CINCINNATI, July 27, 2023 /PRNewswire/ -- Cincinnati Financial Corporation (Nasdaq: CINF) today reported:
Financial Highlights
(Dollars in millions, except per share data) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||
Revenue Data | ||||||||||||||||
Earned premiums | $ | 1,943 | $ | 1,773 | 10 | $ | 3,861 | $ | 3,466 | 11 | ||||||
Investment income, net of expenses | 220 | 195 | 13 | 430 | 380 | 13 | ||||||||||
Total revenues | 2,605 | 820 | 218 | 4,846 | 2,038 | 138 | ||||||||||
Income Statement Data | ||||||||||||||||
Net income (loss) | $ | 534 | $ | (818) | nm | $ | 759 | $ | (1,084) | nm | ||||||
Investment gains and losses, after-tax | 343 | (912) | nm | 427 | (1,438) | nm | ||||||||||
Non-GAAP operating income* | $ | 191 | $ | 94 | 103 | $ | 332 | $ | 354 | (6) | ||||||
Per Share Data (diluted) | ||||||||||||||||
Net income (loss) | $ | 3.38 | $ | (5.12) | nm | $ | 4.80 | $ | (6.77) | nm | ||||||
Investment gains and losses, after-tax | 2.17 | (5.71) | nm | 2.70 | (8.99) | nm | ||||||||||
Non-GAAP operating income* | $ | 1.21 | $ | 0.59 | 105 | $ | 2.10 | $ | 2.22 | (5) | ||||||
Book value | $ | 70.33 | $ | 66.00 | 7 | |||||||||||
Cash dividend declared | $ | 0.75 | $ | 0.69 | 9 | $ | 1.50 | $ | 1.38 | 9 | ||||||
Diluted weighted average share outstanding | 158.0 | 159.6 | (1) | 158.3 | 160.0 | (1) | ||||||||||
* | The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures section 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
Rising Underwriting ProfitsSteven J. Johnston, chairman and chief executive officer, commented: "Non-GAAP operating income more than doubled compared with last year's second quarter result. Higher insurance underwriting profits drove most of the improvement, supported by a 13% rise in income from our investment portfolio. Cash and invested assets reached $24.6 billion, reflecting higher valuations and new securities purchased with the healthy cash flow from our insurance operations.
"Recording an insurance underwriting profit of $47 million compared to a $52 million loss in last year's second quarter, and a $10 million loss the first quarter of 2023, reflects our determination to stay disciplined in our efforts to segment accounts and to charge an appropriate price for each risk. Even as competition in the market heats up, we've managed commercial lines and excess and surplus lines price increases on average at a high-single-digit percentage rate, and personal lines average increases in the mid-single-digit percentage rates.
"Storms continued to increase in frequency, impacting policyholders across the country. Our field claims teams and headquarters claims associates have been busy, responding to around 40 declared catastrophe events in the first half of 2023. I'm proud of their efforts as they brought compassion and expertise to our agents and policyholders, quickly resolving claims and helping affected communities to move forward.
"Weather-related catastrophes contributed approximately 12 points to both our second quarter combined ratio of 97.6% and first half combined ratio of 99.2%. While these combined ratio results are within our long-term target of 95% to 100%, we believe continuing to stick to our model and focusing on the basics of our business will sustain the momentum we've gained in the second quarter and improve results during the second half of the year."
Disciplined Growth Through All Market Cycles"We believe combining our hallmark of personal service with data-driven analytics will allow us to grow profitably through all market cycles. Through the first half of 2023, net written premiums grew 8%, bolstered by the strategic expansion of our independent agency force, overall insured exposure growth and price increases plus the opportunities we've seen in Cincinnati Global Underwriting Ltd.SM and Cincinnati Re®, and in our personal lines and excess and surplus lines insurance operations.
"For the first half of 2023, new business written premiums for our personal lines operation grew 32%, and excess and surplus lines new business written premiums grew 25%.
"Most importantly, we are growing with discipline and precision. The investments we've made in pricing and risk management expertise, along with our geographic and product diversification over the past decade, put us in a strong position to know and take advantage of opportunities for profitable growth."
Creating Value for Shareholders"Our value creation ratio, which considers changes to our book value and the dividends we pay to shareholders, is our main measure for evaluating the value we are creating as a company over time. The board increased our dividend rate in January, and so far this year our book value per share has grown 5% to $70.33. Our results generated a six-month value creation ratio of 7.2% – within striking distance of our 10% or better average annual target for this measure."
Insurance Operations Highlights | ||||||||||||||||
Consolidated Property Casualty Insurance Results | ||||||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||
Earned premiums | $ | 1,863 | $ | 1,697 | 10 | $ | 3,704 | $ | 3,315 | 12 | ||||||
Fee revenues | 3 | 2 | 50 | 5 | 5 | 0 | ||||||||||
Total revenues | 1,866 | 1,699 | 10 | 3,709 | 3,320 | 12 | ||||||||||
Loss and loss expenses | 1,262 | 1,240 | 2 | 2,579 | 2,196 | 17 | ||||||||||
Underwriting expenses | 557 | 511 | 9 | 1,093 | 1,011 | 8 | ||||||||||
Underwriting profit (loss) | $ | 47 | $ | (52) | nm | $ | 37 | $ | 113 | (67) | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Loss and loss expenses | 67.7 % | 73.1 % | (5.4) | 69.7 % | 66.2 % | 3.5 | ||||||||||
Underwriting expenses | 29.9 | 30.1 | (0.2) | 29.5 | 30.5 | (1.0) | ||||||||||
Combined ratio | 97.6 % | 103.2 % | (5.6) | 99.2 % | 96.7 % | 2.5 | ||||||||||
% Change | % Change | |||||||||||||||
Agency renewal written premiums | $ | 1,643 | $ | 1,482 | 11 | $ | 3,178 | $ | 2,879 | 10 | ||||||
Agency new business written premiums | 303 | 286 | 6 | 554 | 530 | 5 | ||||||||||
Other written premiums | 204 | 196 | 4 | 437 | 454 | (4) | ||||||||||
Net written premiums | $ | 2,150 | $ | 1,964 | 9 | $ | 4,169 | $ | 3,863 | 8 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Current accident year before catastrophe losses | 60.5 % | 62.7 % | (2.2) | 60.8 % | 60.6 % | 0.2 | ||||||||||
Current accident year catastrophe losses | 12.7 | 13.8 | (1.1) | 13.2 | 8.6 | 4.6 | ||||||||||
Prior accident years before catastrophe losses | (4.8) | (2.0) | (2.8) | (3.5) | (1.6) | (1.9) | ||||||||||
Prior accident years catastrophe losses | (0.7) | (1.4) | 0.7 | (0.8) | (1.4) | 0.6 | ||||||||||
Loss and loss expense ratio | 67.7 % | 73.1 % | (5.4) | 69.7 % | 66.2 % | 3.5 | ||||||||||
Current accident year combined ratio before catastrophe losses | 90.4 % | 92.8 % | (2.4) | 90.3 % | 91.1 % | (0.8) | ||||||||||
Commercial Lines Insurance Results | ||||||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||
Earned premiums | $ | 1,066 | $ | 994 | 7 | $ | 2,122 | $ | 1,956 | 8 | ||||||
Fee revenues | 1 | 1 | 0 | 2 | 2 | 0 | ||||||||||
Total revenues | 1,067 | 995 | 7 | 2,124 | 1,958 | 8 | ||||||||||
Loss and loss expenses | 708 | 750 | (6) | 1,456 | 1,336 | 9 | ||||||||||
Underwriting expenses | 326 | 307 | 6 | 637 | 608 | 5 | ||||||||||
Underwriting profit (loss) | $ | 33 | $ | (62) | nm | $ | 31 | $ | 14 | 121 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Loss and loss expenses | 66.4 % | 75.5 % | (9.1) | 68.6 % | 68.3 % | 0.3 | ||||||||||
Underwriting expenses | 30.5 | 30.8 | (0.3) | 30.0 | 31.1 | (1.1) | ||||||||||
Combined ratio | 96.9 % | 106.3 % | (9.4) | 98.6 % | 99.4 % | (0.8) | ||||||||||
% Change | % Change | |||||||||||||||
Agency renewal written premiums | $ | 985 | $ | 934 | 5 | $ | 2,026 | $ | 1,904 | 6 | ||||||
Agency new business written premiums | 149 | 165 | (10) | 283 | 321 | (12) | ||||||||||
Other written premiums | (28) | (27) | (4) | (62) | (57) | (9) | ||||||||||
Net written premiums | $ | 1,106 | $ | 1,072 | 3 | $ | 2,247 | $ | 2,168 | 4 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Current accident year before catastrophe losses | 60.3 % | 64.8 % | (4.5) | 62.1 % | 63.0 % | (0.9) | ||||||||||
Current accident year catastrophe losses | 11.6 | 13.6 | (2.0) | 10.8 | 7.7 | 3.1 | ||||||||||
Prior accident years before catastrophe losses | (5.0) | (1.9) | (3.1) | (4.2) | (1.8) | (2.4) | ||||||||||
Prior accident years catastrophe losses | (0.5) | (1.0) | 0.5 | (0.1) | (0.6) | 0.5 | ||||||||||
Loss and loss expense ratio | 66.4 % | 75.5 % | (9.1) | 68.6 % | 68.3 % | 0.3 | ||||||||||
Current accident year combined ratio before catastrophe losses | 90.8 % | 95.6 % | (4.8) | 92.1 % | 94.1 % | (2.0) | ||||||||||
Personal Lines Insurance Results | ||||||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||
Earned premiums | $ | 493 | $ | 413 | 19 | $ | 957 | $ | 815 | 17 | ||||||
Fee revenues | 1 | 1 | 0 | 2 | 2 | 0 | ||||||||||
Total revenues | 494 | 414 | 19 | 959 | 817 | 17 | ||||||||||
Loss and loss expenses | 384 | 339 | 13 | 770 | 554 | 39 | ||||||||||
Underwriting expenses | 146 | 124 | 18 | 282 | 247 | 14 | ||||||||||
Underwriting profit (loss) | $ | (36) | $ | (49) | 27 | $ | (93) | $ | 16 | nm | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Loss and loss expenses | 77.9 % | 82.1 % | (4.2) | 80.5 % | 68.0 % | 12.5 | ||||||||||
Underwriting expenses | 29.7 | 30.0 | (0.3) | 29.5 | 30.2 | (0.7) | ||||||||||
Combined ratio | 107.6 % | 112.1 % | (4.5) | 110.0 % | 98.2 % | 11.8 | ||||||||||
% Change | % Change | |||||||||||||||
Agency renewal written premiums | $ | 541 | $ | 438 | 24 | $ | 929 | $ | 771 | 20 | ||||||
Agency new business written premiums | 106 | 88 | 20 | 185 | 140 | 32 | ||||||||||
Other written premiums | (18) | (16) | (13) | (37) | (27) | (37) | ||||||||||
Net written premiums | $ | 629 | $ | 510 | 23 | $ | 1,077 | $ | 884 | 22 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Current accident year before catastrophe losses | 58.9 % | 63.5 % | (4.6) | 59.4 % | 59.3 % | 0.1 | ||||||||||
Current accident year catastrophe losses | 21.9 | 21.9 | 0.0 | 25.8 | 14.5 | 11.3 | ||||||||||
Prior accident years before catastrophe losses | (0.7) | (0.5) | (0.2) | (1.0) | (1.8) | 0.8 | ||||||||||
Prior accident years catastrophe losses | (2.2) | (2.8) | 0.6 | (3.7) | (4.0) | 0.3 | ||||||||||
Loss and loss expense ratio | 77.9 % | 82.1 % | (4.2) | 80.5 % | 68.0 % | 12.5 | ||||||||||
Current accident year combined ratio before catastrophe losses | 88.6 % | 93.5 % | (4.9) | 88.9 % | 89.5 % | (0.6) | ||||||||||
Excess and Surplus Lines Insurance Results | ||||||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||
Earned premiums | $ | 132 | $ | 124 | 6 | $ | 259 | $ | 236 | 10 | ||||||
Fee revenues | 1 | — | nm | 1 | 1 | 0 | ||||||||||
Total revenues | 133 | 124 | 7 | 260 | 237 | 10 | ||||||||||
Loss and loss expenses | 89 | 74 | 20 | 170 | 140 | 21 | ||||||||||
Underwriting expenses | 33 | 31 | 6 | 66 | 62 | 6 | ||||||||||
Underwriting profit | $ | 11 | $ | 19 | (42) | $ | 24 | $ | 35 | (31) | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Loss and loss expenses | 66.4 % | 60.2 % | 6.2 | 65.4 % | 59.3 % | 6.1 | ||||||||||
Underwriting expenses | 25.8 | 24.9 | 0.9 | 25.7 | 26.2 | (0.5) | ||||||||||
Combined ratio | 92.2 % | 85.1 % | 7.1 | 91.1 % | 85.5 % | 5.6 | ||||||||||
% Change | % Change | |||||||||||||||
Agency renewal written premiums | $ | 117 | $ | 110 | 6 | $ | 223 | $ | 204 | 9 | ||||||
Agency new business written premiums | 48 | 33 | 45 | 86 | 69 | 25 | ||||||||||
Other written premiums | (9) | (8) | (13) | (17) | (14) | (21) | ||||||||||
Net written premiums | $ | 156 | $ | 135 | 16 | $ | 292 | $ | 259 | 13 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||
Current accident year before catastrophe losses | 69.7 % | 59.5 % | 10.2 | 69.5 % | 60.6 % | 8.9 | ||||||||||
Current accident year catastrophe losses | 1.4 | 1.2 | 0.2 | 1.4 | 1.3 | 0.1 | ||||||||||
Prior accident years before catastrophe losses | (4.7) | (0.4) | (4.3) | (5.4) | (2.4) | (3.0) | ||||||||||
Prior accident years catastrophe losses | 0.0 | (0.1) | 0.1 | (0.1) | (0.2) | 0.1 | ||||||||||
Loss and loss expense ratio | 66.4 % | 60.2 % | 6.2 | 65.4 % | 59.3 % | 6.1 | ||||||||||
Current accident year combined ratio before catastrophe losses | 95.5 % | 84.4 % | 11.1 | 95.2 % | 86.8 % | 8.4 | ||||||||||
Life Insurance Subsidiary Results | ||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||
Term life insurance | $ 58 | $ 56 | 4 | $ 114 | $ 110 | 4 | ||||||
Whole life insurance | 13 | 12 | 8 | 25 | 23 | 9 | ||||||
Universal life and other | 9 | 8 | 13 | 18 | 18 | 0 | ||||||
Earned premiums | 80 | 76 | 5 | 157 | 151 | 4 | ||||||
Investment income, net of expenses | 46 | 42 | 10 | 91 | 84 | 8 | ||||||
Investment gains and losses, net | (2) | — | nm | (1) | — | nm | ||||||
Fee revenues | 3 | 1 | 2 | 5 | 2 | 150 | ||||||
Total revenues | 127 | 119 | 7 | 252 | 237 | 6 | ||||||
Contract holders' benefits incurred | 78 | 82 | (5) | 159 | 158 | 1 | ||||||
Underwriting expenses incurred | 22 | 22 | 0 | 42 | 42 | 0 | ||||||
Total benefits and expenses | 100 | 104 | (4) | 201 | 200 | 1 | ||||||
Net income before income tax | 27 | 15 | 80 | 51 | 37 | 38 | ||||||
Income tax provision | 6 | 4 | 50 | 11 | 9 | 22 | ||||||
Net income of the life insurance subsidiary | $ 21 | $ 11 | 91 | $ 40 | $ 28 | 43 | ||||||
Investment and Balance Sheet Highlights | ||||||||||||
Investments Results | ||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||
Investment income, net of expenses | $ 220 | $ 195 | 13 | $ 430 | $ 380 | 13 | ||||||
Investment interest credited to contract holders | (30) | (28) | (7) | (60) | (55) | (9) | ||||||
Investment gains and losses, net | 434 | (1,154) | nm | 540 | (1,820) | nm | ||||||
Investments profit (loss) | $ 624 | $ (987) | nm | $ 910 | $ (1,495) | nm | ||||||
Investment income: | ||||||||||||
Interest | $ 147 | $ 124 | 19 | $ 287 | $ 247 | 16 | ||||||
Dividends | 70 | 72 | (3) | 136 | 137 | (1) | ||||||
Other | 6 | 2 | 200 | 13 | 3 | 333 | ||||||
Less investment expenses | 3 | 3 | 0 | 6 | 7 | (14) | ||||||
Investment income, pretax | 220 | 195 | 13 | 430 | 380 | 13 | ||||||
Less income taxes | 35 | 31 | 13 | 69 | 60 | 15 | ||||||
Total investment income, after-tax | $ 185 | $ 164 | 13 | $ 361 | $ 320 | 13 | ||||||
Investment returns: | ||||||||||||
Average invested assets plus cash and cash equivalents | $ 25,114 | $ 23,918 | $ 25,001 | $ 24,255 | ||||||||
Average yield pretax | 3.50 % | 3.26 % | 3.44 % | 3.13 % | ||||||||
Average yield after-tax | 2.95 | 2.74 | 2.89 | 2.64 | ||||||||
Effective tax rate | 16.2 | 15.9 | 16.1 | 15.8 | ||||||||
Fixed-maturity returns: | ||||||||||||
Average amortized cost | $ 13,535 | $ 12,414 | $ 13,344 | $ 12,364 | ||||||||
Average yield pretax | 4.34 % | 4.00 % | 4.30 % | 4.00 % | ||||||||
Average yield after-tax | 3.59 | 3.31 | 3.55 | 3.32 | ||||||||
Effective tax rate | 17.4 | 17.1 | 17.4 | 17.0 | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Investment gains and losses on equity securities sold, net | $ — | $ 5 | $ (4) | $ 37 | ||||
Unrealized gains and losses on equity securities still held, net | 459 | (1,175) | 568 | (1,882) | ||||
Investment gains and losses on fixed-maturity securities, net | (4) | — | (4) | 3 | ||||
Other | (21) | 16 | (20) | 22 | ||||
Subtotal - investment gains and losses reported in net income | 434 | (1,154) | 540 | (1,820) | ||||
Change in unrealized investment gains and losses - fixed maturities | (154) | (610) | 9 | (1,356) | ||||
Total | $ 280 | $ (1,764) | $ 549 | $ (3,176) | ||||
Balance Sheet Highlights | ||||
(Dollars in millions, except share data) | At June 30, | At December 31, | ||
2023 | 2022 | |||
Total investments | $ 23,879 | $ 22,425 | ||
Total assets | 31,352 | 29,732 | ||
Short-term debt | 25 | 50 | ||
Long-term debt | 789 | 789 | ||
Shareholders' equity | 11,030 | 10,562 | ||
Book value per share | 70.33 | 67.21 | ||
Debt-to-total-capital ratio | 6.9 % | 7.4 % | ||
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 2022 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 and Statements of Income (unaudited) | |||||||
(Dollars in millions) | June 30, | December 31, | |||||
2023 | 2022 | ||||||
Assets | |||||||
Investments | $ 23,879 | $ 22,425 | |||||
Cash and cash equivalents | 748 | 1,264 | |||||
Premiums receivable | 2,749 | 2,322 | |||||
Reinsurance recoverable | 694 | 665 | |||||
Deferred policy acquisition costs | 1,109 | 1,013 | |||||
Other assets | 2,173 | 2,043 | |||||
Total assets | $ 31,352 | $ 29,732 | |||||
Liabilities | |||||||
Insurance reserves | $ 11,911 | $ 11,415 | |||||
Unearned premiums | 4,222 | 3,689 | |||||
Deferred income tax | 1,158 | 1,054 | |||||
Long-term debt and lease obligations | 842 | 841 | |||||
Other liabilities | 2,189 | 2,171 | |||||
Total liabilities | 20,322 | 19,170 | |||||
Shareholders' Equity | |||||||
Common stock and paid-in capital | 1,807 | 1,789 | |||||
Retained earnings | 12,235 | 11,711 | |||||
Accumulated other comprehensive income | (626) | (614) | |||||
Treasury stock | (2,386) | (2,324) | |||||
Total shareholders' equity | 11,030 | 10,562 | |||||
Total liabilities and shareholders' equity | $ 31,352 | $ 29,732 | |||||
(Dollars in millions, except per share data) | Three months ended June 30, | Six months ended June 30, | |||||
2023 | 2022 | 2023 | 2022 | ||||
Revenues | |||||||
Earned premiums | $ 1,943 | $ 1,773 | $ 3,861 | $ 3,466 | |||
Investment income, net of expenses | 220 | 195 | 430 | 380 | |||
Investment gains and losses, net | 434 | (1,154) | 540 | (1,820) | |||
Other revenues | 8 | 6 | 15 | 12 | |||
Total revenues | 2,605 | 820 | 4,846 | 2,038 | |||
Benefits and Expenses | |||||||
Insurance losses and contract holders' benefits | 1,340 | 1,322 | 2,738 | 2,354 | |||
Underwriting, acquisition and insurance expenses | 579 | 533 | 1,135 | 1,053 | |||
Interest expense | 13 | 13 | 27 | 26 | |||
Other operating expenses | 7 | 5 | 12 | 9 | |||
Total benefits and expenses | 1,939 | 1,873 | 3,912 | 3,442 | |||
Income (Loss) Before Income Taxes | 666 | (1,053) | 934 | (1,404) | |||
Provision (Benefit) for Income Taxes | 132 | (235) | 175 | (320) | |||
Net Income (Loss) | $ 534 | $ (818) | $ 759 | $ (1,084) | |||
Per Common Share: | |||||||
Net income (loss)—basic | $ 3.40 | $ (5.12) | $ 4.83 | $ (6.77) | |||
Net income (loss)—diluted | 3.38 | (5.12) | 4.80 | (6.77) | |||
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 June 30, | Six months ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Net income (loss) | $ 534 | $ (818) | $ 759 | $ (1,084) | ||||
Less: | ||||||||
Investment gains and losses, net | 434 | (1,154) | 540 | (1,820) | ||||
Income tax on investment gains and losses | (91) | 242 | (113) | 382 | ||||
Investment gains and losses, after-tax | 343 | (912) | 427 | (1,438) | ||||
Non-GAAP operating income | $ 191 | $ 94 | $ 332 | $ 354 | ||||
Diluted per share data: | ||||||||
Net income (loss) | $ 3.38 | $ (5.12) | $ 4.80 | $ (6.77) | ||||
Less: | ||||||||
Investment gains and losses, net | 2.74 | (7.23) | 3.41 | (11.37) | ||||
Income tax on investment gains and losses | (0.57) | 1.52 | (0.71) | 2.38 | ||||
Investment gains and losses, after-tax | 2.17 | (5.71) | 2.70 | (8.99) | ||||
Non-GAAP operating income | $ 1.21 | $ 0.59 | $ 2.10 | $ 2.22 | ||||
Life Insurance Reconciliation | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Net income of the life insurance subsidiary | $ 21 | $ 11 | $ 40 | $ 28 | ||||
Investment gains and losses, net | (2) | — | (1) | — | ||||
Income tax on investment gains and losses | — | — | — | — | ||||
Non-GAAP operating income | 23 | 11 | 41 | 28 | ||||
Investment income, net of expenses | (46) | (42) | (91) | (84) | ||||
Investment income credited to contract holders | 30 | 28 | 60 | 55 | ||||
Income tax excluding tax on investment gains and losses, net | 6 | 4 | 11 | 9 | ||||
Life insurance segment profit | $ 13 | $ 1 | $ 21 | $ 8 | ||||
Property Casualty Insurance Reconciliation
| ||||||||||||||
(Dollars in millions) | Three months ended June 30, 2023 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 2,150 | $ 1,106 | $ 629 | $ 156 | $ 259 | |||||||||
Unearned premiums change | (287) | (40) | (136) | (24) | (87) | |||||||||
Earned premiums | $ 1,863 | $ 1,066 | $ 493 | $ 132 | $ 172 | |||||||||
Underwriting profit (loss) | $ 47 | $ 33 | $ (36) | $ 11 | $ 39 | |||||||||
(Dollars in millions) | Six months ended June 30, 2023 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 4,169 | $ 2,247 | $ 1,077 | $ 292 | $ 553 | |||||||||
Unearned premiums change | (465) | (125) | (120) | (33) | (187) | |||||||||
Earned premiums | $ 3,704 | $ 2,122 | $ 957 | $ 259 | $ 366 | |||||||||
Underwriting profit (loss) | $ 37 | $ 31 | $ (93) | $ 24 | $ 75 | |||||||||
(Dollars in millions) | Three months ended June 30, 2022 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 1,964 | $ 1,072 | $ 510 | $ 135 | $ 247 | |||||||||
Unearned premiums change | (267) | (78) | (97) | (11) | (81) | |||||||||
Earned premiums | $ 1,697 | $ 994 | $ 413 | $ 124 | $ 166 | |||||||||
Underwriting profit (loss) | $ (52) | $ (62) | $ (49) | $ 19 | $ 40 | |||||||||
(Dollars in millions) | Six months ended June 30, 2022 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 3,863 | $ 2,168 | $ 884 | $ 259 | $ 552 | |||||||||
Unearned premiums change | (548) | (212) | (69) | (23) | (244) | |||||||||
Earned premiums | $ 3,315 | $ 1,956 | $ 815 | $ 236 | $ 308 | |||||||||
Underwriting profit | $ 113 | $ 14 | $ 16 | $ 35 | $ 48 | |||||||||
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 June 30, | Six months ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Book value change per share | ||||||||
Book value as originally reported June 30, 2022 | $ 66.30 | |||||||
Cumulative effect of change in accounting for long-duration insurance contracts, net of tax | (0.30) | |||||||
Book value as adjusted June 30, 2022 | $ 66.00 | |||||||
Value creation ratio: | ||||||||
End of period book value* - as originally reported | $ 70.33 | $ 66.30 | $ 70.33 | $ 66.30 | ||||
Less beginning of period book value - as originally reported | 68.33 | 75.43 | 67.01 | 81.72 | ||||
Change in book value - as originally reported | 2.00 | (9.13) | 3.32 | (15.42) | ||||
Dividend declared to shareholders | 0.75 | 0.69 | 1.50 | 1.38 | ||||
Total value creation | $ 2.75 | $ (8.44) | $ 4.82 | $ (14.04) | ||||
Value creation ratio from change in book value** | 2.9 % | (12.1) % | 5.0 % | (18.9) % | ||||
Value creation ratio from dividends declared to shareholders***
| 1.1 | 0.9 | 2.2 | 1.7 | ||||
Value creation ratio | 4.0 % | (11.2) % | 7.2 % | (17.2) % | ||||
* 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