Cincinnati had a strong Q2’2023 with a notable 23% growth in personal lines

Cincinnati Insurance hosted its Q2’23 earnings call on Jul 28th, 2023. Select highlights:

• Net income for the second quarter of 2023: $534 million (compared to a net loss of over $800 million in the same period last year).
• Large income swings due to gains and losses from securities in the equity portfolio affecting net income.
• Equity portfolio’s value as of June 30: $6.1 billion (an 8% increase since the end of the first quarter).
• Non-GAAP operating income for the quarter: $191 million (more than double the $94 million from a year ago).
• Second quarter 2023 property casualty combined ratio: 97.6% (5.6 percentage points better than last year).
• Excluding catastrophe losses, the accident year combined ratio for the second quarter was 90.4% (2.4 percentage points better than the same period a year ago).
• Continued confidence about performance for the second half of the year despite increased catastrophe losses and elevated inflation effects.
• Pricing continued to accelerate during the second quarter of this year.
• Efforts to address inflation, such as adjusting premiums for rising property costs.
• Improved underwriting performance ratios in most major lines of business compared to the first quarter of this year.
• 2023 consolidated property casualty loss and loss expense ratio improved from 2022 by 4.5 percentage points on a case incurred basis (including 0.6 point improvement on a paid basis) measured at June 30 before catastrophe losses.
• Commercial Lines’ net written premiums grew 3% in the second quarter of 2023 due to disciplined practices, especially for commercial umbrella risks.
• The combined ratio improved by 9.4 percentage points compared to last year, with 1.5 points attributed to lower catastrophe losses.
• The 10% reduction in new business written premiums during the second quarter was anticipated and resulted from pricing and underwriting discipline.
• Personal Lines saw a 23% growth in net written premiums, driven by middle market accounts and Cincinnati Private Client business catering to high net worth clients and agencies. The combined ratio improved by 4.5 percentage points compared to last year, despite a slight increase of 0.6 points from catastrophe losses.
• Steve Spray, president and director of Cincinnati insurance, provided more details about the competition affecting new business production in the commercial sector, sharing that different states have various competitors with diverse risk perspectives and that their focus has been on disciplined pricing and underwriting, prioritizing profits and segmenting the business. “And we’ve just got the tools today that we didn’t have in the past to be able to be disciplined about it.”
• The high net worth segment, represented by Cincinnati Private Client, now accounts for approximately 55% of its business. In California, Cincinnati shifted its approach – writing homeowners business as excess and surplus lines. “We are in this high net worth business for the long term.”