US primary insurer Cincinnati Financial has reported a significant decrease in earnings for the third quarter of 2019, despite improvements to its underwriting performance.
The company reported net income of $248 million for Q3 2019, compared with $553 million for the same period last year.
The $305 million difference was primarily attributed to a $291 million decrease in net investment gains and $56 million of other non-recurring items.
However, Cincinnati did still record a 31% increase in operating income, which came out at $179 million for the quarter.
Results were also lifted by the property casualty underwriting result, which saw profits almost doubled from $42 million in Q3 2018 to $83 million this year.
This resulted in an improvement to the insurer’s combined ratio, which moved from 96.8% to 94.2% year-on-year.
Cincinnati recorded 8% growth in third-quarter net written premiums, reflecting price increases and premium growth initiatives.
Looking at the first nine months of the year, Cincinnati’s results faired better, with net income increasing by 86% to $1.37 billion year-on-year and underwriting profit up 107% to $222 million.
“New business premiums written by agencies rose 18% to a record $585 million in the first nine months of 2019, explained Steven J. Johnston, President and Chief Executive Officer of Cincinnati Financial.
“Net written premiums for the first nine months grew 9% compared with the first nine months of 2018, reflecting low-single-digit average price increases for commercial lines standard and nonadmitted business, and mid-single-digit average price increases in personal lines.
Johnston further commented: “As we apply a consistent reserving approach and as new data comes to light, we strive to take appropriate action. About four years ago, we saw elevated loss cost trends in commercial casualty. Since the end of 2015, we’ve increased net loss reserves for that line of business by 26%, while annualized earned premiums rose approximately 8%.”