Cincinnati Financial reports $755m net income in Q1’24 results

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Cincinnati Financial Corporation announced a notable surge in its first-quarter 2024 net income, reaching $755 million, a significant improvement compared to $225 million in the first quarter of 2023.

This increase was primarily driven by a $484 million after-tax increase in the fair value of equity securities still held.

Additionally, the company attributes the $530 million rise in Q1’24 net income to a $399 million increase in net investment gains and a $111 million uptick in after-tax property casualty underwriting income.

Despite a slight increase from the previous quarter, with a Q1 property casualty combined ratio of 93.6% compared to 87.5% in Q4’23, there has been marked improvement from the unprofitable 100.7% combined ratio reported in the first quarter of 2023.

Moreover, Cincinnati Financial experienced an 11% growth in net written premiums, including price increases, premium growth initiatives and a higher level of insured exposures.

It also reported $346 million in property casualty new business written premiums, marking a significant 38% increase. Notably, agencies appointed since the start of 2023 contributed $25 million, constituting 7% of the total new business written premiums.

In other sectors, the firm disclosed $19 million in net income from its life insurance subsidiary in the first quarter of 2024, alongside a 2% growth in term life insurance earned premiums.

Steven J. Johnston, chairman and chief executive officer, comments that the company has witnessed a strong start to the year, stating, “Non-GAAP operating income nearly doubled last year’s first-quarter results, reaching $272 million on steady contributions from our underwriting and investment operations. Pretax investment income rose $35 million in the first quarter as bond interest grew 21% and dividends from our equity portfolio increased 9%.

“Turning to our insurance operations, our first-quarter combined ratio improved 7.1 percentage points over last year’s first quarter to 93.6%. Lower catastrophe losses contributed to most of the improvement and our current accident year combined ratio before catastrophe losses improved for our commercial, personal and excess and surplus lines business.

“The profitability of Cincinnati Re and Cincinnati Global Underwriting Ltd. remain excellent. The first quarter of 2023 was exceptionally profitable for these areas of our company with a current accident year combined ratio before catastrophe losses in the low 70s. In the first quarter of this year, that measure is in the low 90s – more in line with the rest of our property casualty insurance business.”

He added: “We’re pleased with our growth and with premium increases in the high-single-digit percent range reported by each of our property casualty segments. Consolidated property casualty first-quarter net written premiums grew 11%, including record new business of $346 million.

“The main driver for our growth continues to come from the excellent relationships we develop with our agencies. So far this year, we’ve appointed 88 agencies across the country, including 28 that market only our personal lines products.

“We’re focused on balancing growth and profitability. In the beginning of last year, growth slowed as we chose to lean in to our underwriting discipline and walk away from business we believed was too thinly priced. As the market continued to firm over the course of 2023, our growth began to accelerate. In the first quarter of 2024, we continued to see the benefits of investing in pricing precision tools and data that allows us to finely segment our books of business, giving us confidence in our pricing as we consider each risk our agents submit to us.

“Our personal lines business saw new business premiums increase 54% compared to the same period a year ago, reflecting our ability to write new business for a broad range of our agents’ clients, including Cincinnati Private Client℠ policies, middle-market accounts and homes that qualify for the tailored coverage of our excess and surplus lines company.

“Book value per share reached a record high of $80.83, an increase of 5% since the end of 2023, and consolidated cash and total investments neared $27 billion. Our ample capital allows us to execute on our long-term strategies and, at the same time, continue to pay dividends to shareholders.

“In January, the board of directors expressed its confidence in our financial strength by again raising the quarterly cash dividend. Our value creation ratio, which considers those dividends as well as growth in book value, was 5.9% for the first quarter. Our associates remain determined to do things just a little better every day, strengthening our ability to compete by enhancing the advantages of our local independent agencies. That has been and continues to be our plan for creating shareholder value far into the future.”

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