Cincinnati Financial Corp. management in a meeting with agents yesterday told them to "walk away" from business that competitors are chasing with lowball prices, the company said.
The statement from the firm also said that its independent agents were told increased competition will lead to an overall second-quarter decline of about 1 percent in Cincinnati Financial Corp.'s net written premiums.
Key remarks were delivered by Chief Financial Officer Kenneth Stecher at Cincinnati Insurance Companies' 2007 President's Club meeting in Cincinnati.
"As lower pricing prevails, we believe it's more important than ever to carefully select and underwrite risks. Our agents are helping us do that, although it means we will walk away from accounts that we believe other carriers have seriously underpriced," Mr. Stecher was quoted as saying.
He added that the firm relies "on our agents to identify and attract those policyholders who seek the best value, including superior claims service, broad coverages, high financial strength ratings and three-year commercial policies."
"In the commercial lines segment that accounts for almost 80 percent of our property-casualty written premiums, new business declined approximately 19 percent for the second quarter and 11 percent for the six months," he reported.
In personal lines, Mr. Stecher said the company changed the structure of premium credits to better position agents to sell home and auto policies. The changes, he said, resulted in improved policy retention of about 90 percent.
"Lower premiums per policy continued to reduce personal lines total written premiums, which declined about 7 percent for the second quarter and about 6 percent for six months," he said.
Mr. Stecher said he now anticipates the second-quarter combined ratio to come in at between 89 and 91, compared with 94.5 for the second quarter in 2006.
"Our weather-related losses were unusually light this quarter," he said.
The company estimates $11 million in net pretax catastrophe losses during the second quarter, compared with $64 million in the same 2006 period.
The company will report second-quarter figures in detail on Aug. 7.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.