Cincinnati Financial Corporation CINF reported second-quarter 2018 operating income of 81 cents per share, beating the Zacks Consensus Estimate of 54 cents by a whopping 50%. Also, the bottom line improved 26.6% year over year, mainly on higher revenues, favorable underwriting performance and solid segmental results.
Cincinnati Financial Corporation Price, Consensus and EPS Surprise
Cincinnati Financial Corporation Price, Consensus and EPS Surprise | Cincinnati Financial Corporation Quote
Including net realized investment gains of 51 cents per share, the company’s net income came in at $1.32, which skyrocketed 120% from the year-ago quarter’s level.
Operational Update
Total operating revenues in the quarter under review were $1.5 billion, up 4% year over year. This improvement was driven by 4.3% higher premiums earned and a 1.9% rise in investment income. Also, the top line beat the Zacks Consensus Estimate by 0.6%.
Total benefits and expenses of Cincinnati Financial increased 2.9% year over year to $1.3 billion, primarily due to higher insurance loss and contract holders’ benefits plus underwriting, acquisition as well as insurance expenses.
Combined ratio — a measure of underwriting profitability — improved 110 basis points (bps) year over year to 97.2%.
Cincinnati Financial had 1,735 agency relationships as of Jun 30, 2018 compared with 1,675 as of Jun 30, 2017.
Quarterly Segment Update
Commercial Lines Insurance: Total revenues of $812 million grew 1.9% year over year. This upside was primarily driven by higher premiums earned. The company delivered an underwriting profit of $47 million, which soared 95.8% from the year-ago quarter. Combined ratio also improved 290 bps year over year to 94.2%.
Personal Lines Insurance: Total revenues of $333 million rose 8.1% year over year owing to a substantial increase in premiums earned along with a slight improvement in fee revenues. The segment incurred an underwriting loss of $32 million, considerably wider than the year-ago loss of $24 million. Moreover, combined ratio deteriorated 170 bps year over year to 110.1%.
Excess and Surplus Lines Insurance: Total revenues of $58 million increased 9.4% year over year, aided by higher earned premiums. The segment’s underwriting profit of $13 million declined 31.6% year over year. Combined ratio deteriorated 1140 bps year over year to 77.6%.
Life Insurance: Total revenues of $103 million gained 4% year over year. Total benefits and expenses inched up 1.3% year over year to $81 million.
Financial Update
As of Jun 30, 2018, Cincinnati Financial had total assets worth $21.8 billion, down 0.4% from the level at 2017 end.
Cincinnati Financial’s debt-to-capital ratio was 9.7% as of Jun 30, 2018, reflecting a marginal deterioration from 9% at the end of 2017.
As of Jun 30, 2018, Cincinnati Financial’s book value per share was $48.68, down 3.2% from the tally on Dec 31, 2017.
Zacks Rank
Cincinnati Financial carries a Zacks Rank #4 (Sell).
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 insurance industry, which have already reported second-quarter earnings, the bottom line of The Progressive Corporation PGR and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate while The Travelers Companies, Inc.’s TRV metric missed the same.
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