CINF - Earnings call transcript Q1 2022 | Cincinnati Financial Corporation

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Operator

Thank you all for standing by, and welcome to the CIF First Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please also note that today's call is being recorded. I'll now turn the call over to your host, Dennis McDaniel, Investor Relations Officer. Sir, you may now begin.

Dennis McDaniel

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

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

I'll Now the Steve. to over turn call

Steven Johnston

good Thank performance. Dennis, and our of good was for Thank about you, today morning, you operating hear It us quarter another more everyone. to joining first results. quarter

skill and of independent quarter, our for strategy securities agency-focused up of agents. Non-GAAP held and loss reduction a of led in reflects a portfolio. Our fair or the in income versus $XX dedication reported XX% for year million first $XXX net equity our to was the a profitable and ago. the quarter recognition on with of value We excellent XXXX well operating due the of associates million relationships to terrific growth the

managed at expense ratio current casualty ratio losses points business year each of loss property was first a X.X upper segments. casualty property and for from price both quarter. loss The increase better XX% our average the and of with renewal XXXX. XX.X% lines an Policy to loss written in rose premiums slightly accident policy months, for effects accident property year's again our business. healthy rose personal quarter last combined for lines XXXX first reflecting retention of quarter compared of large percentage X Consolidated We retention meaningful before to measured the insurance increases our year with rates levels first range. property catastrophe Our casualty net commercial than for year XX% ago improved

our support pricing. and Our while taking pricing inadequate believe work that profitable write segmentation we appropriate efforts opportunities retain determine continue growth is have more as profitable underwriters we on to accounts what action to

our the during casualty pricing of property ahead renewal believe quarter also for We was segment. prospective trends first estimate loss cost again each for

amount low insurance Our lines similar increases small compared first price fourth lines in estimated to segment the the continued the to average single-digit average commercial fourth In quarter, to slowed by percentage remaining range, increases renewal personal price range. quarter, quarter. mid-single-digit renewal the in the a experience

and excess continued lines range. in Our the high insurance single-digit surplus segment

of quarter and net by combined written lines a with XXXX first segment commercial premiums ratio Our grew X% XX.X%.

our Our XX.X%, high-net agencies. ratio of XX%, driven XX.X year personal business segment's by lower percentage net a from planned lines worth segment combined expansion losses. quarter grew continued premium ago, of catastrophe our improved first reflecting written points The by produced

net nice Re healthy each grew XX.X% in XX% written by the a of ratio XX%, segment premiums range. written also XXXX combined combined mid-XX% lines quarter had first had and net by quarter Global, with a by growth. continued growth, with combined Cincinnati for first an surplus excess the ratio with a grew and premiums strong rising mid-XX% written quarter premiums Cincinnati XXXX Our the in and ratio net Global, XX%. Re Cincinnati with range. Cincinnati

million, XXXX life points. subsidiary insurance year's matching premiums last term VCR for gains during Our was income losses financial the points. $XX measure our performance. first the grew primary investment conclude long-term resulted income by life the negative first the negative X.X quarter, of investment or of gains creation insurance net quarter, component and while generated earned contributing quarter with investment X%. valuations net I'll ratio, value quarter percentage contributed in or X.X% X.X before losses Lower

financial several our Now performance. our other highlight Chief will Sewell, aspects important Officer, of Financial Mike

Michael Sewell

you, Investment and at with a X% us you compared quarter for XXXX the of same good up pace, grew year all a to first of Thank, for today. joining ago. period thanks Steve, income again the

stockholdings basis average investments $XXX income helped The income. holdings. quarter totaled up year portfolio. for the bond first of purchased $XXX of including the while and was tax-exempt total million generated equity value quarter a at of XXXX XXXX changes billion, for effects, a taxable dollars again the purchased in activities At strategic the was portfolio. net investment First Difficulty] unrealized dividend business the our net unfavorable pretax million appreciated Valuation X.XX%. net our portfolio approximately grew our quarter compared containment million. investment and interest investment continues for securities fixed was priority. the again the bond XXXX maturity average in to securities year [Technical first $XXX XX% total ago. the points ago. in for of Bond were pretax tax our $XXX purchase purchases $XX operating million for our first quarter first million. bonds during quarter, expense from additional a Balancing XX before grow with aggregate the million to to in our $XX X% quarter decrease first end and during for quarter of X.XX% We during was the both quarter totaling down yield income $X.X yield net Cash gains portfolio from a for bond be flow including with flow Cash initiatives of

higher ratio of the expense related X.X underwriting than from casualty percentage accruals Most points property XXXX higher for expenses. was and agencies year. quarter first for increase was last commissions profit-sharing The

Regarding amounts loss loss half reserves. for in the aim reserves, approach estimated targeting expense and consistent by the upper of we loss net actuarially of a range net

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

reserves to of years, accident growth we've combined for for favorable net $XX XXXX. in by million by commercial ratio significant our frequently losses, XXXX year, severity business, strong. -- high During pricing XXXX, property prior we In to for million of $X of we infrequent accident with increased we as casualty million level. umbrella development XXXX casualty XXXX, experienced umbrella relatively favorable including percentage of was ultimate prudent and for for XXXX, in experienced $XX coverage we commercial large uncertainty accident by particularly and lines XXXX. development been quarter points. $XX believe for by strengthened for losses experienced recently an basis level our have On unfavorable for certain umbrella recent for accident benefited estimated the XX% years first tend is unfavorable accident at years prior million by year has the million quarter to Umbrella all-lines year $XX aggregate and in on business, what reserve by XXXX a within elevated the an XXXX, net years X.X Due losses accident for be industry

let Now turn to me management. capital

part maintenance We a through the consistent continue includes issuance intended plans. equity of share to compensation offset as to follow approach of repurchases shares that

than believe quarter end and However, that can provides financial changing circumstances us financial to historical We averages. strength influence was our or more ample or flexibility. opportunities repurchase less excellent

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

Steven Johnston

producing energy travel and to our these so business you, of and return our the field Thank to and steady It's in of execution see optimism return to you of across country. of teams an for feel with organization, our behind out This normalcy across get of be Financial. many wonderful satisfying strong initiatives March results. future the Cincinnati brought can April person. Mike. produced in from able visit lots faces associates see with familiar to desk It's headquarters it to hallway has bringing a our the return to in working our together agents of a bit the a

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

Operator

[Operator Instructions].

the of Our Meyer Shields line is first KBW. question of from

Meyer Shields

think there like million noise? have that you million, lot that this. inflation? covered is random apologize I Or Is if just I a anything $X but million been it, seems else? Or above caught to to of $X $X losses range. in I didn't

Steven Johnston

the eye current noise. it a on We think close But it current will X largely inflation, year. And for lines. more increase Meyer, We a it when it's we're comparing X and it. continue random to category to year more keeping that eye was quarter. X.X% in And think on our the points Certainly, good random quarter, we it's and keep overall is did property it Steve, close on reflect about in accident this the noise accident this in was so first question. forth.

Meyer Shields

That's helpful. Okay.

indemnity is I it for Or wage with loss with the with of are wages? inflation, Second workers' question, higher same clearly helping, when the some is costs -- impacts -- impact guess, in the that? I premiums. how disparity we've level there been on premium line that with seeing, guess, which your sense compensation of and any Is

Steven Johnston

close payroll exposure that help the inflation. the keeping compensation, on with eye that premium got We're because workers' a as we've basis Yes. side. Also, for should well on being the

in good feel workers' confident risk, have feel what think It's on comp environment as we commercial the rising been same I in be compensation have done, of percentage in workers' decreased and of as book. we ratios and really our what down terms a time, feel -- rates. working in the to at But the supporting we loss best the of terms our But still NCCI competitive -- industry our overall adequately most the priced risks. the premium. agents we've

Meyer Shields

can question. Okay. And other if I throw one quick in real

One your book? the that trends has homeowner worth Does of double-digit you're high-net competitors match space about loss in there. the what in talked seeing

Steven Johnston

think been double-digit no. Meyer. trends we worth book. don't I the book, loss And No, about we've good Thank do in seeing you. high-net feel our

Operator

Dwelle Next line Mark question RBC is of from Markets. Capital of the

Mark Dwelle

a questions. got few I've

lines attributable of kind little large commercial work beneath primarily the segment, current year loss in quarter? But I there? more kind touched Meyer So increase in in guess is number a is of losses the surface that there Or the ratio the to of accident bit. it the the on

Steven Johnston

segment if X.X lines commercial points, the would the the on And effect we X.X by down, accident Yes. rose that current was of year large and points. losses break

of So the year. the than well increase current the more amount total accident in

Mark Dwelle

that large though I in combined So be of if embedded of normalized ratio. there mean, -- would be kind some a kind normal must loss load

all losses improvement, a else So if equal? X-point I accident there guess, your in -- kind more X- ratio, to been, were to year guess, try loss I like if have I was of the or would large normal,

Steven Johnston

I the million time but year. it in over the have quarter the but We've -- don't in can $X of -- points first accident I XXXX, current a it, for X.X the losses the was good over total that quarter That's large for question. got handy. tell there here you

For the million. was $X.X quarter it first XXXX, of

$X.X the mentioned. just is that difference that I So million

the having feel $X.X of I it's So numbers, feeling not more like normal, more more normal. a -- feels now million that but right seems

Mark Dwelle

Got it.

Marc Okay. ahead. go --

Stephen Spray

we for And if Mark not. to us the it's feel and regular Steve it's risk a take -- No, field I'm important loss And can or a was agency look process category, territory we is Spray, to we of And think marketing we I over but absolutely I we said, it's on inception sorry. or just going large to this it look trends a see something Mark. X patterns. that that like geography, normal any is have any Steve at add a time, longer more going policy date that period basis. quarter. to be watch on at it

Steven Johnston

Dennis, still we While to to as of and could -- is the the XX you I out numbers. help it you Page have the in seeing, or Q -- terms is with turn Mark, usual, And me quick what we're of K? our

Dennis McDaniel

The K.

Steven Johnston

more the XXXX the said is, say, losses for million, $X.X 'XX. it I'm than XXXX; then X.X% more, we And sorry, I that The And K. and -- last little a million $X above for over higher $X bit current I range. accident year another $X.X X% was would had -- what million. the in for million; there

was $X that in So million. X.X, $X X.X, the respectively. X.X range million to and of

So say, X, X.X range that, more for in that.

Mark Dwelle

clarify what more look of rate the kind normalized helpful. might It definitely That's really Okay. run like. helps

that know was second exposure historically, there written didn't is the little any Russian-Ukraine book? Global question, but Re and this a do have aviation, I know there long Cincinnati is But via Cincinnati if I impacted. you the a be either conflict, of some bit I The the or to know anything shot. might you've --

Steven Johnston

but a bit had little -- we in about CGU. it in have be It's of loss million. aviation, We wouldn't $X Yes.

amount on. go out there going a people organization. to not all to Ukraine for big really, the So suffering And hearts the in that's the

the in But Re, of on keep and terms for $X it's total. to quarter for it. minimis us million about in For we'll an Cincinnati loss, de continue eye

Mark Dwelle

really portfolio And of roll then last and course the of opportunity question, all XX new of, higher how or to to will the over next That's Do portfolio. related at fixed money 'XX? might kind about relatively you portion right of kind the have what get much now. guess, I'm of income a Okay. your to of balance helpful. just we're rates have I sense renew portfolio investment the trying sense the the say, of seeing mature a of the that months

Michael Sewell

have actually Yes, Mark. I do information. that

yields 'XX, the of is just of the 'XX, X.X%. XXXX, X.X% is that looking range X.X% X.X% to this So on balance about X%; and portfolio; 'XX from book about And X.X%; up XXXX. in

Operator

Instructions]. [Operator

from of Dowling question John next the Partners. line of & Your Heagney

John Heagney

a in How we're to inflation had on policies I your your X the question to that months? over seeing past commercial. impact reprice for X does the multiyear ability

Stephen Spray

It's to Yes, desire it's Yes, and We think important we're John, Spray. committed Steve our policyholders. our long-term our X-year to that agents to with relationships. have consistent policy.

conditions, commercial we're get an on for so terms and policy offer a X-year And our can when we risk keen adequate packages. the rate to

that maybe rate are or X-year is more the those say anniversary what about coverages. a inland is that that too, premiums color, this policy. crime for to that year, give really you, the our whether that off that liability, every with does to the that, XX% policies renewing locks know you make on or the an the you X-year the general marine even are I it adjustment, sense? commercial are of and too, And adjustment in subject would so to to little property, subject annual be of Just Does a coverages

John Heagney

Yes.

it but essentially, for I the TIV. X-year can in rate, I So a change adjust have

be an -- that basis. that would So on adjustment annual an inflation Is

Stephen Spray

-- also general now, -- can on inflation it which high based TIV. are it the payroll. in typically You or an right your for your sales And running that your say, that's gross yes, digits. off have exposure, And single -- adjust of can you we're adjust you premiums would liability,

the it's the those premium in. rate increase, As that up, locked goes is just

John Heagney

Right.

I just commercial? written overall portfolio of multiyear, is in in of of crudely much premium it net your How if Okay. terms think

Stephen Spray

Yes, our count. about XX% of it's policy

John Heagney

for much a next that delegated through in I'm on is delegated how be. and get syndicate, sense business your at for -- but if Because, Lloyd's. you at putting your big the your your that your it Lloyd's. versus agent. you obviously, on could have syndicates the capability, authority own syndicate authority bigger capacity writing business to through a How to Then elsewhere, that MGA new then Lloyd's just limit question of other Okay. seem I putting CGU you're had, least have a would at trying with to underwriting

Steven Johnston

handling just authority, coverage that are it given question. delegated our Right. product, the is and we And We're especially And for deductible this be Good sure, particular and a with syndicate. through for first, will our John. that first it's buydown. our

we there. future to additional open coverages, As it we look and other out with partnerships rolling up to over would syndicates

John Heagney

it. Got

So I'm asking is question. terms you much then insurance And business how where far too of of last finally, numbers bit are. written in that E&S, your a standard just kind little advance bit X of a a in little contract. with E&S

was sense to of also standard I commercial get your trying for offering? the much a that agents how are product just platform So leveraging they're

Stephen Spray

our business standard XX% E&S on Steve side. Cincinnati John, time company Spray. writes the About company writes the Yes. of Insurance when coverage,

the have and for big, strong. It's the the is rep, claims extremely the the more policyholders, deal, And same whether with and we to profitability lot both in it. to you it's agents. trying and our can Cincinnati agents Company high it's of I could having and for do for It into been we're of more non-admitted, those see at Insurance really growth big do. CSU, or admitted a resources key percentage. same -- So having a It's what works having well detail, a get actually --

forward. that going about So is really feel good we where

John Heagney

And then of right? better stuff, rest still the agents that's market. giving my Is correct understanding access That's market there, not the the there? retail to wholesale book E&S

Stephen Spray

right. correct. C Insurance E&S in is exactly our owned We company broader to only to market. our subsidiary, That's -- CSU, the of brokerage, not retail provides access our not brokerage wholly we place that non-admitted Cincinnati does Well, Super, call carrier E&S business in-house C -- and what offering. do agents our

Insurance the I appointed might own of Company. carrier question been Only and think licensed part of our non-admitted that and for only at with Cincinnati your have end. agents

John Heagney

getting at for really right. was just agents. agent-centric strategy No, Right, I life towards your It's all so an Yes. making easier -- geared is the strategy.

Stephen Spray

we Absolutely. we do agency-centric. Everything do. everything is Yes,

Operator

participants. now Mr. you, I'll final remarks. Johnston Thank call turn Steven over to the back for

Steven Johnston

you, of Thank Cincinnati some to us the Shareholders Jesse, on Meeting hope and We of Art thanks you you Annual today. May all joining at X, our Museum. see to at for of Saturday,

also a cinfin.com/investors. available We welcome of to with webcast to meeting look to listen Have our great forward on You're again the at quarter speaking call. day. second you our

Operator

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

You may disconnect. now

Cincinnati Financial (CINF) 29 Apr 222022 Q1 Earnings call transcript