Cincinnati Financial’s combined P&C ratio strengthens in 2021
Cincinnati Financial Corporation reported increased net income for the fourth quarter and full year 2021 as the company’s property and casualty insurance business produced an improved combined ratio for both periods.
Year over year, net income increased 40% to $1.47 billion for the fourth quarter and 142% to $2.95 billion for the full year 2021.
Group-wide, Cincinnati Financial reported earned premiums of $1.7 billion for the fourth quarter and $6.5 billion for 2021, representing annual growth of 10% and 8%, respectively .
Within its insurance business, the company reported a combined P&C ratio of 84.2% for the fourth quarter compared to 87.3% a year earlier, and a combined P&C ratio of 88.3% for the whole of the year 2021, compared to 98.1% the previous year.
The company’s P&C business saw underwriting income increase from $187 million in the fourth quarter of 2020 to $256 million in the fourth quarter of 2021. For the full year, damages underwriting income reached $731 million, a 514% increase from $119 million a year earlier.
Losses and loss charges rose 3% to $855 million in the fourth quarter of 2021, but fell 6% for the year to less than $3.6 billion. At the same time, technical charges increased to $490 million in the fourth quarter of 2021 and to $1.9 billion for the full year of 2021.
Premiums earned in P&C insurance jumped 10% to $1.6 billion in the fourth quarter of 2021, and were up 9% for the full year to $6.2 billion.
Steven J. JohnstonChief Executive Officer (CEO), said, “Non-GAAP operating income ended the year strong, increasing 96% to $1.043 billioncompared to the end of 2020. Net income continued its trend of strong fluctuations, with the effects of a robust stock market pushing it to almost $3 billion at the end of the year, more than double our 2020 result.
“The communities we serve through our insurance business experienced a large number of weather-related disasters towards the end of 2021, including a storm system that left a wide path of destruction across the Midwest. in December. While no one likes to witness the pain and destruction these events bring, that’s when our claims representatives in the field shine, offering support to our policyholders and agents with empathy and warmth.
“When disasters strike, we need to have the financial strength to respond quickly and fairly. This desire to be ready to serve those who need us has driven our multi-faceted approach to refining our pricing accuracy, including increasing loss control reviews, improving price segmentation and adding third-party data sources, improving financial strength over time. We believe these long-term initiatives are on track as our combined ratio for the full year 2021 improved by 9.8 points to 88.3% compared to the end of 2020.
“We continued our record of overall favorable reserve development for a 33rd consecutive year. Net favorable prior accident year reserve development benefited our fourth quarter and full year combined ratios by 6 points and 7 points, respectively.
“Recognizing our financial strength, consistently positive growth and profitability, and strong agency relationships, AM Best Co., a leading credit rating agency specializing in the insurance industry, recently affirmed our A+ rating. (Superior). Only the top 12% of insurer groups qualify for AM Best’s top ratings. »