Cincinnati Financial Corporation has announced that its consolidated Q3 results are expected to include pretax catastrophe losses of approximately $252m, representing an impact on the Q3 2022 combined ratio of approximately 13.9 percentage points, based on estimated property casualty earned premiums.
The catastrophe loss estimate includes $220m from Hurricane Ian, excluding any effects of reinstatement premiums assumed or ceded, in addition to less severe storms.
The company notes that its 5‑year historical average contribution of catastrophe losses to the combined ratio for Q3 is 11.6 percentage points.
Cincinnati observes that losses estimated for Hurricane Ian as of September 30, 2022, did not reach a level applicable to Cincinnati Insurance’s property catastrophe treaty or Cincinnati Re’s property catastrophe excess of loss coverage as both reinsurance arrangements include retention of the first $100m of any loss.
It adds that the estimate for total Q3 2022 catastrophe losses incurred includes approximately $46m for the commercial lines insurance segment; $69m for the personal lines insurance segment; $112m for Cincinnati Re and $25m for Cincinnati Global Underwriting Ltd.
Cincinnati expects estimated losses and expenses from catastrophe-related claims to bring Q3 2022 property casualty combined ratio to approximately 104%.
The combined ratio before catastrophe losses continues to reflect increased uncertainty of estimated ultimate losses, says Cincinnati, due in part to elevated paid losses reflecting economic or other forms of inflation. Net written premium growth is estimated to be approximately 14% for the quarter.
Steven J. Johnston, chairman and CEO, commented, “Our hearts go out to all those who found themselves in the path of Hurricane Ian. We have deployed storm teams – made up of our own associates who volunteer to serve extra during catastrophes so that we can quickly begin the restoration process for our policyholders. This is when our claims associates shine, delivering fast, fair and empathetic service.
“So far this year we’ve seen a variety of challenges – inflation, declining stock and bond markets and a Category 4 hurricane – reinforcing our belief in the importance of maintaining our long-term focus.
“Our solid financial position ensures our ability to continue executing on our strategic initiatives, growing our agency plant, introducing diversifying products and investing in our talented associates.”
The company also notes that declining stock markets drove Q3 earnings to a net loss estimated to be between $2.61 and $2.67 per share, with non-GAAP operating income ranging from $0.70 to $0.76 on a per share basis.
Cincinnati Financial plans to report final results for Q3 2022 on October 31, after the close of regular trading on the Nasdaq Stock Market.
