Cincinnati Financial Q4’22 earnings call

Cincinnati Insurance hosted its Q4 2022 earnings call on Feb 7, 2023. The highlights:

• Reported a full-year net loss of $486 million, compared with a net income of $2.946 billion in 2021
• Fourth-quarter 2022 net income of $1.013 billion, compared with net income of $1.470 billion in the fourth quarter of 2021
• 94.9% fourth-quarter 2022 property casualty combined ratio, up from 84.2% for the fourth quarter of 2021
• Challenges during the year included elevated inflation and higher losses from natural catastrophe events
• Responded with actions to improve underwriting selection and pricing, including premium rate increases and increased expectations by underwriters as they factor inflationary trends into areas such as risk selection criteria, pricing of policies and adjusting premium factors for changes in exposure
• Commercial umbrella loss experience has been elevated, although still elevated in the fourth quarter, it was to a less degree than earlier in 2022
• Underwriters work to retain and write more profitable accounts while also addressing ones that Cincinnati determined have inadequate pricing
• Consolidated property-casualty net written premiums rose 10% for the fourth quarter and 13% for the full year of 2022
• E&S Lines Insurance segment continued in the high single-digit range
• Personal lines average renewal price increases were at the high end of the low single digits with both auto and homeowner higher than in the third quarter
• Expect premium rates for personal auto line of business to continue to rise – full year 2023 personal auto written premium effect will be an average premium rate increase of ~10%
• Policy retention rates improved from year-end 2021 with Commercial Lines segment moving higher in the upper 80% range and Personal Lines segment rising to the low to mid-90% range
• Commercial Lines segment grew both fourth quarter and full year 2022 net written premiums by 9%.
• Commercial Lines combined ratio for both the quarter and full year 2022 was ~99%
• Personal Lines segment – net written premium grew 16% for the quarter and 15% for the full year 2022
• Continued with its planned expansion of high net worth business produced by agencies
• E&S line segment finished the year with a 90.4% combined ratio, combined with 2022 net written premium growing 18%
• Life insurance subsidiary reported full year 2022 net income of $66 million – up 50% from a year ago and term life insurance earned premiums grew by 5%
• Cinergy rollout is going extremely well – Cinergy is the insurer’s small-business platform