Cincinnati Financial Q3 2021 Earnings Report
Key Takeaways
Cincinnati Financial Corporation reported a decrease in net income, primarily due to lower net investment gains, but experienced significant growth in non-GAAP operating income driven by improvements in its insurance business. The company's book value per share increased, and it maintained a strong balance sheet.
Third-quarter net income decreased to $153 million, or 94 cents per share, compared to $484 million, or $2.99 per share, in the third quarter of 2020.
Non-GAAP operating income increased by 232% to $209 million, or $1.28 per share, compared to $63 million, or 39 cents per share, in the third quarter of last year.
The property casualty combined ratio improved to 92.6% from 103.6% in the third quarter of 2020.
Book value per share increased to $73.49 at September 30, 2021, up $6.45 since year-end.
Cincinnati Financial
Cincinnati Financial
Cincinnati Financial Revenue by Segment
Forward Guidance
The company did not provide specific forward guidance but highlighted ongoing efforts in pricing segmentation, collaboration between sales, underwriting, and analytics, and a strong balance sheet providing flexibility for business growth and shareholder dividends.
Positive Outlook
- Continued efforts in pricing segmentation across organization
- Strong collaboration between associates in sales, underwriting and analytics
- Achieved strong non-GAAP operating income results
- Maintaining consistent approach to setting reserves
- Strong balance sheet gives flexibility to pursue business growth and pay shareholder dividends
Challenges Ahead
- Catastrophe losses for the quarter outpaced the 5-year average
- Net income decrease primarily due to the after-tax net effect of a decrease in net investment gains
- Life insurance subsidiary net income decreased
- Increase in the underwriting expense ratio primarily due to higher levels of profit-sharing commissions for agencies
- Claims on average are remaining open longer than previously expected.
Revenue & Expenses
Visualization of income flow from segment revenue to net income