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Dec 31, 2020
Cincinnati Financial Q4 2020 Earnings Report
Cincinnati Financial's Q4 2020 net income increased, driven by growth in non-GAAP operating income and investment performance.
Key Takeaways
Cincinnati Financial Corporation reported a strong fourth quarter in 2020, marked by significant growth in net income and non-GAAP operating income. The company's property casualty combined ratio improved, and book value per share reached a record high. Despite challenges from weather-related catastrophes and the global pandemic, Cincinnati Financial demonstrated resilience and strategic focus, enhancing profitability and delivering shareholder value.
Net income for Q4 2020 was $1.049 billion, or $6.47 per share, compared to $626 million, or $3.79 per share, in Q4 2019.
Non-GAAP operating income increased by 29% to $262 million, or $1.61 per share, up from $203 million, or $1.23 per share, in the same quarter last year.
The property casualty combined ratio improved to 87.3% in Q4 2020 from 91.6% in Q4 2019.
Book value per share rose to $67.04 at December 31, 2020, an increase of $6.49 or 10.7% since year-end 2019.
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 focused on maintaining its proven strategies to enhance the profitability of its core business, diversify geographically and by product, and deliver meaningful shareholder value. The company believes more opportunities lie ahead to serve agents and their communities.
Positive Outlook
- Steady rise in renewal premiums is expected to lead to net written premium growth ahead of the industry average.
- Successfully managing commercial lines pricing, with average increases in the mid-single-digit percent range in the fourth quarter.
- Advantage in three-year commercial package policy, which reduces administrative burdens for agents and policyholders and supports commercial lines retention.
- Personal lines operations saw 5% growth in net written premiums for both the quarter and the full year.
- Strong renewal premiums drove a 7% increase in full-year 2020 earned premiums, including a 6% increase for term life insurance.
Challenges Ahead
- Catastrophe loss impact was 2.1 percentage points higher than the fourth-quarter 10-year average.
- The pandemic put a spotlight on the importance of life insurance, and were able to support agencies in providing a total account solution for their clients through The Cincinnati Life Insurance Company.
- More recent additions to our insurance portfolio also contributed: the excess and surplus lines segment increased its net written premiums 15% for the year while Cincinnati Global Underwriting Ltd.SM and Cincinnati Re® each contributed 1% to overall growth in 2020.
- Positive contributions from both our insurance operations and investment performance increased our book value nearly 11% to a record $67.04 per share at December 31, 2020.
- Achieving these positive results in a year that brought a global pandemic, a record number of catastrophe events and historically low interest rates, demonstrates the strength of our relationships with the independent agents who represent us, the mastery demonstrated by our associates in underwriting on an account by account basis and the benefits realized by our dedication to data and analytics.
Revenue & Expenses
Visualization of income flow from segment revenue to net income