Cincinnati Financial has some decreases, increases in 2022′s financials

Credit: Nick Graham

Credit: Nick Graham

Butler County’s largest employer had a mixed ending to 2022, but Cincinnati Financial Corporation’s leadership has hope for this year.

The Fortune 500 corporation reported operating income decreases for the fourth quarter of 2022 as well as the full year compared to the respective time periods in 2021. For all of 2022, Cincinnati Financial reported a net loss of $486 million, compared with a net income of $2.95 billion in 2021. Additionally, in the fourth quarter of 2022, the company posted a net income of just more than $1.01 billion, which is nearly $500 million less than 2021′s fourth quarter.

The company also reported a $457 million decrease in the last three months of 2022, stating it reflected the after-tax net effect of a $339 million decrease in net investment gains, as well as a $129 million decrease in after-tax property casualty underwriting profit.

Cincinnati Financial Chairman and CEO Steven Johnston said with increases in some areas of the company and decreases in other areas, the insurance giant had entered 2023 “from a position of strength.”

“Our personal insurance business has recorded four consecutive years of underwriting profit, our commercial insurance business has enjoyed 11 years of underwriting profit, our excess and surplus lines company has achieved a combined ratio in the low-90s or better every year since 2012, and our life insurance company contributed record-high earnings of $66 million in 2022,” he said. “While our commercial umbrella business was challenged during 2022, its five-year average combined ratio through 2022 was below 85%.”

The underwriting profit was tied to Winter Storm Elliott, which Johnson said is rare to have a storm of its magnitude in the fourth quarter. The winter storm affected policyholders in 44 states and Washington, D.C., and the southwest Ohio region right before Christmas.

“Catastrophe losses contributed 7.8 points to the quarter, twice as high as our fourth-quarter five-year average, pushing our fourth-quarter combined ratio to 94.9%,” Johnson said. “On a full-year basis, our combined ratio was 98.1%, within our long-term target of 95-100%, and marking 11 years in a row of underwriting profit.”

Johnson continued to say the cash flow produced by the insurance business “continues to fuel investment income as we grew pretax investment income 9% to a record-high $781 million.”

“The board of directors expressed their confidence in our future by declaring a dividend increase in January,” he said. “Our value creation ratio captures the dividends we pay along with changes in our book value.”

Johnson continued to say that for the first time, Cincinnati Financial’s “new business written by our independent agents surpassed $1 billion. Strong pricing and exposure growth across our insurance business combined to support a second consecutive year of double-digit net written premium growth. While we continued to focus on pricing sophistication and segmentation to exercise underwriting discipline, full-year 2022 growth of 13% is our highest result since 2001.”

He said the company is employing several strategies to maintain diversified and profitable growth, which includes, among other tactics, growing its management liability and surety book, which topped $300 million in written premiums for 2022.

Cincinnati Financial Corporation is a property and casualty insurance company and has been on the Fortune 500 list for six of the past seven years. The company employs around 3,300 at its headquarters on South Gilmore Road in Fairfield and more than 5,100 people company-wide.

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