Cincinnati Financial Corporation has reported a rise in net income for both the fourth quarter and full year 2021, as the firm’s property and casualty (P&C) insurance operation produced an improved combined ratio for both periods.
When compared with the previous year, net income increased by 40% to $1.47 billion for Q4 and by 142% to $2.95 billion for the full year 2021.
Across the group, Cincinnati Financial has reported earned premiums of $1.7 billion for Q4 and $6.5 billion for 2021, representing year-on-year growth of 10% and 8%, respectively.
Within its insurance operations, the company has announced a P&C combined ratio of 84.2% for Q4 against 87.3% a year earlier, and a P&C combined ratio of 88.3% for the full year 2021, compared with 98.1% in the prior year period.
The firm’s P&C business saw its underwriting profit jump from $187 million in Q4 2020 to $256 million in Q4 2021. For the full year, the P&C underwriting income reached $731 million, which is up 514% on the $119 million posted a year earlier.
Loss and loss expenses increased by 3% to $855 million in Q4 2021, but fell by 6% for the year to under $3.6 billion. At the same time, underwriting expenses increased to $490 million in Q4 2021 and increased to $1.9 billion for the full year 2021.
Earned premiums in P&C insurance spiked by 10% to reach $1.6 billion in Q4 2021, and increased by 9% for the full year to $6.2 billion.
Steven J. Johnston, Chairman, President and Chief Executive Officer (CEO), commented: “Non-GAAP operating income finished the year strong, increasing 96% to $1.043 billion, compared with year-end 2020. Net income continued its pattern of wide swings as the effects of a robust equity market pushed it to nearly $3 billion at the end of the year, more than double our 2020 result.
“The communities we serve through our insurance business saw a high number of weather-related catastrophes near the end of 2021, including a storm system that left a wide path of destruction across the Midwest in December. While no one likes to witness the pain and destruction these events bring, it is when our field claims representatives shine, delivering support to our policyholders and agents with empathy and warmth.
“When catastrophes strike, we must have the financial strength to respond quickly and fairly. That desire to be ready to serve those who need us led to our multifaceted approach to refine our pricing precision, including increasing loss control reviews, improving pricing segmentation and adding third-party data sources – enhancing financial strength over time. We believe these long-term initiatives are on the right track as our full-year 2021 combined ratio improved 9.8 points to 88.3% compared with year-end 2020.
“We continued our record of overall favorable reserve development for a 33rd consecutive year. Net favorable reserve development on prior accident years benefited our fourth-quarter and full-year combined ratios by 6 points and 7 points, respectively.
“Recognizing our financial strength, our consistently positive growth and profitability and our strong agency relationships, A.M. Best Co., a leading credit rating agency specializing in the insurance industry, recently affirmed our A+ (Superior) rating. Only the top approximately 12% of insurer groups qualify for Superior ratings from A.M. Best.”
