Cats Hit Selective and Cincinnati Financial 2Q Earnings

NU Online News Service, July 28, 3:17 p.m. EDT

Two regional insurers took earnings hits in the 2011 second quarter due to catastrophe losses.

Cincinnati Financial Corp. records a second-quarter net loss of $49 million compared to net income of $27 million for the same period last year. The company’s combined ratio jump 29 points to 136.6.

Total revenues grew 11 percent, or $97 million, to 975 million for the quarter.

For the 2011 first half, net income declined 86 percent, or $82 million, to $13 million.

The company says after-tax property and casualty losses from natural catastrophes in the second quarter were $189 million.

Net realized investment gains rose $60 million during the quarter.

Steven J. Johnston, president and chief executive officer of Cincinnati, says in a statement that the company was prepared “operationally and financially for the pounding our own policyholders and the [property and casualty] insurance industry took from this spring’s powerful storms.”

He says reinsurance covered $220 million, reducing the net pretax loss to $290 million.

Branchville, N.J.-based Selective Insurance says its net income dropped 88 percent in the second quarter, or more than $16 million, to over $2 million. The company’s combined ratio jumped 8.5 points to 109.5.

Total revenues for the quarter increased 3 percent, or $12 million, to $400 million.

For the 2011 first half, net income fell 3 percent, or $695,000, to $24 million.

 “The industry experienced unprecedented catastrophe losses due to severe storms thus far this year, but on a relative basis ours were not of the same magnitude,” says Gregory E. Murphy, chairman, president and CEO.

The company’s catastrophe losses for the quarter were $38 million.

On a positive note for Selective, Murphy says the markets “are firming.” He notes that commercial lines renewal price increased close to 3 percent for the quarter, the ninth consecutive quarter “of positive commercial lines renewal pricing.”