Primary insurer Cincinnati Financial has reported a net income of $703 million for the second quarter of 2021, compared with $909 million for the same prior year period.
The insurer reported a $206 million decline in income for the second quarter primarily due to the after-tax net effect of a $427 million decrease in net investment gains partially offset by a $207 million increase in after-tax property casualty underwriting income.
The company also reported an improved combined ratio of 85.5% compared to 103.1% for the same prior year period.
Steven J. Johnston, chairman, president and CEO, commented: “We continued to achieve strong non-GAAP operating income results, increasing that measure 311% to $292 million in the second quarter.
“Our property casualty insurance operations led the way, earning $221 million in pretax underwriting profit for the quarter. Investment income continued its steady contribution, growing 5% compared with second-quarter 2020.
“The change in accounting rules adopted in 2018 that we’ve mentioned in the past continues to cause volatility in net income results as unrealised investment gains and losses flow through that number.
“For instance, our second-quarter net income decreased $206 million compared to the second quarter of 2020 when stock markets were rebounding from pandemic-induced effects early last year. However, when you look at our net income for the first half of 2021 in total compared with the first half of 2020, you’ll see a positive swing of $1.640 billion.
“Looking closer at our insurance operations, property casualty underwriting produced our best results in 15 years, making strides in both our quarterly and first-half combined ratios in all of our major areas of business.
“Lower weather-related catastrophe losses supported by our initiatives to deepen product and geographic diversification helped our property casualty insurance operations improve our second-quarter and first-half combined ratios 17.6 points and 12.5 points, respectively, to 85.5% and 88.3%.”