Cincinnati Financial Corp. reported $156 million, or 95 cents per share, of net income for the third quarter of 2010 compared with a net income of $171 million, or $1.05 per share, in the third quarter of 2009.
The company’s third quarter 2010 operating income was $56 million, or 34 cents per share, of operating income compared with operating income of $96 million, or 59 cents per share in the third quarter last year.
Net income and operating income for the third quarter of 2010 declined due to property/casualty insurance results that were lower by $42 million after taxes.
For the first nine months of 2010, the contribution from property/casualty insurance rose $25 million over the year-ago period. The contribution to net income from investments, including net realized investment gains, rose $26 million for the quarter and $42 million for the nine-month period.
Cincinnati Financial’s third quarter 2010 property/casualty combined ratio was 103.9 percent, up 8.8 percentage points from one year ago primarily due to a lower benefit from reserve development on prior accident years and relatively higher weather-related catastrophe losses.
The company had a 1 percent increase in property/casualty net written premiums, including personal lines segment growth of 9 percent.
New property/casualty business written by agencies was $109 million, up $2 million from third quarter 2009. A total of $11 million was contributed during the quarter by all agencies appointed since the beginning of 2009.
The company’s investment income, after income tax effects, grew 1 percent in the third quarter of 2010. On a nine-month basis, it grew 4 percent, driven by pre-tax interest income growth of 7 percent.
Kenneth W. Stecher, president and chief executive officer, said the company’s balance sheet strength “grew as of September 30, 2010, with assets topping $15 billion and shareholders’ equity reaching $5 billion.”
“Book value per share rose 6 percent during the third quarter and 5 percent over the nine-month period,” he added.
Stecher also noted, “With the support of our agents, we are declining business we consider underpriced and, at the same time, enjoying growth in states and lines of business that we have targeted for premium growth.”
Stecher added that written premium growth in the company’s “personal lines and excess and surplus lines more than offset the 3 percent decline in our larger commercial segment.”
He said while the overall property/casualty combined ratio was unsatisfactory, profitability in Cincinnati Financial’s commercial casualty unit remained strong.
“Our challenge remains to improve performance of our homeowner personal line of business and our workers’ compensation commercial line, which have been offsetting otherwise profitable overall underwriting results,” he said.
Source: Cincinnati Financial Corp.
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