CINF - Earnings call transcript Q3 2021 | Cincinnati Financial Corporation

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Operator

Good day, and thank you for standing by. Welcome to Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to your speaker today, Mr. Dennis McDaniel, Investor Relations Officer. Sir, you may proceed.

Dennis McDaniel

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

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

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

Steve Johnston

you Dennis. was another it Overall, joining you, more and us third thank Good results. quarter about for good Thank morning, today our to hear quarter.

ago, country communities catastrophes our impacted year weather-related hail, than and across a wind, fire. While were lower by were flooding

of income basis on third of fair value million send changes shine, of businesses. $XXX due communities, reassuring $XXX to in held families they equity providing first income of for have XXX% ago, operating portfolio. for million quarter third X basis lower the compared an with compared income securities than fair less million an benefit more our increase. the third excellent and up the tripled, into quarter $X.X caused Net portfolio our a in in year for we months field on catastrophe a affected significant these after-tax despite increased year fell million with Non-GAAP recently, losses or year the Equity the XXXX the As last of earnings with quarter several decrease. value quarters the ago, contributing billion service and XXXX XXXX net volatility associates claims $XXX $XX of versus quarter for after-tax third

Our points was losses with XX.X% last third XXXX points improvement. year, catastrophe XX better combined of ratio the decreased X.X representing quarter year, property than casualty percentage this

economy combined improve a growth effects strengthening before year ratio Premium Consolidated percentage of X grow continued casualty rose months XXXX. and first written a XXXX. estimates. continued as in loss accident premiums XX% helped catastrophe also X.X enjoy net our of to industry nice great pace with agents ahead us relationships third points quarter at the current than we Our and the property better was of the during quarter

when tools cost third for during casualty we continue is segmentation, and to for Renewal underwriters retain We opportunities away focus profitable our trends be prospective they of quarter each loss write accounts the need walking determine our pricing on to giving segment. risk estimate property more continued ahead the from while to pricing inadequate.

slightly insurance mid-single-digit increases, lines quarter. from estimated the commercial average price range down Our segment renewal again second experienced percentage

in the renewal low-single-digit average the including Our range. price auto with in slowed excess and quarter, a while insurance increases range, segment little second compared surplus continued third high-single-digit lines personal quarter personal lines segment the the

written ago quarter XX%. growing quarter Our with and had an commercial lines segment net premiums compared this combined third a percentage ratio XX.X% with improving XX.X points outstanding by by year the

produced our by expansion due a ratio. towards For loss X% year had premiums as combined and levels, benefit our planned segment worth X for Its continued months largely quarter than it agencies. lines to moving underwriting from of grew written net for pre-pandemic our to patterns business quarter ago, profit third higher an lines increasing our third personal ratio high segment, XXXX third was Personal the personal of a auto driving first the XXXX, quarter auto small in personal still underwriting total profit. produced net

XX%. quarter surplus first the net year written third net sub-XX% Re premiums and for produced premiums grew The the quarter each and the a XXXX. excess ratio Our Cincinnati segment and Global months of written and of line combined X the by quarter grew in third Cincinnati third

we to models. Ida underwriting While leading quarter, significant by an based for from event experienced of the loss we magnitude our the losses surprised saw for losses weren't on both Hurricane this of level

subsidiary insurance component the life our creation average grew and VCR of I'll net for quarter financial of XX, reaching measure largest were net both $XX first annual term months conclude the third by before earned through X and value year. as XXXX of the produced insurance life million operating range results to income VCR the of XX% third ratio, measured was Strong primary the gains our long-term Our premiums already income X%. quarter XX.X%, of our performance. target September investment XXXX, XX%. with

perspective our financial our Sewell, areas some Now performance. Officer, other on Financial add Chief Mike will of

Mike Sewell

compared third to today. up during ago. year the all thanks Investment quarter and XXXX, same the for of us Steve, you income grew period joining X% with of nicely a you, Thank

third is before end $XXX At billion continues has purchased Cash $XXX pretax contributes including from purchases up Third first our bond of the million equity during net quarter. area and Investing third quarter overall approximately factor both from months of increase holdings. portfolio as the the the during be of and total points third net XXXX was the $XXX in X year. $X.X ago. strong XXXX always increase been year period. and quarter, securities. changes activities was for value third loss portfolios. and during bonds grew bond million of quarter X% the a the first expense income a in income to average our for third $X.X of Cash net Valuation very priority portfolio for the XXXX the our we the portfolio first another unfavorable of basis operating of investments stock the income yield XX%, for yield $X.X for investment all for year billion, and totaled The portfolio from modestly with to the a compared tax was totaling taxable dividend months X trying quarter investment and The of our our equity equity tax-exempt bond year. flow controls. major X net focus, $XXX million a quarter for effects, with Expense pretax was Interest to interest strategic third balance reported investment generated the was months the X.XX%, up for ago for the it flow billion, It in we holdings optimize was X.XX%. $XX income the including fixed was million the quarter a appreciated purchases third X business average and for quarter, X%, year our maturity total the portfolio in million. management were XX%

profit The points points X.X percentage third commissions for year's quarter higher quarter, due than ratio including higher last property for third XXXX X.X accruals agencies. casualty to expense sharing was underwriting

Moving on to loss reserves.

to Our expense in upper the of and estimated net aims consistent loss the for loss reserving range amounts approach remains reserves. half net of actuarially and

by paid such each and we loss as expenses consider losses we quarter, of ultimate information, and reserves, line do new As business. year estimated accident and then updated losses and case

$XXX During combined months net years. favorably was for XXXX quarter. ratio XXXX, million the we XXXX, for development to $XX by On the to development of third for the for accident all-lines by million by X $XX $XXX year, quarter casualty all the million $XX million favorable of million X.X% XXXX, XXXX. in for reserve of years net prior on prior aggregate an contributed basis experienced and accident year for accident first It property favorable the

equity approach, share good a a intended flexibility. financial provides and of our we quarter repurchases follow part also through in that end management, as offset shape strength plans. believe Regarding to consistent shares plenty compensation financial capital maintenance issuance was of including of We

for share and income declared fixed third $X.XX. the shares average decreased the XXX,XXX The quarter typically value $X.XX. share. investment operations life an our share $X.XX. book as investment equity the in the remarks main summary turn per prepared share. with Property call back the dividends price my quarter, underwriting Net conclude book decrease I'll the net $XX.XX gains book creation we and value gains $X.XX. to increased net of effect They the book other for at we was repurchased per losses I contributions and to now third over by shareholders. a of approximately value added to decreased than value of And Life insurance increased items by of book losses per $XXX.X. per noninsurance to value per During I'll income quarter by $X.XX, insurance by share ratio. Investment represent and do, casualty Net portfolio during of value share third book drivers $X.XX value per Steve. $X.XX portfolio a

Steve Johnston

demand tasks. accomplish has flexibility Mike. we Thank to you, day-to-day The continued COVID-XX pandemic in our how

initiatives, on we strong staying able by the However, execution are to results. long-term keep of these our focused producing steady

We shareholders have to drive people, the strong continue come. value delivering the for for the years and to technology

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

Operator

comes Paul question Sandler. of first the The from Instructions] [Operator Piper from line Newsome

Paul Newsome

to if issues the are same but I lines to really any back in there seeing temporary, I'm math that's, kind of last you but from rate file Any you that think, obviously regulators. Because seeing obviously, that with the you reported have others effectively are and some rates. go on some thoughts a or windfall the not of And of seeing? whether the issues curious others as are you year, push into any how doesn't same was trying personal that? some -- of getting get it

Steve Johnston

rate I good a to approved. a with than relationships overall, we're are plans say the with There our think are doing approved. good rate as position changes with rating general our regulators, obviously others. just to adjustments structure getting in our are we that I regulators tougher good and vis-a-vis states again, getting some Well, or increases But -- would fine are that relationships statement that our

Paul Newsome

I a And trends. question, broad Great. think, inflation on

the Some in the higher you the up perhaps maybe inflation and little of line the a that showing a peers on does inflation, commercial commercial side have we've particularly bit cases of in seen some a of and as the effect maybe on potential reasonable that? lag we in a in home courts lines for own thoughts resumption think any Do see numbers? the talked through your way about coming up Any side it early show that's your And of auto house. in assumption? with

Steve Johnston

goods There’s We and is we’re all the our claims to be We cost supply certainly that cost inflation that look of in forward houses, what inflation. look that the what policy issues, And we prospects. our very think segments. cars, prospective system cost getting the see be of of ensuring we forth. the to for each to rate in and period try as will cost see we the we use the in loss we we lags be so at trends into chain there models. prospective build There’s this loss feel social that those trends, be loss be could and court comfortable ahead will for and settle into

Paul Newsome

Always your Great. Congrats quarter. insights. appreciate on the

Steve Johnston

Thank you, Paul.

Operator

Next Wolfe have Research. Zaremski from up, we Mike

Charlie Lederer

Lederer This is actually Charlie on Mike. for

development you for current of it? underlying there talk like first benefited any Were my the the reserve like question, So that can margins? about notable strong sustainability year

Steve Johnston

underwriting feel with reserves, our of we're our the about the and the future as Charlie, the look trends loss pricing. making of of for good, cost best results estimates feel optimistic performance very We comfortable company. estimates of and in forward of our sustainability we And

Charlie Lederer

I And year. the releases give you Could any accident you Okay. around the by releases, particularly accident color know recent years? the mentioned from reserve

Mike Sewell

Yes. Charlie, this Mike is Sewell.

there. which about auto, it quarterly, that So There tail the lines, the pandemic development commercial tails accident developments more lot probably accident would certain with surprise year was that's mainly years, I so we and current If over say our few that those have. I other were the of more on would is workers' the XXXX. commercial recent X.X years. -- one that, compensation, think one That on areas I'd personal you short years cautious that when related uncertainty to, no things for But points. going has back as be longest property, accident which even favorable goes of the be I mentioned, were lines, around with there's a the look with several favorable in was a all of at

you're for you one. as total But for measures the the benefiting seems time a through line year-to-date last So the that really years, Those more frequency slightly then in been data is below we claims reserve develop. really to incurred. seeing recent lastly, versus last year, it years accident control development have favorable not a at the -- has percent there, that are property but there. comp And we last but look looking just how couple, business. paid look losses averages. little some a workers' case It those and The was bit, favorable important cost in commercial the at as the of factors how casualty, lot the the XXXX of have of put paid over XXXX up to over business, casualty loss, at for declined XXXX been

So that our supplement. in you'll see

Operator

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

Mark Dwelle

couple of a Just questions.

the wasn’t there. there terms, was dollar talk more it of sort in you unit, on detail very that a in are E&S was about rare. little much but a -- addition I those if reserve wondering as was could First, there

Steve Johnston

bit a settle. we we the look you know see there environment, rate but in -- if I as claims little a a maybe are that bit Mark, at little it don’t as the longer I have slowdown think we settlement call to just taking

terms up and coming with that, in that’s estimate so you’re And seeing. what there, to our best recognize want of we

Mark Dwelle

Okay.

that good you’re on stuff new wanted of bit coming certainly Anything the for to little you’re geographic had customers the question seeing of mean, over pretty business, type in or winning? year, was winning you’re pretty terms strong a quarter second is new a where that in but spread new of of the I it business. Just from. color I where last The you ask, growth a

Steve Spray

Steve Spray. is this Mark, Yes,

think it our of We’re doing by But is agents, comp seeing it you an I it our face-to-face again, across of the building underwriting last deep it and single there’s year. -- locally, I as entire relationships, just our policy. easier year footprint. bit little from And business think -- a pricing, strategy, mentioned, with execution every pandemic policy agency-focused account

out We’re there.

We’re solve aggressively trying our write business to help problems. agents

We same that have that Our field reps, field our underwriters. interchangeably, have here. use our renewal the underwriters pricing tools

our good segments solid that with -- the execution, all think feel deep just frankly, and writing. pricing new quite business agents. new we we continued the the our I those So of have It’s of goes we’re on it’s just business across it front, relationships about

Mark Dwelle

premium talk results quarter? And that audits a exposure little of in overall growth And you’re getting Can the kind just and that then about are mainly one the growth? unit that kind you degree renewals other bit. question to premium what to of also extent impacted relating the flattering

Steve Spray

Sure.

-- all for in, I exposure. increase, say it’s half on rate the lines would and -- that So for premium about about about half commercial

Operator

[Operator from Instructions] the comes of KBW. line question from Bach Your James next

James Bach

to wanted detail give the some incurred I was on the that percent in So that the just mentioned XX% paid to more just detail see on reported up. quarter, lines of And on was little a for could you that? IBNR of losses kind more commercial you if negative

Steve Johnston

actuaries, of points. at methodologies. our a lot They look methods. different use of they data at think I They Well, look variety a several

now at look had seeing what an row with incurred for XX addition to think paid where I we're a get terms set reserves, case to in quarter. estimate try years losses, can factors they'll and development. it's we record now a track every inflationary we've good that in XX of been favorable the In estimate And losses, best or

confident, making. years over the very comfortable changed estimates it's the they're hasn't team and feel with we're experienced that So that an

Operator

back are CEO, the Steven any this There our Sir? I closing at remarks. time. Johnston, over no Mr. questions call to turn will further for

Steve Johnston

thanks you, joining for day. Have you call. our call. with to Excellent And speaking with Thank forward of We fourth again on a all look job to Grace. the today. to you you us quarter great --

Operator

concludes you, Thank today's call. This conference presenters. Thank joining. all you for

You may disconnect. now

Cincinnati Financial (CINF) 28 Oct 212021 Q3 Earnings call transcript