Cincinnati Financial Corporation Announces Preliminary Estimate for Losses from Spring Storms, Civil Unrest and Pandemic

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CINCINNATI, July 14, 2020 /PRNewswire/ — Cincinnati Monetary Company (Nasdaq: CINF) right now introduced that its consolidated second-quarter outcomes are anticipated to incorporate pretax disaster losses of roughly $231 million – including 16.5 share factors to the quarterly mixed ratio based mostly on estimated property casualty earned premiums.

Two multi-state storms in early April every triggered roughly $50 million in losses, along with disaster losses from a number of much less extreme storms. Broken property resulting from civil unrest resulted in $29 million in losses, together with $eight million for Cincinnati World Underwriting Ltd^sm. The estimate for whole second-quarter 2020 disaster losses incurred consists of roughly: $122 million for the industrial strains insurance coverage section; $91 million for the non-public strains insurance coverage section; $three million for the surplus and surplus strains insurance coverage section; and $15 million for Cincinnati World.

Steven J. Johnston, chairman, president and CEO, commented: “Cincinnati Insurance coverage was constructed to face up to difficult quarters because of our sturdy steadiness sheet and resilient enterprise mannequin. Our discipline claims associates rose to the event this spring, serving policyholders with empathy within the midst of the worldwide pandemic. They continued to totally and shortly assessment claims to find out the suitable cost based mostly on the coverage contract. Our strong monetary place ensures our capacity to assist the households and companies in our brokers’ communities on the highway to restoration after a lined loss.”

The corporate additionally estimates second-quarter 2020 pandemic-related incurred losses and bills to whole roughly $65 million, impacting the quarterly mixed ratio by roughly 4.6 share factors. The entire consists of:

$15 million for Cincinnati Re^® and $9 million for Cincinnati World losses. Roughly half of the losses for Cincinnati Re characterize its estimated share from reinsurance treaties with firms that supplied affirmative protection for pandemic-related enterprise interruption, and a lot of the the rest is an estimated share of treaties overlaying skilled legal responsibility. A lot of the losses for Cincinnati World characterize its share of potential losses from enterprise interruption protection for big dangers with custom-made coverage phrases and situations
$6 million for credit score losses associated to uncollectible premiums
$19 million for authorized bills in protection of enterprise interruption claims
$16 million in underwriting bills for the beforehand introduced Keep-at-Dwelling policyholder credit score on April and Could private auto insurance policies

Estimated losses and bills from catastrophe-related claims and the pandemic are anticipated to convey the corporate’s second-quarter 2020 property casualty mixed ratio to roughly 102% to 104%. Web written premium progress is estimated to be between 5% and 6% for the quarter.

In the course of the second quarter of 2020 the corporate’s funding portfolio improved. A internet funding acquire attributable primarily to the fairness safety portfolio, plus adjustments in unrealized beneficial properties for the fixed-maturity safety portfolio, on a pretax foundation totaled roughly $1.6 billion.

There are nonetheless vital uncertainties concerning the last word results of the COVID-19 pandemic on future insurance coverage premiums, losses and funding outcomes. The unaudited loss estimates and different information introduced on this launch is preliminary, based mostly upon administration estimates and topic to the completion of our procedures for the preparation of our quarterly monetary statements. In consequence, we might make additional changes between now and the time the monetary outcomes for the quarter are finalized.

Cincinnati Monetary plans to report closing outcomes for second-quarter 2020 on Monday, July 27, after the shut of normal buying and selling on the Nasdaq Inventory Market. A convention name to debate the outcomes can be held at 11 a.m. ET on Tuesday, July 28, with a stay, audio-only web broadcast accessible at cinfin.com/buyers.

About Cincinnati Monetary
Cincinnati Monetary Company presents primarily enterprise, dwelling and auto insurance coverage, our foremost enterprise, by The Cincinnati Insurance coverage Firm and its two customary market property casualty firms. The identical native unbiased insurance coverage companies that market these insurance policies might supply merchandise of our different subsidiaries, together with life insurance coverage, fastened annuities and surplus strains property and casualty insurance coverage. For added details about the corporate, please go to cinfin.com.

Mailing Deal with:	Avenue Deal with:
P.O. Field 145496	6200 South Gilmore Highway
Cincinnati, Ohio 45250-5496	Fairfield, Ohio 45014-5141

Secure Harbor
That is our “Secure Harbor” assertion beneath the Non-public Securities Litigation Reform Act of 1995. Our enterprise is topic to sure dangers and uncertainties that will trigger precise outcomes to vary materially from these steered by the forward-looking statements on this report. A few of these dangers and uncertainties are mentioned in our 2019 Annual Report on Kind 10-Okay, Merchandise 1A, Danger Components, Web page 35.

Components that would trigger or contribute to such variations embrace, however will not be restricted to:

Results of the COVID-19 pandemic that would have an effect on outcomes for causes resembling:
- Securities market disruption or volatility and associated results resembling decreased financial exercise that have an effect on the corporate’s funding portfolio and ebook worth
- An unusually excessive degree of claims in our insurance coverage or reinsurance operations that improve litigation-related bills
- An unusually excessive degree of insurance coverage losses, together with danger of laws or courtroom choices extending enterprise interruption insurance coverage to require protection when there was no direct bodily injury or loss to property
- Decreased premium income and money movement from disruption to our distribution channel of unbiased brokers, shopper self-isolation, journey limitations, enterprise restrictions and decreased financial exercise
- Lack of ability of our workforce to carry out needed enterprise capabilities
Unusually excessive ranges of disaster losses resulting from danger concentrations, adjustments in climate patterns, environmental occasions, terrorism incidents or different causes
Elevated frequency and/or severity of claims or growth of claims which can be unexpected on the time of coverage issuance
Insufficient estimates, assumptions or reliance on third-party information used for important accounting estimates
Declines in total inventory market values negatively affecting the corporate’s fairness portfolio and ebook worth
Extended low rate of interest atmosphere or different components that restrict the corporate’s capacity to generate progress in funding revenue or rate of interest fluctuations that end in declining values of fixed-maturity investments, together with declines in accounts wherein we maintain bank-owned life insurance coverage contract property
Home and world occasions leading to capital market or credit score market uncertainty, adopted by extended durations of financial instability or recession, that result in:
- Important or extended decline within the honest worth of a selected safety or group of securities and impairment of the asset(s)
- Important decline in funding revenue resulting from decreased or eradicated dividend payouts from a selected safety or group of securities
- Important rise in losses from surety and director and officer insurance policies written for monetary establishments or different insured entities
Our incapability to combine Cincinnati World and its subsidiaries into our on-going operations, or disruptions to our on-going operations resulting from such integration
Recession or different financial situations leading to decrease demand for insurance coverage merchandise or elevated cost delinquencies
Difficulties with expertise or information safety breaches, together with cyberattacks, that would negatively have an effect on our capacity to conduct enterprise; disrupt {our relationships} with brokers, policyholders and others; trigger reputational injury, mitigation bills and information loss and expose us to legal responsibility beneath federal and state legal guidelines
Disruption of the insurance coverage market attributable to expertise improvements resembling driverless vehicles that would lower shopper demand for insurance coverage merchandise
Delays, insufficient information developed internally or from third events, or efficiency inadequacies from ongoing growth and implementation of underwriting and pricing strategies, together with telematics and different usage-based insurance coverage strategies, or expertise initiatives and enhancements anticipated to extend our pricing accuracy, underwriting revenue and competitiveness
Elevated competitors that would end in a big discount within the firm’s premium quantity
Altering shopper insurance-buying habits and consolidation of unbiased insurance coverage companies that would alter our aggressive benefits
Lack of ability to acquire sufficient ceded reinsurance on acceptable phrases, quantity of reinsurance protection bought, monetary power of reinsurers and the potential for nonpayment or delay in cost by reinsurers
Lack of ability to defer coverage acquisition prices for any enterprise section if pricing and loss traits would lead administration to conclude that section couldn’t obtain sustainable profitability
Lack of ability of our subsidiaries to pay dividends in step with present or previous ranges
Occasions or situations that would weaken or hurt the corporate’s relationships with its unbiased companies and hamper alternatives so as to add new companies, leading to limitations on the corporate’s alternatives for progress, resembling:
- Downgrades of the corporate’s monetary power rankings
- Considerations that doing enterprise with the corporate is just too tough
- Perceptions that the corporate’s degree of service, significantly claims service, is now not a distinguishing attribute within the market
- Lack of ability or unwillingness to nimbly develop and introduce protection product updates and improvements that our opponents supply and shoppers look forward to finding within the market
Actions of insurance coverage departments, state attorneys normal or different regulatory companies, together with a change to a federal system of regulation from a state-based system, that:
- Impose new obligations on us that improve our bills or change the assumptions underlying our important accounting estimates
- Place the insurance coverage trade beneath higher regulatory scrutiny or end in new statutes, guidelines and laws
- Prohibit our capacity to exit or scale back writings of unprofitable coverages or strains of enterprise
- Add assessments for warranty funds, different insurance coverage–associated assessments or obligatory reinsurance preparations; or that impair our capacity to get better such assessments by future surcharges or different fee adjustments
- Enhance our provision for federal revenue taxes resulting from adjustments in tax legislation
- Enhance our different bills
- Restrict our capacity to set honest, sufficient and affordable charges
- Place us at an obstacle within the market
- Prohibit our capacity to execute our enterprise mannequin, together with the way in which we compensate brokers
Adversarial outcomes from litigation or administrative proceedings
Occasions or actions, together with unauthorized intentional circumvention of controls, that scale back the corporate’s future capacity to keep up efficient inside management over monetary reporting beneath the Sarbanes-Oxley Act of 2002
Unexpected departure of sure govt officers or different key staff resulting from retirement, well being or different causes that would interrupt progress towards essential strategic objectives or diminish the effectiveness of sure longstanding relationships with insurance coverage brokers and others
Occasions, resembling an epidemic, pure disaster or terrorism, that would hamper our capacity to assemble our workforce at our headquarters location

Additional, the corporate’s insurance coverage companies are topic to the consequences of fixing social, world, financial and regulatory environments. Public and regulatory initiatives have included efforts to adversely affect and limit premium charges, limit the flexibility to cancel insurance policies, impose underwriting requirements and increase total regulation. The corporate is also topic to public and regulatory initiatives that may have an effect on the market worth for its widespread inventory, resembling measures affecting company monetary reporting and governance. The final word adjustments and eventual results, if any, of those initiatives are unsure.