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Cincinnati Financial (CINF) Expects Q1 Cat Loss of $253M

Cincinnati Financial Corporation CINF estimates first-quarter 2023 catastrophe loss of $235 million pre-tax. The loss is expected to primarily stem from three March storms, accounting for $171 million in cat loss and some other less severe storms.

The Zacks Consensus Estimate for first-quarter earnings is currently pegged at $1.34 per share, which indicates a decline of 15.2% from the year-ago quarter’s reported figure. We expect estimates to move south once analysts start incorporating loss estimates into their numbers.

While the commercial lines insurance segment will absorb $110 million of losses, the personal lines insurance segment will incur a loss of $115 million. The excess and surplus lines insurance segment, Cincinnati Re and Cincinnati Global Underwriting Ltd will incur a loss of $1 million, $3 million and $6 million, respectively.

The catastrophe loss will lower the combined ratio by 1280 basis points in the first quarter.  Notably, the five-year historical average contribution of catastrophe losses to the combined ratio is 630 basis points for the first quarter.

CINF estimates property casualty combined ratio between 99% and 103% in the first quarter of 2023. The Zacks Consensus Estimate for property casualty combined ratio is pegged at 95.81, a deterioration of 1431 basis points from the year-ago reported quarter.

Being a P&C insurer, CINF remains exposed to catastrophe loss rendering substantial volatility to the insurer’s underwriting results. In 2022, the company incurred $612 million catastrophe losses, which increased 29.7% year over year. Underwriting profit of $140 million decreased 81% year over year. The company experienced higher current accident year loss and loss expenses before catastrophe losses and lower amounts of favorable reserve development on prior accident years. In 2022, the combined ratio deteriorated 980 basis points year over year to 98.1. Cincinnati Financial expects to maintain a GAAP combined ratio in the low to mid-90% range in 2023.

Shares of this Zacks Rank #2 (Buy) property-casualty underwriter have gained 4.7% year to date compared with the industry’s increase of 2.7%. Strong performance at Commercial Lines segment, an agent-centered business model, price increases and a higher level of insured exposures, low leverage, ample capital, consistent cash flow generation, favorable reserve release, share repurchases should drive growth for Cincinnati Financial.

Zacks Investment Research
Zacks Investment Research


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Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. KNSL, Everest Re Group, Ltd. RE and Selective Insurance Group, Inc. SIGI. While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), Everest Re and Selective Insurance carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. Year to date, KNSL has gained 21.3%.

The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.92 and $11.94, indicating a year-over-year increase of 27.1% and 20.4%, respectively.

Everest Re beat estimates in each of the last four quarters, the average being 18.41%.

The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $44.28 and $53.54, indicating a year-over-year increase of 63.5% and 20.9%, respectively. Year to date, RE has gained 9.5%.

The Zacks Consensus Estimate for Selective Insurance’s 2023 and 2024 earnings per share is pegged at $6.62 and $7.60, indicating a year-over-year increase of 31.6% and 14.8%, respectively. Year to date, SIGI has gained 9.1%.

The Zacks Consensus Estimate for SIGI’s 2023 and 2024 revenues is pegged at $4.17 billion and $4.60 billion, indicating a year-over-year increase of 13.6% and 10.1%, respectively.

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Zacks Investment Research