CINCINNATI, Feb. 6, 2023 /PRNewswire/ --Cincinnati Financial Corporation (Nasdaq: CINF) today reported:
Financial Highlights
(Dollars in millions except per share data) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Revenue Data | ||||||||||||
Earned premiums | $ 1,874 | $ 1,676 | 12 | $ 7,219 | $ 6,482 | 11 | ||||||
Investment income, net of expenses | 208 | 186 | 12 | 781 | 714 | 9 | ||||||
Total revenues | 3,114 | 3,323 | (6) | 6,557 | 9,630 | (32) | ||||||
Income Statement Data | ||||||||||||
Net income (loss) | $ 1,013 | $ 1,470 | (31) | $ (486) | $ 2,946 | nm | ||||||
Investment gains and losses, after-tax | 811 | 1,150 | (29) | (1,159) | 1,903 | nm | ||||||
Non-GAAP operating income* | $ 202 | $ 320 | (37) | $ 673 | $ 1,043 | (35) | ||||||
Per Share Data (diluted) | ||||||||||||
Net income (loss) | $ 6.40 | $ 9.04 | (29) | $ (3.06) | $ 18.10 | nm | ||||||
Investment gains and losses, after-tax | 5.13 | 7.07 | (27) | (7.30) | 11.69 | nm | ||||||
Non-GAAP operating income* | $ 1.27 | $ 1.97 | (36) | $ 4.24 | $ 6.41 | (34) | ||||||
Book value | $ 67.01 | $ 81.72 | (18) | |||||||||
Cash dividend declared | $ 0.69 | $ 0.63 | 10 | $ 2.76 | $ 2.52 | 10 | ||||||
Diluted weighted average shares outstanding | 158.2 | 162.5 | (3) | 158.8 | 162.7 | (2) | ||||||
* The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures defines and reconciles measures presented in this release that are not based on U.S. Generally Accepted Accounting Principles. Forward-looking statements and related assumptions are subject to the risks outlined in the company's safe harbor statement. |
Insurance Operations Highlights
Investment and Balance Sheet Highlights
More Than a Decade of Underwriting Profit Steven J. Johnston, chairman and chief executive officer, commented: "Winter Storm Elliott impacted policyholders in 44 states and Washington, D.C. The timing of the storm was particularly influential as many businesses were closed and families were traveling for the holiday, delaying discovery and reporting of losses.
"It's rare for us to experience a catastrophe of Elliott's magnitude in the fourth quarter. Our standard property casualty and excess and surplus businesses recorded $158 million in losses from this storm, while Cincinnati Re® and Cincinnati Global Underwriting Ltd.SM recorded $3 million in total. Catastrophe losses contributed 7.8 points to the quarter, twice as high as our fourth-quarter five-year average, pushing our fourth-quarter combined ratio to 94.9%.
"On a full-year basis, our combined ratio was 98.1%, within our long-term target of 95-100%, and marking 11 years in a row of underwriting profit."
Diversified Growth in a Challenging Market"For the first-time ever, new business written by our independent agents surpassed $1 billion. Strong pricing and exposure growth across our insurance business combined to support a second consecutive year of double-digit net written premium growth. While we continued to focus on pricing sophistication and segmentation to exercise underwriting discipline, full-year 2022 growth of 13% is our highest result since 2001.
"We are employing a number of strategies to maintain diversified, profitable growth, including: growing our management liability and surety book – which topped $300 million in written premiums for 2022; adding CinergySM, our small-business platform, to new states; writing excess and surplus lines homeowner policies in California and Florida; and participating in a firming property insurance market through Cincinnati Re and Cincinnati Global."
Positive Momentum Heading into 2023"We enter 2023 from a position of strength: our personal insurance business has recorded four consecutive years of underwriting profit; our commercial insurance business has enjoyed 11 years of underwriting profit; our excess and surplus lines company has achieved a combined ratio in the low-90s or better every year since 2012; and our life insurance company contributed record-high earnings of $66 million in 2022. While our commercial umbrella business was challenged during 2022, its five-year average combined ratio through 2022 was below 85%.
"Cash flow produced by our insurance business continues to fuel investment income as we grew pretax investment income 9% to a record-high $781 million.
"The board of directors expressed their confidence in our future by declaring a dividend increase in January. Our value creation ratio captures the dividends we pay along with changes in our book value. On a five-year average basis through 2022, we've achieved an 11.2% VCR – in line with our long-term target of 10-13%."
Insurance Operations Highlights | ||||||||||||||||||||||||
Consolidated Property Casualty Insurance Results | ||||||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Earned premiums | $ 1,800 | $ 1,599 | 13 | $ 6,924 | $ 6,184 | 12 | ||||||||||||||||||
Fee revenues | 2 | 2 | 0 | 10 | 10 | 0 | ||||||||||||||||||
Total revenues | 1,802 | 1,601 | 13 | 6,934 | 6,194 | 12 | ||||||||||||||||||
Loss and loss expenses | 1,172 | 855 | 37 | 4,716 | 3,596 | 31 | ||||||||||||||||||
Underwriting expenses | 537 | 490 | 10 | 2,078 | 1,867 | 11 | ||||||||||||||||||
Underwriting profit | $ 93 | $ 256 | (64) | $ 140 | $ 731 | (81) | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Loss and loss expenses | 65.1 % | 53.5 % | 11.6 | 68.1 % | 58.1 % | 10.0 | ||||||||||||||||||
Underwriting expenses | 29.8 | 30.7 | (0.9) | 30.0 | 30.2 | (0.2) | ||||||||||||||||||
Combined ratio | 94.9 % | 84.2 % | 10.7 | 98.1 % | 88.3 % | 9.8 | ||||||||||||||||||
% Change | % Change | |||||||||||||||||||||||
Agency renewal written premiums | $ 1,396 | $ 1,238 | 13 | $ 5,665 | $ 5,091 | 11 | ||||||||||||||||||
Agency new business written premiums | 238 | 212 | 12 | 1,032 | 897 | 15 | ||||||||||||||||||
Other written premiums | 60 | 84 | (29) | 610 | 491 | 24 | ||||||||||||||||||
Net written premiums | $ 1,694 | $ 1,534 | 10 | $ 7,307 | $ 6,479 | 13 | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Current accident year before catastrophe losses | 58.0 % | 54.9 % | 3.1 | 60.2 % | 56.0 % | 4.2 | ||||||||||||||||||
Current accident year catastrophe losses | 8.0 | 4.6 | 3.4 | 10.2 | 9.1 | 1.1 | ||||||||||||||||||
Prior accident years before catastrophe losses | (0.7) | (5.0) | 4.3 | (1.3) | (5.9) | 4.6 | ||||||||||||||||||
Prior accident years catastrophe losses | (0.2) | (1.0) | 0.8 | (1.0) | (1.1) | 0.1 | ||||||||||||||||||
Loss and loss expense ratio | 65.1 % | 53.5 % | 11.6 | 68.1 % | 58.1 % | 10.0 | ||||||||||||||||||
Current accident year combined ratio before | ||||||||||||||||||||||||
catastrophe losses | 87.8 % | 85.6 % | 2.2 | 90.2 % | 86.2 % | 4.0 | ||||||||||||||||||
Commercial Lines Insurance Results | ||||||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Earned premiums | $ 1,040 | $ 947 | 10 | $ 4,024 | $ 3,674 | 10 | ||||||||||||||||||
Fee revenues | 1 | 1 | 0 | 4 | 4 | 0 | ||||||||||||||||||
Total revenues | 1,041 | 948 | 10 | 4,028 | 3,678 | 10 | ||||||||||||||||||
Loss and loss expenses | 715 | 506 | 41 | 2,761 | 1,940 | 42 | ||||||||||||||||||
Underwriting expenses | 313 | 301 | 4 | 1,229 | 1,140 | 8 | ||||||||||||||||||
Underwriting profit | $ 13 | $ 141 | (91) | $ 38 | $ 598 | (94) | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Loss and loss expenses | 68.8 % | 53.4 % | 15.4 | 68.6 % | 52.8 % | 15.8 | ||||||||||||||||||
Underwriting expenses | 30.1 | 31.8 | (1.7) | 30.6 | 31.0 | (0.4) | ||||||||||||||||||
Combined ratio | 98.9 % | 85.2 % | 13.7 | 99.2 % | 83.8 % | 15.4 | ||||||||||||||||||
% Change | % Change | |||||||||||||||||||||||
Agency renewal written premiums | $ 908 | $ 809 | 12 | $ 3,672 | $ 3,334 | 10 | ||||||||||||||||||
Agency new business written premiums | 130 | 135 | (4) | 600 | 571 | 5 | ||||||||||||||||||
Other written premiums | (31) | (24) | (29) | (113) | (94) | (20) | ||||||||||||||||||
Net written premiums | $ 1,007 | $ 920 | 9 | $ 4,159 | $ 3,811 | 9 | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Current accident year before catastrophe losses | 61.0 % | 57.5 % | 3.5 | 62.9 % | 57.8 % | 5.1 | ||||||||||||||||||
Current accident year catastrophe losses | 10.2 | 4.0 | 6.2 | 7.6 | 4.6 | 3.0 | ||||||||||||||||||
Prior accident years before catastrophe losses | (1.8) | (6.8) | 5.0 | (1.3) | (8.4) | 7.1 | ||||||||||||||||||
Prior accident years catastrophe losses | (0.6) | (1.3) | 0.7 | (0.6) | (1.2) | 0.6 | ||||||||||||||||||
Loss and loss expense ratio | 68.8 % | 53.4 % | 15.4 | 68.6 % | 52.8 % | 15.8 | ||||||||||||||||||
Current accident year combined ratio before | ||||||||||||||||||||||||
catastrophe losses | 91.1 % | 89.3 % | 1.8 | 93.5 % | 88.8 % | 4.7 | ||||||||||||||||||
Personal Lines Insurance Results | ||||||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Earned premiums | $ 443 | $ 396 | 12 | $ 1,689 | $ 1,542 | 10 | ||||||||||||||||||
Fee revenues | 1 | 1 | 0 | 4 | 4 | 0 | ||||||||||||||||||
Total revenues | 444 | 397 | 12 | 1,693 | 1,546 | 10 | ||||||||||||||||||
Loss and loss expenses | 288 | 197 | 46 | 1,166 | 992 | 18 | ||||||||||||||||||
Underwriting expenses | 136 | 119 | 14 | 509 | 457 | 11 | ||||||||||||||||||
Underwriting profit | $ 20 | $ 81 | (75) | $ 18 | $ 97 | (81) | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Loss and loss expenses | 65.0 % | 49.9 % | 15.1 | 69.1 % | 64.3 % | 4.8 | ||||||||||||||||||
Underwriting expenses | 30.7 | 30.1 | 0.6 | 30.1 | 29.7 | 0.4 | ||||||||||||||||||
Combined ratio | 95.7 % | 80.0 % | 15.7 | 99.2 % | 94.0 % | 5.2 | ||||||||||||||||||
% Change | % Change | |||||||||||||||||||||||
Agency renewal written premiums | $ 393 | $ 342 | 15 | $ 1,601 | $ 1,434 | 12 | ||||||||||||||||||
Agency new business written premiums | 75 | 50 | 50 | 296 | 202 | 47 | ||||||||||||||||||
Other written premiums | (23) | (10) | (130) | (66) | (42) | (57) | ||||||||||||||||||
Net written premiums | $ 445 | $ 382 | 16 | $ 1,831 | $ 1,594 | 15 | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Current accident year before catastrophe losses | 56.6 % | 48.4 % | 8.2 | 58.7 % | 53.4 % | 5.3 | ||||||||||||||||||
Current accident year catastrophe losses | 9.4 | 5.3 | 4.1 | 14.0 | 14.2 | (0.2) | ||||||||||||||||||
Prior accident years before catastrophe losses | (0.3) | (3.1) | 2.8 | (1.0) | (2.8) | 1.8 | ||||||||||||||||||
Prior accident years catastrophe losses | (0.7) | (0.7) | 0.0 | (2.6) | (0.5) | (2.1) | ||||||||||||||||||
Loss and loss expense ratio | 65.0 % | 49.9 % | 15.1 | 69.1 % | 64.3 % | 4.8 | ||||||||||||||||||
Current accident year combined ratio before | ||||||||||||||||||||||||
catastrophe losses | 87.3 % | 78.5 % | 8.8 | 88.8 % | 83.1 % | 5.7 | ||||||||||||||||||
Excess and Surplus Lines Insurance Results | ||||||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Earned premiums | $ 124 | $ 109 | 14 | $ 485 | $ 398 | 22 | ||||||||||||||||||
Fee revenues | — | — | 0 | 2 | 2 | 0 | ||||||||||||||||||
Total revenues | 124 | 109 | 14 | 487 | 400 | 22 | ||||||||||||||||||
Loss and loss expenses | 89 | 63 | 41 | 315 | 250 | 26 | ||||||||||||||||||
Underwriting expenses | 31 | 27 | 15 | 124 | 106 | 17 | ||||||||||||||||||
Underwriting profit | $ 4 | $ 19 | (79) | $ 48 | $ 44 | 9 | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Loss and loss expenses | 71.6 % | 58.1 % | 13.5 | 64.8 % | 62.8 % | 2.0 | ||||||||||||||||||
Underwriting expenses | 24.7 | 25.1 | (0.4) | 25.6 | 26.7 | (1.1) | ||||||||||||||||||
Combined ratio | 96.3 % | 83.2 % | 13.1 | 90.4 % | 89.5 % | 0.9 | ||||||||||||||||||
% Change | % Change | |||||||||||||||||||||||
Agency renewal written premiums | $ 95 | $ 87 | 9 | $ 392 | $ 323 | 21 | ||||||||||||||||||
Agency new business written premiums | 33 | 27 | 22 | 136 | 124 | 10 | ||||||||||||||||||
Other written premiums | (6) | (6) | 0 | (26) | (21) | (24) | ||||||||||||||||||
Net written premiums | $ 122 | $ 108 | 13 | $ 502 | $ 426 | 18 | ||||||||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||||
Current accident year before catastrophe losses | 66.4 % | 56.0 % | 10.4 | 65.7 % | 60.3 % | 5.4 | ||||||||||||||||||
Current accident year catastrophe losses | 1.6 | 0.6 | 1.0 | 1.0 | 0.6 | 0.4 | ||||||||||||||||||
Prior accident years before catastrophe losses | 3.8 | 1.2 | 2.6 | (1.7) | 1.9 | (3.6) | ||||||||||||||||||
Prior accident years catastrophe losses | (0.2) | 0.3 | (0.5) | (0.2) | 0.0 | (0.2) | ||||||||||||||||||
Loss and loss expense ratio | 71.6 % | 58.1 % | 13.5 | 64.8 % | 62.8 % | 2.0 | ||||||||||||||||||
Current accident year combined ratio before | ||||||||||||||||||||||||
catastrophe losses | 91.1 % | 81.1 % | 10.0 | 91.3 % | 87.0 % | 4.3 | ||||||||||||||||||
Life Insurance Subsidiary Results | ||||||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Term life insurance | $ 55 | $ 54 | 2 | $ 220 | $ 210 | 5 | ||||||||||||||||||
Whole life insurance | 12 | 11 | 9 | 46 | 46 | 0 | ||||||||||||||||||
Universal life and other | 7 | 12 | (42) | 29 | 42 | (31) | ||||||||||||||||||
Earned premiums | 74 | 77 | (4) | 295 | 298 | (1) | ||||||||||||||||||
Investment income, net of expenses | 44 | 41 | 7 | 171 | 166 | 3 | ||||||||||||||||||
Investment gains and losses, net | (1) | 3 | nm | (2) | 11 | nm | ||||||||||||||||||
Fee revenues | — | 2 | (100) | 4 | 5 | (20) | ||||||||||||||||||
Total revenues | 117 | 123 | (5) | 468 | 480 | (3) | ||||||||||||||||||
Contract holders' benefits incurred | 74 | 91 | (19) | 296 | 340 | (13) | ||||||||||||||||||
Underwriting expenses incurred | 21 | 21 | 0 | 84 | 84 | 0 | ||||||||||||||||||
Total benefits and expenses | 95 | 112 | (15) | 380 | 424 | (10) | ||||||||||||||||||
Net income before income tax | 22 | 11 | 100 | 88 | 56 | 57 | ||||||||||||||||||
Income tax | 8 | 2 | 300 | 22 | 12 | 83 | ||||||||||||||||||
Net income of the life insurance subsidiary | $ 14 | $ 9 | 56 | $ 66 | $ 44 | 50 | ||||||||||||||||||
Investment and Balance Sheet Highlights | ||||||||||||||||||||||||
Investments Results | ||||||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Investment income, net of expenses | $ 208 | $ 186 | 12 | $ 781 | $ 714 | 9 | ||||||||||||||||||
Investment interest credited to contract holders' | (27) | (26) | (4) | (109) | (105) | (4) | ||||||||||||||||||
Investment gains and losses, net | 1,027 | 1,455 | (29) | (1,467) | 2,409 | nm | ||||||||||||||||||
Investment profit | $ 1,208 | $ 1,615 | (25) | $ (795) | $ 3,018 | nm | ||||||||||||||||||
Investment income: | ||||||||||||||||||||||||
Interest | $ 134 | $ 121 | 11 | $ 510 | $ 477 | 7 | ||||||||||||||||||
Dividends | 72 | 67 | 7 | 275 | 246 | 12 | ||||||||||||||||||
Other | 5 | 1 | 400 | 11 | 5 | 120 | ||||||||||||||||||
Less investment expenses | 3 | 3 | 0 | 15 | 14 | 7 | ||||||||||||||||||
Investment income, pretax | 208 | 186 | 12 | 781 | 714 | 9 | ||||||||||||||||||
Less income taxes | 33 | 29 | 14 | 123 | 111 | 11 | ||||||||||||||||||
Total investment income, after-tax | $ 175 | $ 157 | 11 | $ 658 | $ 603 | 9 | ||||||||||||||||||
Investment returns: | ||||||||||||||||||||||||
Average invested assets plus cash and cash equivalents | $ 23,843 | $ 24,219 | $ 24,775 | $ 23,215 | ||||||||||||||||||||
Average yield pretax | 3.49 % | 3.07 % | 3.15 % | 3.08 % | ||||||||||||||||||||
Average yield after-tax | 2.94 | 2.59 | 2.66 | 2.60 | ||||||||||||||||||||
Effective tax rate | 15.8 % | 15.5 % | 15.8 % | 15.5 % | ||||||||||||||||||||
Fixed-maturity returns: | ||||||||||||||||||||||||
Average amortized cost | $ 12,896 | $ 12,132 | $ 12,605 | $ 11,771 | ||||||||||||||||||||
Average yield pretax | 4.16 % | 3.99 % | 4.05 % | 4.05 % | ||||||||||||||||||||
Average yield after-tax | 3.44 | 3.32 | 3.35 | 3.37 | ||||||||||||||||||||
Effective tax rate | 17.2 % | 16.9 % | 17.1 % | 16.8 % | ||||||||||||||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months endedDecember 31, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Investment gains and losses on equity securities sold, net | $ 4 | $ (2) | $ 16 | $ 4 | ||||
Unrealized gains and losses on equity securities still held, net | 1,020 | 1,409 | (1,526) | 2,278 | ||||
Investment gains and losses on fixed-maturity securities, net | (6) | 10 | (3) | 30 | ||||
Other | 9 | 38 | 46 | 97 | ||||
Subtotal - investment gains and losses reported in net income | 1,027 | 1,455 | (1,467) | 2,409 | ||||
Change in unrealized investment gains and losses - fixed maturities | 231 | (82) | (1,639) | (234) | ||||
Total | $ 1,258 | $ 1,373 | $ (3,106) | $ 2,175 | ||||
Balance Sheet Highlights | ||||||||
(Dollars in millions except share data) | At December 31, | At December 31, | ||||||
2022 | 2021 | |||||||
Total investments | $ 22,425 | $ 24,666 | ||||||
Total assets | 29,736 | 31,387 | ||||||
Short-term debt | 50 | 54 | ||||||
Long-term debt | 789 | 789 | ||||||
Shareholders' equity | 10,531 | 13,105 | ||||||
Book value per share | 67.01 | 81.72 | ||||||
Debt-to-total-capital ratio | 7.4 % | 6.0 % |
For additional information or to register for our conference call webcast, please visit cinfin.com/investors.
About Cincinnati FinancialCincinnati Financial Corporation offers primarily business, home and auto insurance through The Cincinnati Insurance Company and its two standard market property casualty companies. The same local independent insurance agencies that market those policies may offer products of our other subsidiaries, including life insurance, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit cinfin.com.
Mailing Address: | Street Address: |
P.O. Box 145496 | 6200 South Gilmore Road |
Cincinnati, Ohio 45250-5496 | Fairfield, Ohio 45014-5141 |
Safe Harbor Statement This is our "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2021 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 32.
Factors that could cause or contribute to such differences include, but are not limited to:
Further, our insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. We also are subject to public and regulatory initiatives that can affect the market value for our common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.
* * *
Cincinnati Financial Corporation | ||||||||
Condensed Consolidated Balance Sheets (unaudited) | ||||||||
(Dollars in millions except per share data) | December 31, | December 31, | ||||||
2022 | 2021 | |||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities, at fair value (amortized cost: 2022—$12,979; 2021—$12,230) | $ 12,132 | $ 13,022 | ||||||
Equity securities, at fair value (cost: 2022—$4,294; 2021—$4,121) | 9,841 | 11,315 | ||||||
Other invested assets | 452 | 329 | ||||||
Total investments | 22,425 | 24,666 | ||||||
Cash and cash equivalents | 1,264 | 1,139 | ||||||
Investment income receivable | 160 | 144 | ||||||
Finance receivable | 92 | 98 | ||||||
Premiums receivable | 2,322 | 2,053 | ||||||
Reinsurance recoverable | 640 | 570 | ||||||
Prepaid reinsurance premiums | 79 | 78 | ||||||
Deferred policy acquisition costs | 1,014 | 905 | ||||||
Land, building and equipment, net, for company use (accumulated depreciation: 2022—$322; 2021—$303) | 202 | 205 | ||||||
Other assets | 646 | 570 | ||||||
Separate accounts | 892 | 959 | ||||||
Total assets | $ 29,736 | $ 31,387 | ||||||
Liabilities | ||||||||
Insurance reserves | ||||||||
Loss and loss expense reserves | $ 8,400 | $ 7,305 | ||||||
Life policy and investment contract reserves | 3,059 | 3,014 | ||||||
Unearned premiums | 3,689 | 3,271 | ||||||
Other liabilities | 1,229 | 1,092 | ||||||
Deferred income tax | 1,045 | 1,744 | ||||||
Note payable | 50 | 54 | ||||||
Long-term debt and lease obligations | 841 | 843 | ||||||
Separate accounts | 892 | 959 | ||||||
Total liabilities | 19,205 | 18,282 | ||||||
Shareholders' Equity | ||||||||
Common stock, par value—$2 per share; (authorized: 2022 and 2021—500 million shares; issued: 2022 and 2021—198.3 million shares) | 397 | 397 | ||||||
Paid-in capital | 1,392 | 1,356 | ||||||
Retained earnings | 11,702 | 12,625 | ||||||
Accumulated other comprehensive income | (636) | 648 | ||||||
Treasury stock at cost (2022—41.2 million shares and 2021—38.0 million shares) | (2,324) | (1,921) | ||||||
Total shareholders' equity | $ 10,531 | $ 13,105 | ||||||
Total liabilities and shareholders' equity | $ 29,736 | $ 31,387 | ||||||
Cincinnati Financial Corporation | ||||||||||||||
Condensed Consolidated Statements of Income (unaudited) | ||||||||||||||
(Dollars in millions except per share data) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Revenues | ||||||||||||||
Earned premiums | $ 1,874 | $ 1,676 | $ 7,219 | $ 6,482 | ||||||||||
Investment income, net of expenses | 208 | 186 | 781 | 714 | ||||||||||
Investment gains and losses, net | 1,027 | 1,455 | (1,467) | 2,409 | ||||||||||
Fee revenues | 2 | 4 | 14 | 15 | ||||||||||
Other revenues | 3 | 2 | 10 | 10 | ||||||||||
Total revenues | 3,114 | 3,323 | 6,557 | 9,630 | ||||||||||
Benefits and Expenses | ||||||||||||||
Insurance losses and contract holders' benefits | 1,246 | 946 | 5,012 | 3,936 | ||||||||||
Underwriting, acquisition and insurance expenses | 558 | 511 | 2,162 | 1,951 | ||||||||||
Interest expense | 13 | 14 | 53 | 53 | ||||||||||
Other operating expenses | 10 | 6 | 23 | 20 | ||||||||||
Total benefits and expenses | 1,827 | 1,477 | 7,250 | 5,960 | ||||||||||
Income (Loss) Before Income Taxes | 1,287 | 1,846 | (693) | 3,670 | ||||||||||
Provision (Benefit) for Income Taxes | ||||||||||||||
Current | 58 | 81 | 148 | 247 | ||||||||||
Deferred | 216 | 295 | (355) | 477 | ||||||||||
Total (benefit) provision for income taxes | 274 | 376 | (207) | 724 | ||||||||||
Net Income (Loss) | $ 1,013 | $ 1,470 | $ (486) | $ 2,946 | ||||||||||
Per Common Share | ||||||||||||||
Net income (loss)—basic | $ 6.44 | $ 9.14 | $ (3.06) | $ 18.29 | ||||||||||
Net income (loss)—diluted | 6.40 | 9.04 | (3.06) | 18.10 |
Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures
(See attached tables for reconciliations; additional prior-period reconciliations available at cinfin.com/investors.)
Cincinnati Financial Corporation prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules for insurance company regulation in the United States of America as defined by the National Association of Insurance Commissioners'(NAIC) Accounting Practices and Procedures Manual, and therefore is not reconciled to GAAP data.
Management uses certain non-GAAP financial measures to evaluate its primary business areas – property casualty insurance, life insurance and investments. Management uses these measures when analyzing both GAAP and non-GAAP results to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management's control; supplement reporting segment disclosures with disclosures for a subsidiary company or for a combination of subsidiaries or reporting segments; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.
Cincinnati Financial Corporation | ||||||||
Net Income Reconciliation | ||||||||
(Dollars in millions except per share data) | Three months ended December 31, | Twelve months ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income (loss) | $ 1,013 | $ 1,470 | $ (486) | $ 2,946 | ||||
Less: | ||||||||
Investment gains and losses, net | 1,027 | 1,455 | (1,467) | 2,409 | ||||
Income tax on investment gains and losses | (216) | (305) | 308 | (506) | ||||
Investment gains and losses, after-tax | 811 | 1,150 | (1,159) | 1,903 | ||||
Non-GAAP operating income | $ 202 | $ 320 | $ 673 | $ 1,043 | ||||
Diluted per share data: | ||||||||
Net income (loss) | $ 6.40 | $ 9.04 | $ (3.06) | $ 18.10 | ||||
Less: | ||||||||
Investment gains and losses, net | 6.49 | 8.95 | (9.24) | 14.80 | ||||
Income tax on investment gains and losses | (1.36) | (1.88) | 1.94 | (3.11) | ||||
Investment gains and losses, after-tax | 5.13 | 7.07 | (7.30) | 11.69 | ||||
Non-GAAP operating income | $ 1.27 | $ 1.97 | $ 4.24 | $ 6.41 | ||||
Life Insurance Reconciliation | ||||||||
(Dollars in millions) | Three months ended December 31, | Twelve months ended December 31, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income of life insurance subsidiary | $ 14 | $ 9 | $ 66 | $ 44 | ||||
Investment gains and losses, net | (1) | 3 | (2) | 11 | ||||
Income tax on investment gains and losses | — | 1 | — | 3 | ||||
Non-GAAP operating income | 15 | 7 | 68 | 36 | ||||
Investment income, net of expenses | (44) | (41) | (171) | (166) | ||||
Investment income credited to contract holders' | 27 | 26 | 109 | 105 | ||||
Income tax excluding tax on investment gains and losses, net | 8 | 1 | 22 | 9 | ||||
Life insurance segment profit (loss) | $ 6 | $ (7) | $ 28 | $ (16) | ||||
Property Casualty Insurance Reconciliation | ||||||||||||||
(Dollars in millions) | Three months ended December 31, 2022 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 1,694 | $ 1,007 | $ 445 | $ 122 | $ 120 | |||||||||
Unearned premiums change | 106 | 33 | (2) | 2 | 73 | |||||||||
Earned premiums | $ 1,800 | $ 1,040 | $ 443 | $ 124 | $ 193 | |||||||||
Underwriting profit | $ 93 | $ 13 | $ 20 | $ 4 | $ 56 | |||||||||
(Dollars in millions) | Twelve months ended December 31, 2022 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 7,307 | $ 4,159 | $ 1,831 | $ 502 | $ 815 | |||||||||
Unearned premiums change | (383) | (135) | (142) | (17) | (89) | |||||||||
Earned premiums | $ 6,924 | $ 4,024 | $ 1,689 | $ 485 | $ 726 | |||||||||
Underwriting profit | $ 140 | $ 38 | $ 18 | $ 48 | $ 36 | |||||||||
(Dollars in millions) | Three months ended December 31, 2021 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 1,534 | $ 920 | $ 382 | $ 108 | $ 124 | |||||||||
Unearned premiums change | 65 | 27 | 14 | 1 | 23 | |||||||||
Earned premiums | $ 1,599 | $ 947 | $ 396 | $ 109 | $ 147 | |||||||||
Underwriting profit | $ 256 | $ 141 | $ 81 | $ 19 | $ 15 | |||||||||
(Dollars in millions) | Twelve months ended December 31, 2021 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 6,479 | $ 3,811 | $ 1,594 | $ 426 | $ 648 | |||||||||
Unearned premiums change | (295) | (137) | (52) | (28) | (78) | |||||||||
Earned premiums | $ 6,184 | $ 3,674 | $ 1,542 | $ 398 | $ 570 | |||||||||
Underwriting profit (loss) | $ 731 | $ 598 | $ 97 | $ 44 | $ (8) | |||||||||
Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. | ||||||||||||||
*Included in Other are the results of Cincinnati Re and Cincinnati Global. |
Cincinnati Financial Corporation
Other Measures
Value Creation Ratio Calculations | ||||||||||||||||
(Dollars are per share) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Value creation ratio: | ||||||||||||||||
End of period book value* | $ 67.01 | $ 81.72 | $ 67.01 | $ 81.72 | ||||||||||||
Less beginning of period book value | 60.01 | 73.49 | 81.72 | 67.04 | ||||||||||||
Change in book value | 7.00 | 8.23 | (14.71) | 14.68 | ||||||||||||
Dividend declared to shareholders | 0.69 | 0.63 | 2.76 | 2.52 | ||||||||||||
Total value creation | $ 7.69 | $ 8.86 | $ (11.95) | $ 17.20 | ||||||||||||
Value creation ratio from change in book value** | 11.7 % | 11.2 % | (18.0) % | 21.9 % | ||||||||||||
Value creation ratio from dividends declared to shareholders*** | 1.1 | 0.9 | 3.4 | 3.8 | ||||||||||||
Value creation ratio | 12.8 % | 12.1 % | (14.6) % | 25.7 % | ||||||||||||
* Book value per share is calculated by dividing end of period total shareholders' equity by end of period shares outstanding | ||||||||||||||||
** Change in book value divided by the beginning of period book value | ||||||||||||||||
*** Dividend declared to shareholders divided by beginning of period book value |
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SOURCE Cincinnati Financial Corporation