CINF - Earnings call transcript Q1 2021 | Cincinnati Financial Corporation

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Operator

Good day, and thank you for standing by. Welcome to the First Quarter 2021 Earnings Conference Call. At this time, all participants lines are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions]. today's being that advised be conference recorded. is Please instructions]. [Operator Thank you. like hand would over to I conference your to the now Mr. speaker today, Dennis Relations Investor McDaniel, Officer. sir. ahead, go Please

Dennis McDaniel

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

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

Now call I'll to the turn over Steve.

Steven Johnston

our quarter compared first today term. joining careful strategy by continue for pleased last were in the and by quarter value rose portfolio. catastrophe $X.X Non-GAAP income believe quarter the billion Dennis. quarter higher million with about year. execution our hear and for million income first thank it of $XX after-tax results. and increases you the long proven with equity basis operating to despite to year morning we more and of the included ago, on Thank our for the Net performance, We over as Good an a more operating us you, reflects or it first profitably growing fair was up than losses, reducing XX% XXXX $XX security seek

Our of increase combined with points year year than better and than X.X XX.X% a casualty X.X this ago, elevated better year losses loss before and ratio same X.X effects continued expense loss percentage ago. the catastrophe current year property to improve catastrophe loss points. a points causing quarter The was ratio was accident an percentage

results we from continue risks and price to risks from as by likewise, line to and geography, and policies. diversify product segmentation underwrite Our efforts benefit of

continued casualty each discipline pricing property independent strong continued quarter good and new we us XX% represent who of slow of trends business agents Renewal to our premium various are While economic as we and continue we ever. during in first lines' the the our for net for with estimate to to pricing growth, effects profitably, the as our and XXXX, cost of first property discipline. pricing relationships and prospective quarter are pandemic Consolidated written loss business ahead of be underwriting segment. rose premiums believe see commercial the indicators growing casualty

ratio emphasis to segment mid-single-digit insurance by increases, by surplus while for X% The insurance percentage segmentation price the a grew excess we segment an our segments with lines quarter percent year improved combined commercial net and commercial lines range and ongoing and high-single-digit average Our again the first pricing personal improved with written experienced estimated range. the basis. ago, premiums points lines on XX.X compared a on policy-by-policy

net X.X segment the Our worth this high combined improved premiums by as performance progress lines continuing catastrophe net grew with that a written percentage personal first by X%, the quarter year points X.X planned. lines offset losses underlying quarter personal points segment of higher higher. with The for ratio ago, were to portion than was first

surplus produced of growth advantage by half in results and market, written by freeze and quarter underwriting its produced loss. a segment premiums underwriting pricing its hurt premium premiums our grew in taking and its net by XX% written the lines another growing combined first improved the million. ratio net contributed caused Cincinnati excess roughly winter by Our net $XX XX%. nice events to and Re profit premiums Global from reinsurance XX%. modest grew Cincinnati written a of Losses

net first life a satisfactory term X%. quarter reported level earned by and grew life premium insurance subsidiary at Our income insurance

novel District the in constitute direct or on coronavirus loss Before damage Earlier the known Or certified claims important answer month, premises I business surfaces That the to general it Ohio does remarks, property? at to Federal one litigation. community of by this Court. respect interruption prepared Court close Supreme I'd presence like to is, question with my physical mention as the to update measure the or to Ohio, the does the agreed damage infected our parties to efficient creation case. judicial financial appreciate these questions throughout ratio, decision conclude value the our state performance. level premises that presence of on the We court's believe direct at with of law of with We premises? a primary COVID-XX long-term to physical at resolving all property hear involved. the I'll or a loss create person constitute a will benefiting more process SARS-CoV-X

quarter of contributed Our points valuation investment VCR the improved for of XXXX, portfolio. X.X first including was by X.X% our percentage

results. Chief our financial comments add his Mike Officer, of Now, Financial areas important other our will Sewell, regarding

Michael Sewell

of thanks joining all and to Steve, you today. us Thank for you,

same quarter income rose pretax compared income X% quarter year. income the bond taxable The $XX last grew Dividend XXXX as first grew up was portfolio for quite purchased quarter quarter average X%. tax-exempt with basis XX during first totaled Our our the equity the the for net first yield X% from X.XX%, total purchases investment points performance The good and a of bonds million. investment was portfolio of ago. quarter for X.XX%. and the average from pretax year the was first yield Interest

strong, $X.X billion business of generated the is always year $XXX for was from boost months of first the maturity to overall three in our changes million. unfavorable in Cash million portfolio. $XXX with our $XXX stock offsetting including Investment portfolio, operating strategic very bond income. our we were portfolio, favorable quarter portfolio. the net invest million expense We to fixed before continue first with effects, a investment matter but including XXXX with to XXX% help $X.X million, first of ago. appreciated balance for a net the equity tax an flow of Cash total approximately year million valuation decrease billion, controls. net value was and for ended aim activities months $XXX our totaling for up investments gain during quarter the three and purchases investment our The portfolio. We the portfolio XXXX $XXX portfolio, important for Expense for bond equity portfolio management continues from of flow

The was quarter. percentage last lower to several year's lower first travel. The XXXX as business continued items, expense quarter X.X spending ratio pandemic underwriting points cause casualty for than property such first

and restrictions rate We lift future more expect a people feel person. some in meeting normal of those quarters in expenses could as return more comfortable to

net in range approach In terms of the loss of amounts expense actuarially loss for of reserves. our reserves, the and half upper aims consistent loss net estimated

Each quarter and losses was a as expenses the we $XXX information, losses consider combined During prior percentage by and estimate we casualty ratio accident business. development year such typical quarter and years. line was or of higher paid points of for first of favorable a loss on new property amount than net quarter effect and million, experienced ultimate the X.X XXXX, fair accident The quarter.

estimates needed. study the As we during we update as data and obtain year, new

line end longest compensation first the had which This many development. line Our and reserve the as property loss favorable reserves quarter of over open business, claims can amount years. largest at XX% just tail gross represents total of the has of loss net $X quarter, expense the at for workers' of our casualty billion remain

months released XXXX. reserves million accident of On of an for for first amount year for development aggregate was year $XX favorable the the $XX million in aggregate accident to $XX any by the the given reserve small, XXXX, relatively was years three $XX was prior for by year, net While for million and XXXX accident all-lines million. amount basis

flexibility believe of excellent were consistent approach the with Regarding financial management, capital at continue strength financial the that the We our we and shape end past. quarter. the in

XXX,XXX of shares per quarter, at approximately average $XXX.XX. first the During price an we repurchased share

a investment items prepared to the value of gains income $X.XX increased we value and in for a increase insurance $X.XX. by value book $X.XX, and by with As I share non-insurance main net gains share of income $X.XX. book per summary Net book a increased $X.XX. added They per to creation portfolio high for end effect drivers always reduced my do, by remarks by and Property Net to book book the of The value the declared shareholders. per Life record first value share value first-quarter insurance ratio. per underwriting during losses other our was $XX.XX by value represent $X.XX. share. fixed equity the quarter increased investment dividends casualty operations contributions decreased book I'll share. losses than $X.XX portfolio Investment life and the per

to I'll over turn Steve. back the call Now

Steven Johnston

Thank you, Mike.

I associates continued want to our their focus and we close, for dedication. thank Before

conditions, offer Overwhelming our remain grow the we new serving their empathetic claim pipeline service optimistic of policyholders layered weather strategy. balancing winter services past services, creating stay headquarters, products a focused additional impacted help as and products prospects about claim our value long-term continued We've release top customers executing service the clients. over and the of profitably us, ways our agents months. and opportunity. many to worked independent few pandemic hallmark to both our to associates, industry-leading generates and and who field still together of at We severe deliver future on by represent on to While to the claims fair ever-changing in and

today and call me Hollenbeck Spray, the Mike are Hoffer. a with and Marc for As Theresa open questions. Marty Schambow, Patricia, Steve please reminder,

Operator

Instructions]. [Operator

from Capital. Your comes Mark the from of question RBC first line Dwelle

Mark Dwelle

bit Very than large of hoping unusual adjustment Or – catastrophe like to Are for the little to those through related release do questions. XXXX events? could detail related talk back further they reserve cats? the a was that? you such to go events. couple A a I have more prior

Michael Sewell

question. little That's high. I a great does It a seem appreciate it.

largest, The when cats, at it, development. So for least XX you had business on look to was then it really, in the related really in X was primary $X $X you widespread. was we prior-year million at There through was it cats was points concentrated total the our $X was coming many there look to at XXXX below other there that items. it adjustments. favorable were And smaller around million When range. items million CGU, where also three but

That year, in was one was adjustment. was there favorable million then wildfire, I million. $X Australia Delta. million the adjustment. XXXX. first that in and The $X Sally, That XXXX. was was it also previous a think was the a that $X That was was And about

development and on you favorable when points $XX about cats. it's million, X up, add all that's So, of it your

Mark Dwelle

I see.

like, about, a So, something? kind small than you adjustment rather or more adjustments where ultimately, you miscalled this big said, it of was as one dozen almost

Michael Sewell

That's Mark. right, exactly

a You hit it. was Thank question. great you. That

Mark Dwelle

Again, business the new question Re. a to The related second level Cincinnati had unit. fairly sizable that's growth I of that in

So, have I'm what – used rate not really it run the of doesn't lot historical to data. a

business. to large you smaller that could large business increase guess, think – curious, that such But of might thinking opportunity where be would the than about One that business writing. bit core maybe then I term, eventually it's, saw is prompted and be large And going suppose things. how that how obviously, become? relative in to two a how So, little you kind you I'm a longer

Steven Johnston

and in diversified way direction, turn we If it we to great for got other into. model. that other Johnston. them take improving the capital to Cincinnati is advantage and the a to Re. Insurance of each that Cincinnati didn't the our what This allocated direction to need can would answer want be to turn. here short by things we conditions we Steve firming had this hit market prices, that it supported Good opportunistically It's is Company And be, to Cincinnati across And strength grow. and can where the they way go question. if if area firming want well terms It's the it written the advantage ask organization they and the terms on a financial they and of talented team strength just Basically, is an go quarter, if just opportunity hurdle then there firming enter the that's turn prices rate in conditions. And is, and did. But writings it sheet. estimate of paper. We an how really, opportunity form we would just capital would contract in the full Re had much take try and of that's they of board, grow the could have in the connected, they're the balance

Mark Dwelle

primarily lines? it Or in was mix? or Was the casualty-oriented property-oriented a growth maybe

Michael Sewell

It across board was pricing board. we terms opportunity more specialty. little saw and But a good It the maybe for have across casualty bit been was and and conditions. the where it fair

Mark Dwelle

– just seeing, terms in little would guess, little levels? the continuing of I you to conditions, the beginning last bit a is just pricing it's stabilize pricing bit Or you question, still that my pricing at that a remarks, characterize behavior in opening as the commented positive while improve? you're to the environment but market it really

Steven Johnston

some looking I than this we the policy It's rate state more you little may what's over through a it might that that's increases of is others see As policy, our than at that that tapering comments we we state. time. heard loss trends. mentioned bit consistent cost we in been still of back industry And approach. important approach are top-down coverage of as – coverage, look a do we And we're But by by environment. ahead feel prepared pricing getting ground-up a by remarks, be a that think little have off I period have a history, less bit.

risk details our and by think getting fair that approach that's policy our that their I we all appreciated think and adequate we lot is agents a driven by the clients taking risk, and steady I mix and are just forward policy. and pricing, by described, by

Mark Dwelle

or rate think your you to you that inhibit the market multiyear does think approach, it Do policies ability as do it? capture that enhances moves your

Steven Johnston

Mark. it's Well, a steadying influence,

for prices same long-term rates and on when go as think I with a have we our we we just down. The in go to are us position to up, retention years, experience stable in that agents for contracts. it we very for manage terms customers for it pricing three they will relationships with and that proven their work well is that's have high really. think in decades approach policies is the think the of three-year three-year can we And appropriately the winning formula

Operator

turn to Mr. the Thank Please like to There go you. ahead, I time. at over questions call Johnston. no now [Operator would further sir. instructions]. this are back

Steven Johnston

And us for Eastern. We Saturday, today. meeting for X:XX you us joining Thank AM on of will shareholder hope thank our you some join virtual X May you, Patricia. at

our look to on forward While safe. in register in-person resume the details agents now, www.cinfin.com are Thank best for with we meetings have way Please future, great on meeting. some to We meetings the at second day. you. intend again for call. how for associates speaking the keep virtual and you shareholders, a And to visit point to quarter

Operator

today's concludes Thank for you call. conference participating. does This

You may now disconnect.

Cincinnati Financial (CINF) 30 Apr 212021 Q1 Earnings call transcript