Insurer Cincinnati Financial Corporation has reported a full-year 2023 net income of $1.84 billion, compared with a net loss of $487 million in 2022.
For Q4 alone, the firm posted a net income of $1.18 billion, compared with a net income of $1.01 billion for the same quarter of 2022.
This came after recognising an $824 million Q4 2023 after-tax increase in the fair value of equity securities still held.
Cincinnati Financial suggests that the $170 million increase in Q4 2023 net income reflected the after-tax net effect of a $126 million increase in after-tax property casualty underwriting profit, a $25 million increase in net investment income and a $13 million increase in net investment gains.
The firm reported a 87.5% Q4 property casualty combined ratio, improved from 94.9% for the fourth quarter of 2022.
Full-year 2023 property casualty combined ratio was 94.9%, with net written premiums up 10%.
Meanwhile, Cincinnati Financial saw 13% growth in Q4 2023 net written premiums, including price increases, premium growth initiatives and a higher level of insured exposures.
It also reported $310 million fourth-quarter 2023 property casualty new business written premiums, adding that agencies appointed since the beginning of 2022 contributed $28 million or 9% of total fourth-quarter new business written premiums.
As for other sectors, the firm posted $10 million of fourth-quarter 2023 life insurance subsidiary net income and 4% growth in fourth-quarter 2023 term life insurance earned premiums.
Steven J. Johnston, chairman and chief executive officer, commented: “Non-GAAP operating income finished the year strong, increasing 42% to $952 million, compared with full-year 2022. Net income continued its pattern of wide swings as the effects of a robust equity market in the fourth quarter pushed it to nearly $2 billion at the end of the year, compared with a net loss in 2022.”
“Turning to our insurance business, property casualty underwriting achieved excellent fourth-quarter results. Underwriting profit for the quarter increased 171%, boosting full-year underwriting gains to $401 million. Our full-year 2023 combined ratio improved 3.2 points to 94.9%, benefiting from sound underwriting judgment and lower catastrophe losses. Our 2023 core combined ratio on a current accident year before catastrophe loss basis was 1.8 points better than full-year 2022.”
“While favorable reserve development for the fourth quarter was lower than usual, 2023 marks 35 consecutive years of property casualty net favorable reserve development on prior accident years.”
“We believe our property casualty net written premium growth was healthy and it accelerated as the year progressed. Thanks to the hard work by our associates and the steady contributions of our independent agency partners, we increased net written premiums by 10% for the year to more than $8 billion. For our life insurance business, earned premiums rose 4%.”
“We continue to refine pricing precision on accounts we underwrite. Our ability to price on a policy-by-policy basis will support our efforts to maintain appropriate pricing as we navigate a challenging market environment in 2024. Appropriate pricing, combined with our hallmarks of strong agency relationships and overwhelming claims service, will help our agents attract and retain high-quality business.”
Cincinnati Re and Cincinnati Global Underwriting Ltd. continue to perform as planned and were very profitable in 2023, with a 77% combined ratio in total. Their unique risk profile helps diversify earnings and both are good examples of how we take advantage of market opportunities as they arise, the company noted.
“At December 31, 2023, our book value per share climbed 15% from a year ago, to $77.06, bolstered by record pretax net investment income of $894 million for the year.
“Consolidated cash and total investments reached more than $26 billion. Our ample capital allows us to execute on our long-term strategies and, at the same time continue to pay dividends to shareholders. Our value creation ratio for 2023, which considers the dividends we pay as well as growth in book value, was 19.5%, ahead of our 10% to 13% average annual target for this measure,” Johnston noted.
