Cincinnati Insurance Estimates $160M-$170M in Q2 Storm Losses

The Cincinnati Insurance Companies’ property/casualty group expects second-quarter catastrophe losses of roughly $160 million to $170 million.

That loss amount represents an impact on the second-quarter 2016 combined ratio of approximately 14.4 to 15.3 percentage points, based on estimated property/casualty earned premiums, the company said.

Cincinnati Insurance is a subsidiary of Cincinnati Financial Corp. Its 10-year historical average contribution of catastrophe losses to the combined ratio is 13.4 percentage points for the second quarter. Catastrophe losses from storm damage affect property/casualty insurance underwriting income, one of the sources of consolidated net income along with profits from investment operations and life insurance operations.

The company estimates its second-quarter 2016 P/C combined ratio will be in the 98 percent to 101 percent range.

Steven J. Johnston, president and chief executive officer, commented: “It was a stormy spring in the South and Midwest, and our teams of claims professionals worked quickly to provide the highest quality of service to affected policyholders.

“Roughly one-third of our second-quarter catastrophe losses came from hail damage to commercial properties in the San Antonio, Texas, area.”

In the first quarter of 2016, Cincinnati Financial Corp. reported a net income of $188 million, or $1.13 per share, compared with $128 million, or 77 cents per share, in the first quarter of 2015. Operating income rose by $53 million, or 53 percent, to $148 million in the first quarter. That’s up from $97 million in the first quarter of 2015.

The company attributed the $60 million increase in net income for the first quarter of this year to two primary items: $45 million of improvement in the contribution from P/C underwriting — cat losses were $6 million less compared with the same quarter a year ago; and a $9 million increase in net realized investment gains.