Cincinnati Financial (CINF) 25 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Dennis McDaniel	Investor Relations Officer
Steve Johnston	President & Chief Executive Officer
Mike Sewell	Chief Financial Officer
Steve Spray	Cincinnati Insurance Chief Insurance Officer
Michael Zaremski	Credit Suisse
Paul Newsome	Sandler O'Neill
Josh Shanker	Deutsche Bank
Mark Dwelle	RBC Capital Markets.
Meyer Shields	KBW
Larry Greenberg	Janney Montgomery
Amit Kumar	Buckingham Research

Call transcript

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Operator

Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions]. you. Thank Relations begin Investor conference. you Officer, McDaniel, your may Dennis

Dennis McDaniel

Results room The of Late Mike Financial. Investment McDaniel President President Chief Chairman, link On for quarter Hello. Chief our a is visit some Marty supplemental call. year-end our along Dennis please our including our Finance, remarks Cincinnati Steve quarter first prepared others and investment release with To Steve Spray; call and Sewell. Board portfolio. investors XXXX documents, Claims we Thank in on news menu from conference financial first Hollenbeck; information This is navigation with our end participating at a you this you'll the on including find Hoffer. results Chief Theresa Officer, website in be issued for joining ask may Executive Officer, Corporate time, After Directors' and that Insurance Vice these hear earnings our questions. shortest Senior package, yesterday, – At the cinfin.com/investors. Marty on Cincinnati Officer, our their then the left. Mullen; to Quarterly copies Johnston, by Officer; of us made Insurance of any may responses far route investor Financial the from Chief of the Officer, call, us Chief Stecher; Ken and

accounting was the to turn reconciliation And and call accounting Also rules now, GAAP. Steve. risks of we release. our statutory be your I'll forward-looking therefore today involve prepared uncertainties. news in non-GAAP a Statutory SEC. statements accordance not various the our With to First, and please some to matters and to is direct and forward are certain provided with with note that reconciled uncertainties, measures These looking. filings to the these data is discussed attention release of the risks news to with respect over

Steve Johnston

first Operating careful of thank it $XXX Good from in the up performance indicator was quarter value of year growing income operating significantly good results. which term. quarter morning. for ago. million still also seek a quite of improved execution for XXXX, to a And long equity is up the and operating today we joining prudent the for the held Non-GAAP was million believe first we over as us our continue performance to core securities increase. Changes strategy we about $XXX profitably you Net reflects our fair more hear of believe accounted income, short-term XX%. better and

several casualty ago. by property Slightly better was measures. an indicated XX.X% weather while unfavorable effects effect improved points XXXX points, underwriting year X.X the was Our than in percentage had X.X catastrophe worse ratio of combined underlying

business fourth than catastrophe the losses written while increases estimated combined last quarter, with healthy in experienced to us The by ratio contributing that through first of first quarter. each segments. written policies, that year's segment XX.X% individual to for points, Commercial amounts average helped pricing percentage improved again increases business similar first average had for ratio XXXX service in which That increases percentage quarter premiums demonstrated the low our net new premiums. were Lines worse single-digit our was casualty growth with again of excellent – price along the quarter more segment's XX% agencies with The X.X management price earn to slightly of renewal property

was the fourth quarter. was ratio X.X experience increases was above The points to XXX% a segment lines combined remained combined in range single-digit the personal ago. ratio personal ratio weather. higher by as little the Our The average than continued a quarter for lines severe to similar catastrophe losses as quarter the challenged year high fourth rate first

excess and nicely XXs. XXXX and XX.X%. written a ratio in ratio double-digit including the premium Our with profit Cincinnati in of low net quarter to lines underwriting combined reported and planned strong grow combined contributed as growth a another Re segment surplus continued to

income in ratio future for favorable than name lower typical for week better year It for regarded and to insurance of transaction at from insurance our in of to acquired income first of reputation. new represents life primary the the subsidiary an down low Cincinnati's in also of of loss of for Our value prospects of X.X%. quarter $X accounting with the was the underwriter value due contribution Its part included million $XX with net underwriting periods million. purchase earned first XX.X%. the investment the before of specialty and $X I'll and profitable of month vehicle, MSP next plan highly growth few the quarter our to times closing. of We The and on We for and a first investment early the investment conclude which helped in aspects profit net first Results the X.X implement a for generated contributed by grew a a again X.X% quarter unlocking net confident actuarial boost less and very the gains end due remain an contribution term XX% $XX good February to premiums favorable payment XXs stock alignment March life part contribution long-term with basis. combined its recently net a performance. following assumptions with of up was first the million approximately multiple premiums primarily gains FX brand book was integrated as with acquisition. an written measure at ratio the global our to million to strong Underwriting. creation closed financial quarter of Lloyd's MSP market a the

Financial comment other Next on Chief Sewell financial our Mike our of areas performance. Officer, will key

Mike Sewell

for of of quarter from joining a XX% XXXX. you up for strong was The all our us thanks portfolio down X.XX% the today. first up was the from first holdings. growth basis bond up to rising Dividends portfolio income a first many yield and XX were our Steve points you, quarter of income Investment Thank the X% rates result equity Interest year dividend X%. pre-tax for quarter for ago. of average from was our very

We the purchase Tax-exempt high-coupon pretax from during X.XX% we points continue continued year yields, of to than had XX bonds. Taxable invest up in basis average $XX of bonds to including XX purchased we quarter. relatively in bonds an basis X.XX%, a higher higher ago. Despite a redemptions averaged the experienced ago. bonds experience net year million points purchases purchased yield

volatility value net for But quarter favorable effects. bond for our our first from $XXX ended tax again was net XXXX million portfolio before equity experienced from fueling with income. appreciated $XXX billion, stock from for The security Cash overall investment XX% both our of up in operating investment Our We That $XXX million including trends. $XXX included million quarter activities portfolio. bond portfolios. $XXX gain the our our market nearly portfolio a and flow valuation and generated the was again that of $X.X million portfolio. bond million

remember, well. the nature. the relates the cash in of healthy without borrowing. Speaking characterized Much bolt-on acquisition for be integration acquisition it's to pay financial work to MSP flow Also of helped additional proceeding as processes that can and

with MSP as results the Re. disclosed previously part future, for along report plan we to we Cincinnati other foreseeable of As

expense management. Turning to

We working continue wasteful our avoid to to spending. business in invest strategically while

XXXX full The ratio in year underwriting XXXX by line first percentage expense the the basically X.X property-casualty compared was quarter with period XXXX ratio. it decreased with points and

Regarding accident our the loss reserves, our for again a approach and on with by compared ago. resulted driving the Favorable prior years. reserve development with combined remains ratio casualty lines of first segment benefit favorable property quarter in year commercial points, development more percentage consistent XXXX favorable X.X net result our

development representing an XXXX casualty accident XXXX, it Most million XXXX reserve On nearly year XX% XX% largest business, accident commercial for and For year, of property reserve prior by the during experienced accident experienced of for all-lines favorable included lines years. $XX of we for accident basis business casualty, our of of XX% and half major total. year our the quarter. favorable lines development,

be As steady for over management, the we've proven to capital long term.

and remains shape value first main per usual I'll $X.XX $X.XX. in share. investment $X.XX. by reduced share contributions drivers with per fixed of of $X.XX. the They share. for of value increase Life casualty value income, record-high book portfolio And dividends The first operations our insurance share are summary turn by to increased Net other back quarter added value conclude a value-creation strength Investment represent gains $X.XX. investment the to increased prepared per contributed underwriting the increased to ratio. $X.XX. I'll the book over gains equity net now, in of quarter insurance, declared income book the with and $XX.XX remarks Steve. a plenty was losses a Property excellent effect life book Net for non-insurance per as financial than call losses book to value by my flexibility. during financial shareholders. Our portfolio items the we by $X.XX And

Steve Johnston

Thanks Mike.

quarter the one The another we good was Cincinnati about Financial. of first future and optimistic remain

by the and as meetings success. our sales They hear on We'll proven seeking are serve the appointed shareholder to focus how our our growth them for stakeholders with around over about with partner their strategy, of benefit of we all for from them enhanced we agencies what mutual time. profitable their we business creating annual and Our at value enthusiastic confidence clients continue our execution to is country. meet

Ken and call would Heidi, me Hoffer. Stecher, Hollenbeck a with Mullen, As Theresa Spray, open are reminder, and you Marty today for Marty questions? please Mike Steve the

Operator

the And Zaremski Suisse. from Michael Please comes Credit your first ahead. go Instructions] question of [Operator with line

Michael Zaremski

morning. good Hey

you're it's are talking the any more about the to size account in any you're any or me of it currently? some First also, the a guys I commercial of you comment rates. not. don't on hardening. lot It And question, whether of XXXX seems you market. do the just Fortune think but changes can be business large to Maybe it's remind if It -- you carriers sounds can of rate does meaningful given do large kind seeing do how know Cinci, like of large you about

Steve Spray

Yes Mike. Spray. This Steve is

for Fortune be target not a XXXX us. that would

of and middle as in give with just larger are lines some excess market. up $XXX,XXX you some national -- identify premium specialization more be to would would we would because that consider carriers an in and in We that moving that commercial expertise idea risks

marketplace, going think as we to that January put exactly continue finger X. the since on change hard of is rate where all noticed noticeable change a and I coming kind to go, it's have evolve. candidly from our far As in increases to a It's

the and to of out They're what in of an and are what a lines But number of commercial as market, an has a habitational surplus as And I'm heavy example, that the kind continue they're subsidiaries firm. there fleet indicator traditional excess of are E&S We markets auto. affirming far seeing risks auto been as as liability, are traditionally our standard some of example, capacity always that kind to seeing float for are CSU market marketplace of saying that is majority surplus issues leading they're and sent submissions the up And certainly being validating classes and lot for seeing. seeing lines in substantially. such.

the So firming. I auto commercial still that long-winded is answer, think but marketplace

to I rate in about thing we are increases pay took. quarter, special of talked -- pay believe average attention the that it, that -- I last also think think to the by announced. action it we're we attention, out And taking one front I that

rising Cincinnati not of future Company. is, all certainly Insurance think boats the it's past raising I tide the the of

are segmentation. focused We really executing on on

average executing floor. an increase the that disclosed, have we we rate see with story might our at you while the tell full are certainly agents that how doesn't So of ground

the our at We retain can most the most and that of that, book -- portion to priced book of doing segmenting the book, adequately are attacking adequately all price. and we the really our portion book in of inadequately portion

Michael Zaremski

is in that's terms the as do maybe sense -- part the you do expense industry's think inflation as trend good of you of well? And rising of rates a Do line that -- That's impetus color. moving follow-up, north? you

Steve Johnston

Steve. is This

mentioned look rate I our mentioned, comfortable where that that past the still in we and as taking. by we the are we've loss see cost Steve we see cost our risk-by-risk versus And premium as policy-by-policy trends, very trends the think position. our inflation of at we're we it looking at terms loss as still much manageable in

Michael Zaremski

about to Okay, the just this growth better trying great. My more was lines understand next long-winded question I'm but question a might personal complex answer, and to on dynamics. how think or be

on less So not pricing, the mid-single the levels I recently. in implies basis, line's shrinking which is have that which organic believe pricing a -- and hand, an by that's maybe initiative -- bit. been higher a pushing if X%, you lot of little top growing -- But on agencies high-net-worth pricing you're the talking that appointing -- about you're guys digit the kind more substantial. personal you're But middle other maybe you're than appointing then yet isn't lines, separate

going trying So to trying to -- lines and -- kind some dynamic you what for think there's to of forward guys? the is conflicting dynamics about personal understand competitive just that how how in

Steve Spray

Great Spray, Steve absolutely Mike. question, right. Yes. again. is This you're And

all our in. lines personal for are, segment, We

-- the tick to the of still the and We the rate single-digit are it seeing on high now high mid-single is is single-digit auto range. in but high The expect in we continue homeowner digit, end to up right increases.

Indiana, for the that four those larger to action. be us, growth underwriting to is putting we the than -- mind, pressure come states action, are just it's and continue action would far the business. strong some states as prudent and taking are a growth. Michigan it example. both and little to a of underwriting across need that taking growth, new little where As so, putting they're stronger Kentucky, as action written personal They But bit on focusing specific those an on some deliberate rightfully And Georgia, and well. the maybe premium under country really pressure pricing write is really rate are lines others. underwriting

agencies. committed see, the tend market they're the on middle to As to But you lot worth of it well. net lines A have we as can new do those getting and appoint continue do to only. high a focus personal profitable

Michael Zaremski

currently? -- remind book in also worth, us the just can terms of And high that you net then And worth? is how how you and of large net us high remind Okay. business define

Steve Spray

Yes.

$X is for defined XX% personal all as our Coverage cost of of the A first worth And now Coverage A, right million. high replacement home of about So book. so the lines net us it's excess is overall value in

Michael Zaremski

you very Thank much. Okay.

Steve Spray

Thank Yes. you.

Operator

question Please with go And Paul O'Neill. of comes line from your Newsome Sandler ahead. the next

Paul Newsome

But -- bigger perhaps give little seen could I commercial-casualty tends quarter bit seemed color a it wanted mean, of the Is I sort be little happened of with kind past. the just reserve a me you decent a tells realize quarter something give particular the in in the is to that the piece to changed? that the quarter a or see fourth that although change you with if there there that us amount -- I on in reserve releases of releases me release? in what seemed case anything in more reserve general. we've it can the And bit than there

Mike Sewell

and more then Hey, Paul. with This can. a I'll in wants to jump is anything few Mike. comments, make if he And maybe Steve

yes, was casualty, the for about it -- commercial the million. So $XX

If year reserves. it kind occur. paid come approaching build think factors and we who think was There so on other was folks across. half million a had the XXXX; years, $XX that looking favorable got losses that reserves, accident from and that these of it what quarter-to-quarter about of actuarial million $X prior the setting same We in know, then quarter. speaking, you about will changeover development for the it favorable total years in watching at spread know actuarial consistent million actually year $X any I and area. development of. was how it the haven't We're So to XXXX; for XXXX. million $X we from calls as don't are before, will plus I've Generally the accident accident We've in do and setting said folks, the we those approach XXXX; the

our improved. the paid case losses, paid first have you loss or look in at XX-K. quarter, from cost improving, has back X Even So our if footnote incurred -- been trends

case that of down but about is XX, versus on XXXX. incurred a there, see kind in average per -- out page a bit put the So it quarter for of gives the supplement preview you'll our XX% also little we

see this in develop, process we're point, actuaries' going at the our let's setting how reserves consistent and reserves. So follow to

Paul Newsome

That's completely great. And topic. different

with results limits reinsurance changes the future? continues such? high-net-worth personal business Lloyd's How EMS you've in the the usage potentially the looking makeup's at bigger thinking amount grow differently lines that So changed your -- reinsurance even has a operation, today, business changing at business, fair To nicely. got was I might or like me as that -- Does to mean and in that use? was the look I you reinsurance right

Steve Johnston

Paul, question. this Excellent Steve. is

about market we to want did lack thought good our there buy a in Xst there where writing not works a we traditional Through of year specific favor. the clash in, where primary through the have are Part wanted to that clash new wanted surprised to we Insurance and was of that that that cover being we side, we exposed But actually when correlation contract cover have as by we to we had didn't a Re. basically, think be in get everything, though we didn't. on thinking of cover. bit. this reinsurance the place the Cincinnati just might And reinsurance both some contract. July working be the cognizant same, the on clash I put We disclosed Cincinnati And modeling, even losses a ago that to

continue would we've come we'll looked one we provided And contract have be look July instance would million, we in differently last reinsurance to of that where and the growth. Xst where parties. $XXX at at of from excess a both that A of that So bought the $XX coverage million Section might loss the

risk vigorous lot gives us have and area very might could into additional where exposure cover. insights does that management a have of a that we We modeling, need

Paul Newsome

the or also not? prospectively Just curious. operations that Lloyd's Would clash cover cover

Steve Johnston

at not No, this point.

Paul Newsome

Okay. Congrats on Thanks quarter. the guys.

Steven Johnston

you. Thank

Operator

question Bank. Your comes go from next Deutsche with line of Please ahead. the Shanker Josh

Josh Shanker

the volume for flat losing you're taking XXXX, And question. was customers. guess. thank I a been my guess customers at there's you premium and of it time And I in as rate, auto with some But a with personal answering since saw the I you? lot Yeah, hasn't which and Or you section the looking can bundle flat I their movement carrier a assume for progresses you're their different the whether pricing? -- unbundle about keeping for how higher auto and homeowners talk fell? seek to

Steve Spray

Hi, Spray, the again. Yes that. It's Steve -- Josh. seeing question. an we're for We're a package we that. Thanks excellent question. We're unbundling not writer. watched not

on We are underwriting is you're write rate to I had earlier said seeing action. again auto have and looking What like taking package high put rate earlier there. mentioned our increases auto growth the on it's just single-digit appropriate with pressure what business. And I

is those with I quite say on frankly auto states mentioned. what even that. us is retention And that a zero specific below Michigan ground more it's the is tick so our I'd for So our in and homeowner

high typically Now one mix other thing of and me, change high premium net versus homeowner write of auto middle business, as worth -- to lower more excuse to a percentage the net as think worth continue worth a package market. total packages, net have about, the we our high

bit little well. a there up showing that's So as

Josh Shanker

think. that words down. in the think up lose at losing flat I you that not how is tick I if think count high says the single-digits XX% I that but you the that of reading be it to look Is well to might pricing to as what XX% mean I I I But as mean somewhere it and policy Or should Are to am a auto don't said is exact I homeowners and was put policies -- happens below me correctly? about that? X% you between which would mouth. auto? package Sorry, or X% -- you

Steve Spray

might go and may account-by-account the We go. keep the would Josh. entire situation-by-situation, varies we it or That to think is would that package market have I auto and homeowner another distressed.

Steve Johnston

this Josh, is Steve Johnston. And

restate heard increases Steve make to to what Just auto as The sure the getting just single-digit. auto I high I you I the in is said. kind on think side rate want we're clarify. of personal

Josh Shanker

I -- that Thank That's clear. was Yes. think you.

So, -- go I guess yes ahead.

Steve Johnston

little XX% more are on basis. one just is bit accounts about of a information that lines our of And personal package

Josh Shanker

the mainstream high-net-worth I or -- the more Okay. losing they the side of And more the guess part portfolio? to tend be the they less that in terms guess policies I you're of on or on are the

Steve Spray

would of Josh -- would the portion it more middle-market our on It business. be

Josh Shanker

very much Thank great for answers Okay. quarter. and the you

Steve Johnston

Thank you.

Steve Spray

Thank you, Josh.

Operator

from of line Mark comes question the Markets. Capital Dwelle next go with Your Please ahead. RBC

Mark Dwelle

Yeah. Good morning.

was just compared respect right reinsurance Some with what already new apart since stuff's the But business of my the MSP? was portion new the -- can you other it's premium as break much how to of been -- to answered. from within the segment previous that

Mike Sewell

Yes. Mark, this is Mike Sewell.

other believe you if -- that about I think press about is section the so And the here. hold release in and that was on of -- it the a part was

Mark Dwelle

the other... written million in was $XXX premiums of

Mike Sewell

Yes. -- Re $XX of It here, for premium to and million about earned related for quarter Cinci the was got earned of we it MSP was what was about have for million underwriters. $XX the was

Mark Dwelle

apply? that what Is would on basis? written a And same about that ratio

Mike Sewell

to fairly probably be It's close. going

business they was wrote had and written Re $XX they for quarter what the was $XX it Cinci they million the MSP. wrote for the is for Although for quarter what million,

Mark Dwelle

question that Okay. has it. Cincinnati seasonal to amount That's the I the a property Re -- know had was variation I certain I or lot we to similarly seasonal? know year? guess And of related more MSP that a mean, throughout then it's steady is helpful. it last I that the business Is of

Mike Sewell

seasonal. bit to a Yeah. also It's going be little

be think a are more revenue like recognition related policies line over recognized got be when kind that they've year. wind. But -- to of their straight of lot about you the seasonality they will will Some of over

later rest consistent see to will tend so of and earned in And our as watch you not earnings as the be we as of it you'll business. the the see their that, occurring year more premiums over probably pattern

Mark Dwelle

Okay.

Steve Johnston

it's XX-K, question we And and we've if for bit as a and Beaufort on to just reinsurance want we one have modeling in this about to place follow-up at the there additional that tag level, I the would point a buying our add million we been estimated have little after-reinsurance at of don't XX more hurricane XXX and estimated reinsurance Beaufort this might modeled about significant page you of in and But a it. after-tax it's loss. for read $XX terms while single

one ratio So point. that's about loss

So we will continue to managing look at that seasonality a as you there. asked job good and risk are definitely of doing the

Mark Dwelle

seeing in how some fact there? for see I quite in Okay. line I the know really indicated any trends probably much area are And to some loss are what workers' other holding they've That's within the book. But shift rate question -- wanted remains not been business to your Have -- mean favorable about know that you was that? that still declines. comp is just helpful. a I I that out that of begun that ask you time.

Steve Spray

our still it to decrease Spray. net me under on rate -- rates. the year-over-year as as is Steve written We're industry mid-single continues Cinci think rates. I in Mark, base or down pressure well excuse Yeah, on is our for digits there. And

we results are use adequately. the under simple book. The good. We continue first and just of be are that really looks that think over good feeling quarter and doubt XXXX, priced The show the year of tools about It's pressure. quarter pricing to has I analytics underwriting very accident we very still math. still segmentation no the that there's that will year deteriorated those accident But

If and so our about our control opportunities. and underwriting I are it area think a it's comp It's it. get the pricing, thing I commercial to feel and different workers' well, package to coverage quarter. other of placed mentioned write to environment lines, just it out I pick the to whether that a good there think unlike comp major going compensation I isn't can work competitive that really our We We're us managing is favorable continue workers this or else. typically one mentioned lines. we're still loss as agent underwriting, well the us to last little last have have that pricing claims and be gives quarter -- that hedge compensation still somewhere the and managing that's just about attributes we just us with

I the doubt -- mentioned still want grow we before, work to we we're looking but for like that comp yeah, no pressure. line under are still still it's And there's So, opportunities.

I think it's under industry. pressure for the

Mark Dwelle

That’s all And questions. helpful color. my Thanks. are those

Operator

next line Your the from Please ahead. KBW. go comes question Shields with Meyer

Meyer Shields

Hi, on workers' quarter first loss the Is compensation the comparable full great. Is year or One good for Thanks, quarter number? morning. best quarter year ratio? the follow-up the last please. that accident first of

Steve Johnston

the Well, accident I quarter, have losses – for and first Meyer, before I XX.X. have catastrophe current the year here

For ago, the same quarter a year XX.X.

So what that's one quarter. Do those match you're looking at?

Meyer Shields

I'm higher quarter of we're as represented of compression sort that year fourth number a that for proxy seeing? last wondering whether They do. of a in and year rate-driven significantly accident we saw a rebasing the XXXX But the

Steve Johnston

No.

our volatility balancing I think prospects and in going are situation the and and there's and And we about doing team them line his we them point, of feel quarter-by-quarter. Steve's job to as great compensation just some saw Steve call risk workers' good to be versus we rate any policy-by-policy. a

Meyer Shields

Okay. No that's very helpful.

Second, we about the operating an realized impact small there question income rate really tax If that? unusual a ball tax get the take out they unrealized Is gains, guess. XX.X%. anything and in I on of

Mike Sewell

then have you're models for we else rate out you're But -- is income, really to much. with at -- tax XX%. too investment will mix you your probably currently No effective would XX%. when be our probably a our not if that so you're that approaching say if I the looking building think be almost near going everything same current

So to investment in there. size income of operating depending income going compared on that's to fluctuate the between

tax a blended it your fluctuate, of you'll of of will rate rate, probably might effective effective probably basis. a their But a significant -- XX%. on effective long-term get XX% put you about probably that tax the impact in rate just around for maybe So and rate. might an be the if will on because estimate close say for XX%, MSP I size will that tax it overall have be not way also

Meyer Shields

Thank Okay, helpful. you great.

Operator

of comes next with line the question Larry Janney Your Greenberg go ahead. from Montgomery. Please

Larry Greenberg

Good casualty. morning heard reserves and your thank and you. commentary on Mike, commercial

turn us auto the color if has bit. on it could you you It problem in like Any the reserves? little else the more little the commercial and first you mean, bit a in industry. a a been give bit looks quarter guys wondering little clearly color maybe for more provide Just there? I corner everyone of could a

Mike Sewell

Yes.

Let in. -- someone from or and you can Steve me else what like chime a to if would give I then

for commercial the was auto of $XX accident So $XX million million year year for If that quarter. which look I over was was kind XXXX. the accident that out favorable

obviously million. we've a tail. by $X and favorable was to favorable was clear million. majority, million. there there right year be before unfavorable, short XXXX then it year with a strengthened a $X majority is Accident it being going So a $X year accident so Accident XXXX was XXXX But by

still process. looking accident as it's is were page-command a So we that following year a of current at it case, that of more consistent it's lot -- that the seeing just

Steve Johnston

over said And to Mike been there the -- of process corner work everything consistent team mentioned to put and line. and effort Steve. do think quarters, have that some Mike been Yes, hard from we've auto. that it's the position the turned I when to agree commercial do and times some feel is about good underwriting after reserves feel And a adverse Larry development the had quarter we the months, loss through claims for has of that real lot this into a I with many years control

Larry Greenberg

Great. a little but tiny Thank subsequent quarters MSP know then way gets quarter, any have But probably this you. you bigger purchase the it impact? for period. still is it was And accounting I there of full probably probably insignificant bit that the quantifying although when for in

Mike Sewell

For we it's right We -- went there's through do more have -- now, detailed process. probably a analysis.

which was what lot the at when organization. at estimate thought then pay that had that to an end value came the were we that of about value had point? And those net the million really then add estimated February, net adjustments would implied we a paying disclosed we was asset First, or the that the you closing with which in of it on asset And come for we what's back £XXX of premium October. we

closing. So, did we we $XX for million we -- close, the there paid when

We have Lloyd's. paid funds an extra $XX million at in extra

then look would that, originally And assets we off, doesn't at at at one costs the So, on have been comes the that's continue assets extra you before your the There's closer fall can closed be you set premium. from a about that couple written the capital. once million we item in so goodwill. Had intangibles have do. acquisition disclosed. have we you least We put then which did Munich realized that and or that did that U.S. much the that Deferred you deferred to How things allowance tax take up Thinking relook add to that out I against written-off. or that GAAP. to liabilities a that you assumed, £XXX revalue we on. gets do of on of gets under valuation that

We'll $XX we when that right goodwill going least syndicate together, distribution goodwill. to all two. on further about have we've be quarter third intangibles maybe that adjustments some and add or and books of value I'm over occur of can So, goodwill about got you the thinking If will a estimating up probably we're our that will that capacity -- really force. next subject say now, million at and make that relationships to and the about -- the will the I'm intangibles

be So, some not will those be amortized. amortized, some will those of of

amortized but bit with say. going have you're intangibles, replaced some complicated That's being of wanted to costs up pick quarters a very you little a that acquisition when answer. don't you during being So, four it's at than the to to more there accountants I'll question first probably deferred benefit least hear, love

Larry Greenberg

but the on I the ratio just Yes, and commentary. amortize all focusing you get kind expense of write-off from deck of the the benefit I not on was to having No, yes. appreciate that, actually really

Mike Sewell

Good.

Operator

question Your Kumar from go Research. comes Buckingham with line ahead. next the Amit of Please

Amit Kumar

and morning. Thanks good

follow-ups. few a Just

And about just going clip. releases that releases? trailed seemed talk out have you they quarters. before I the segment, running back meaningfully Can first higher at that is it two the The of E&S reserve coming what question to past over drop-off to were have off the causing reserve in a is

Steve Johnston

question. you, Thank Steve Amit. Johnston. Good This is

E&S a talked we're We Cincinnati for how judgment for I we reserves. at to we've CSU set use the what similar seeing the Insurance, of think of you're have E&S and data E&S and we time right -- higher company, over some any generally calls. But we to Company. development computation is data risks favorable industry, we experience actual actual methodologies. terms what driving that we And as the more reserves operation look the about at this lot estimation look to the as seeing we past is in into start without we that new gather for to look which and actual and And blend of limits, different in the Company, we're start-up

on is that's So, But that the the about to change that and favorable see growth I in seeing from number in good and position focusing there strong bit both performance quarter-to-quarter very combined and you'll the where more little what in you're what accident hope explains mid-XXs the the and I a profitability. on year of ratio that CSU development. about reserve running feel think we're consistency and that been we ex-cat consistency low in

Amit Kumar

Yes, it does.

that the included Does If about was that commercial that exposure? exclude a broader. to Is you talked single pure question be exposure low other the digits. E&S This single The low goes on digit pricing? you number pricing what be? bit back discussion in and would maybe

Steve Spray

That number Steve Yeah. Amit, excludes Spray. is exposure. this

probably exposure two to If you added numbers. it the add those in about points would

Amit Kumar

I maybe was discussion a tad got that take a offline. And some I pricing it. can the higher. calls this of Got sense to E&S listening

follow as different of companies. this we're wide range sort think higher But I on number. a that. getting any metrics you pricing I digit from if heard offline can up why to know of maybe have thoughts single like I Or don't I

Steve Spray

that certainly Amit, I here. Yeah. we think can address

be companies an example, think varies product E&S XX% the the pricing look long has liability, It on on rights stable. side. almost it a And business been whether for can -- tougher solid. tougher whether they at cat, CSU time. by company-to-company. business, our good been their construction. is as at The but I The casualty of in appetite E&S it's the they're And underwriting vary from property has

has coastal And make have may would a either. the to rate why relative effect maybe think that's -- Does Florida increases muted. say that you book be wouldn't others I would sense? it in so, apples-to-apples that be But

Amit Kumar

Yes, it does.

want I on all think I you helpful I in introduction. to is always your That that's have. answers. exhaustive XX-K. do commend the Thanks letter for And the

and luck future. for here stop the will I So, good

Steve Johnston

Thank you very much, Amit.

Operator

And Please Zaremski Instructions] comes of your go ahead. next the line [Operator from Credit question Mike with Suisse.

Michael Zaremski

you follow-up you're same that's be the talk value that it I to if And unique to so Hey, segment proposition and/or business One on given willing about do along maybe your about thanks. profitable lines, competitors space? the feel allowing is. who to something profitable. that's -- in curious E&S if was there's or how capture your you distribution maybe

Steve Spray

question. on -- you much. Mike, Steve Good Thank or this. Spray very answering calling calling --

Our value multifaceted. CSU is prop for

non-admitted time company First when and the foremost, takes risk. -- time carrier the at that we formed the the

with compliance a and all you because involved also the have brokerage in have the lines business surplus E&S that a taxes to We to take brokerage, goes formed a care non-admitted carrier. of

that that appointed Company go Cincinnati Insurance that MGAs, It's have direct our to with through effect through brokerage We agents key our wholesalers do have only our company. the company. appointed not access of licensed contracted is MGUs. Company E&S E&S agents of and Insurance access in only to Cincinnati So

sharing our against the that losses include the it industry. We the that company stack premium calculations. would think factor and I Another agents' is up our in profit-sharing big we anybody E&S you might profit into from know

I'd So, in can wheel. than many we of marketplace the them. business think share we we have the don't the cogs what that with because leaner the in does run so profitability E&S like to operation

in commission we they so would pay a get return E&S do in that many to agencies the the of agent. to is what more And might what placement. upfront we XX% cases traditional double We be which

a our ago bill it's well. resources which for sent about E&S, out to just to premium of mind. from what exactly claims I tough agents those agents many company, it claims in E&S a importantly third handle but year that's peace our other in to cases party. big, the know think fine, That's And E&S on our they're to to claims, risks most in class loss They for gives with access of They big policyholders our be months a local is may also relationship compensation beyond Company, E&S when Cincinnati Insurance unique. local now into introduced to ago, good going that's community. the claims XX business. our rep. control, deal. That and them clients rep the all is that a our would our well just managed, happen attractive that as get whether audit. And -- know in assigned it has also agents of the E&S markets going direct people them the We've are agency handle is many a be Because have a

surface again long-winded. today. in and that think proposition we've really a differentiating we agencies got our So value are We think own we just inside the think E&S, scratching

Our $X.X E&S write approximately million, is we've our $XXX we do the that business with identified that and business agencies market. in billion about

So our business can agencies, inside see, more really write our you runway to strong. as is

Michael Zaremski

best there's helpful. luck. That's sounds strong advantages very there, Thank very much. so you some of It Yeah. like competitive

Operator

to queue. in like questions Johnston. I'd turn Mr. to back further the over the no call are There

Steve Johnston

us XX Cincinnati all Art the to today. of you our you, Meeting We Saturday, of Heidi. shareholders Saturday joining see this you at Annual some thanks April of -- to hope And Thank for Museum. on at

the our webcast second Thank again you cinfin.com/investors. in very at you look call. You're of meeting also to listen quarter much. available forward speaking with our welcome to We to all

Operator

And call. this today's conference concludes

may now You disconnect.

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