Cincinnati Financial Posts Higher Profit
NU Online News Service, Oct. 29, 3 :24 p.m. EST?Cincinnati Financial Corporation posted a third-quarter net income of $104 million, a jump from $72 million in profit reported during the year-ago period.
The Fairfield, Ohio-based insurer’s statutory net written premiums for its property-casualty insurance affiliates–The Cincinnati Insurance Company, The Cincinnati Indemnity Company and The Cincinnati Casualty Company–jumped 13.4 percent to $723 million compared to last year.
The quarterly earnings, the firm said, reflect a settlement with a vendor to recoup $23 million from a $39 million charge the insurer incurred three years ago to write off previously capitalized software development costs.
The company also posted $10 million in net realized investment gains for the quarter, in contrast to an $11 million loss it recorded one year ago.
“We are on track for record full-year 2003 revenue and income and the best property-casualty profitability we have recorded in more than 10 years,” said John Schiff, chief executive officer at Cincinnati Financial.
Mr. Schiff added, though, that catastrophe losses for the quarter were slightly higher than the company anticipated. The insurer’s catastrophe losses, net of reinsurance, came in at $41 million, higher than $5 million posted one year ago.
“Catastrophe losses for the quarter included $15 million related to Hurricane Isabel, which affected policyholders in Maryland, New York, North Carolina, Pennsylvania, Virginia and West Virginia in September, and $15 million related to storms in July,” Mr. Schiff said. “The remainder primarily was related to newly reported claims from earlier events, including $12 million from the April 2003 hail storm in Ohio and Kentucky.”
Commenting on the company’s premium growth, Mr. Schiff noted that net written premiums for commercial lines of insurance rose 14.9 percent from the year-ago period, to reach $507 million, representing some 70 percent of the company’s total p-c net written premiums for the quarter.
“Competition in the commercial lines marketplace, particularly for the better accounts, is mounting,” he said. “In this market, we are experiencing our best results–both in terms of growth and profitability–for commercial package programs. Premiums in these areas continue to grow at double-digit rates.”
Mr. Schiff observed that net written premiums for personal lines segment also rose, up 10.2 percent to $216 million compared to one year ago. “Across the board in personal lines, our premium growth is being driven by higher rates and coverage pricing,” he said.
Based in Fairfield, Ohio, Cincinnati Financial is the parent company of Cincinnati Insurance, which includes Cincinnati Casualty and Cincinnati Indemnity.
Through its subsidiaries, Cincinnati Financial sells commercial property, liability, auto, bond and fire insurance, and its personal lines include homeowners and liability products. Last year, it posted $2.84 billion in overall sales.