Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the Cincinnati Financial First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. ahead. go Please

Dennis McDaniel

our far Dennis joining is conference quarter Cincinnati Thank portfolio. release Results Financial. Late the to financial the our Hello. copies including package, for McDaniel our for on news menu information a the us we earnings Quarterly To our along first in you with yesterday, supplemental This issued at results, quarter of documents, the these on call. route of end The our visit shortest investment link navigation please investor find any left. website, cinfin.com/investors. is XXXX

Schambow; call, investors first some then Steve time, Chief including from us, Chief this on Steve that others ask by may may participating After Chief Hoffer. of made Financial Soloria; room from Claims Senior Investment and Executive President Vice responses Chairman Sewell. and in Chief Cincinnati the call with the On and Marc you Corporate At Finance, will Spray; Executive Officer, and questions. Johnston; Insurance’s Officer, remarks, Vice Theresa Officer, and prepared President Steve Mike President, hear their be Officer,

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

over turn the Steve. I’ll call Now to

Steve Johnston

net $XXX for income position good today for same and us about hear a for from of first quarter the morning, Thank quarter of the our a to ago. rebounded joining XXXX results. you, year thank loss more and you Net million Dennis,

Last a investment year, from fair this we’ll and in reduction to we in swings. portfolio securities we our income, saw net value, still continue significant portfolio recognize experience gain. run gains through these a held losses and As equity year,

fluctuations We appreciated equity our over portfolio. aren’t with holds the in billion the quarterly will these We to concerned value in grow $X.X long-term. value. Currently, equity continue our portfolio believe

of year income million including that was were catastrophe million quarter million down an operating $XXX for from Non-GAAP after-tax the ago, $XXX $XXX higher on a basis. losses

combined losses. XXX.X% casualty catastrophe ratio points XX.X was of first percentage for than driven Our last higher quarter XXXX by an first XX.X quarter year’s increase property points

the ago, ex-cat the combined Our at ex-cat year reported combined than but was period a call. conference first we worse points ratio XX.X% year better X.X percentage that of XX.X% quarter accident same accident last than ratio year points X.X our XXXX full

losses current a incurred premiums on by XXXX the measured improvement for confident improved to factors the our address make Pricing for percentage before remainder losses, a the year also ratio accident a rising at on persistency X.X loss To casualty performance Despite and catastrophe a business. points major year. property On which point quarter to paid from consolidated several property year higher of increase of that adjust XXst and catastrophe account costs. March about inflation loss changes X.X includes of than was see case quarter be expense to basis, inflation, reasons XXXX basis, the basis. year each help we for line the during of we last first effects, in this elevated fourth the of

more estimates by of trends continue as not cost X.X the However, until in reported, or become we regarding ultimate points ratio loss remaining we to the prudent component uncertainty increased reserve IBNR, recognize incurred losses but clear. longer-term our

in various we a small underwriting challenges and positive line of have given lines for umbrella commercial the We quarter, casualty recent another experienced business. quarter profit also earned our the on industry

retention our various accounts overcome They are challenges to proud facing also our seeking profitable We’re emphasize we addressing Cincinnati’s of industry. the to continue business. working with agencies insurance profitable have pricing while of new who appointed determine that inadequate underwriters, ones

quarter high XX% for year record also last factor premiums we new created in time year, was quarter discipline business growth commercial believe underwriting associates’ comparison first that the in lines, in first for business written of the difficult While and this year. our a pricing this of and at new a a our was reduction

significant premiums, in result premiums elevated the written levels written from of rose a exposures inflation. XX% net for in with casualty to portion quarter That X% the as a Turning property included renewal first quarter. higher insured first consolidated increase factor the we

Commercial segment of increases the Insurance mid-single high near estimated Lines end renewal range. price the had digit Our average

Lines Our renewal personalized increases Surplus digit homeowner. both and digit segment higher And moved Excess auto high-single range. price in Insurance the the including and in range, were average mid-single

of As we rate and XXXX premium our approximately XX%. continue increase segment. briefly premium previously full disclosed, highlight a auto rates personal line business for growth reaching by insurance expect I’ll we premium to will year profitability of rise

written combined Client for first high ago expansion net than Commercial ratio X.X largely from of of from points lines including XXXX X.X worth grew business clients percentage Its year quarter net agencies. premiums Cincinnati a losses. catastrophe net our lines XX% planned X%. premiums higher was written Private grew Personal points

points component. points Lines the net Its with percentage XX%. a ago, than including increase XX.X was higher premiums written catastrophe a from combined IBNR higher ratio year X.X point of and a year XX.X had in XX.X XX.X% combined ratio including was growing Excess points combined ago, losses. percentage ratio Its Surplus a than

But profitability reinsurance decreased XXXX. the impressive combined net while of had Re of ratio, for Global Cincinnati both by level written an a quarter and first benefited We premiums XX.X% market. had from Cincinnati the X%. Cincinnati Re firm

risk exercising and Our terms also discipline. pricing is while relative we assumed we the and to conditions stronger underwriting tightened

where reinsurance had assumed to selected a basis. share loss We higher risk capacity seating previously certain treaties reallocated we where non-renewed and on levels quota participations companies retention retrocessional

net XX%. growing with was ratio premium written combined Global’s Cincinnati XX.X%

another up had insurance in subsidiary net with quarter income insurance X%. of premium life life from quarter good year’s XX% growth last first Our earn term

value the creation ratio. with usual as conclude I’ll

financial performance, primary our favorable was income X.X%. or measure while before of added X.X% of Net investment Our quarter XXXX our gains another X.X%. VCR valuation investment losses first contributed long-term portfolio

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

Mike Sewell

Thank XX% you, increased Steve, the more us of pacing all year grow quarter dividend for you quarter fourth the last are first as XXXX versus of joining quarter. reported increasing rates today. and Dividend thanks income now for for by to to the we and X% the continued income XX% Investment slowly. for

quarter’s we special million the remember one dividend quarter in quarter. received a XXXX. stock dividend last tough holdings make Looking in second second of ahead will you for may to comparison $X a That from next our of growth, year’s

XXXX. purchases the quarter equity the of Net first first million the the net quarter fixed first compared to totaling security of three added interest was with maturity quarter $XX totaled months year. purchases first million. for the portfolio our securities for with Bond more XX% in up We $XXX income investment

the Valuation favorable X.XX%. holdings. the of The during XXXX stock The first pre-tax bonds aggregate was and were a investment fixed the year and for taxable exempt quarter in average first for basis our higher yield portfolio changes XXXX quarter the our both yield during of pre-tax XX X.XX% ago. was tax of for purchase total points maturity average for than portfolio bond

while $XXX net gain before net billion. total effects. gain fixed overall for portfolio of $XXX $X.X $X portfolio equity of was the maturity the the At position tax was million. end value million was was of a The in net quarter net position investment billion, appreciated in portfolio quarter, the loss approximately The a

Cash from flow rising a first up continued of yields, year bond to operating income. helping was months $XXX XXXX from for ago. the XX% Cash to grow augment interest flow million activities three

balance Regarding business. with appropriately we making in strategic expense controlling investments management, intend to expenses our

last The points first was for casualty commissions expenses. from Most and the for property percentage profit was ratio XXXX decrease than a ratio expense agencies smaller year. of X.X accrued related sharing underwriting quarter lower

targets a loss reserves, net to the the expense we amounts actuarially maintain upper estimated half and in consistent loss loss approach of reserves. that net on range Moving of

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

the quarter in $XXX property IBNR reserves million increase our for million, of casualty net was including the loss, XXXX, loss expense $XXX During portion. first

that for for We years combined experienced points. On million years prior months included XXXX, $X accident $XX the million unfavorable year, by for of million percentage XXXX in XXXX. X.X $XX $XX $XX on for accident of benefited million property XXXX, casualty accident unfavorable the net net development reserve first favorable three prior favorable basis all-lines development million by favorable reserve to aggregate ratio an for XXXX and

flexibility intended financial maintenance capital steadfast remain and We approach in is We and plans. issued shares our we include believe strength. offset that compensation through quite management repurchased excellent have we we financial good that shares how equity to

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

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

I’ll turn now, to over the back call Steve. And

Steve Johnston

Mike. Thanks,

for to our some and future any work pursue in We I’d Jamie interests. the professionals. Cincinnati the assembling Managing Hole and first resigned of our team business reinsurance thank with comment quarter, other Later We sports him his motor like significant Head in Before transitions reinsurance his with to strong a seasoned wish ambitions to for we well Jamie for call Director on other open and endeavors. within Re of Cincinnati his team. questions, contributions Re,

with has Reinsurance Gen division has Phil our Re. Re. is leadership and Phil Cincinnati America XX roles Sandercox, than since now more Casualty Re Aspen XXXX of who experience, led years including reinsurance leading

grow this future time. confident are business of and all Phil’s We aspect our continuing of over leadership to to Cincinnati look in forward Re the under

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

Operator

you. Thank

[Operator Greg begin Instructions] session. ahead. will question We now from comes question-and-answer Raymond go James. Our from the please Greg, first Peters

Greg Peters

everyone. morning, good Well,

Steve Johnston

Greg. morning, Good

Greg Peters

Yes. commercial prepared end high the lines of press release X, you I was begin, how Page to about mid was average the the single you and you business I’d remarks, talk in the through near in sentence, on pricing and this digit like percent going agencies. the decrease next your the your range. And by in renewal new then written in talked about commented – XX%

moving strong at of seems increased for in you us it directions, new pricing. it more a increasing holding pricing’s business be up there’s is pricing or or And So could yet different to sense give competition? two competition Maybe why least.

Steve Spray

thanks. Steve Greg, Yes. here. Spray

on and about I like of single key range all, average, the mid the have we the of the just us to end that to think book. talk digit is that well, First I it for segmentation higher that in on as

the entire tell doesn’t So certainly average, story. it the

book. the segmenting We’re

strong on. we more risks accounts price then that we’ve feel really Rates that the on we are getting rate need feel we an those We’re focused got retaining still and renewal adequate book. like on on more those

risks. them to is primary business. way business, executed and new responsibilities precisely it And price the to underwriting the on how we risk to been And new tools reps discipline. the just for pricing. showing great each then know their whose got have the And around across country to. question pricing on and our lines underwrite field of discipline They pricing wanted those one just the commercial on We’ve have to just is your them use they’ve per on –

around, is think feeling is where pressure I price I it other and say, adequacy competition markets. we’re from it’s the So really would –

Greg Peters

there is competition a or from are answer, be broad little that geographic hotter seem areas to that running based? a follow-up it just any a as Just to fairly is standpoint

Steve Spray

to time at would are – the commercial think insurance others Greg. we a business way say, look I in areas we get And business. local insurance still is from there that hotter than the is time,

in will with are or competitors have there almost every well. or we probably a quite or competitors frankly. So different that the business. hotter others local in around you’ll where you But so we quite we’ll another, jurisdictions bounces compete than state colder state do increased more as a specific than regional see bit, but will nationals Obviously, competition run yes, it

Greg Peters

talk statistics is seems [indiscernible] the just inflation margin another question commercial, and I the it your for XXXX cetera? running property and reserve have the commercial feeling was guess, I about in your inflation position your altered on casualty like and there. auto. I Have assumption Can underlying going rates trends? and you’re second the you you versus how Yes. inflation et XXXX, like about over

Steve Johnston

I We a that Johnston. good still getting feel think, it’s presentation, terms Steve described, perspective. described in for mind loss and for I as in set the Steve are are and terms of question, see pace And – in is Keep we exceeding in inflation. this that position Greg, keeping the we in of, the our us, cost increases we inflation. always your

will we prospective think be and do premiums then that data at look costs basically our have, best and we periods, forecast policy cover lost lost returns. our trying We’re provide out target what to profit in charge those the to costs always that

good we’re this our do is our to of very the of that Steve we That’s a and book in feel optimistic low with to And underwriting. terms future we the we policies feel underwriting. feel in and to more our position a that on a the continues contains ongoing a we about than in chipping segmentation, high on team that profit also is that mentioned shift the have mix prospects. an mix profit effort potential Everybody potential.

Greg Peters

answers. points. good the Those are Thanks for

Steve Johnston

Greg. you, Thank

Operator

Excuse me.

BMO. Our next Mike, ahead. go Mike from Zaremski from question please comes

Mike Zaremski

first stick with about of on guess, versus talk lines I question commercial morning. exposure. Good kind great. and Hey, pricing

exposure, in are you updated put Thanks. like where inflation driving also the And am inflationary of that to feel property others numbers the to And is so to which the you costs? correct replacement – square if around costs, I kind any talked of, updating pricing replace replacement line terms levels And I pricing? pure levels is is and per kind can So phenomenon believe through through too. getting more be up is to have exposure there about things. on of foot runs you I in exposure your also reflect that of not with side this

Steve Spray

Mike, again, Steve Spray. Great point and yes.

the But the you for inflationary have quite we’ve increased increases you inflation, that – quarters wage side property have taking guys, side casualty. exposure and increased those values. few now, for And property, property to – have the For a we increases always frankly, increased as taking we on quite we’re continued in casualty always sales the have matter, are on on on those obviously persistent, or percentages. been on

and the But you commercial XXXX. on you exposure. As it’s have about right half but asking half rate I say, you’re And do net in on rate about I’ll exposure XX-XX the know and property. as the I homeowner specific and commercial same not quarter question, this – phenomenon to that just for first speak change as breakdown would a between first it’s property, of far quarter

Mike Zaremski

Got it.

think was is is if of – your growth, a question, like types then I pricing growth premium kind my then on that it or to that lower too. so combined are to it if [indiscernible] corrective load, were decelerated so – next comps ratio previous And some premium levels? question know about there is into catastrophe taken maybe to know there are – you tough we get don’t being actions down I And it the and the of would just Is delves some lot. the – there back the

Steve Spray

Yes.

well. underwriting may that here discipline – this It’s weigh Johnston Spray, is up. as it to want think, and is. again, do I Steve pricing showing yes, in is I think Steve

of but change action That business of the retentions underwriting strong, remained pressure business bit can affect Our a under that, can obviously, bit. a mix and/or new being pricing. our from

umbrella example reducing note increased that’s would policy we’re book, increasing the the experience putting pricing, as we’ve some corrective retention. you had of pressure quarters, on in umbrella, If an several in our last umbrella loss action in taking capacity, line

parts of a pointed question, you great as lot things. of It’s but it’s there’s a moving there So multitude out. a

Mike Zaremski

my against one all and And reasons, great. is fair of the in for is us to just, losses. catastrophe we’re question Okay, appreciate final protect I was business it

And higher it catastrophe it’s been the so inherently trend plus. But like be I of than volatile. expected a over levels, to think it’s going just a feels bit if decade last the

do, dynamics is some might changing you told some guys we know but catastrophe losses the retaining can look so. So kind Is gave increase And our segment for us, higher could they’ve there’s that load which it of too, can since average too, disclosure over an negotiations, still I you at fair back of we in I us hinted years think way ongoing have know catastrophe just XX more, too these there’s models of with reinsurance to which go about guys at we which it? costs companies also by kind be the level. or

is levels So a on are thinking any bit of expected kind basis? Cinci also whether forward a maybe on higher be thoughts to that catastrophe

Steve Johnston

building Steve of it, using there way is it on but past across cats described volatility do Johnston. Mike, at the you we we time. experience, the in is have give the the also And our guidance our catastrophe And just way we go the is models This about loads models, don’t combination looking a we that terms and of in.

in over time. convective a distribution. of a period might but exposure the first just have I think be have of seen severity but of more to frequency, makeups the is here business of more lower one that different a storm, we has loss severe higher And that of we that our particularly quarter, type which

or losses, the and And with ex-cat to sure combined it with we’re row on focus going realizing with XX I target have making that we’ve XXX. a they’re a level. been we cats now bucket they years that to be we in under So and keep can overall whether on combined ratio our ratio focus the successful think in

our and since on about action to and help we’ll selection I so our our that the occurred retention talked $XXX would in cats on mitigate underwriting have And did cat retention this that of our not program so the prior year, the to all in which continue say, call, to that catastrophe quarter losses the were under increase they an we in first take and forth. was the impact would last change. million,

Mike Zaremski

thank you. Helpful,

Steve Johnston

you. Thank

Operator

Our question ahead. please next Piper Newsome Paul Sandler. comes go from from Paul,

Paul Newsome

Well, morning. a Good should I where down the that in think me, little you IBNR hoping the of pieces quarter more added – we maybe the was we maybe from and dumb just you of could conservativeness that is coming first how should and how particular. just interpret bit increase for in piece

Mike Sewell

Paul, this Mike. is

then and me wants anyone XX make do quarter, let to So think comment nicely, really IBNR add a that. the for But out in – or not I on on whether that we I’ll the supplement. else brief the Page to lay for

there last IBNR that about $XX from increase was obviously an can through related that of March, the net And know to the in you $XXX $XXX loss year. that that to commercial The which same casualty, quarter was you million. largest of quarter compared first million of so the of through see we million and IBNR, added increase

there. IBNR that IBNR between also some $XX CGU $XXX a total We Re. E&S in commercial Part auto, decrease $XX million $XX there million added catastrophes. was related And of $XX of the Cinci added, in $XX million and add million homeowner, million to was then did the million. and We on

et one tell. loss in ingredient favorable maybe, that’s – IBNR is you ratio, anything we but the of Steve, And kind summary. so some course, But, cetera, development So got combined there. to a to of entire if only had else

Steve Johnston

year be a the in excellent incurred fixed Mike I reserve. there. accident that’s on case at thought first detail comment a the And a And – more, I when also made talk and paid over the incurred, losses And Yes, percentage pretty it’s the improvement little quarter two when point coverage my basis. industry, by about on ago. saw I case think maybe X.X common a plus improvement talk for quarter speak bit I it look the having would maybe more about a elements, current we the year an where little we case we would those

loss However, add X.X% IBNR points. of we did ratio

and as So a accident think point quarter with that green. it’s good are incurred the we make the we that improvement in to is see always case reserves very recognize first as underlying – prudent we we the But the ratio.

substantial a of amount add did IBNR. We pretty

to hold that the us the so IBNR. advocate. – And improvement added And the paid think position in strong we and yet being our year true in reserving we’re first would and the changing it case in good script, the a improvement I actually, ratio quarter still while we’re it points paid, seeing calendar improvement balance we gives wasn’t in about same loss XX.X for that the prudent always in the sheet of case. And our

so decomposing X.X%. And ratio total kind IBNR comparing the it case was total, into and of But to prior. loss it in quarter paid that up

a color thought I Just little that. on give more

Paul Newsome

apologize I little if question. And Separate great. was just slow. I a That’s

the given Maybe in remainder it square what in low could what actual the folks earnings company think was that XXs about those of year in getting to fourth you you with thought happened prospectively. And and capable call, ratio. quarter. think last about how Just conference comments sort maybe I should first that combined those on results with square you the mid in think differently, the happened the quarter? of should we year the what we kind comments happened this to mentioned the of

Steve Johnston

slow And anything. you’re Paul. Sure, on never

in to are than a loss positives control, last anticipated think, guidance. time, feel segmentation, we catastrophe the probably We have quarters higher still little the see go. we that things. guidance still on terms confident would the same happening we The of same team are our by we’re forth, quarter, underwriting, we losses still in with whole I have stand always for top we You first that And effort the pricing, putting three of but all gave.

Paul Newsome

the always. Great, thanks. help Appreciate as

Steve Johnston

Thank you.

Operator

question Shields now from Mayer, from go Meyer ahead. have a KBW. please We

Meyer Shields

Great, thanks good morning all. and

question, of shortage the available didn’t we premium like at X/X, wanted guess, for reinsurance that or decline don’t in specifically could premiums and between hoping I appetite – you I I business. well-priced see current breakdown First no saw of lines. know it reinsurance property there But cat And other we premium property seems describe for reinsurance anyone your sort was was for it.

Steve Johnston

Yes, was excellent premium Cincinnati question. written The net for Re down.

I One, think business in book, re-underwriting were areas. we action it as took that intentional that that to was couple at we or didn’t looking a retrocessional due do the we to a wanted assuming And Cincinnati anymore. we part feel Re of effort business. of

reinsurance. we retrocession really decrease – of retrocession premium doing of And for the that in assuming. the represented premium doing Cincinnati And property not the longer decrease property as exited Re no a so, all quarter result

quantitatively, that those – also as were those best at look that part, felt served companies their risk the on doing retention we’re contract at were qualitatively better as strong look way say, We I’d and double-digit we we higher and same. rates, we did, increase increases. each We reinsuring go other reward, the terms to better that property conditions the stayed we at with

and every first and profit profitably. it’s business, reinsurance the with avenue growing growing are looking of at so, we And

in we suggest retrocessions. you of question, But out on growth basis as your a continued kind the it’s quarter take This action there. needed with very we confident are we of there thought go-forward to some

very that well talented, We to have opportunities. the advantage take talented is a positioned team of

Meyer Shields

appreciate Okay. the That’s helpful. really clarification. I

Second is question, process a this of more question.

E&S there like wondering, from to that is E&S? admitted catastrophe paper discussion moving official admitted a to hearing property primary We’re of of a Cincinnati, transfer was segments And exposed market. program I from an within lot capability to your

Steve Spray

can Spray. before is you declinations need E&S the that account market that’s admitted of is, process typically official is an business, admitted, non-admitted number you Meyer, I have state export little different. market. to the Steve guess a every – certain you get a the to With When

non-admitted with up think I so it, if from answer market on just that. And to question, me, hit to into follow I that something admitted your cannot do move but our don’t you

the to to call that. do they what need search to – diligent you get a need the You follow –

is are That business – our casualty. being said, about CSU E&S XX% we

We are are job an our their with I maybe and And homeowner writing capacity in excess that policyholders – all think in prone an E&S and little doing and agents providing communities an I up business And the a of been really with on our for agents more to of E&S increased amount we’re alternatives surplus areas basis. very they’re we’ve just and think be – flexible to solution. very able nimble, step an on fronts. on excellent

answers your hopefully, So that question.

Meyer Shields

talked Johnston thoroughly. about And like in comments And was It final introductory to does, Thank Steve question. you. I then you it’s one very uncertainty But going sound nitpicking, so apologize – advance. whether was signs me. speaking, trends. I word wondering I it’s the surprised guess we’re uncertainty in casualty lines uncertainty loss And practically loss of trends just real actual whether maybe over seeing in or like

Steve Johnston

Yes.

think economic statement, one Meyer. more I was that do look things to in you evolving, in the in what uncertainty of coming you had look social when with various different how at and possible areas period general a uncertainty that all making might and pandemic conditions think It of the of time different inflation, out terms of inflation when recession, it. and just at I a, trends it’s increasing into go expect I terms think, you’re of the a

Meyer Shields

patience your clarifications. you for for Thank Okay. and

Steve Johnston

Thank it’s – good you. question. that’s a No,

Operator

Mark please from Our next from question comes proceed. Mark, RBC. Dwelle

Mark Dwelle

Yes, good morning.

or the I that been the in the things this think talking what I some want already to we’ve XX-K try together to just do knit about morning and – is hello? of

Steve Johnston

here. We’re

you Can us? here. hear We’re

Mark Dwelle

added the In it respect Okay. of there’s lines quarter. substantial Yes, to echo. comment X in was paragraph same I that the that combined added it the umbrella commercial – there also XX-Q, suggested the getting the commercial about was to that kind the ratio point a some with a subsequent in It opening you suggested fact had said gave a difficult reserve last profitable that then certainly after And adds earlier in – pleased you’re quarter the over several that kind with I year. some that, had and last that been add. line to your IBNR become was that line this remarks rise quarters of think

guess line the noise a you going line communicate I line feel trying communicate there? guess trying maybe using is I particular to is there. to try rehabilitating? are what of things I ask this that you’re a I different Is and you like to on lot a or a like So lens, what that there’s as to that that wanted different

Steve Johnston

I action cutting guess, that last year. where it a we’ve line right on that like. chase, produce a challenge line a improving a It Yes. we we first line is It the profit quarter fashion see we fronts, is multiple did and now. small taken a to were corrective happy saw the is we underwriting that for see. in to it And an it

business it the and And think has will most more and the it’s and us of that it point bit little so future important a been attention. I terms of been and in line late that it’s is growth of think a here given decades that that we’ve in profitability, to we good needed for attention

Mark Dwelle

drag, it, cycle add? is it’s producing IBNR is and fact even with and in a Or And of so an is the that I’ll bigger reflective it of the smaller it call IBNR then combined had ratio, overall that add? it now just rehabilitation drag a that its, the the on exclusively – drag where is been result the that of

Steve Johnston

ex-cat is, deterioration. combined that And think, right. it I when to ratio about we That’s talk our the comparing

Mark Dwelle

of Right, course.

the I the pricing on earlier idea the And where in of premium – overall the action. Can about Yes. of know growth XX% you the some – that about improvement pricing was a I Okay. commented line the think on side, had give what you of general range where is?

Mike Sewell

Mark, that Yes. Yes. that the in would almost say I price price XX%. – exclusively that that’s

Mark Dwelle

Okay.

really not maybe is is flat that’s bit. the So so there? we’re – And little really declining a everything to exposure even probably rate the happening

Mike Sewell

correct. That’s

Mark Dwelle

it. Got

Okay.

this that – wanted you a to thing, second question The I kind of just got I Meyer. building answered just for right. sure make on again, I is

the reinsurance retro higher exited it One that the it’s unit, the some you’re portion sounds the And retro, as you’ve ultimately being decline is like the of second of tower. far in As sort premium the in market. two in property that things.

getting equal. exposure else you’re in and taking distant accordingly should less accordingly, theory So all premium more be

that, So result the overall on actions CAT property right exposure a and conclusion if net your as underwriting you reduced reached have the taking there. I you’re of

Steve Johnston

exactly right. stated better – more than probably Mark, did. state well That’s I And

Mark Dwelle

is on listen I right. personal I And side, it’s advantage a wanted All also had catastrophe of one related first. and line be the about more I being and then going to to that the answer of question talk question. to able this – to the kind

So you segment highest among CAT that’s current for had that XX ever the the that, recollection period exposure. points my In of of business.

Was a that $X pieces as was homeowners and impacted? that you’ve points tornado that geographies guess number I in about had number hits fact I $XXX,XXX for far high you of writing of the impact pound the that of reinsurance dominates a XX think that’s you that as a why it house, it was? attaches worth were million events and of quarter. house? – that large it that in should made if the the about there’s As – if the coverage we a and think changes I your particular that certain hits you’re and was net as lot Or is number where a as know it how bigger a operates? Which product product When quite than change the that accordingly, pound a those more

Steve Johnston

I I didn’t for the those that it $XXX was XXXX. each first occurred quarter, were our million, that say, first that less wanted buying to do under in which to reinsurance. of with Yes. them would in have us And clarify off, retention

So our raising retention that not our any. did impact

I think was widespread. that it just

in estimates, a our there were job the spot and catastrophes of third have the estimate – row, was for the making that that to timeframes a a of still of think made had our that quarter, us. it I bit happened on and where People we a estimate widespread them, last there a we but just quarter affected claims. day leads one on that uncertainty a estimate which lot saying do it being to the best in bit makes of tougher in we great which to in virtually little the quarter the out little

Mark Dwelle

Okay.

on was little because if of hearing So maybe it of you’re of sort a conservatism a plus I’m it’s scoop the the end right that, just frequency extra right at quarter.

Steve Johnston

one Certainly my bit have plays how a scoop. go extra on hand we the do thoughts out. frequency, have I tipped with I’m to our might and on my see little best wait personal on we’ll that. that hoping and the way that to estimate But

Mark Dwelle

the there. for stop answers. then. Alrighty I’ll Thanks

Steve Johnston

Thank you.

Operator

please our from of Grace, Carter Grace go America. Bank comes And ahead. question next from

Grace Carter

Hi everyone.

Steve Johnston

Grace. Hi

Grace Carter

past higher So that to that’s relative you’ve increases was been new for strong just I and Thanks. as any the the lines expecting so. business you you’ve tilt ramped and how versus written there’s progressing where pretty do business. how cycle the trended the worth year see rate increased several up this expectations continue personal as quarters, differences net wondering towards course if rate you over to just you’re has pricing previous needed And of high periods just given

Steve Spray

great Spray, Steve question. Grace,

advantage for I think market. high now that client area. growth add that a middle our in you’re us is our worth high that as the we’re we lot we’re agents. continued of private also would marketplace net personal in the gives XX% and about a the worth net or I company, in seeing think about XX% an lines growth And

action, last we’ve growth we personal pretty of primarily over And time. over was in lot several necessary put pressure market got in space a And action some And that the tough specific on think corrective that taking lines the years, states. turned. middle

with lines. coming so in growth us out helped personal up And now bottoming that and back has

over I business written we there as to I as script sophistication doing new have add personal also period his come we’re our continue would to they of what the in also lines Steve time to pressure in in contributing rate growth. put in and earn, going that of as that’s to increases longer then a with continue might those as improve pricing premium to it some and and mentioned that, add continued would expect on I well. it’s that

Grace Carter

Thank is reforms in recent from Florida out more quarter? in there you. question, one quick this the calling worth just And the anything results

Steve Spray

we that’s this probably on going think conclusions. too look watch at Steve it the draw is but the I any early it’s very very early Again, right we’re is closely, to Grace, Florida We I say changes surface out. something in a Well, we play think just Spray. positive. how as direction, that too would promising far move the tell think but to to it’s going to in

Grace Carter

you. Thank

Operator

coming Instructions] a [Operator Our next Mike, follow-up please go with Mike ahead. from is question Zaremski at BMO.

Mike Zaremski

thanks. Hey,

can us a I [ph]. which gave umbrella color the bit, didn’t you didn’t we I improving loss re-up math commercial issue up the paid you do me mention some ratios last on guess, guys a popped year. you it. umbrella on ourselves. guess, so Let specifically also good – which It’s that

getting again Is Or are – social the of trends with for you on seems feel for severity normalizing to the potentially. coming that do industry too everyone and kind maybe just inflation seeing worse it’s side. auto you’re the be commercial

But ratio higher? – like paid and pricing kind right you so curious, direction, the in moving right loss a the umbrella do on of the you are the auto in in and right pricings also moving of because moving seems could you direction. touch kind costs feel direction industry-wide bit commercial just moving maybe So is do like loss

Steve Johnston

Mike. seeing think we’re we’re more Yes. I a do of is little of think This taking action. Johnston. Steve that a trends I that do the in the normalization umbrella. bit appropriate Good question,

it’s However, line frequency, cautionary for high us. still in I low us be it’s want severity volume that wise, to a for

I trends we’ve But action basically time think both and and on for it. to think a seeing on it we’re right and do feel that the and area going the where the side have the a that to of time positive pricing thing So that about say would effect. taking having commercial over It’s harder. attention long a same is good I optimistic the makes noise we’re auto. from we’re underwriting I an time to And track little bit paid period

Mike Zaremski

on large that losses the you action that ratio is up excluding property Okay. And maybe then – last action ratio disclosure Any to lines. side, because personal both you and it the at it fair And best-in-class has and if way do at is that’s look on property since loss follow-up, a commercial on there? your the because you’re looking the thoughts helpful. just lines,

Steve Johnston

Yes.

complement thank the I on transparency the the for you and think and disclosure.

people, out go is so as have different detail they to that making it what for about do different much think we forecast. different there that their like lay analysts I with you ways

And want in in for of so long-term a then it ex-CAT if build you provision do you a that want ex-large do can to loss to for long-term it do both, ex-CAT way. kind something provision build ex-CAT, a and or you just

as well. as So your you we to give try can information detail you as can be as we basically just much lay possible for you much that and jobs can do as as transparent so out we

Mike Zaremski

see if getting that and at that things corrective higher, and to not so and fair why it. is pricings – is taken that’s the to why going been being and costs on ratio just look moving worse is And improving actions the looking us for at if do have you’re way we that replacement It’s a is point. at okay trend the underlying higher getting there’s more to getting as exposure ratios property like trying re-price still this that of looks

Steve Johnston

on No, property of comfortable as our been the our action property rate and taking for where feel line. getting rate Yes. time. we and corrective terms we’re we have We do the rate, in the some forecasts we and indications do property

good in at all we’re that fronts in well increase improving solid about increases, way underwriting looking of the pretty addressing and rate on exposures solid Steve really getting all at our the it our feel terms Really going. earlier. as just mentioned and We’re technology

Mike Zaremski

Okay. Thank you. Understood. number Thanks for tough of questions. answering a

Steve Johnston

Mike. you, Thank

Operator

closing turn our Johnston I to back concludes remarks. for Mr. question-and-answer to like this would And the session. over any conference

Steve Johnston

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

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

Operator

conference presentation. Cincinnati concluded. attending for Financial’s you The has Thank now

You may now disconnect.

Cincinnati Financial (CINF) 28 Apr 232023 Q1 Earnings call transcript