Primary insurer Cincinnati Financial improved its property casualty combined ratio to 87.3% in the fourth quarter of 2020, despite incurring higher than average catastrophe losses.
The combined ratio improved by 4.3 points from 91.6% in Q4 2019, while underwriting profit grew by 57% to $187 million over the same period.
This was despite a Q4 catastrophe loss impact that was 2.1 percentage points higher than the 10-year average.
The underwriting growth helped Cincinnati to achieve net income of $1.05 billion in the quarter, representing a 68% increase on the $626 million reported in Q4 2019.
During Q4, the company recorded 7% growth net written premiums, reflecting price increases and premium growth initiatives.
And investment income similarly grew by 2% to $172 million, including 7% growth for stock portfolio dividends and 2% growth in interest income.
However, looking at the full year, Cincinnati’s net income decreased by 39% from $2.00 billion to $1.22 billion, while underwriting profit dropped by 65% from $341 million to $119 million.
The combined ratio also deteriorated by 4.3 points from 93.8% to 98.1% over the full-year period, although investment income grew by 4% to $670 million.
“Spring storms in the Midwest, hurricanes in the Southeast and wildfires in the West: across our country, weather-related catastrophes were relentless in 2020,” said Steven J. Johnston, President and CEO at Cincinnati. “In the midst of a global pandemic, our experienced claims professionals rose to the occasion, responding quickly and compassionately.”
“This year, it was more important than ever to keep our attention centered on our proven strategies to enhance the profitability of our core book of business,” he continued.
“A steady rise in renewal premiums led the way to what we believe will again be net written premium growth ahead of the industry average. We successfully managed commercial lines pricing, improving it as the year progressed to see average increases in the mid-single-digit percent range in the fourth quarter.”