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CINCINNATI, Oct. 31, 2022 /PRNewswire/ -- Cincinnati Financial Corporation (Nasdaq: CINF) today reported:
Financial Highlights
(Dollars in millions, except per share data) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Revenue Data | ||||||||||||
Earned premiums | $ 1,882 | $ 1,669 | 13 | $ 5,345 | $ 4,806 | 11 | ||||||
Investment income, net of expenses | 193 | 179 | 8 | 573 | 528 | 9 | ||||||
Total revenues | 1,408 | 1,785 | (21) | 3,443 | 6,307 | (45) | ||||||
Income Statement Data | ||||||||||||
Net income (loss) | $ (418) | $ 153 | nm | $ (1,499) | $ 1,476 | nm | ||||||
Investment gains and losses, after-tax | (532) | (56) | nm | (1,970) | 753 | nm | ||||||
Non-GAAP operating income* | $ 114 | $ 209 | (45) | $ 471 | $ 723 | (35) | ||||||
Per Share Data (diluted) | ||||||||||||
Net income (loss) | $ (2.64) | $ 0.94 | nm | $ (9.41) | $ 9.07 | nm | ||||||
Investment gains and losses, after-tax | (3.37) | (0.34) | nm | (12.37) | 4.63 | nm | ||||||
Non-GAAP operating income* | $ 0.73 | $ 1.28 | (43) | $ 2.96 | $ 4.44 | (33) | ||||||
Book value | $ 60.01 | $ 73.49 | (18) | |||||||||
Cash dividend declared | $ 0.69 | $ 0.63 | 10 | $ 2.07 | $ 1.89 | 10 | ||||||
Diluted weighted average shares outstanding | 158.0 | 162.9 | (3) | 159.3 | 162.8 | (2) | ||||||
* The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures section defines and reconciles measures presented | ||||||||||||
Forward-looking statements and related assumptions are subject to the risks outlined in the company's safe harbor statement. |
Insurance Operations Highlights
Investment and Balance Sheet Highlights
Investments Lead Profits
Steven J. Johnston, chairman and chief executive officer, commented: "Investment income in the third quarter of 2022 continued to contribute to a positive operating profit. Steady cash flow from 10 consecutive years of underwriting profit helps fuel our investment approach, allowing us to continually invest new money in both the equity and fixed-maturity securities markets.
"As previously announced, losses from Hurricane Ian pushed our third-quarter combined ratio to 103.9%. Confident in our balance sheet, we were able to focus on what was important: outstanding claims service. I applaud the efforts of our associates who worked quickly to comfort those who had experienced loss and get them moving toward recovery.
"Our property casualty insurance business remains profitable for the year so far, recording a 99.2% combined ratio through the end of September, within our long-term goal of a 95% to 100% combined ratio.
"For both the third quarter and first nine months of the year, our combined ratios before catastrophes rose compared to 2021's excellent results. These ratios, which filter out much of the effects of severe weather, continue to include increased uncertainty of estimated ultimate losses, due in part to elevated paid losses reflecting economic or other forms of inflation."
Tackling Inflation in Insurance
"Our sophisticated pricing models give us a robust view of the many factors impacting our business. We can examine these elements to clearly see the actions we need to take to address inflation.
"When considering new or renewal business, our underwriters are focused on risk selection and pricing discipline. Our continued strong net written premium growth of 14% on both a quarterly and nine-month basis reflects our management of both exposure growth and net rate increases that factor in expected inflation effects. Premium growth also benefits from 162 new agency appointments so far this year and our efforts to gain a larger share of each agency's business.
"In this inflationary environment, we must keep up with increases in the costs of building materials when pricing property coverage. For our homeowners business, we automatically apply an inflation factor on all renewal policies to adjust exposure amounts. On commercial property policies, we use third-party data to evaluate insurance to value for each account. For the third quarter, we averaged a commercial property premium increase effect roughly double what it was a year ago.
"Looking at only the average amount of renewal price increases can mask the actual impact of segmentation and the fact that policies are priced on an account-by-account basis with some experiencing higher than average increases and some experiencing lower than average increases – based on the risk factors appropriate for that individual account. However, personal auto is one line of business where we see the need for rate increases nearly across the board. Inflation levels our industry hasn't experienced in decades, combined with increasingly distracted drivers, continue to push both severity and frequency of claims higher."
Confidence in the Future
"Our confidence in our ongoing ability to produce value for our shareholders far into the future is unwavering. Our talented and dedicated associates are working vigorously with the independent agents who represent us to drive our multi-pronged strategy to continue growing our insurance business profitably."
Insurance Operations Highlights | ||||||||||||
Consolidated Property Casualty Insurance Results | ||||||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Earned premiums | $ 1,809 | $ 1,596 | 13 | $ 5,124 | $ 4,585 | 12 | ||||||
Fee revenues | 3 | 3 | 0 | 8 | 8 | 0 | ||||||
Total revenues | 1,812 | 1,599 | 13 | 5,132 | 4,593 | 12 | ||||||
Loss and loss expenses | 1,348 | 988 | 36 | 3,544 | 2,741 | 29 | ||||||
Underwriting expenses | 530 | 490 | 8 | 1,541 | 1,377 | 12 | ||||||
Underwriting profit (loss) | $ (66) | $ 121 | nm | $ 47 | $ 475 | (90) | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Loss and loss expenses | 74.5 % | 61.9 % | 12.6 | 69.1 % | 59.8 % | 9.3 | ||||||
Underwriting expenses | 29.4 | 30.7 | (1.3) | 30.1 | 30.0 | 0.1 | ||||||
Combined ratio | 103.9 % | 92.6 % | 11.3 | 99.2 % | 89.8 % | 9.4 | ||||||
% Change | % Change | |||||||||||
Agency renewal written premiums | $ 1,390 | $ 1,244 | 12 | $ 4,269 | $ 3,853 | 11 | ||||||
Agency new business written premiums | 264 | 230 | 15 | 794 | 685 | 16 | ||||||
Other written premiums | 96 | 64 | 50 | 550 | 407 | 35 | ||||||
Net written premiums | $ 1,750 | $ 1,538 | 14 | $ 5,613 | $ 4,945 | 14 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Current accident year before catastrophe losses | 61.7 % | 54.7 % | 7.0 | 61.0 % | 56.3 % | 4.7 | ||||||
Current accident year catastrophe losses | 15.2 | 13.6 | 1.6 | 10.9 | 10.7 | 0.2 | ||||||
Prior accident years before catastrophe losses | (1.1) | (7.0) | 5.9 | (1.4) | (6.1) | 4.7 | ||||||
Prior accident years catastrophe losses | (1.3) | 0.6 | (1.9) | (1.4) | (1.1) | (0.3) | ||||||
Loss and loss expense ratio | 74.5 % | 61.9 % | 12.6 | 69.1 % | 59.8 % | 9.3 | ||||||
Current accident year combined ratio before catastrophe losses | 91.1 % | 85.4 % | 5.7 | 91.1 % | 86.3 % | 4.8 | ||||||
Commercial Lines Insurance Results | ||||||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Earned premiums | $ 1,028 | $ 930 | 11 | $ 2,984 | $ 2,727 | 9 | ||||||
Fee revenues | 1 | 1 | 0 | 3 | 3 | 0 | ||||||
Total revenues | 1,029 | 931 | 11 | 2,987 | 2,730 | 9 | ||||||
Loss and loss expenses | 710 | 451 | 57 | 2,046 | 1,434 | 43 | ||||||
Underwriting expenses | 308 | 298 | 3 | 916 | 839 | 9 | ||||||
Underwriting profit | $ 11 | $ 182 | (94) | $ 25 | $ 457 | (95) | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Loss and loss expenses | 69.0 % | 48.5 % | 20.5 | 68.6 % | 52.6 % | 16.0 | ||||||
Underwriting expenses | 30.0 | 32.1 | (2.1) | 30.7 | 30.8 | (0.1) | ||||||
Combined ratio | 99.0 % | 80.6 % | 18.4 | 99.3 % | 83.4 % | 15.9 | ||||||
% Change | % Change | |||||||||||
Agency renewal written premiums | $ 860 | $ 775 | 11 | $ 2,764 | $ 2,525 | 9 | ||||||
Agency new business written premiums | 149 | 145 | 3 | 470 | 436 | 8 | ||||||
Other written premiums | (25) | (25) | 0 | (82) | (70) | (17) | ||||||
Net written premiums | $ 984 | $ 895 | 10 | $ 3,152 | $ 2,891 | 9 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Current accident year before catastrophe losses | 64.5 % | 56.1 % | 8.4 | 63.5 % | 57.9 % | 5.6 | ||||||
Current accident year catastrophe losses | 4.9 | 3.9 | 1.0 | 6.8 | 4.8 | 2.0 | ||||||
Prior accident years before catastrophe losses | — | (10.9) | 10.9 | (1.1) | (8.9) | 7.8 | ||||||
Prior accident years catastrophe losses | (0.4) | (0.6) | 0.2 | (0.6) | (1.2) | 0.6 | ||||||
Loss and loss expense ratio | 69.0 % | 48.5 % | 20.5 | 68.6 % | 52.6 % | 16.0 | ||||||
Current accident year combined ratio before catastrophe losses | 94.5 % | 88.2 % | 6.3 | 94.2 % | 88.7 % | 5.5 | ||||||
Personal Lines Insurance Results | ||||||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Earned premiums | $ 431 | $ 388 | 11 | $ 1,246 | $ 1,146 | 9 | ||||||
Fee revenues | 1 | 1 | 0 | 3 | 3 | 0 | ||||||
Total revenues | 432 | 389 | 11 | 1,249 | 1,149 | 9 | ||||||
Loss and loss expenses | 324 | 281 | 15 | 878 | 795 | 10 | ||||||
Underwriting expenses | 126 | 118 | 7 | 373 | 338 | 10 | ||||||
Underwriting profit (loss) | $ (18) | $ (10) | (80) | $ (2) | $ 16 | nm | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Loss and loss expenses | 75.2 % | 72.4 % | 2.8 | 70.5 % | 69.3 % | 1.2 | ||||||
Underwriting expenses | 29.3 | 30.3 | (1.0) | 29.9 | 29.5 | 0.4 | ||||||
Combined ratio | 104.5 % | 102.7 % | 1.8 | 100.4 % | 98.8 % | 1.6 | ||||||
% Change | % Change | |||||||||||
Agency renewal written premiums | $ 437 | $ 393 | 11 | $ 1,208 | $ 1,092 | 11 | ||||||
Agency new business written premiums | 81 | 53 | 53 | 221 | 152 | 45 | ||||||
Other written premiums | (16) | (11) | (45) | (43) | (32) | (34) | ||||||
Net written premiums | $ 502 | $ 435 | 15 | $ 1,386 | $ 1,212 | 14 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Current accident year before catastrophe losses | 59.5 % | 53.1 % | 6.4 | 59.4 % | 55.2 % | 4.2 | ||||||
Current accident year catastrophe losses | 17.7 | 20.1 | (2.4) | 15.6 | 17.2 | (1.6) | ||||||
Prior accident years before catastrophe losses | (0.2) | (0.7) | 0.5 | (1.3) | (2.7) | 1.4 | ||||||
Prior accident years catastrophe losses | (1.8) | (0.1) | (1.7) | (3.2) | (0.4) | (2.8) | ||||||
Loss and loss expense ratio | 75.2 % | 72.4 % | 2.8 | 70.5 % | 69.3 % | 1.2 | ||||||
Current accident year combined ratio before catastrophe losses | 88.8 % | 83.4 % | 5.4 | 89.3 % | 84.7 % | 4.6 | ||||||
Excess and Surplus Lines Insurance Results | ||||||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Earned premiums | $ 125 | $ 105 | 19 | $ 361 | $ 289 | 25 | ||||||
Fee revenues | 1 | 1 | 0 | 2 | 2 | 0 | ||||||
Total revenues | 126 | 106 | 19 | 363 | 291 | 25 | ||||||
Loss and loss expenses | 86 | 70 | 23 | 226 | 187 | 21 | ||||||
Underwriting expenses | 31 | 29 | 7 | 93 | 79 | 18 | ||||||
Underwriting profit | $ 9 | $ 7 | 29 | $ 44 | $ 25 | 76 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Loss and loss expenses | 68.4 % | 66.2 % | 2.2 | 62.4 % | 64.6 % | (2.2) | ||||||
Underwriting expenses | 25.5 | 27.9 | (2.4) | 26.0 | 27.3 | (1.3) | ||||||
Combined ratio | 93.9 % | 94.1 % | (0.2) | 88.4 % | 91.9 % | (3.5) | ||||||
% Change | % Change | |||||||||||
Agency renewal written premiums | $ 93 | $ 76 | 22 | $ 297 | $ 236 | 26 | ||||||
Agency new business written premiums | 34 | 32 | 6 | 103 | 97 | 6 | ||||||
Other written premiums | (6) | (4) | (50) | (20) | (15) | (33) | ||||||
Net written premiums | $ 121 | $ 104 | 16 | $ 380 | $ 318 | 19 | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||
Current accident year before catastrophe losses | 74.8 % | 62.6 % | 12.2 | 65.4 % | 61.9 % | 3.5 | ||||||
Current accident year catastrophe losses | (0.4) | 0.4 | (0.8) | 0.8 | 0.7 | 0.1 | ||||||
Prior accident years before catastrophe losses | (5.9) | 3.3 | (9.2) | (3.6) | 2.1 | (5.7) | ||||||
Prior accident years catastrophe losses | (0.1) | (0.1) | 0.0 | (0.2) | (0.1) | (0.1) | ||||||
Loss and loss expense ratio | 68.4 % | 66.2 % | 2.2 | 62.4 % | 64.6 % | (2.2) | ||||||
Current accident year combined ratio before catastrophe losses | 100.3 % | 90.5 % | 9.8 | 91.4 % | 89.2 % | 2.2 | ||||||
Life Insurance Subsidiary Results | ||||||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Term life insurance | $ 55 | $ 53 | 4 | $ 165 | $ 156 | 6 | ||||||
Whole life insurance | 11 | 13 | (15) | 34 | 35 | (3) | ||||||
Universal life and other | 7 | 7 | 0 | 22 | 30 | (27) | ||||||
Earned premiums | 73 | 73 | 0 | 221 | 221 | 0 | ||||||
Investment income, net of expenses | 43 | 42 | 2 | 127 | 125 | 2 | ||||||
Investment gains and losses, net | (1) | 4 | nm | (1) | 8 | nm | ||||||
Fee revenues | 2 | 1 | 1 | 4 | 3 | 33 | ||||||
Total revenues | 117 | 120 | (3) | 351 | 357 | (2) | ||||||
Contract holders' benefits incurred | 70 | 84 | (17) | 222 | 249 | (11) | ||||||
Underwriting expenses incurred | 21 | 21 | — | 63 | 63 | 0 | ||||||
Total benefits and expenses | 91 | 105 | (13) | 285 | 312 | (9) | ||||||
Net income before income tax | 26 | 15 | 73 | 66 | 45 | 47 | ||||||
Income tax provision | 5 | 4 | 25 | 14 | 10 | 40 | ||||||
Net income of the life insurance subsidiary | $ 21 | $ 11 | 91 | $ 52 | $ 35 | 49 | ||||||
Investment and Balance Sheet Highlights | ||||||||||||
Investments Results | ||||||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
Investment income, net of expenses | $ 193 | $ 179 | 8 | $ 573 | $ 528 | 9 | ||||||
Investment interest credited to contract holders | (27) | (26) | (4) | (82) | (79) | (4) | ||||||
Investment gains and losses, net | (674) | (70) | nm | (2,494) | 954 | nm | ||||||
Investments profit (loss) | $ (508) | $ 83 | nm | $ (2,003) | $ 1,403 | nm | ||||||
Investment income: | ||||||||||||
Interest | $ 129 | $ 121 | 7 | $ 376 | $ 356 | 6 | ||||||
Dividends | 66 | 61 | 8 | 203 | 179 | 13 | ||||||
Other | 3 | 1 | 200 | 6 | 4 | 50 | ||||||
Less investment expenses | 5 | 4 | 25 | 12 | 11 | 9 | ||||||
Investment income, pretax | 193 | 179 | 8 | 573 | 528 | 9 | ||||||
Less income taxes | 30 | 28 | 7 | 90 | 82 | 10 | ||||||
Total investment income, after-tax | $ 163 | $ 151 | 8 | $ 483 | $ 446 | 8 | ||||||
Investment returns: | ||||||||||||
Average invested assets plus cash and cash equivalents | $ 23,323 | $ 23,263 | $ 24,081 | $ 22,420 | ||||||||
Average yield pretax | 3.31 % | 3.08 % | 3.17 % | 3.14 % | ||||||||
Average yield after-tax | 2.80 | 2.60 | 2.67 | 2.65 | ||||||||
Effective tax rate | 15.8 | 15.6 | 15.8 | 15.5 | ||||||||
Fixed-maturity returns: | ||||||||||||
Average amortized cost | $ 12,655 | $ 11,931 | $ 12,521 | $ 11,673 | ||||||||
Average yield pretax | 4.08 % | 4.06 % | 4.00 % | 4.07 % | ||||||||
Average yield after-tax | 3.38 | 3.37 | 3.32 | 3.38 | ||||||||
Effective tax rate | 17.1 | 16.9 | 17.1 | 16.8 | ||||||||
(Dollars in millions) | Three months ended | Nine months ended | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Investment gains and losses on equity securities sold, net | $ 16 | $ (1) | $ 34 | $ 6 | ||||
Unrealized gains and losses on equity securities still held, net | (705) | (104) | (2,568) | 869 | ||||
Investment gains and losses on fixed-maturity securities, net | — | 8 | 3 | 20 | ||||
Other | 15 | 27 | 37 | 59 | ||||
Subtotal - investment gains and losses reported in net income | (674) | (70) | (2,494) | 954 | ||||
Change in unrealized investment gains and losses - fixed maturities | (514) | (88) | (1,870) | (152) | ||||
Total | $ (1,188) | $ (158) | $ (4,364) | $ 802 | ||||
Balance Sheet Highlights | ||||
(Dollars in millions, except share data) | At September 30, | At December 31, | ||
2022 | 2021 | |||
Total investments | $ 20,988 | $ 24,666 | ||
Total assets | 28,199 | 31,387 | ||
Short-term debt | 44 | 54 | ||
Long-term debt | 789 | 789 | ||
Shareholders' equity | 9,431 | 13,105 | ||
Book value per share | 60.01 | 81.72 | ||
Debt-to-total-capital ratio | 8.1 % | 6.0 % | ||
For additional information or to register for our conference call webcast, please visit cinfin.com/investors.
About Cincinnati Financial
Cincinnati Financial Corporation offers primarily business, home and auto insurance through The Cincinnati Insurance Company and its two standard market property casualty companies. The same local independent insurance agencies that market those policies may offer products of our other subsidiaries, including life insurance, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit cinfin.com.
Mailing Address: | Street Address: |
P.O. Box 145496 | 6200 South Gilmore Road |
Cincinnati, Ohio 45250-5496 | Fairfield, Ohio 45014-5141 |
Safe Harbor Statement
This is our "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2021 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 32.
Factors that could cause or contribute to such differences include, but are not limited to:
Further, our insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. We also are subject to public and regulatory initiatives that can affect the market value for our common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.
* * *
Cincinnati Financial Corporation | |||||||
(Dollars in millions) | September 30, | December 31, | |||||
2022 | 2021 | ||||||
Assets | |||||||
Investments | $ 20,988 | $ 24,666 | |||||
Cash and cash equivalents | 1,083 | 1,139 | |||||
Premiums receivable | 2,403 | 2,053 | |||||
Reinsurance recoverable | 561 | 570 | |||||
Deferred policy acquisition costs | 1,036 | 905 | |||||
Other assets | 2,128 | 2,054 | |||||
Total assets | $ 28,199 | $ 31,387 | |||||
Liabilities | |||||||
Insurance reserves | $ 11,166 | $ 10,319 | |||||
Unearned premiums | 3,798 | 3,271 | |||||
Deferred income tax | 780 | 1,744 | |||||
Long-term debt and lease obligations | 843 | 843 | |||||
Other liabilities | 2,181 | 2,105 | |||||
Total liabilities | 18,768 | 18,282 | |||||
Shareholders' Equity | |||||||
Common stock and paid-in capital | 1,776 | 1,753 | |||||
Retained earnings | 10,797 | 12,625 | |||||
Accumulated other comprehensive income | (828) | 648 | |||||
Treasury stock | (2,314) | (1,921) | |||||
Total shareholders' equity | 9,431 | 13,105 | |||||
Total liabilities and shareholders' equity | $ 28,199 | $ 31,387 | |||||
(Dollars in millions, except per share data) | Three months ended September 30, | Nine months ended September 30, | |||||
2022 | 2021 | 2022 | 2021 | ||||
Revenues | |||||||
Earned premiums | $ 1,882 | $ 1,669 | $ 5,345 | $ 4,806 | |||
Investment income, net of expenses | 193 | 179 | 573 | 528 | |||
Investment gains and losses, net | (674) | (70) | (2,494) | 954 | |||
Other revenues | 7 | 7 | 19 | 19 | |||
Total revenues | 1,408 | 1,785 | 3,443 | 6,307 | |||
Benefits and Expenses | |||||||
Insurance losses and contract holders' benefits | 1,418 | 1,072 | 3,766 | 2,990 | |||
Underwriting, acquisition and insurance expenses | 551 | 511 | 1,604 | 1,440 | |||
Interest expense | 14 | 13 | 40 | 39 | |||
Other operating expenses | 4 | 5 | 13 | 14 | |||
Total benefits and expenses | 1,987 | 1,601 | 5,423 | 4,483 | |||
Income (Loss) Before Income Taxes | (579) | 184 | (1,980) | 1,824 | |||
Provision (Benefit) for Income Taxes | (161) | 31 | (481) | 348 | |||
Net Income (Loss) | $ (418) | $ 153 | $ (1,499) | $ 1,476 | |||
Per Common Share: | |||||||
Net income (loss)—basic | $ (2.64) | $ 0.95 | $ (9.41) | $ 9.16 | |||
Net income (loss)—diluted | (2.64) | 0.94 | (9.41) | 9.07 | |||
Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures
(See attached tables for reconciliations; additional prior-period reconciliations available at cinfin.com/investors.)
Cincinnati Financial Corporation prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules for insurance company regulation in the United States of America as defined by the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual, and therefore is not reconciled to GAAP data.
Management uses certain non-GAAP financial measures to evaluate its primary business areas – property casualty insurance, life insurance and investments. Management uses these measures when analyzing both GAAP and non-GAAP results to improve its understanding of trends in the underlying business and to help avoid incorrect or misleading assumptions and conclusions about the success or failure of company strategies. Management adjustments to GAAP measures generally: apply to non-recurring events that are unrelated to business performance and distort short-term results; involve values that fluctuate based on events outside of management's control; supplement reporting segment disclosures with disclosures for a subsidiary company or for a combination of subsidiaries or reporting segments; or relate to accounting refinements that affect comparability between periods, creating a need to analyze data on the same basis.
Cincinnati Financial Corporation | ||||||||
Net Income Reconciliation | ||||||||
(Dollars in millions, except per share data) | Three months ended September 30, | Nine months ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income (loss) | $ (418) | $ 153 | $ (1,499) | $ 1,476 | ||||
Less: | ||||||||
Investment gains and losses, net | (674) | (70) | (2,494) | 954 | ||||
Income tax on investment gains and losses | 142 | 14 | 524 | (201) | ||||
Investment gains and losses, after-tax | (532) | (56) | (1,970) | 753 | ||||
Non-GAAP operating income | $ 114 | $ 209 | $ 471 | $ 723 | ||||
Diluted per share data: | ||||||||
Net income (loss) | $ (2.64) | $ 0.94 | $ (9.41) | $ 9.07 | ||||
Less: | ||||||||
Investment gains and losses, net | (4.26) | (0.43) | (15.65) | 5.86 | ||||
Income tax on investment gains and losses | 0.89 | 0.09 | 3.28 | (1.23) | ||||
Investment gains and losses, after-tax | (3.37) | (0.34) | (12.37) | 4.63 | ||||
Non-GAAP operating income | $ 0.73 | $ 1.28 | $ 2.96 | $ 4.44 | ||||
Life Insurance Reconciliation | ||||||||
(Dollars in millions) | Three months ended September 30, | Nine months ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income of the life insurance subsidiary | $ 21 | $ 11 | $ 52 | $ 35 | ||||
Investment gains and losses, net | (1) | 4 | (1) | 8 | ||||
Income tax on investment gains and losses | — | 1 | — | 2 | ||||
Non-GAAP operating income | 22 | 8 | 53 | 29 | ||||
Investment income, net of expenses | (43) | (42) | (127) | (125) | ||||
Investment income credited to contract holders | 27 | 26 | 82 | 79 | ||||
Income tax excluding tax on investment gains and | 5 | 3 | 14 | 8 | ||||
Life insurance segment profit (loss) | $ 11 | $ (5) | $ 22 | $ (9) | ||||
Property Casualty Insurance Reconciliation | ||||||||||||||
(Dollars in millions) | Three months ended September 30, 2022 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 1,750 | $ 984 | $ 502 | $ 121 | $ 143 | |||||||||
Unearned premiums change | 59 | 44 | (71) | 4 | 82 | |||||||||
Earned premiums | $ 1,809 | $ 1,028 | $ 431 | $ 125 | $ 225 | |||||||||
Underwriting profit (loss) | $ (66) | $ 11 | $ (18) | $ 9 | $ (68) | |||||||||
(Dollars in millions) | Nine months ended September 30, 2022 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 5,613 | $ 3,152 | $ 1,386 | $ 380 | $ 695 | |||||||||
Unearned premiums change | (489) | (168) | (140) | (19) | (162) | |||||||||
Earned premiums | $ 5,124 | $ 2,984 | $ 1,246 | $ 361 | $ 533 | |||||||||
Underwriting profit (loss) | $ 47 | $ 25 | $ (2) | $ 44 | $ (20) | |||||||||
(Dollars in millions) | Three months ended September 30, 2021 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 1,538 | $ 895 | $ 435 | $ 104 | $ 104 | |||||||||
Unearned premiums change | 58 | 35 | (47) | 1 | 69 | |||||||||
Earned premiums | $ 1,596 | $ 930 | $ 388 | $ 105 | $ 173 | |||||||||
Underwriting profit (loss) | $ 121 | $ 182 | $ (10) | $ 7 | $ (58) | |||||||||
(Dollars in millions) | Nine months ended September 30, 2021 | |||||||||||||
Consolidated | Commercial | Personal | E&S | Other* | ||||||||||
Premiums: | ||||||||||||||
Written premiums | $ 4,945 | $ 2,891 | $ 1,212 | $ 318 | $ 524 | |||||||||
Unearned premiums change | (360) | (164) | (66) | (29) | (101) | |||||||||
Earned premiums | $ 4,585 | $ 2,727 | $ 1,146 | $ 289 | $ 423 | |||||||||
Underwriting profit (loss) | $ 475 | $ 457 | $ 16 | $ 25 | $ (23) | |||||||||
Dollar amounts shown are rounded to millions; certain amounts may not add due to rounding. *Included in Other are the results of Cincinnati Re and Cincinnati Global. |
Cincinnati Financial Corporation
Other Measures
Value Creation Ratio Calculations | ||||||||
(Dollars are per share) | Three months ended September 30, | Nine months ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | |||||
Value creation ratio: | ||||||||
End of period book value* | $ 60.01 | $ 73.49 | $ 60.01 | $ 73.49 | ||||
Less beginning of period book value | 66.30 | 73.57 | 81.72 | 67.04 | ||||
Change in book value | (6.29) | (0.08) | (21.71) | 6.45 | ||||
Dividend declared to shareholders | 0.69 | 0.63 | 2.07 | 1.89 | ||||
Total value creation | $ (5.60) | $ 0.55 | $ (19.64) | $ 8.34 | ||||
Value creation ratio from change in book value** | (9.4) % | (0.1) % | (26.5) % | 9.6 % | ||||
Value creation ratio from dividends declared to shareholders*** | 1.0 | 0.8 | 2.5 | 2.8 | ||||
Value creation ratio | (8.4) % | 0.7 % | (24.0) % | 12.4 % | ||||
* Book value per share is calculated by dividing end of period total shareholders' equity by end of period shares outstanding | ||||||||
** Change in book value divided by the beginning of period book value | ||||||||
*** Dividend declared to shareholders divided by beginning of period book value |
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SOURCE Cincinnati Financial Corporation