Primary insurer Cincinnati Financial improved its property casualty combined ratio to 91.2% in the first quarter of 2021 compared to 98.5% for the year prior.
The insurer also reported an underwriting profit of $133 million compared to $24 million in 2020.
Its net income improved from last year as it reported a $620 million income compared to a $1.226 billion loss for the year prior, this is a vast improvement as last year the company’s investment result suffered from the financial market volatility which was being driven by the pandemic and subsequent recessionary risks.
Steven J. Johnston, chairman, president and CEO, commented: “Severe winter weather impacted communities from Washington state to the East Coast, and our claims representatives were there, delivering fast and empathetic claims service.
“In Texas alone, we’re assisting more than 600 primary property casualty policyholders, preparing to pay more than $50 million to help restore lives and livelihoods. Altogether, we experienced nearly $150 million in catastrophe losses in the first quarter of 2021, contributing 10.4 points to our combined ratio, considerably higher than our first-quarter 10-year average of 6.3 points.
“Despite those elevated catastrophe losses, we achieved our best first-quarter combined ratio result in eight years. Producing a 91.2% combined ratio demonstrates the power of our initiatives to balance growth with profitability through pricing segmentation and product and geographic diversification. First-quarter underwriting profit grew $109 million compared to the first quarter a year ago.
“Our current accident year combined ratio before catastrophe losses, which removes much of the variability caused by catastrophes and reserve development, also improved 5.3 points compared with last year’s first quarter to a satisfactory 86.2%. Contributing to that good result was a 3-point improvement in our underwriting expenses due mainly to a few unusual items such as lower levels of business travel spending and uncollectible premiums.”
The insurers property casualty net written premiums grew 12% for the first quarter compared with the same quarter of 2020, with its standard commercial lines and personal lines policies continued to average renewal price increases at percentages in the mid-single-digit range.
Excess and surplus lines policy pricing strengthened to average renewal price increases at percentages in the high-single-digit range.
He continued: “Agents continued to respond favourably to the increased availability of pricing segmentation through The Cincinnati Casualty Company and our excess and surplus lines homeowner policies, growing personal lines new business written premiums by 35% over the same period of 2020. Our reinsurance division, Cincinnati Re, also experienced another strong quarter of growth, contributing 6% to the growth rate for total property casualty net written premiums.
“Consolidated cash and total investments topped $22 billion while we prudently added to insurance reserves that in total reached nearly $10 billion. Book value per share rose to $69.16 driven by the contribution of our insurance operations and the strength of our investment portfolio. This ample capital allows us to execute on our long-term strategies and, at the same time, continue to pay dividends to shareholders through the normal variability of investment and insurance markets.
“In January, the board of directors expressed its confidence in our financial strength by again raising the cash dividend. Our value creation ratio, which considers those dividends as well as growth in book value, was 4.1% for the first quarter, on track to meet our annual average target of 10% to 13%.”