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Jun 30, 2022
Cincinnati Financial Q2 2022 Earnings Report
Cincinnati Financial experienced a net loss and a decrease in non-GAAP operating income due to a reduction in the fair value of equity securities and increased catastrophe losses.
Key Takeaways
Cincinnati Financial Corporation reported a net loss of $808 million for the second quarter of 2022, compared to a net income of $703 million in the same period last year. Non-GAAP operating income decreased by 64% to $104 million. The company's book value per share decreased to $66.30. The combined ratio for the property casualty business was 103.2%.
Second-quarter net loss was $808 million, or $5.06 per share, compared to net income of $703 million, or $4.31 per share, in the second quarter of 2021.
Non-GAAP operating income decreased 64% to $104 million, or 65 cents per share, compared with $292 million, or $1.79 per share, in the second quarter of last year.
Book value per share at June 30, 2022, was $66.30, down $15.42 since year-end.
The property casualty combined ratio for the second quarter of 2022 was 103.2%, up from 85.5% for the second quarter of 2021.
Cincinnati Financial
Cincinnati Financial
Cincinnati Financial Revenue by Segment
Revenue by Segment
Commercial Lines Revenue
CapyFin.comPersonal Lines Revenue
CapyFin.comE&S Lines Revenue
CapyFin.comLife Insurance Revenue
CapyFin.com Forward Guidance
Cincinnati Financial is optimistic that continuing to adjust their predictive models and staying focused on pricing segmentation can lead to improved results, allowing them to again produce a full-year combined ratio in the low- to mid-90s.
Positive Outlook
- Continuing to adjust predictive models
- Staying focused on pricing segmentation
- New small business program, CinergySM, introduced to agents in Illinois, Indiana and Ohio, with additional states planned for the remainder of 2022
- Cincinnati Re® and Cincinnati Global Underwriting Ltd.SM boosted growth, contributing 3 points and 1 point, respectively, to the six-month total, while also contributing meaningful amounts of underwriting profit.
- The Cincinnati Life Insurance Company had a strong first half of the year, increasing term insurance earned premiums 7% and reaching a record $31 million in operating income.
Challenges Ahead
- Investment income increased nicely producing our main source of profits in the second quarter and bringing our total non-GAAP operating income to $357 million for the first half of the year.
- Our insurance business experienced an underwriting loss for the second quarter with a 103.2% combined ratio, resulting in part from an 8.5-point increase in catastrophe losses compared with second quarter 2021.
- Took prudent reserving action in the quarter, reflecting elevated inflation in assorted forms and our belief that various pandemic effects have distorted paid loss cost trends.
- Commercial umbrella coverages – part of our commercial casualty line of business – had a particularly large impact, despite representing only 7% of our full-year 2021 property casualty earned premiums.
- Continued downward pressure in both the equity and bond markets contributed to a decline in book value per share.
Revenue & Expenses
Visualization of income flow from segment revenue to net income