CINF - Earnings call transcript Q4 2024 | Cincinnati Financial Corporation

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Operator

Good morning, and welcome to the Cincinnati Financial Fourth Quarter and Full Year 2024 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. Cincinnati McDaniel, Dennis is Financial. This joining Thank and our Quarter for Year you XXXX for Full Earnings Fourth us Conference Call. Late on our financial a news with issued year-end supplemental our package, yesterday, our including portfolio. results, we along investment release documents, find investor visit website, To our please of of any copies these investors.cinfin.com. section page. The to results is of middle the information route the the shortest quarterly the near Investor Overview

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

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

call to over Now the I'll turn Steve.

Stephen Spray

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

by L.A. to impacted those hearts out the go Our wildfires.

are the support and I our immediate tirelessly on most to longer-term our belongings, also needs with of agents put their line, who and devastating one. lives working help loved claims of in first for treasure and who sense plans. the homes, lost their associates our partnership a responders You've want policyholders course, and to thank the cases, community,

performed how last more showed the for improvements. year. let's strong this fourth about dive current very Operating quarter areas we for our catastrophe, Before key I estimate was performance details share into many and

pleased the superb work to for business. we also year best agents are providing XXXX, who with full consider We performance insurance the of in associates to service be our thanks the to

quarter ratio the a an fourth million had operating after-tax double-digit XX%. excellent premiums securities included and growth results last quarter rose for of we equity XXXX $XXX period income. and in of Our was for boosted and for same income period compared the value $XXX Net a better fourth net million to the the income. from $XXX million of and year of still recognition investment income unfavorable The held, basis on year result combined an ago. in the swing income, fair included decrease Net year growth in same

$XXX and Non-GAAP operating income XX% increased for to XX% rose the for XXXX. million full year quarter

ratio effect Our XX.X% better The better percentage ago. X.X ratio ratio year to points combined only outstanding points fourth quarter XXXX included It full points was a than catastrophe the improvement than property year brought casualty loss X.X year XXXX. an full XX.X%, combined lower. X.X a

Our for improvement losses points X the including fourth ratio percentage XX.X% with year improved year XXXX, compared combined catastrophe X.X XXXX points of before accident quarter. accident by

basis. and single-digit percentage to fourth in range the third the quarter excess of slightly for risk pricing price a Commercial lines growth, another quarter its which as increases precision were segmentation policy-by-policy of use underwriters reported our range. on remained moved in surplus growth Estimated high quarter diligently to premium efforts renewal tools average We strong high and the the lines XXXX. we believe their single-digit profitable lower support similar

single-digit was the and high homeowner range. the in auto double-digit low quarter segment lines third in similar to personal the personal Our range also with

continued Insurance of at identify of New additional the business Cincinnati XX% but reflecting with appointed XXXX, growth the for pace. in agencies appointing segment year our a agencies expansion Policy Nearly Commercial from since we X/X growth beginning range. XXXX was up of were nice where to produced strategy our the by upper similar still agencies opportunities. Lines the in appropriate slightly retention last year, rates representing

and remained new Our growth including Personal result premiums. Lines are casualty low the business quarter, similar XX% renewal to the consolidated segment written The XX% in in position a agency range. growing premium property was for overall XX% of premiums in mid-XX% growth net

a Insurance for basis. X% excellent improved percentage full improved net a is quarter also to ratio points of XXXX. premiums combined Commercial XX.X%. year metrics fourth Lines compared brief grew an that Next by segment by on Most written review XXXX X performance with with

Personal net ratio XX% X.X and lines improved combined premiums and grew XX.X%. percentage premiums by ratio. the to points Lines grew written XX% with XX.X% written Excess Surplus combined a net

Although Global XX.X% were percentage Cincinnati Cincinnati it's net X% with profitable. grew written X% ratio. XX.X% ratio Re X.X that combined combined was and profitable. Re Cincinnati points very while also growth was a last an with than still Both higher Cincinnati year, Global's premium quite

a of Our value on net These above a and XXXX results bring to of improved life our income XX% ratio increase life subsidiary combined target insurance basis. XX% term also average insurance creation strong earned to growth our X%. its XX% results with X-year premium in and

year X.X%, or overall portfolio higher was investment a on half. items Net of valuation DCR the the other basis. contributed contributed and investment for we losses quarter full X.X%, other and reached our before XX.X% income year to fourth gains Our

to We related XX% catastrophe losses Lines our to $XXX premiums Re additional and of update recent estimates our of quarter of net I Before effects primary treaty Global. That XXXX and on our reinsurance and will property the million reinsurance to for pretax reinstated X% reinsurers. XXXX segment, We applicable Mike, reinsurance includes approximately for estimate recoveries. XX% Cincinnati over for approximately of Insurance the Personal turn coverage catastrophe an seed Cincinnati our program. our layers first call the $XXX California wildfires million provide I'll to current financial

Re million To in $XX of in XXXX, renewed profit. have Cincinnati to a quarter estimated again wildfire revenue net this would the premiums we primary million. event this treaties to from premium underwriting property casualty first reinstated. occurred receive our of our reinsurers. each decrease perspective, earned a year, that effect effect $XX will modest of part additional we The is had January On of still risk we believe of X treaties keep transfer

million. of change we to $X.X our for XX% next this We for million, increased the our of from XXXX XX% catastrophe to For for then are for year of property coverage, objective $XXX terms The the $X.X and billion. approximately to million, risk treaty $XXX billion. casualty $XX balance The is treaties, while primary of the protect XX% program first the treaty may increasing our retention the property at $XX million million is retained our adding treaty Other top conditions remained $X.X similar XXXX. the to treaty's fairly the and again million, sheet. all retention next retain of billion another $XXX next $XXX the per of

financial for Financial call over turn additional me of Mike Sewell, Officer, performance. Chief the let highlights our to Now

Michael J. Sewell

the joining full and year same you, billion to for last the improved contributed all us quarter fourth performance. reached compared the and our year It periods for grew the Steve, XX% of and income for Thank XXXX for operating today. you significantly thanks with XX% of to $X Investment year.

and the Dividend for fourth portfolio. by equity fourth income quarter $X.X points of year. The XX% fixed from driven X.XX% of year. maturities securities interest grew quarter fourth quarter with rebalancing last fixed income of billion third the portfolio totaled in basis for investment XX down year. for maturity up X% previously yield purchases was the pretax Bond sales for was compared average $X.X this quarter Net billion quarter, disclosed the securities the of our

and of tax-exempt portfolio. in yield Valuation unfavorable for was fourth during for bond equity for average our our bonds X.XX%. total portfolio aggregate The changes and the were XXXX pretax quarter taxable the both purchased

million the and million the Before $XXX bond loss equity portfolio. for was tax portfolio the net effects, $XXX for

addition total $X.X net while was a At value fixed portfolio a investment quarter, equity position in the was billion, from was flow loss investment billion, for higher maturity net XX% from appreciated up approximately portfolio the of income portfolio in net million. last activities gain flow billion. Cash was of $X.X to bond operating benefit growth. continue Cash of end year. to the The yields the fourth in position full $X.X $XXX year XXXX

Regarding expense spending is objective in investing efforts balance business. our with our management, strategically control to

in casualty category. expense property and XXXX ratio in year each for full underwriting expense line with total was XX.X% XXXX major Our

actuarially half and to to remains approach our in The where reserves, net primarily for was lower employee-related fourth range outpacing estimated loss net quarter year the loss points addition premium last of upper X.X sharing and is accruals lower topic commissions than the increase in percentage amounts reserves. expenses. due for expense agency the growth the profit ratio next My consistent aims of loss in

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

loss XXXX. the $XXX During benefited We our property was on favorable combined accident reserve casualty during portion. that million XXXX, the IBNR to percentage $X.X net loss by addition and including million ratio development property experienced for of points $XXX X.X prior billion, net casualty expense years reserves

the reserve any For quarter. fourth prior was our development year material commercial casualty there line accident of during business, no for

an for 'XX. net 'XX, My favorable years development prior and all-lines unfavorable favorable reserve accident for activities. 'XX, for capital million aggregate final highlight year, in million our $XX comments million 'XX On XXXX during a basis $X $XXX by management to for million $XXX included accident favorable an

$XXX paid capital XXXX, For to share returned dividends full we in million of addition repurchases. to through shareholders year

remained financial shares $XX fourth growth million both financial of for share, company year-end securities per an flexibility providing billion. of our We insurance Shares Parent under billion of at value during $X.X immaterial profitable cash capital was to excellent end totaled quarter. and $XXX average per share are including $XX.XX equity nearly and amount at GAAP strength the repurchased XX%. high an our position. marketable with record price totaled book believe a in X.X [indiscernible] approximately operations. consolidated total And our at Debt quarter plenty capacity shareholders' our

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

Stephen Spray

and risk. it, we anniversary of for focused marks XXth and Insurance and diversification, Mike. growth pricing consistency the considerable financial come the of it. We of We for and product we've geographic understand through the strength. effort to understand balancing time, plan importance profitability stability, are We Over the appropriately we that Cincinnati price in that management. time Thanks, XXXX spend accepting Company. on business risk

those loss No the thought our a in to by financial strength. one confident catastrophic expects [indiscernible], such experience as people

for value shareholders. streak fast, associates same Board strategy their of the on Our our fair, time, focus April extend a recently XX At dividends increase years. claims reinforced we The service. in declaring way build to in paving can increasing by empathetic to X% ready and are our confidence dividend delivering payable an the to

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

Operator

[Operator Instructions]

comes Our first with question today from Phillips Michael Oppenheimer.

Michael Phillips

to And aftermath how of California. to I for outlook then perspective start higher-level for Re do just Cincinnati how capacity progresses? year the guess, off, see sector expect translate for to segment? to Steve, the I that on kind you premium guess respond? get you want the I XXXX question do of reinsurance as want maybe the How on into in

Stephen Spray

Re? Yes. Cincinnati Seeded you or specifically Are talking on Re

Michael Phillips

market Yes, thoughts the guys does opportunities, of just what -- the to mean broadly and then you kind to you looks in and respond your would all that how -- going drill how your responds. industry, how general be for thoughts on some Re? guys it Cincinnati down First for it

Stephen Spray

the Yes. start reinsurance your with I'll Mike. to question, Maybe just market

an is the shown reinsurers of itself just I profit. couple have First I industry last think, underwriting the shown the think appropriately, years, has

I good. that. all We specifically Insurance. healthy. Cincinnati That's speak that's think I'll need for

partnerships a just long-term got such and talk on basis, regular and We've them obviously. our seeded reinsurers with relationships to partners, our

with and know our change, losses of they're time, up reinsurer's that plus margin them that. to the all that traded We course. the won't They pay remarks over stay going way them there. time. We've to expect over need no ground Cincinnati healthy. Re, We

date with well. You is heard profitable very as XXXX inception to -- extremely Re. Cincinnati profitable

throughout CAT. the proceed with wildfires losses to change. plan They Their within specifically And plan were for on they'll -- their they do. what California expectation. year XXXX on the That's

Michael Phillips

Okay.

your related Morelli but for Next in question a see did -- is I I claim didn't it's Personal X tiny, Lines, classify that asked, change in connectivity wouldn't not I in up. amount think Personal general I this your is But umbrella. dollar in to lot But of In to Lines, of layer. real quarter outsized. move X a exposure sort company question

Any ] plus can would and that umbrella there, something amount that you a is help after to million, that is extra add seeing X anything anything [indiscernible] layers comp? the [ $XX layer quarter million So specifically in XX justify $XX then that layer. excess a color in broadly of you're more would quarter, X in of dollars on cost

Stephen Spray

the I appreciate Mike. question. Thanks,

at Now or personal. quarter umbrella, it for a whether be commercial looking

I think going it's mislead a of it's going you kind bit. to to little

you think just very umbrella of -- more with to frequency annual to There's got I is pull back the low. obviously number. an

line. in it. It's There's inherent volatility severity a

state, obviously, business of every as well. by -- at do thing Lines have So line we for we I'm We commercial. that's whether by every class speaking the agents same it trends, of and in we for be loss look look to business, single large Personal have

So in commercial that book any -- umbrella me, Lines that that excuse causes concern. see don't us anything Personal book or in we

Operator

question Gregory from next James. The Peters is Raymond with

Unknown Analyst

said figure I million want -- back loss the went. go reinstatement you're to out some might And of to $XX or to the think -- far using you for costs you Could up loss $XX trying the how your what gross you be on for perspective what gross tower provide pegging just loss. comment on number? I million to

Stephen Spray

is range, best gross imagine, as estimate an net we're active And that Yes. ultimate our an Thanks, for the now, Greg. just right stick providing And range range there's of is you not loss we're this we're -- our to active, to of and cat. a net is you still can number -- parts our going just moving ready many million that right now, $XXX $XXX with just go. million not so Greg, to providing

Unknown Analyst

to of rate a making that recently market losses. some we about feels companies. for there's perspective what -- from the insurance fire talk get away activity all through for risk. and in allowing with pivot call and paying and the bunch maybe insurance I can was the movement And you more looking that of to just governor it homeowners -- regulator Can know your And compensate once then there a the is like

Stephen Spray

basis. today Yes, XX% out One in for the a on sure. our Cincinnati I'd is premiums are thing book California of non-admitted point homeowner

market. I any mentioned event, there's determine just objectively and On as we as documented. California don't always a it's after -- and company learned, I is I you -- can policyholders, that agents the regardless at great after cat think admitted We've side, learned. well I there's also, it's pretty don't of want single event individual large if challenging got and secret a think them. everything, any and to imagine lessons also dive look and the do loss support lessons any we

with in of well. Greg, do need California a lot forward, imagine, that and just there's with of this there's wildfires, moving -- can do the changing moving obviously we with our We'll here anything there's anything. you lot a parts as as if to But strategy and

if list formulate regulation actively face-to-face. a a nature, And think the that the that now, take fairly, although But And little on will things longer right make any -- things environment yes, to we're there's forward. of rate to claims we look and are we're lessons looking them of paying at. going at focused that really really we I changes will empathetically learned, going long

Unknown Analyst

away pivot line question. of that from I'll Okay.

lines some -- and Just a it's market, give us cycles market the sense a in just going growing just maybe price increases aren't us remind of lines personal of pricing the is are the the that instances there's you and peaked, Can down. my question were maybe kind in in robust commercial at ex-California, you year? snapshot where end moderating the as of broadly

what policies the part has reside give And policies. where us those and snapshot the book Can your I know total of was? multiyear of of you percentage a

Stephen Spray

Yes, sure.

on is business, comp that's the commercial Work lines general So for high were been about -- documented. in the as liability range. down been just in the major range. That's well and pretty the mid-single-digit talked of -- single-digit we auto property,

in the the doesn't or point So we're rate tell estimate doesn't for average, the still book. story -- seeing Greg, us. I it think just But

precision underwriters Our pricing agents desk the the that the with at using have. they -- level working tools

there's So flat -- there a example, and may risk policy, a business. of package XX% that know, our may as in by percentage we're of by policy just And underwriter, increase. pricing we're or we may a is large book albeit as percentage XX% that are an of And smaller, book, get you being it's get underwriting is risk. our a

we're year, look. earning seeing rate the book, rate XX into last months still So come from still the was the ago into

rate here you'll throughout commercial suspect into lines I still So that coming XXXX, see book.

Operator

is question next from The KBW. Dean Cristello with

Unknown Analyst

sort start I else just the those curious accident surplus sort commercial anything of segment. the both the striking, auto like into of years was and and that you strengthening in line if sort on lines? you're the to I dive wanted And reserve seeing trends excess provide from? of deeper of in sort what could there's

Michael J. Sewell

Mike the Sewell. for This Thanks Yes. Dean. question, is

So couple there. you're keying points in yes, of a on

there. some where I years XXXX reserve liability the mostly little -- that's say personal it's you an I our that So a We're saw accident trend. coverages for strengthening there. And showing incurred really, think the for case of were auto, mostly are of on the upward and those the would in so XXXX that bit

what than book. E&S least relates incurred They about had surplus -- to at were we casualty, of just our greater there. materializing are were XX% as case it then is just our lines, And they the expected.

with inflation, similar kind industry seeing of averages that cetera. really et the it's we're to So

we as indicated, [ of there. prudent $XXX million I more IBNR. And reserving So ] added was

casualty. So the overall to for X/X about book, went that of commercial

So our just consistent reserving, watching prudent process. being doing and what we're with

the thanks So question. for

Unknown Analyst

sense. any it. week just other color property quarter? like [indiscernible] seemed this this That then there your ex the you and is quarter? the profitability low so on abnormally makes Got And last strong it commercial why could was cat Yes. quickly on provide and Or

Stephen Spray

it. Yes, would just but But drove that where property lion's large I is in it what's gone commercial -- volatility drop We've this those large has other get you losses those a Sprague. It the with absolute way. quarter-to-quarter. of take Dean, losses had we'll was driving it's share be Steve Sure. results. the -- can

at I again, bit look year Commercial of be working a I'd full remiss Lines didn't underwriting was with talk temperature. prefer book. to So underwriting our that a the teams -- kind agents and the about property it running the commercial if teams, I of

just so on good got there. we always all in with And risk as hands pricing selection deck and do, a segmentation us spot

Operator

with Zaremski question Capital next from Michael The BMO Markets. is

Unknown Analyst

I less trend to the It's for adding Dan loss you're in go can on about that cost in so those throughout IBNR, you're commercial just little could inflation still that's now year? year-over-year, Mike. magnitude If how casualty, maybe levels to you XXXX. back and the talk changed a to just But adding seeing

Stephen Spray

would caveat our on that the prospective do everything the maybe feel disclose little you Steve matching pricing that workers' with -- feel Mike, this compensation a or only again, rates, ratemaking costs. loss we this Sure. our we be of increase. loss one But Yes, Spray we know, that a is I'll exceeding again. prospective on specific is is basis, premiums, a line is our too, broader we with as business. hit And don't

Unknown Analyst

peers this being would social of maybe How say reaction exposure? overly casualty And have talked much about these since is inflation. to as just industry contractors, industry to trend. Okay. on exposed a then Some the that you

Stephen Spray

challenge seen construction exposed commercial Yes. auto overly I the we business, of inflation. lot the losses. business We we what to can't time from depends claims the be have piece. on to back and inflation that construction social into auto in is referring they're a we watch you're to jurisdiction say -- A construction venue can in the at least do We the the to. social it that's that the closely, time, and maybe do see umbrella Mike, or really write, of defect

be seen into our and contractors of construction our for to social we've construction particularly haven't business, say trade we small with -- I mid-market, book. book, would But mix that can't -- seen inflation which such, the

Unknown Analyst

comp, the only Okay. mentioned Then seeing just business line you're you trend where on also workers' above of that's pricing.

any there an adjusting was some comp leases maybe reserve that and news going taking there more pick acceleration Just thoughts of upfront? of this good to the or Are forward year.

Stephen Spray

that's a look with talk actuarial here time. and that it the we team, something at Yes, they're all regularly the taking

been calendar results report comp know So and that, I talking Mike. Obviously, don't on I wise, the deterioration now be of I've about work continue for have don't year anything -- to favorable. how to pricing long the

So and hands we'll is a different it. actuaries. also point taken But your far taking with maybe We'll in or leave in understanding as well that discussions as take just it. of the view the

Operator

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

Stephen Spray

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

Operator

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

may disconnect. You now

Cincinnati Financial (CINF) 11 Feb 252024 Q4 Earnings call transcript