Cincinnati Financial Quarterly Profit Rises 158%

Cincinnati Financial Quarterly Profit Rises 158%

NU Online News Service, April 23, 10 :57 p.m. EDT?Cincinnati Financial Corporation reported first-quarter net income soared 158 percent to $146 million from $57 million for the period last year. [@@]

The Fairfield, Ohio-based Cincinnati Financial's p-c insurance operations saw $92 million in underwriting profit for the first quarter, sharply higher than $30 million reported one year ago. Almost all profits came from the company's p-c commercial-lines units.

Earned premiums for p-c operations overall were reported at $716 million, up from $629 million a year earlier. And net written premiums for p-c insurance affiliates rose 15.1 percent to $790 million for the first quarter, compared with $687 million one year ago.

The combined ratio for p-c operations improved to 87.1, down from 95.1 one year ago.

The company showed particularly strong results from its p-c commercial-lines business with underwriting profits of $91 million, compared with $31 million a year earlier, and with earned premiums of $519 million, up from $450 million one year ago.

In the p-c personal-lines business, the insurer showed $2 million in first-quarter underwriting profit with $197 million in earned premiums, compared with an underwriting loss of $1 million with $179 million in earned premiums reported one year earlier.

"We're off to a great start in 2004, and we continue to expect record results for the full year," said chairman and chief executive John Schiff. He also cited a number of positive factors that contributed to his company's strong p-c underwriting results.

Mr. Schiff said p-c commercial-lines results demonstrate that Cincinnati Financial agents are bringing their best business to his company and are working closely with the company to ensure that underwriting remains a priority.

"Since 2000, the number of commercial-lines underwriting associates has increased by 60 percent, with five new underwriting classes in each year," Mr. Schiff said. "We also are able to take advantage of the experience of our commercial-lines team leaders, who all have at least seven years of underwriting experience."

Another factor was the relatively mild catastrophe losses, which added less than 0.1 percentage points to the combined ratio and had no material effect on per-share earnings.

"First-quarter underwriting profitability is typically the strongest of the year for our property-casualty operations, primarily due to seasonal variations in catastrophe losses," Mr. Schiff said.

Additionally, the company financial picture was helped by a legal ruling releasing some of its uninsured/underinsured motorist reserves. Over the past two quarters, Cincinnati Financial has released $70 million pretax in previously established uninsured/underinsured motorist-coverage reserves.

The reserve release followed the Ohio Supreme Court's November 2003 limiting of its 1999 Scott-Pontzer v. Liberty Mutual decision. That action added $21 million to Cincinnati Financial's 2004 first-quarter net income, after having already added $25 million to the 2003 fourth-quarter income.