 %
(0.7)
58.6 %
59.7 %
(1.1)
Current accident year catastrophe losses
13.8
9.4
4.4
11.2
11.9
(0.7)
Prior accident years before catastrophe losses
(2.4)
(2.4)
0.0
(2.2)
(3.2)
1.0
Prior accident years catastrophe losses
(0.8)
(0.3)
(0.5)
(1.1)
(0.6)
(0.5)
Loss and loss expense ratio
67.6 %
64.4 %
3.2
66.5 %
67.8 %
(1.3)
Current accident year combined ratio before
catastrophe losses
86.8 %
87.7 %
(0.9)
88.6 %
89.4 %
(0.8)
$336 million or 17% growth of third-quarter 2024 property casualty net written premiums, and nine-month growth of 14%, reflecting premium growth initiatives, price increases and a higher level of insured exposures. The contribution to third-quarter growth from Cincinnati Re® and Cincinnati Global in total was 1 percentage point.
$93 million or 30% increase in third-quarter 2024 new business premiums written by agencies. The growth included a $30 million increase in standard market property casualty production from agencies appointed since the beginning of 2023.
245 new agency appointments in the first nine months of 2024, including 82 that market only our personal lines products.
3.0 percentage-point third-quarter 2024 combined ratio increase, including an increase of 3.9 points from catastrophe losses.
1.0 percentage-point nine-month 2024 combined ratio improvement, including a decrease of 1.2 points from lower catastrophe losses.
3.2 percentage-point third-quarter 2024 benefit from favorable prior accident year reserve development of $71 million, compared with 2.7 points or $53 million for third-quarter 2023.
3.3 percentage-point nine-month 2024 benefit from favorable prior accident year reserve development, compared with 3.8 points for the first nine months of 2023.
1.1 percentage-point improvement, to 58.6%, for the nine-month 2024 ratio of current accident year losses and loss expenses before catastrophes, including an increase of 1.1 points for the portion estimated as reserves for claims incurred but not reported (IBNR) and a decrease of 2.2 points for the case incurred portion.
0.3 percentage-point increase in the underwriting expense ratio for the first nine months of 2024, compared with the same period of 2023, largely due to higher levels of profit-sharing commissions for agencies.
Commercial Lines Insurance Results
(Dollars in millions)
Three months ended September 30,
Nine months ended September 30,
2024
2023
% Change
2024
2023
% Change
Earned premiums
$ 1,137
$ 1,062
7
$ 3,326
$ 3,184
4
Fee revenues
1
1
0
3
3
0
Total revenues
1,138
1,063
7
3,329
3,187
4
Loss and loss expenses
706
680
4
2,171
2,136
2
Underwriting expenses
351
331
6
1,028
968
6
Underwriting profit
$ 81
$ 52
56
$ 130
$ 83
57
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Loss and loss expenses
62.1 %
64.0 %
(1.9)
65.3 %
67.1 %
(1.8)
Underwriting expenses
30.9
31.2
(0.3)
30.9
30.4
0.5
Combined ratio
93.0 %
95.2 %
(2.2)
96.2 %
97.5 %
(1.3)
% Change
% Change
Agency renewal written premiums
$ 987
$ 914
8
$ 3,086
$ 2,940
5
Agency new business written premiums
187
148
26
562
431
30
Other written premiums
(36)
(33)
(9)
(101)
(95)
(6)
Net written premiums
$ 1,138
$ 1,029
11
$ 3,547
$ 3,276
8
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year before catastrophe losses
60.7 %
60.5 %
0.2
61.3 %
61.6 %
(0.3)
Current accident year catastrophe losses
5.8
6.8
(1.0)
7.5
9.5
(2.0)
Prior accident years before catastrophe losses
(4.0)
(3.2)
(0.8)
(2.9)
(3.9)
1.0
Prior accident years catastrophe losses
(0.4)
(0.1)
(0.3)
(0.6)
(0.1)
(0.5)
Loss and loss expense ratio
62.1 %
64.0 %
(1.9)
65.3 %
67.1 %
(1.8)
Current accident year combined ratio before
catastrophe losses
91.6 %
91.7 %
(0.1)
92.2 %
92.0 %
0.2
$109 million or 11% growth in third-quarter 2024 commercial lines net written premiums, including higher agency renewal and new business written premiums. Eight percent growth in nine-month net written premiums.
$73 million or 8% increase in third-quarter renewal written premiums, with commercial lines average renewal pricing increases in the high-single-digit percent range.
$39 million or 26% increase in third-quarter 2024 new business premiums written by agencies, as we continue to carefully underwrite each policy in a highly competitive market.
2.2 percentage-point third-quarter 2024 combined ratio improvement, including a decrease of 1.3 points from lower catastrophe losses.
1.3 percentage-point nine-month 2024 combined ratio improvement, including a decrease of 2.5 points from lower catastrophe losses.
4.4 percentage-point third-quarter 2024 benefit from favorable prior accident year reserve development of $50 million, compared with 3.3 points or $34 million for third-quarter 2023.
3.5 percentage-point nine-month 2024 benefit from favorable prior accident year reserve development, compared with 4.0 points for the first nine months of 2023.
Personal Lines Insurance Results
(Dollars in millions)
Three months ended September 30,
Nine months ended September 30,
2024
2023
% Change
2024
2023
% Change
Earned premiums
$ 678
$ 527
29
$ 1,897
$ 1,484
28
Fee revenues
2
1
100
4
3
33
Total revenues
680
528
29
1,901
1,487
28
Loss and loss expenses
553
368
50
1,421
1,138
25
Underwriting expenses
196
159
23
554
441
26
Underwriting profit (loss)
$ (69)
$ 1
nm
$ (74)
$ (92)
20
