Cincinnati Financial Corporation, a holding company whose primary business is property and casualty insurance, reported increases in both net operating income and revenues for the three months ended March 31, 2002, over the same period last year.
Net operating income rose to $80 million, or 49 cents per share, versus $69 million, or 42 cents per share, for last year’s comparable period. Total net income reached $75 million, or 46 cents per share, including net realized capital losses of $5 million, or 3 cents per share, for the first quarter of 2002. For the comparable 2001 period, net realized capital gains of $4 million, or 2 cents per share, resulted in total net income of $73 million, or 44 cents per share.
Revenues advanced 11.1 percent to $687 million, including pre-tax investment income of $109 million, up 8.7 percent over first-quarter 2001 investment income of $100 million.
“The first quarter more than lived up to high expectations, letting us start 2002 with extremely satisfying results that are unlikely to be sustained at this level through the remaining quarters of 2002,” CEO John Schiff, Jr. remarked. “The quarter benefited tremendously from the momentum of premium growth, which reduced our expense ratio even as our loss ratio continued to reflect claim severity. The increase in premiums-the cumulative result of pricing and underwriting initiatives introduced over the past two years and still in process-led to a small underwriting profit and good cash flow, allowing investment income flow to the bottom line.”
The Corporation’s property casualty insurance group—The Cincinnati Insurance Company, The Cincinnati Indemnity Company and The Cincinnati Casualty Company-had first-quarter net written premium of $621 million, up 15.3 percent or $83 million over the comparable 2001 period. First-quarter net written premiums for commercial lines of insurance rose 16.8 percent to $474 million, while personal lines rose 10.8 percent to $147 million.
“The rate of new business growth returned to double digits this quarter after leveling off in 2001 while we concentrated on renewal underwriting,” Schiff continued. “An 11.6 percent increase to $71 million from $64 million was all the more satisfying because we have set the bar very high for information about each risk, and our agents are meeting the challenge with quality submissions. This effort and heightened risk selection, particularly in the workers’ compensation line, combined to limit new commercial growth to 3.7 percent or $2 million. Personal lines new business increased by $5 million, with premium growth outstripping policy growth.
Schiff also attributed the improved profitability in part to “firmer prices in commercial lines and homeowners’ rate increases.”
Topics Profit Loss
Was this article valuable?
Here are more articles you may enjoy.
Manufacturers Hit by Soaring Property Insurance Costs 
With American Mobile Out, Florida’s Mobile Home Insurance Market Seems to Have ‘Fallen Apart’ 
Labor Market Study: 14% of Carriers Plan to Reduce Headcounts 
Allstate to Sell Employer Voluntary Benefits Business to StanCorp for $2 Billion 
