• Net Loss: $90 million for the first quarter of 2025.
• Non-GAAP Operating Loss: $37 million, a swing of $309 million from the previous year.
• Catastrophe Losses: $356 million increase in after-tax catastrophe losses.
• Property Casualty Combined Ratio: 113.3%, 19.7 percentage points higher than the previous year.
• Accident Year Combined Ratio (before catastrophe losses): 90.5%, improved by 0.6 percentage points compared to the previous year.
• Reinsurance Recovery: $429 million estimated recovery from primary property catastrophe reinsurance treaty.
• Net Written Premiums Growth: 11% for the quarter.
• Commercial Lines Combined Ratio: 91.9%, improved by 4.6 percentage points.
• Personal Lines Combined Ratio: 151.3%, 57.4 percentage points higher than the previous year.
• Excess and Surplus Lines Combined Ratio: 88.3%, improved by 3.6 percentage points.
• Investment Income Growth: 14% increase compared to the first quarter of 2024.
• Bond Interest Income Growth: 24% increase.
• Cash Flow from Operating Activities: $310 million for the first three months of 2025.
• Dividends Paid: $125 million in the first quarter of 2025.
• Share Repurchase: 300,000 shares at an average price of $139.96 per share.
• Book Value per Share: $87.78 at quarter-end.

• Warning! GuruFocus has detected 3 Warning Signs with SBSI.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cincinnati Financial Corp (NASDAQ:CINF) reported strong growth in investment income, up 14% compared to the first quarter of 2024.
• The commercial lines insurance segment produced a superb combined ratio of 91.9%, showing steady improvement over the past three years.
• Excess and surplus lines had an outstanding quarter with a combined ratio below 90%, indicating strong underwriting profitability.
• Consolidated property casualty net written premiums grew 11% for the quarter, with 14% growth in agency renewal premiums.
• Cincinnati Financial Corp (NASDAQ:CINF) maintained a strong financial position with a debt to total capital ratio under 10% and a quarter-end book value of $87.78 per share.

Negative Points

• Cincinnati Financial Corp (NASDAQ:CINF) reported a net loss of $90 million for the first quarter of 2025, driven by a $356 million increase in after-tax catastrophe losses.
• The property casualty combined ratio increased by 19.7 percentage points compared to the first quarter of last year, primarily due to higher catastrophe losses.
• Personal lines experienced a significant increase in the combined ratio to 151.3%, largely due to higher catastrophe losses and reinstatement premiums.
• Cincinnati Re reported an underwriting loss with a combined ratio of 137.4%, impacted by 63.9 percentage points from catastrophe losses.
• Cincinnati Global's net written premiums decreased by 9% from a year ago, reflecting underwriting discipline in a softening market.

Q & A Highlights

Q: Can you confirm if there were any reserve movements in commercial casualty and if lower emergence on known claims was mainly property-related? A: Yes, there was $1 million of favorable development in commercial casualty, with no significant movements between accident years. The lower emergence was indeed property-related. - Michael Sewell, CFO

Q: How much of the California wildfire claims are still open, and how do you view the risk of these open claims? A: We've paid about 65% of the gross claims, amounting to $488 million. The net loss from the California wildfires is at the low end of our range, $449 million. We are collecting reinsurance on the rest. - Michael Sewell, CFO

Q: How do tariffs impact your overall book, particularly concerning the California fires? A: Tariffs are a macro pressure, but Cincinnati is prepared to respond. We have a history of prudent reserving and sophisticated pricing tools to manage such impacts. - Stephen Spray, CEO

Q: Is there a structural response to tariffs, given your three-year contracts in commercial lines? A: About 75% of our commercial lines premiums are adjusted annually. We have tools to segment and price business effectively, even with three-year policies. Exposures are adjusted annually, which helps manage tariff impacts. - Stephen Spray, CEO

Q: Given the significant catastrophes early in the year, is Cincinnati considering buying additional reinsurance? A: We reinstated our property cat reinsurance tower after the first event and currently have no plans to purchase additional reinsurance. We regularly evaluate capital management strategies. - Stephen Spray, CEO

Q: Is reinsurance still a diversifier given recent volatility and potential declines in property cap pricing? A: Yes, reinsurance remains core to our strategy. Despite volatility, our inception-to-date combined ratio for Cincinnati Re is 95.8, providing diversifying revenue and profit streams. - Stephen Spray, CEO

Q: How does appointing new agencies impact Cincinnati Financial's culture? A: We appoint high-quality agencies aligned with our values, maintaining a family feel. Our regional approach and local presence ensure that new agencies receive the Cincinnati experience, fueling future growth. - Stephen Spray, CEO

Q: Are you seeing increased competition in larger accounts and specialty lines? A: Yes, larger accounts face more competition, but the commercial market remains rational. Our Lloyd's syndicate experiences pressure in shared and layered markets, but we maintain underwriting discipline. - Stephen Spray, CEO

Q: What are the trends in commercial auto reserves and any reserve issues? A: We had $7 million of reserve strengthening in commercial auto due to higher-than-expected loss emergence from 2019-2021. Overall, we had $91 million of favorable development, spread across various lines. - Michael Sewell, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.