CINF - Earnings call 3 2023 | Cincinnati Financial Corporation

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Operator

Good morning, and welcome to the Cincinnati Financial Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

Dennis McDaniel

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

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

Now Steve. I'll to turn over the call

Steven J. Johnston

joining Good today morning, our to thank you us results. and for hear more about

of securities after-tax the every recognition of basis million fair third as reduction we included of on the quarter quarter half underwriting almost an for $XXX performance year. The of again the equity of still third of value the for of major $XX net loss held. XXXX line for We in are million business operating with pleased improved ratios compared this our first saw with

the portfolio believe of to long the increase will term. continue equity over our We value

after-tax billion the quarter of increased year. Non-GAAP doubled value. but more million $X.X for last year's third basis. casualty was losses. year, end quarter appreciated a losses including As decreased points since the of the during X.X catastrophe third property catastrophe quarter third X.X X% of decrease $XXX had XX.X% last ratio better The operating in It million on decrease percentage than income for has points third $XXX of million, X% last quarter an XX, a the it of including September of XXXX of than $XX combined

profit year significant percentage quarter, ex-cat positive third last points X.X are quarter the XXXX momentum average a Our X.X on by than performance. improving accident segmentation signs see increases points combined 'XX, also for price contributed of and Pricing better the in other risk in losses. On ratios property September basis. Similar a and XX, case to X-month our incurred address also to we loss casualty X.X operating increase improved and to risk year incurred by a before our percentage points and combined accident on XXXX basis. elevated basis, underlying measured current with ratio loss from inflation expense losses, effects XXXX consolidated at selection catastrophe efforts on

ultimate component losses, by we For increased as our reserve service we regarding in X.X recognize to the outstanding are incurred time continue not who points of by remaining agents more trends IBNR period, reported loss or profitable the same their estimates ratio producing uncertainty to appointed but become and for associates provide working prudent until cost clients. clear. Agencies longer-term with us, Cincinnati business Insurance the

third managing selecting quarter at have in loans healthy They average inadequate working that are for renewal continued the price a are careful risks we business retain pricing. also determine profitable diligently policies. Estimated and pace. increases new pricing underwriters Our to while accounts

That increase performance rising comment our low exposures insurance the Our lower for Insurance third quarter a compared and and grew quarter price growth rising XX% to premiums auto year high for addition Excess segment premiums, the on property Personal casualty and written the end written discipline. the increases. Considering quarter. segment net in Commercial the percentage range. near single-digit range, in profitability improving reflecting in included single-digit I'll XX% the Lines by third X% reflecting an again reported to homeowner premium segment, ago. to continued Commercial high in levels of higher single-digit consolidated to low quarter, Lines operating averaged third Lines the is included of renewal range. We net growth the how high pricing while of in Surplus insured written Lines the double-digit end premiums range

again third attractive Cincinnati profitably grow ratio the and was XX% ratio an was attractive the we risk net saw largely year's pricing. Cincinnati with year, losses. Excess demonstrate premiums reduced XXXX catastrophe while Lines Re's to written due worth growth net excellent better high of The of rate catastrophe Lines third Lines addition example, XX.X% last improved strong reporting premiums continue in X.X higher accounts by premiums premiums net in XX% quarter growth XX%. up excellent business X matching in XX.X% of essentially Both market the ratio for and quarter an despite net certain increased for benefits. Cincinnati total lower combined combined enhanced premiums X.X fewer For points clients. in its by again Cincinnati points. grew Private year including ratio XXXX this XX%, together for points losses. Personal with due last and increase X.X Client decreased for diversification premiums up Lines while combined points Re middle as points to our percentage combined premiums written growth pricing our Commercial agencies segments lower written improved ratio written written Property to overall ratio was higher X.X opportunities market. premiums Commercial X.X to points commercial quarter. Casualty by for to opportunities third an and net X%. with from umbrella and percentage continue Global, percentage Surplus with compensation Cincinnati than Global's workers' specialty combined increased percentage combined The

subsidiary conclude measure X%. I'll performance, earned with Our income life ratio. term with long-term creation net primary financial third insurance quarter and life performed premiums the well, our X% growing XXXX again up value insurance of

While third our quarter X-month gains or negative Net for quarter is was positive our X.X%, investment X.X%. our on losses VCR other and contributed valuation contributed X.X%. XXXX a negative the investment VCR before X.X%, portfolio income basis lower of items

performance. Chief our Next, his Financial add about Mike Officer, commentary Sewell, will financial

Michael J. Sewell

up today. and thanks net third with part XX% Investment for security quarter in for of for quarter, the you, for the joining to again the the the continued equity just totaled XXXX Thank first was Steve, year. $XX million. Bond due XXXX. Dividend quarter operating growth, billion income results, strong compared us X $X purchases XX% improved X all more of for with nicely the contributed months to third for quarter to interest year. you added purchases income growing X% net months We fixed of this portfolio securities totaling of the of income up third show first to over maturity investment XXXX, that our to

in our quarter total XX and equity pretax the fixed last of third for for average were quarter The third tax-exempt changes bonds quarter the X.X%. The bond third of unfavorable points for portfolios. rose average during yield and the pretax year. XXXX yield purchased aggregate XXXX was basis taxable Valuation of the X.XX% for maturity both with compared for portfolio

management to months operating for billion, of billion. Cash flow our gain a loss yields, up and equity portfolio XXXX of million appropriate end investment net the $X.X $XXX tax boost balance between position effects, first X million portfolio. the billion. a to At efforts making the an strive for appreciated net $XXX strike our of adding $X.X for ago. quarter, portfolio investment of to expenses equity was of net bond the We was was in approximately continued bond nearly strategic rising a flow in cash the fixed million $XX the maturity was total $X.X from was income, always net controlling position while and portfolio the Before business. from the year billion portfolio for loss investments value The activities in benefit $X.X expense

property expenses. expense lower. a basis, X.X last it quarter points than due points increase X.X to was third percentage an ratio underwriting On The year, primarily X-month in travel-related and casualty XXXX was higher associate

loss on to reserves. Moving

approach net in half upper net the of range the reserves. aims estimated Our actuarially loss amounts consistently and of for loss expense

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

casualty For net to loss and of XXXX, addition $XXX $XXX reserves property loss IBNR portion. million for expense million, X the including was the first quarters our

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

capital of management, have consistent long-term a we also terms approach. In

dividends we did third not million shareholders. $XXX in shares. the to of During any quarter XXXX, We repurchase paid

our financial our and financial Our are is both that flexibility assessment of in condition. strength excellent

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

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

Steven J. Johnston

fundamentals, associates our communities navigate the challenging the building impacting and proud way quickly who We're sticking Mike. Cincinnati listening, Thanks, live market. the see them. to continue associates represent pressures in agents of market Because agents our our Insurance and solutions independent most to our strong to this field serve, respond I'm relationships. offering help we

to find able value. then solutions leading our are to contribute long-term shareholder success, that to agent We

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

Operator

[Operator is from Raymond Instructions] Our first Greg Peters question James. with

Charles Peters

put are the agents the just the about agents. you you doing How Or when just with up the minimum sort new year. talked on per basis? appoint agent release, them XXX pointed of to mind some off comments another in of does a the of new And have only? press way, that start we premium Can Lines you've clarify it long in this been levels it what's once to they've appointments take production you agent Personal can targets your get --

Stephen Spray

by agency ourselves business depends One there. of really It and thing on Spray. we deliberate lot agencies a think for Steve spend as And agency. is independent time this we've We sure agents both agency. that company, very we it's out a making the we best about the prided I always of us a appoint. Greg, Yes, as do kind fit are the with

business community X we of in the the #X at the state agency, we #X least aligned measured do the So go more. volume into that It when or but bear years that will majority future on we we fruit. relationship, with maybe feel the time, over of and by as we're pretty are size just carrier depends or and the agencies confident premium for a the

flavor a of we you little trajectory just -- gives little have. a that the So that

it inconsequential don't agency. we player And in in be so -- just consequential depends any to want just but

Charles Peters

percentage can that of chunk Was a were geographically press the of on Personal those only. out Or that? And you the -- called you think add color in some release, focused? I Lines

Stephen Spray

Yes, sure, Greg.

say, agencies private an Sorry, state active focused you Personal as of only high the Lines Typically, for there net will California, right let's agencies to asked in Lines client or where Commercial that. maybe we're now. worth not be example,

worth and would we client-focused. if make would or it be high be Personal only, net Lines appointment an So private agency in California

Charles Peters

and can we've of talk If business business. I couple look trends some perspective to other the headwinds from of inside competition we flattish it. your the opportunities? us where right. in seeing commercial book way, of give you're kind about you And the seeing your some by it's some Got of some All heard carriers competition. at where Maybe you're side quarters. guess commercial, lines commercial, the new of pockets pivoting last increased

Stephen Spray

is Steve just new that Again, Yes. around business to pricing Spray, It's that the on pricing segmentation all underwriting discipline pointing our Greg. discipline field and from underwriters front. and you're

It making that pricing over state. the have, pricing model, has always assigning to it's a very agents, varies we those are But little by we're at can varies gotten more seeing competing more profitability the new have decisions that been feel the underwriting field it we tell XX in well our conditions, we -- driving disrupted, proven disciplined just and put last that over the you business But and So years, really years, competitive that it's this the -- commercial on our that that associates competitive our executing you appointing the the it's opportunities the agents long market, some agencies, that the quarter each served with. territory business has a and producing by best field a is who of working frankly, locally, out us on tools what's have the this and really fall. In segmentation, on precision, we pressure year. adequate. see year, we're candidly, strategy. to put pressure it's terms, with are the new I pricing And are underwriters quality more market quite

Charles Peters

for then quarter, And in Personal how context on well market actually, because the growth pretty question you're of written. the your look And performing. in results I some the business also the of Okay. rest guess you're if the reporting Lines is new would be we substantial at doing final

sort Personal of property, updated Lines inside the about and us give trends thinking auto And your I'm maybe you're clearly. -- view business. So on an seeing

great. X, that you be if could So separate the would

Stephen Spray

Sure.

that key the we're we prospective we're with getting improvement as I of Lines say Candidly, with to our the cat grow today. pressure go-to today the going be the care that of Personal of approaching seen headed And our -- certainly that XX% levels, can think of might had seeing is Actually a private ex-cat. Lines really we we with the empathy, well, position well Lines that that been go-forward it's pleased what XX% by us way encouraged think comment than on Personal That with loss of we're think Personal home. the would basis locally First harder are adequate. we Personal think, the we The that's some confident on way about disruption for been us -- in the in like puts size call a market. has a A fact a we Lines. Yes, strategy, the core fast and like, seeing that Personal sheet, forward. there. just to in has we're client, precision, going handle I've in with We future regardless see marketplace. We under lot our balance us claims roughly our market the opportunity forward out [indiscernible] the we all, Lines model ratio good agency market. the the in we're never a rate on a market inflation in and agency ratio pressure lot we're loss expertise, all -- where in for I certainly bode increased the it's shouldn't And our with Personal -- Lines but confident feel agents going increased but it, it's -- book. middle we're and be feel cat activity, pricing inflation for of

Operator

Mike Zaremski BMO. with next question The from is

Michael Zaremski

of I guess selection. sticking maybe of Lines. maybe Commercial growth risk going with the just and back And to kind topic

would your growth relative levels are similar been yet you've bit about than Financial's to appetite this and growth because peers just a growth isn't of of So rate kind doesn't to curious industry, I like, this your have are about the a back, changing of peers. every business historical if thought, you're overall is like Cincinnati then levels are step of fairly a rate, seem pricing just which kind losing to pricing much your talking number it quarter, pricing lower rate like because your surprise. But I -- just similar power your

you're what certain you're certain So to -- take we're growth kind certain trying more you're -- shed be get at if decides is we the used a and or and is the -- you kind I'm certain to the Or are to raising relative that actually your change. just risks historically rate on lines, are in process historical has change of selection and risks back appetite will your in fundamental just to than lot all-in actually, wrong looking see not the it where lines, this it casualty journey risk actually just -- willing whether or maybe rate average. to to kind of your industry to of

Stephen Spray

call Johnston opening Yes. I of and that net a drag, full from compensation now Mike, on Steve commented going point got or piece remarks on in Lines we've comp point for might workers' that Spray on X again. as been premium you Commercial several Steve excess it, written has for different We're umbrella Commercial there start about in reasons. his the X both could years. drag

our simply, little rate states, of ago is through jurisdictions, here On that Commercial started are a umbrella that limits, the a industry. underwriting that maybe being certain took certain some we deliberate. aggressive, umbrella, business. In for Lines. decreases Just in appropriate pushed book, year really the over It probably reducing action really on shedding

Commercial putting weight as that's the on Lines growth So a well.

And like strategy. historical I So away years. doing on business, those model, linear I've years our think, a winning well the levels things control, have best served ago. agents the since claims a before, business, our think or selection, I here, from winning basis for handling, We've I got XX face-to-face risk improved in been loss business was many your has our with returning to locally all saying comment walking other many, got of we've that us

has precision, over improved pricing Our exponentially segmentation last years. XX the

tools, was just we their I them on look price and a field and rep XX into do individual each ago when we where merits. the say, that those account own have So didn't years

adequate and walk our get feel our an we use underwriters and we a account, if precision it risk-adjusted field -- they renewal -- So yes, we're on those have underwriters we'll don't an from to like can where away out. pricing tools basis, that wait we'll rate

row underwriting got a don't to XX.X underwriting Insurance months is foremost rolling. the about We've want and and we profit now haul Company. we of keep profit. and that Cincinnati First X in at years XX need of over years -- growth worry an I long

are about appointments. agency talking We

We have our growing plenty company. of that. runway to to E&S continue do We're

Personal You Well, see worry in -- Lines. I'm for don't growth I future. prospects what's going not on the about

Michael Zaremski

my of thorough IBNR. Okay. -- follow-up uncertainty And you -- obviously cost to is deliberate helpful answer. been about in just is your environment. Growth of you've kind the in talked actions talked too. in That's slower, and maybe bit terms terms trend little increase a uncertainty loss And of you've more about

would cost fair higher bit is characterize that a characterization? Cincinnati a fair on it a is to basis trend that X that a a than or year be Is go-forward taking view it So loss ago. has been

Steven J. Johnston

at moderated. XXXX. rapid still Greg, is inflation we've And moderated, I Steve acceleration It in seen was of months this think going but Johnston. starting kind several of what is up, a last now the the beginning of

a while can the them terms rolling are best point, costs for periods rate do and look with time best policy actually most think, important we way our the out estimate to set takes on is now, a that in look to The that. And right prospective key little can. on and continue individual way at pricing just the all is do prospective do on the increases prospective inflation. for I our that the doing the pricing we to loss to of reach we policyholders. good we very think book, the that period I and in thing it position impact that we're But think the to I inflation a the into the we're it policy-by-policy in basis we right

Michael Zaremski

Okay.

in feel of if plays wood, excess So you everything knock trend, pricing it clearly loss sounds is on out. like

you agree that... If with don't

Steven J. Johnston

with agree would I that.

Operator

question The of Bank with Grace next is from Carter America.

Grace Carter

I it Looking loss bit at quite on curious line improvement row a more bit concerns few we what's have seen you like just book. saw line in a medical on more you'll color the peers give referenced a inflation. Commercial little there? could some the we've out in all the color decent the where kind pressure line that pricing But the regarding of kind if there. if get talk but compensation of mean, I segment, we've other And what's happening a heard obviously, second ratio. results underlying was some also on on for about pressure workers' sticks of seemed by could just quarter us year-over-year going

Stephen Spray

pressure under can an rate time. just of from think anything the and point. and workers' business as pressure. is comp that you Yes, again, expertise, see at on pressure really by over primarily put is been business but the grow it's year And The I ratio, compensation the Cincinnati medical Grace, that when medical is is by the seeing We've keep it's pressure the bureaus. line. accident -- always on Spray. just line ready the got hate ratio that right this we've pricing running year it of fortunately, The Thanks question. year loss -- just that telling a an we're rates new business. under -- it's -- on line same out basis with attractive for workers' company we we're quite ordinary out level. to Steve conservative think simply to Insurance story, inflation it we that, compensation tremendous combined is are yes, that is, doing it the I But impact inflation work now, risk, -- rating at But accident But are downward is still for performing the it we're for pressure. can't well. mentioned, risk Calendar I definitely

Grace Carter

premiums or And in you surprising curious from on going all? Re, some in the heard you all loss of guess mentioned that outweigh Or I cost year, recent specialty, you there's about here if to if the I kind was anything next casualty are to over casualty sort new reducing at growth? think start also all couple a of comments think to market -- now. trends talking And I et casualty for the concerns you of we've book reinsurance inflect quarters of if lately. just particularly any on Cincinnati allow pressure more will property, ongoing piece it in and if guess, on casualty opportunities cetera, just that book to back players

Steven J. Johnston

to question. Grace. down you, really Thank our actually paper. Cincinnati It at good boils writes think Cincinnati Cincinnati Re on company Insurance and we Re. I didn't And a model that form Really it

So the A+ allocated it's an quality And capital there's there. then model.

in do So much things is We this what property, contract try this we in try every just it to much to up. this don't in much comes do as specialty. at look casualty

at we'll hurdle go contract becomes own we're risk overall for that if and and fits about can the target how look model, good merits Just each it its looking into our ahead us on write rate feel that we that. and get available to

that business that. think reflect movements we So in will that I various lines would the see

past, the and in good or and pricing just now, is been good like the as seeing what opportunity where and sometimes felt right lines. I the that think transactional areas where liability we so in professional is forth as they've specialty liability, property opportunity the certain lines we are really seeing not are we're

Cincinnati of to and terms diversification. at we'll contract in that very bringing by is contract So bullish go everything just profitability Re and us that with

Operator

Shields Meyer [Operator Instructions] The is next from KBW. question with

Meyer Shields

on Great. Personal Lines. questions Two

any difference middle the there in market? and clients private appreciable profitability is First, of

Stephen Spray

middle The But Spray. between got now, And feel over client. We create are high well. Not margin. Steve our results pretty stand difference Meyer, good Again, outperformed a long in worth precision don't we like own. pricing over ratios middle market middle book by force. needs we I can subsidize has same there. got want client middle -- for net book industry, We've the specific you, or the time private and the tell pull, can we we've loss that right those its market to disclosing market market. to on we as the agency the private

net we do be both we outperform. the think, of private high pull, over segments worth expect will So to the client long But profitable.

Meyer Shields

I helpful. completely very understood. That's Okay.

Second cost couple question, inflation, in the moderating I talked of seeing quarter damage. have that well? a for was whether auto you're rent about physical companies specifically as wondering And third

Steven J. Johnston

We have just physical within seen it certain damage. areas in

As But we thing. looking prospective since kind sort data inflation the and cost XXXX of we premium forecast again, that been the replacement still cumulatively vehicles, that as at cars, of rental look a to we're loss at it's needed how on -- use in the periods.

we trends. ahead do of loss where our with but getting we're of inflation feel cost And so in that we we're being cautious, rates, terms are think, I our

-- XXXX. decrease the did trends of And benefited think actually we we credit inflation did our cost ahead through rates. loss stay-at-home the we we pricing. our helping pricing. are We I now ratio. that And and We with not while our I during had expense us actually think We that that's contemplate bring auto a as not

Operator

Fred a next The Investor. question from is Nelson, Private

Unknown Attendee

I got the I today told that Financial pushing and a on a call XX, night for refer Cincinnati last from me would phone the that call, I conference thanking she her lady and on insurance, costs changed even that vehicles of have comments accidents? the all didn't you battery-operated any the you is share? pricing But replacement has one. and you of can Do know question types, had

Steven J. Johnston

Yes. Fred, this is Johnston. Steve

is we contemplate the sure costs just make to I that have think involved. what do we

be will the the As parts complex, there we different in go the believe, involved. They in electronic all are cost that less vehicles fleet, to of terms having in more of more are that I battery.

a to calculate create costs appreciate those to up we So on We thank us. feel we your price, different. call your in it stay as friend task. of And but -- comments. challenge It we're is will the top please that to

Unknown Attendee

with And really business ask insurance to The I it. you. question operated not trucks the do. about they so it's thank the work for thing easy calls farming you you pickup thank with. I machinery have and an the Well, battery they'll in and best appreciate say other people soon

Steven J. Johnston

Well, thank you, Fred. It's always from good to you. hear

Operator

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

Steven J. Johnston

you all on to fourth look Thank and with joining call. forward you, thank us We speaking to quarter again for today. you Gary, our

Operator

The for attending now you presentation. Thank conference has today's concluded.

disconnect. You may now

Cincinnati Financial (CINF) 27 Oct 232023 Q3 Earnings call transcript