Yahoo Finance Cincinnati Financial Corp (CINF) Q1 2024 Earnings Call Transcript Highlights: Strong ...
Net Income: $755 million for Q1 2024, with $484 million from the increase in fair value of equity securities.
Non-GAAP Operating Income: $272 million for Q1 2024, nearly doubled from last year's $141 million.
Combined Ratio: 93.6% for Q1 2024, improved by 7.1 points from last year.
Net Written Premiums Growth: 11% increase for Q1 2024.
Investment Income Growth: Up 17% for Q1 2024 compared to Q1 2023.
Dividend Income: Increased by 9% for Q1 2024.
Bond Interest Income: Grew 21% for Q1 2024.
Value Creation Ratio (VCR): 5.9% for Q1 2024.
Net Reserve Development: $100 million favorable for Q1 2024.
Shareholder Dividends: $116 million paid in Q1 2024.
Share Repurchases: 680,000 shares at an average price of $109.89 per share in Q1 2024.
Book Value: Record high of $80.83 per share at Q1 2024 end.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide insights on the loss picks in commercial casualty and whether there have been any changes to your view of loss trends given the trajectory of the current accident year loss ratio? A: Steven Justus Johnston, Chairman & CEO of Cincinnati Financial, responded that they are confident with the loss picks and are reflecting uncertainty. He noted that while there are positive rate trends exceeding loss cost trends in commercial casualty, they are recognizing additional uncertainty in their loss picks for the first quarter.
Q: Regarding workers' compensation, has there been a change in the initial loss pick due to the decrease in pricing? A: Johnston explained that the trends in workers' compensation have been consistent, with rates under pressure but strong historical performance. They are recognizing the uncertainty from rate decreases with a slightly higher loss pick for the current year.
Q: Could you clarify why the underlying loss ratio for commercial lines improved excluding Cincinnati Re and Global? A: Johnston pointed out that the improvement was noted in the first three segments (Commercial Lines, Personal Lines, and Excess and Surplus Lines), and the mention of excluding Cincinnati Re and Global was to simplify the understanding of consolidated figures. He emphasized the strong performance and reshaping of Cincinnati Re's portfolio to reduce risk and volatility.
Q: How is the underlying loss ratio for Cincinnati Re and Global expected to behave given the business mix shifts? A: Johnston confirmed that due to the shift towards more proportional reinsurance, the underlying loss ratio might appear higher but with reduced volatility, indicating a less risky portfolio.
Q: What are your expectations for the profitability and pricing trends in personal auto insurance? A: Johnston expressed confidence in the pricing and profitability across Personal Lines, including auto insurance. He noted that the pricing has been effective, and they anticipate reaping benefits from the current pricing strategies.
Q: Can you discuss the growth and performance of commercial auto, particularly in terms of new units versus rate-driven growth? A: Stephen Michael Spray, President of The Cincinnati Insurance Company, mentioned that growth in commercial auto is driven by both rate increases and new business. He highlighted their disciplined approach to pricing and risk selection, which has positioned the commercial auto book favorably amidst challenging industry conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
