Cincinnati Financial Corporation has reported a full-year net loss of $486 million, compared with a net income of $2.946 billion in 2021.
For Q4 alone, the firm posted a net income of $1.013 billion, compared with a net income of $1.470 billion for the same quarter of 2021.
This came after recognising an $806 million Q4 2022 after-tax increase in the fair value of equity securities still held.
Cincinnati Financial suggests that the $457 million decrease in Q4 2022 net income reflected the after-tax net effect of a $339 million decrease in net investment gains and a $129 million decrease in after-tax property casualty underwriting profit.
The firm reported a 94.9% Q4 property casualty combined ratio, up from 84.2% for Q4 of 2021.
Full-year 2022 property casualty combined ratio was 98.1%, with net written premiums up 13%.
Meanwhile, Cincinnati Financial saw 10% growth in Q4 2022 net written premiums, including price increases, premium growth initiatives and a higher level of insured exposures.
It also reported $238 million Q4 2022 property casualty new business written premiums, adding that agencies appointed since the beginning of 2021 contributed $20 million or 8% of total Q4 new business written premiums.
As for other sectors, the firm posted $14 million of 2022 life insurance subsidiary net income, up $5 million from the same period in 2021, and 2% growth in fourth-quarter 2022 term life insurance earned premiums.
Steven J. Johnston, chairman and chief executive officer, commented, “Winter Storm Elliott impacted policyholders in 44 states and Washington, D.C. The timing of the storm was particularly influential as many businesses were closed and families were travelling for the holiday, delaying discovery and reporting of losses.
“It’s rare for us to experience a catastrophe of Elliott’s magnitude in the fourth quarter. Our standard property casualty and excess and surplus businesses recorded $158 million in losses from this storm, while Cincinnati Re and Cincinnati Global Underwriting Ltd recorded $3 million in total.
“Catastrophe losses contributed 7.8 points to the quarter, twice as high as our fourth-quarter five-year average, pushing our fourth-quarter combined ratio to 94.9%.
“On a full-year basis, our combined ratio was 98.1%, within our long-term target of 95-100%, and marking 11 years in a row of underwriting profit.”
Johnston continued, “For the first time ever, new business written by our independent agents surpassed $1 billion. Strong pricing and exposure growth across our insurance business combined to support a second consecutive year of double-digit net written premium growth.
“While we continued to focus on pricing sophistication and segmentation to exercise underwriting discipline, full-year 2022 growth of 13% is our highest result since 2001.
“We are employing a number of strategies to maintain diversified, profitable growth, including: growing our management liability and surety book – which topped $300 million in written premiums for 2022; adding Cinergy, our small-business platform, to new states; writing excess and surplus lines homeowner policies in California and Florida; and participating in a firming property insurance market through Cincinnati Re and Cincinnati Global.”
He concluded, “We enter 2023 from a position of strength: our personal insurance business has recorded four consecutive years of underwriting profit; our commercial insurance business has enjoyed 11 years of underwriting profit; our excess and surplus lines company has achieved a combined ratio in the low-90s or better every year since 2012; and our life insurance company contributed record-high earnings of $66 million in 2022.
“While our commercial umbrella business was challenged during 2022, its five-year average combined ratio through 2022 was below 85%. Cash flow produced by our insurance business continues to fuel investment income as we grew pretax investment income 9% to a record-high $781 million.
“The board of directors expressed their confidence in our future by declaring a dividend increase in January. Our value creation ratio captures the dividends we pay along with changes in our book value. On a five-year average basis through 2022, we’ve achieved an 11.2% VCR – in line with our long-term target of 10-13%.”
Cincinnati Financial announced last month that it anticipated Q4 pretax catastrophe losses of approximately $141m.
At the time, the catastrophe loss estimate included $161m from Winter Storm Elliott, net of reinsurance and excluding any effects of reinstatement premiums assumed or ceded, in addition to less severe storms and favourable loss reserve development on previous catastrophe events, primarily ones that occurred in 2022.
