07/28/2021 | Press release | Distributed by Public on 07/28/2021 14:10
CINCINNATI, July 28, 2021 /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, |
|||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||
Revenue Data |
|||||||||||||||||||||
Earned premiums |
$ |
1,593 |
$ |
1,482 |
7 |
$ |
3,137 |
$ |
2,938 |
7 |
|||||||||||
Investment income, net of expenses |
175 |
166 |
5 |
349 |
331 |
5 |
|||||||||||||||
Total revenues |
2,295 |
2,714 |
(15) |
4,522 |
2,615 |
73 |
|||||||||||||||
Income Statement Data |
|||||||||||||||||||||
Net income (loss) |
$ |
703 |
$ |
909 |
(23) |
$ |
1,323 |
$ |
(317) |
nm |
|||||||||||
Investment gains and losses, after-tax |
411 |
838 |
(51) |
809 |
(525) |
nm |
|||||||||||||||
Non-GAAP operating income* |
$ |
292 |
$ |
71 |
311 |
$ |
514 |
$ |
208 |
147 |
|||||||||||
Per Share Data (diluted) |
|||||||||||||||||||||
Net income (loss) |
$ |
4.31 |
$ |
5.63 |
(23) |
$ |
8.13 |
$ |
(1.96) |
nm |
|||||||||||
Investment gains and losses, after-tax |
2.52 |
5.19 |
(51) |
4.97 |
(3.25) |
nm |
|||||||||||||||
Non-GAAP operating income* |
$ |
1.79 |
$ |
0.44 |
307 |
$ |
3.16 |
$ |
1.29 |
145 |
|||||||||||
Book value |
$ |
73.57 |
$ |
57.56 |
28 |
||||||||||||||||
Cash dividend declared |
$ |
0.63 |
$ |
0.60 |
5 |
$ |
1.26 |
$ |
1.20 |
5 |
|||||||||||
Diluted weighted average shares outstanding |
162.9 |
161.5 |
1 |
162.7 |
161.5 |
1 |
|||||||||||||||
* The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures section defines and reconciles measures presented 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
Property Casualty Operations Producing Results
Steven J. Johnston, chairman, president and CEO, commented: 'We continued to achieve strong non-GAAP operating income results, increasing that measure 311% to $292 million in the second quarter. Our property casualty insurance operations led the way, earning $221 million in pretax underwriting profit for the quarter. Investment income continued its steady contribution, growing 5% compared with second-quarter 2020.
'The change in accounting rules adopted in 2018 that we've mentioned in the past continues to cause volatility in net income results as unrealized investment gains and losses flow through that number. For instance, our second-quarter net income decreased $206 million compared to the second quarter of 2020 when stock markets were rebounding from pandemic-induced effects early last year. However, when you look at our net income for the first half of 2021 in total compared with the first half of 2020, you'll see a positive swing of $1.640 billion.
'Looking closer at our insurance operations, property casualty underwriting produced our best results in 15 years, making strides in both our quarterly and first-half combined ratios in all of our major areas of business. Lower weather-related catastrophe losses supported by our initiatives to deepen product and geographic diversification helped our property casualty insurance operations improve our second-quarter and first-half combined ratios 17.6 points and 12.5 points, respectively, to 85.5% and 88.3%.'
Getting Back to Business
'In the past few months, we've had opportunities to visit in person with the outstanding independent agencies that represent Cincinnati Insurance in their communities. Their excitement for the future is palpable.
'Property casualty new business written premiums reached another record high in the second quarter, growing 12% to $235 million compared with last year, as production from recently appointed agencies accelerates. Our underwriters select and price new business from our agencies with confidence as we continue to hone our abilities in both pricing precision and policy segmentation.
'Total property casualty net written premium growth for the first six months returned to pre-pandemic levels, increasing 11% compared with the first half of 2020. Growth was 10% for the first-half and full-year 2019. Overall renewal pricing trends developed satisfactorily with standard commercial and personal lines policies averaging percentage increases in the mid-single-digit range and excess and surplus lines policies in the high-single-digit range.
'By seeking increased pricing on those accounts that need it most and remaining competitive on our agents' best-performing accounts, we are able to strike a nice balance between growth and profitability.'
Book Value at Record High
'At June 30, our book value again reached a record high, increasing 10% since December 31, 2020. Consolidated cash and total investments also reached a new high, topping $24 billion.
'Our ample capital allows us to execute on our long-term strategies and, at the same time, continue to pay dividends to shareholders. Our value creation ratio, which considers the dividends we pay as well as growth in book value, was 11.6% for the first half of 2021, in line with our 10% to 13% 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, |
|||||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||||
Earned premiums |
$ |
1,514 |
$ |
1,403 |
8 |
$ |
2,989 |
$ |
2,792 |
7 |
|||||||||||||
Fee revenues |
3 |
2 |
50 |
5 |
5 |
0 |
|||||||||||||||||
Total revenues |
1,517 |
1,405 |
8 |
2,994 |
2,797 |
7 |
|||||||||||||||||
Loss and loss expenses |
830 |
1,007 |
(18) |
1,753 |
1,937 |
(9) |
|||||||||||||||||
Underwriting expenses |
466 |
439 |
6 |
887 |
877 |
1 |
|||||||||||||||||
Underwriting profit (loss) |
$ |
221 |
$ |
(41) |
nm |
$ |
354 |
$ |
(17) |
nm |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Loss and loss expenses |
54.8 |
% |
71.8 |
% |
(17.0) |
58.6 |
% |
69.4 |
% |
(10.8) |
|||||||||||||
Underwriting expenses |
30.7 |
31.3 |
(0.6) |
29.7 |
31.4 |
(1.7) |
|||||||||||||||||
Combined ratio |
85.5 |
% |
103.1 |
% |
(17.6) |
88.3 |
% |
100.8 |
% |
(12.5) |
|||||||||||||
% Change |
% Change |
||||||||||||||||||||||
Agency renewal written premiums |
$ |
1,333 |
$ |
1,244 |
7 |
$ |
2,609 |
$ |
2,442 |
7 |
|||||||||||||
Agency new business written premiums |
235 |
210 |
12 |
455 |
425 |
7 |
|||||||||||||||||
Other written premiums |
146 |
105 |
39 |
343 |
210 |
63 |
|||||||||||||||||
Net written premiums |
$ |
1,714 |
$ |
1,559 |
10 |
$ |
3,407 |
$ |
3,077 |
11 |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Current accident year before catastrophe losses |
56.8 |
% |
58.2 |
% |
(1.4) |
57.2 |
% |
59.0 |
% |
(1.8) |
|||||||||||||
Current accident year catastrophe losses |
5.8 |
16.9 |
(11.1) |
9.1 |
13.2 |
(4.1) |
|||||||||||||||||
Prior accident years before catastrophe losses |
(5.9) |
(2.9) |
(3.0) |
(5.7) |
(2.4) |
(3.3) |
|||||||||||||||||
Prior accident years catastrophe losses |
(1.9) |
(0.4) |
(1.5) |
(2.0) |
(0.4) |
(1.6) |
|||||||||||||||||
Loss and loss expense ratio |
54.8 |
% |
71.8 |
% |
(17.0) |
58.6 |
% |
69.4 |
% |
(10.8) |
|||||||||||||
Current accident year combined ratio before catastrophe losses |
87.5 |
% |
89.5 |
% |
(2.0) |
86.9 |
% |
90.4 |
% |
(3.5) |
|||||||||||||
Commercial Lines Insurance Results |
|||||||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||||
Earned premiums |
$ |
911 |
$ |
870 |
5 |
$ |
1,797 |
$ |
1,733 |
4 |
|||||||||||||
Fee revenues |
1 |
1 |
0 |
2 |
2 |
0 |
|||||||||||||||||
Total revenues |
912 |
871 |
5 |
1,799 |
1,735 |
4 |
|||||||||||||||||
Loss and loss expenses |
480 |
596 |
(19) |
983 |
1,204 |
(18) |
|||||||||||||||||
Underwriting expenses |
287 |
267 |
7 |
541 |
543 |
0 |
|||||||||||||||||
Underwriting profit (loss) |
$ |
145 |
$ |
8 |
nm |
$ |
275 |
$ |
(12) |
nm |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Loss and loss expenses |
52.8 |
% |
68.4 |
% |
(15.6) |
54.7 |
% |
69.5 |
% |
(14.8) |
|||||||||||||
Underwriting expenses |
31.4 |
30.7 |
0.7 |
30.1 |
31.3 |
(1.2) |
|||||||||||||||||
Combined ratio |
84.2 |
% |
99.1 |
% |
(14.9) |
84.8 |
% |
100.8 |
% |
(16.0) |
|||||||||||||
% Change |
% Change |
||||||||||||||||||||||
Agency renewal written premiums |
$ |
852 |
$ |
794 |
7 |
$ |
1,750 |
$ |
1,636 |
7 |
|||||||||||||
Agency new business written premiums |
146 |
134 |
9 |
291 |
288 |
1 |
|||||||||||||||||
Other written premiums |
(21) |
(20) |
(5) |
(45) |
(44) |
(2) |
|||||||||||||||||
Net written premiums |
$ |
977 |
$ |
908 |
8 |
$ |
1,996 |
$ |
1,880 |
6 |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Current accident year before catastrophe losses |
57.9 |
% |
58.9 |
% |
(1.0) |
58.9 |
% |
60.0 |
% |
(1.1) |
|||||||||||||
Current accident year catastrophe losses |
4.3 |
14.6 |
(10.3) |
5.2 |
12.4 |
(7.2) |
|||||||||||||||||
Prior accident years before catastrophe losses |
(8.3) |
(4.5) |
(3.8) |
(7.9) |
(2.4) |
(5.5) |
|||||||||||||||||
Prior accident years catastrophe losses |
(1.1) |
(0.6) |
(0.5) |
(1.5) |
(0.5) |
(1.0) |
|||||||||||||||||
Loss and loss expense ratio |
52.8 |
% |
68.4 |
% |
(15.6) |
54.7 |
% |
69.5 |
% |
(14.8) |
|||||||||||||
Current accident year combined ratio before catastrophe losses |
89.3 |
% |
89.6 |
% |
(0.3) |
89.0 |
% |
91.3 |
% |
(2.3) |
|||||||||||||
Personal Lines Insurance Results |
|||||||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||||
Earned premiums |
$ |
382 |
$ |
364 |
5 |
$ |
758 |
$ |
723 |
5 |
|||||||||||||
Fee revenues |
1 |
1 |
0 |
2 |
2 |
0 |
|||||||||||||||||
Total revenues |
383 |
365 |
5 |
760 |
725 |
5 |
|||||||||||||||||
Loss and loss expenses |
241 |
286 |
(16) |
514 |
517 |
(1) |
|||||||||||||||||
Underwriting expenses |
113 |
122 |
(7) |
220 |
230 |
(4) |
|||||||||||||||||
Underwriting profit (loss) |
$ |
29 |
$ |
(43) |
nm |
$ |
26 |
$ |
(22) |
nm |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Loss and loss expenses |
63.0 |
% |
78.9 |
% |
(15.9) |
67.8 |
% |
71.6 |
% |
(3.8) |
|||||||||||||
Underwriting expenses |
29.7 |
33.4 |
(3.7) |
29.0 |
31.8 |
(2.8) |
|||||||||||||||||
Combined ratio |
92.7 |
% |
112.3 |
% |
(19.6) |
96.8 |
% |
103.4 |
% |
(6.6) |
|||||||||||||
% Change |
% Change |
||||||||||||||||||||||
Agency renewal written premiums |
$ |
397 |
$ |
387 |
3 |
$ |
699 |
$ |
681 |
3 |
|||||||||||||
Agency new business written premiums |
53 |
44 |
20 |
99 |
78 |
27 |
|||||||||||||||||
Other written premiums |
(11) |
(8) |
(38) |
(21) |
(17) |
(24) |
|||||||||||||||||
Net written premiums |
$ |
439 |
$ |
423 |
4 |
$ |
777 |
$ |
742 |
5 |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Current accident year before catastrophe losses |
55.3 |
% |
53.8 |
% |
1.5 |
56.3 |
% |
56.9 |
% |
(0.6) |
|||||||||||||
Current accident year catastrophe losses |
10.9 |
25.3 |
(14.4) |
15.7 |
18.7 |
(3.0) |
|||||||||||||||||
Prior accident years before catastrophe losses |
(2.9) |
0.0 |
(2.9) |
(3.7) |
(3.2) |
(0.5) |
|||||||||||||||||
Prior accident years catastrophe losses |
(0.3) |
(0.2) |
(0.1) |
(0.5) |
(0.8) |
0.3 |
|||||||||||||||||
Loss and loss expense ratio |
63.0 |
% |
78.9 |
% |
(15.9) |
67.8 |
% |
71.6 |
% |
(3.8) |
|||||||||||||
Current accident year combined ratio before catastrophe losses |
85.0 |
% |
87.2 |
% |
(2.2) |
85.3 |
% |
88.7 |
% |
(3.4) |
|||||||||||||
Excess and Surplus Lines Insurance Results |
|||||||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||||
Earned premiums |
$ |
95 |
$ |
78 |
22 |
$ |
184 |
$ |
156 |
18 |
|||||||||||||
Fee revenues |
1 |
- |
nm |
1 |
1 |
0 |
|||||||||||||||||
Total revenues |
96 |
78 |
23 |
185 |
157 |
18 |
|||||||||||||||||
Loss and loss expenses |
58 |
57 |
2 |
117 |
102 |
15 |
|||||||||||||||||
Underwriting expenses |
28 |
22 |
27 |
50 |
47 |
6 |
|||||||||||||||||
Underwriting profit (loss) |
$ |
10 |
$ |
(1) |
nm |
$ |
18 |
$ |
8 |
125 |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Loss and loss expenses |
61.0 |
% |
73.6 |
% |
(12.6) |
63.7 |
% |
65.5 |
% |
(1.8) |
|||||||||||||
Underwriting expenses |
28.5 |
28.4 |
0.1 |
27.0 |
30.0 |
(3.0) |
|||||||||||||||||
Combined ratio |
89.5 |
% |
102.0 |
% |
(12.5) |
90.7 |
% |
95.5 |
% |
(4.8) |
|||||||||||||
% Change |
% Change |
||||||||||||||||||||||
Agency renewal written premiums |
$ |
84 |
$ |
63 |
33 |
$ |
160 |
$ |
125 |
28 |
|||||||||||||
Agency new business written premiums |
36 |
32 |
13 |
65 |
59 |
10 |
|||||||||||||||||
Other written premiums |
(5) |
(4) |
(25) |
(11) |
(8) |
(38) |
|||||||||||||||||
Net written premiums |
$ |
115 |
$ |
91 |
26 |
$ |
214 |
$ |
176 |
22 |
|||||||||||||
Ratios as a percent of earned premiums: |
Pt. Change |
Pt. Change |
|||||||||||||||||||||
Current accident year before catastrophe losses |
62.0 |
% |
59.0 |
% |
3.0 |
61.5 |
% |
57.4 |
% |
4.1 |
|||||||||||||
Current accident year catastrophe losses |
0.4 |
3.6 |
(3.2) |
0.8 |
2.0 |
(1.2) |
|||||||||||||||||
Prior accident years before catastrophe losses |
(1.5) |
11.2 |
(12.7) |
1.5 |
5.9 |
(4.4) |
|||||||||||||||||
Prior accident years catastrophe losses |
0.1 |
(0.2) |
0.3 |
(0.1) |
0.2 |
(0.3) |
|||||||||||||||||
Loss and loss expense ratio |
61.0 |
% |
73.6 |
% |
(12.6) |
63.7 |
% |
65.5 |
% |
(1.8) |
|||||||||||||
Current accident year combined ratio before catastrophe losses |
90.5 |
% |
87.4 |
% |
3.1 |
88.5 |
% |
87.4 |
% |
1.1 |
|||||||||||||
Life Insurance Subsidiary Results |
|||||||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||||
Term life insurance |
$ |
52 |
$ |
51 |
2 |
$ |
103 |
$ |
98 |
5 |
|||||||||||||
Universal life insurance |
14 |
16 |
(13) |
21 |
24 |
(13) |
|||||||||||||||||
Other life insurance, annuity, and disability income products |
13 |
12 |
8 |
24 |
24 |
0 |
|||||||||||||||||
Earned premiums |
79 |
79 |
0 |
148 |
146 |
1 |
|||||||||||||||||
Investment income, net of expenses |
42 |
39 |
8 |
83 |
78 |
6 |
|||||||||||||||||
Investment gains and losses, net |
4 |
1 |
300 |
4 |
(31) |
nm |
|||||||||||||||||
Fee revenues |
1 |
1 |
0 |
2 |
1 |
100 |
|||||||||||||||||
Total revenues |
126 |
120 |
5 |
237 |
194 |
22 |
|||||||||||||||||
Contract holders' benefits incurred |
85 |
79 |
8 |
165 |
152 |
9 |
|||||||||||||||||
Underwriting expenses incurred |
24 |
25 |
(4) |
42 |
43 |
(2) |
|||||||||||||||||
Total benefits and expenses |
109 |
104 |
5 |
207 |
195 |
6 |
|||||||||||||||||
Net income (loss) before income tax |
17 |
16 |
6 |
30 |
(1) |
nm |
|||||||||||||||||
Income tax provision (benefit) |
3 |
4 |
(25) |
6 |
- |
nm |
|||||||||||||||||
Net income (loss) of the life insurance subsidiary |
$ |
14 |
$ |
12 |
17 |
$ |
24 |
$ |
(1) |
nm |
|||||||||||||
Investment and Balance Sheet Highlights |
|||||||||||||||||||||||
Investments Results |
|||||||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||||||||
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
||||||||||||||||||
Investment income, net of expenses |
$ |
175 |
$ |
166 |
5 |
$ |
349 |
$ |
331 |
5 |
|||||||||||||
Investment interest credited to contract holders |
(27) |
(25) |
(8) |
(53) |
(51) |
(4) |
|||||||||||||||||
Investment gains and losses, net |
520 |
1,060 |
(51) |
1,024 |
(665) |
nm |
|||||||||||||||||
Investments profit (loss) |
$ |
668 |
$ |
1,201 |
(44) |
$ |
1,320 |
$ |
(385) |
nm |
|||||||||||||
Investment income: |
|||||||||||||||||||||||
Interest |
$ |
117 |
$ |
114 |
3 |
$ |
235 |
$ |
226 |
4 |
|||||||||||||
Dividends |
60 |
53 |
13 |
118 |
106 |
11 |
|||||||||||||||||
Other |
1 |
2 |
(50) |
3 |
5 |
(40) |
|||||||||||||||||
Less investment expenses |
3 |
3 |
0 |
7 |
6 |
17 |
|||||||||||||||||
Investment income, pretax |
175 |
166 |
5 |
349 |
331 |
5 |
|||||||||||||||||
Less income taxes |
27 |
25 |
8 |
54 |
51 |
6 |
|||||||||||||||||
Total investment income, after-tax |
$ |
148 |
$ |
141 |
5 |
$ |
295 |
$ |
280 |
5 |
|||||||||||||
Investment returns: |
|||||||||||||||||||||||
Average invested assets plus cash and cash |
$ |
22,619 |
$ |
18,759 |
$ |
22,259 |
$ |
19,672 |
|||||||||||||||
Average yield pretax |
3.09 |
% |
3.54 |
% |
3.14 |
% |
3.37 |
% |
|||||||||||||||
Average yield after-tax |
2.62 |
3.01 |
2.65 |
2.85 |
|||||||||||||||||||
Effective tax rate |
15.5 |
15.6 |
15.5 |
15.5 |
|||||||||||||||||||
Fixed-maturity returns: |
|||||||||||||||||||||||
Average amortized cost |
$ |
11,653 |
$ |
11,107 |
$ |
11,570 |
$ |
11,124 |
|||||||||||||||
Average yield pretax |
4.02 |
% |
4.11 |
% |
4.06 |
% |
4.06 |
% |
|||||||||||||||
Average yield after-tax |
3.35 |
3.42 |
3.38 |
3.39 |
|||||||||||||||||||
Effective tax rate |
16.7 |
16.7 |
16.7 |
16.6 |
|||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Investment gains and losses on equity securities sold, net |
$ |
- |
$ |
24 |
$ |
6 |
$ |
17 |
|||||||||
Unrealized gains and losses on equity securities still held, net |
489 |
1,044 |
974 |
(602) |
|||||||||||||
Investment gains and losses on fixed-maturity securities, net |
9 |
- |
12 |
(75) |
|||||||||||||
Other |
22 |
(8) |
32 |
(5) |
|||||||||||||
Subtotal - investment gains and losses reported in net income |
520 |
1,060 |
1,024 |
(665) |
|||||||||||||
Change in unrealized investment gains and losses - fixed maturities |
132 |
506 |
(64) |
182 |
|||||||||||||
Total |
$ |
652 |
$ |
1,566 |
$ |
960 |
$ |
(483) |
|||||||||
Balance Sheet Highlights |
|||||||||
(Dollars in millions, except share data) |
At June 30, |
At December 31, |
|||||||
2021 |
2020 |
||||||||
Total investments |
$ |
23,061 |
$ |
21,542 |
|||||
Total assets |
29,677 |
27,542 |
|||||||
Short-term debt |
59 |
54 |
|||||||
Long-term debt |
789 |
788 |
|||||||
Shareholders' equity |
11,858 |
10,789 |
|||||||
Book value per share |
73.57 |
67.04 |
|||||||
Debt-to-total-capital ratio |
6.7 |
% |
7.2 |
% |
|||||
For additional information or to register for our conference call webcast, please visit cinfin.com/investors.
About Cincinnati Financial
Cincinnati 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 2020 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 34.
Factors that could cause or contribute to such differences include, but are not limited to:
Further, the company's 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. The company also is subject to public and regulatory initiatives that can affect the market value for its 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, |
||||||||||||||
2021 |
2020 |
|||||||||||||||
Assets |
||||||||||||||||
Investments |
$ |
23,061 |
$ |
21,542 |
||||||||||||
Cash and cash equivalents |
1,003 |
900 |
||||||||||||||
Premiums receivable |
2,217 |
1,879 |
||||||||||||||
Reinsurance recoverable |
504 |
517 |
||||||||||||||
Deferred policy acquisition costs |
924 |
805 |
||||||||||||||
Other assets |
1,968 |
1,899 |
||||||||||||||
Total assets |
$ |
29,677 |
$ |
27,542 |
||||||||||||
Liabilities |
||||||||||||||||
Insurance reserves |
$ |
9,999 |
$ |
9,661 |
||||||||||||
Unearned premiums |
3,417 |
2,960 |
||||||||||||||
Deferred income tax |
1,495 |
1,299 |
||||||||||||||
Long-term debt and lease obligations |
848 |
845 |
||||||||||||||
Other liabilities |
2,060 |
1,988 |
||||||||||||||
Total liabilities |
17,819 |
16,753 |
||||||||||||||
Shareholders' Equity |
||||||||||||||||
Common stock and paid-in capital |
1,731 |
1,725 |
||||||||||||||
Retained earnings |
11,205 |
10,085 |
||||||||||||||
Accumulated other comprehensive income |
731 |
769 |
||||||||||||||
Treasury stock |
(1,809) |
(1,790) |
||||||||||||||
Total shareholders' equity |
11,858 |
10,789 |
||||||||||||||
Total liabilities and shareholders' equity |
$ |
29,677 |
$ |
27,542 |
||||||||||||
(Dollars in millions, except per share data) |
Three months ended June 30, |
Six months ended June 30, |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenues |
||||||||||||||||
Earned premiums |
$ |
1,593 |
$ |
1,482 |
$ |
3,137 |
$ |
2,938 |
||||||||
Investment income, net of expenses |
175 |
166 |
349 |
331 |
||||||||||||
Investment gains and losses, net |
520 |
1,060 |
1,024 |
(665) |
||||||||||||
Other revenues |
7 |
6 |
12 |
11 |
||||||||||||
Total revenues |
2,295 |
2,714 |
4,522 |
2,615 |
||||||||||||
Benefits and Expenses |
||||||||||||||||
Insurance losses and contract holders' benefits |
915 |
1,086 |
1,918 |
2,089 |
||||||||||||
Underwriting, acquisition and insurance expenses |
490 |
464 |
929 |
920 |
||||||||||||
Interest expense |
13 |
14 |
26 |
27 |
||||||||||||
Other operating expenses |
5 |
5 |
9 |
10 |
||||||||||||
Total benefits and expenses |
1,423 |
1,569 |
2,882 |
3,046 |
||||||||||||
Income (Loss) Before Income Taxes |
872 |
1,145 |
1,640 |
(431) |
||||||||||||
Provision (Benefit) for Income Taxes |
169 |
236 |
317 |
(114) |
||||||||||||
Net Income (Loss) |
$ |
703 |
$ |
909 |
$ |
1,323 |
$ |
(317) |
||||||||
Per Common Share: |
||||||||||||||||
Net income (loss)-basic |
$ |
4.36 |
$ |
5.65 |
$ |
8.21 |
$ |
(1.96) |
||||||||
Net income (loss)-diluted |
4.31 |
5.63 |
8.13 |
(1.96) |
||||||||||||
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.
For these reasons, many investors and shareholders consider non-GAAP operating income to be one of the more meaningful measures for evaluating insurance company performance. Equity analysts who report on the insurance industry and the company generally focus on this metric in their analyses. The company presents non-GAAP operating income so that all investors have what management believes to be a useful supplement to GAAP information.
Cincinnati Financial Corporation |
|||||||||||||||||
Net Income Reconciliation |
|||||||||||||||||
(Dollars in millions, except per share data) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Net income (loss) |
$ |
703 |
$ |
909 |
$ |
1,323 |
$ |
(317) |
|||||||||
Less: |
|||||||||||||||||
Investment gains and losses, net |
520 |
1,060 |
1,024 |
(665) |
|||||||||||||
Income tax on investment gains and losses |
(109) |
(222) |
(215) |
140 |
|||||||||||||
Investment gains and losses, after-tax |
411 |
838 |
809 |
(525) |
|||||||||||||
Non-GAAP operating income |
$ |
292 |
$ |
71 |
$ |
514 |
$ |
208 |
|||||||||
Diluted per share data: |
|||||||||||||||||
Net income (loss) |
$ |
4.31 |
$ |
5.63 |
$ |
8.13 |
$ |
(1.96) |
|||||||||
Less: |
|||||||||||||||||
Investment gains and losses, net |
3.19 |
6.56 |
6.29 |
(4.12) |
|||||||||||||
Income tax on investment gains and losses |
(0.67) |
(1.37) |
(1.32) |
0.87 |
|||||||||||||
Investment gains and losses, after-tax |
2.52 |
5.19 |
4.97 |
(3.25) |
|||||||||||||
Non-GAAP operating income |
$ |
1.79 |
$ |
0.44 |
$ |
3.16 |
$ |
1.29 |
|||||||||
Life Insurance Reconciliation |
|||||||||||||||||
(Dollars in millions) |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Net income (loss) of the life insurance subsidiary |
$ |
14 |
$ |
12 |
$ |
24 |
$ |
(1) |
|||||||||
Investment gains and losses, net |
4 |
1 |
4 |
(31) |
|||||||||||||
Income tax on investment gains and losses |
1 |
- |
1 |
(7) |
|||||||||||||
Non-GAAP operating income |
11 |
11 |
21 |
23 |
|||||||||||||
Investment income, net of expenses |
(42) |
(39) |
(83) |
(78) |
|||||||||||||
Investment income credited to contract holders |
27 |
25 |
53 |
51 |
|||||||||||||
Income tax excluding tax on investment gains and |
2 |
4 |
5 |
7 |
|||||||||||||
Life insurance segment profit (loss) |
$ |
(2) |
$ |
1 |
$ |
(4) |
$ |
3 |
|||||||||
Property Casualty Insurance Reconciliation |
|||||||||||||||||||||||||
(Dollars in millions) |
Three months ended June 30, 2021 |
||||||||||||||||||||||||
Consolidated |
Commercial |
Personal |
E&S |
Other* |
|||||||||||||||||||||
Premiums: |
|||||||||||||||||||||||||
Written premiums |
$ |
1,714 |
$ |
977 |
$ |
439 |
$ |
115 |
183 |
||||||||||||||||
Unearned premiums change |
(200) |
(66) |
(57) |
(20) |
(57) |
||||||||||||||||||||
Earned premiums |
$ |
1,514 |
$ |
911 |
$ |
382 |
$ |
95 |
$ |
126 |
|||||||||||||||
Underwriting profit |
$ |
221 |
$ |
145 |
$ |
29 |
$ |
10 |
$ |
37 |
|||||||||||||||
(Dollars in millions) |
Six months ended June 30, 2021 |
||||||||||||||||||||||||
Consolidated |
Commercial |
Personal |
E&S |
Other* |
|||||||||||||||||||||
Premiums: |
|||||||||||||||||||||||||
Written premiums |
$ |
3,407 |
$ |
1,996 |
$ |
777 |
$ |
214 |
$ |
420 |
|||||||||||||||
Unearned premiums change |
(418) |
(199) |
(19) |
(30) |
(170) |
||||||||||||||||||||
Earned premiums |
$ |
2,989 |
$ |
1,797 |
$ |
758 |
$ |
184 |
$ |
250 |
|||||||||||||||
Underwriting profit |
$ |
354 |
$ |
275 |
$ |
26 |
$ |
18 |
$ |
35 |
|||||||||||||||
(Dollars in millions) |
Three months ended June 30, 2020 |
||||||||||||||||||||||||
Consolidated |
Commercial |
Personal |
E&S |
Other* |
|||||||||||||||||||||
Premiums: |
|||||||||||||||||||||||||
Written premiums |
$ |
1,559 |
$ |
908 |
$ |
423 |
$ |
91 |
$ |
137 |
|||||||||||||||
Unearned premiums change |
(156) |
(38) |
(59) |
(13) |
(46) |
||||||||||||||||||||
Earned premiums |
$ |
1,403 |
870 |
$ |
364 |
78 |
$ |
91 |
|||||||||||||||||
Underwriting profit (loss) |
$ |
(41) |
$ |
8 |
$ |
(43) |
$ |
(1) |
$ |
(5) |
|||||||||||||||
(Dollars in millions) |
Six months ended June 30, 2020 |
||||||||||||||||||||||||
Consolidated |
Commercial |
Personal |
E&S |
Other* |
|||||||||||||||||||||
Premiums: |
|||||||||||||||||||||||||
Written premiums |
$ |
3,077 |
$ |
1,880 |
$ |
742 |
$ |
176 |
$ |
279 |
|||||||||||||||
Unearned premiums change |
(285) |
(147) |
(19) |
(20) |
(99) |
||||||||||||||||||||
Earned premiums |
$ |
2,792 |
$ |
1,733 |
$ |
723 |
$ |
156 |
$ |
180 |
|||||||||||||||
Underwriting profit (loss) |
$ |
(17) |
$ |
(12) |
$ |
(22) |
$ |
8 |
$ |
9 |
|||||||||||||||
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, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Value creation ratio: |
|||||||||||||||||
End of period book value* |
$ |
73.57 |
$ |
57.56 |
$ |
73.57 |
$ |
57.56 |
|||||||||
Less beginning of period book value |
69.16 |
50.02 |
67.04 |
60.55 |
|||||||||||||
Change in book value |
4.41 |
7.54 |
6.53 |
(2.99) |
|||||||||||||
Dividend declared to shareholders |
0.63 |
0.60 |
1.26 |
1.20 |
|||||||||||||
Total value creation |
$ |
5.04 |
$ |
8.14 |
$ |
7.79 |
$ |
(1.79) |
|||||||||
Value creation ratio from change in book value** |
6.4 |
% |
15.1 |
% |
9.7 |
% |
(5.0) |
% |
|||||||||
Value creation ratio from dividends declared to |
0.9 |
1.2 |
1.9 |
2.0 |
|||||||||||||
Value creation ratio |
7.3 |
% |
16.3 |
% |
11.6 |
% |
(3.0) |
% |
|||||||||
* 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 |
View original content to download multimedia:https://www.prnewswire.com/news-releases/cincinnati-financial-reports-second-quarter-2021-results-301343433.html
SOURCE Cincinnati Financial Corporation
Investor Contact: Dennis E. McDaniel, 513-870-2768, [email protected]; Media Contact: Betsy E. Ertel, 513-603-5323, [email protected]