Printable earnings release (PDF 150KB)

The Cincinnati Insurance Company n The Cincinnati Indemnity Company

The Cincinnati Casualty Company n The Cincinnati Specialty Underwriters Insurance Company

The Cincinnati Life Insurance Company n CFC Investment Company n CSU Producer Resources Inc.

Cincinnati Global Underwriting Ltd. n Cincinnati Global Underwriting Agency Ltd.

Investor Contact: Dennis E. McDaniel, 513-870-2768

[e-mail]

Media Contact: Betsy E. Ertel, 513-603-5323

[e-mail]

Cincinnati Financial Reports Third-Quarter 2021 Results

Cincinnati, October 27, 2021 - Cincinnati Financial Corporation (Nasdaq: CINF) today reported:

• Third-quarter2021 net income of $153 million, or 94 cents per share, compared with $484 million, or $2.99 per share, in the third quarter of 2020, after recognizing an $82 million third-quarter 2021 after-tax reduction in the fair value of equity securities still held.
• $146 million or 232% increase in non-GAAP operating income* to $209 million, or $1.28 per share, compared with $63 million, or 39 cents per share, in the third quarter of last year.
• $331 million decrease in third-quarter 2021 net income, primarily due to the after-tax net effect of a $477 million decrease in net investment gains partially offset by a $136 million increase in after-tax property casualty underwriting income.
• $73.49 book value per share at September 30, 2021, up $6.45 since year-end.
• 12.4% value creation ratio for the first nine months of 2021, compared with 3.0% for the same period of 2020. Financial Highlights

(Dollars in millions, except per share data)

Three months ended September 30,	Nine months ended	September 30,
2021	2020	% Change	2021	2020	% Change

Revenue Data
Earned premiums	$	1,669	$	1,522	10	$	4,806	$	4,460	8
Investment income, net of expenses		179			167	7		528			498	6
Total revenues		1,785			2,227	(20)		6,307			4,842	30
Income Statement Data
Net income	$	153	$	484	(68)	$	1,476	$	167	nm
Investment gains and losses, after-tax		(56)			421	nm		753			(104)	nm
Non-GAAP operating income*	$	209	$	63	232	$	723	$	271	167
Per Share Data (diluted)
Net income	$	0.94	$	2.99	(69)	$	9.07	$	1.03	nm
Investment gains and losses, after-tax		(0.34)			2.60	nm		4.63			(0.64)	nm
Non-GAAP operating income*	$	1.28	$	0.39	228	$	4.44	$	1.67	166
Book value							$	73.49	$	60.57	21
Cash dividend declared	$	0.63	$	0.60	5	$	1.89	$	1.80	5
Diluted weighted average shares outstanding		162.9			162.0	1		162.8			162.5	0

• The Definitions of Non-GAAP Information and Reconciliation to Comparable GAAP Measures section defines and reconciles measures presented in this release that are not based on U.S. Generally Accepted Accounting Principles.
  Forward-looking statements and related assumptions are subject to the risks outlined in the company's safe harbor statement.

CINF 3Q21 Release

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Insurance Operations Highlights

• 92.6% third-quarter 2021 property casualty combined ratio, improved from 103.6% for the third quarter of 2020.
• 10% growth in third-quarter net written premiums, reflecting price increases and premium growth initiatives.
• $230 million third-quarter 2021 property casualty new business written premiums, up 22%. Agencies appointed since the beginning of 2020 contributed $21 million or 9% of total new business written premiums.
• $11 million third-quarter 2021 life insurance subsidiary net income, down $7 million from the third quarter of 2020, and 8% growth in third-quarter 2021 term life insurance earned premiums.

Investment and Balance Sheet Highlights

• 7% or $12 million increase in third-quarter 2021 pretax investment income, including an 11% increase for stock portfolio dividends and a 7% increase for bond interest income.
• Three-monthincrease of 1% in fair value of total investments at September 30, 2021, including a 1% increase for the bond portfolio and a decrease of less than 1% for the stock portfolio.
• $4.297 billion parent company cash and marketable securities at September 30, 2021, up 14% from year-end 2020.

Rebuilding Communities After Catastrophes

Steven J. Johnston, chairman, president and CEO, commented: "After a fairly quiet start to the year from a weather- related catastrophe standpoint, August and September brought hail, wind and flooding to many parts of the country. We were ready to respond, quickly sending teams of our own field claims associates to the most impacted areas. Through their consistent and coordinated approach, we were able to quickly review claims to determine the appropriate payment based on the policy contract.

"This quarter is a nice example of the impact our growth, profitability and diversification initiatives are having on our insurance business. While catastrophe losses for the quarter outpaced our 5-year average of 9.8% for the third quarter by 4.4 points, our combined ratio came in at a satisfactory 92.6%.

"That improvement reflects our continued efforts in pricing segmentation across our organization and the strong collaboration we enjoy between our associates in sales, underwriting and analytics.

"On a nine-month basis we achieved strong non-GAAP operating income results, increasing that measure to $723 million. Our insurance operations continued to lead the way. With three-quarters of the year behind us, our combined ratio is 89.8%.

"We again built on our record of 32 years of overall favorable reserve development. While maintaining our consistent approach to setting reserves, we were able to recognize a 7.2 percentage-point benefit to our nine-month combined ratio, compared with 2.1 points for the 2020 period."

Growing as Planned

"New business premiums written by agencies rose 12% to a record $685 million in the first nine months of 2021. Our field marketing associates, who underwrite our new business, are armed with analytics that complement their experience, earned through an average of 21 years in the industry, giving them confidence when competing for our agencies' best accounts.

"A strengthening economy contributed to net written premium growth for the third quarter and first nine months of 2021, compared with the same periods a year ago. Total property casualty net written premium growth maintained its return to pre-pandemic levels, increasing 11% for the first nine months."

Value for Shareholders

"At September 30, our book value per share was $73.49 up 10% from the year-end. We held a total of $5.791 billion of unrealized gains in our equity portfolio, even after recognizing a small decline in the portfolio's fair value during the third quarter.

"A strong balance sheet gives us the flexibility to pursue business growth and pay shareholder dividends as a consistent, long-term strategy. Our value creation ratio at 12.4% for the first nine months of 2021 reflects the success of that strategy."

CINF 3Q21 Release

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Insurance Operations Highlights

Consolidated Property Casualty Insurance Results

(Dollars in millions)	Three months ended September 30,	Nine months ended September 30,
		2021			2020			% Change		2021			2020			% Change
Earned premiums	$	1,596	$	1,450	10		$	4,585	$	4,242	8
Fee revenues		3			2	50			8			7	14
Total revenues		1,599			1,452	10			4,593			4,249	8
Loss and loss expenses		988			1,071	(8)			2,741			3,008	(9)
Underwriting expenses		490			432	13			1,377			1,309	5
Underwriting profit (loss)	$	121	$	(51)		nm	$	475	$	(68)		nm
Ratios as a percent of earned premiums:								Pt. Change									Pt. Change
Loss and loss expenses		61.9 %			73.8 %	(11.9)			59.8 %			70.9 %	(11.1)
Underwriting expenses		30.7			29.8			0.9			30.0			30.9			(0.9)
Combined ratio		92.6 %			103.6 %	(11.0)			89.8 %			101.8 %	(12.0)
								% Change									% Change
Agency renewal written premiums	$	1,244	$	1,153		8		$	3,853	$	3,595	7
Agency new business written premiums		230			189		22			685			614	12
Other written premiums		64			51		25			407			261	56
Net written premiums	$	1,538	$	1,393		10		$	4,945	$	4,470	11
Ratios as a percent of earned premiums:								Pt. Change									Pt. Change
Current accident year before catastrophe losses		54.7 %			55.7	%	(1.0)			56.3 %			57.9	%	(1.6)
Current accident year catastrophe losses		13.6			18.9		(5.3)			10.7			15.1		(4.4)
Prior accident years before catastrophe losses		(7.0)			(0.2)		(6.8)			(6.1)			(1.7)		(4.4)
Prior accident years catastrophe losses		0.6			(0.6)			1.2			(1.1)			(0.4)			(0.7)
Loss and loss expense ratio		61.9 %			73.8	%	(11.9)			59.8 %			70.9	%	(11.1)
Current accident year combined ratio before		85.4 %			85.5	%	(0.1)			86.3 %			88.8	%	(2.5)
catastrophe losses

• $145 million or 10% growth of third-quarter 2021 property casualty net written premiums, and nine-month growth of 11%, largely reflecting premium growth initiatives and price increases. Cincinnati Re® contributed 3 percentage points to property casualty growth for the first nine months of 2021.
• $41 million or 22% increase in third-quarter 2021 new business premiums written by agencies and nine-month increase of 12%. The third-quarter growth included a $15 million increase in standard market property casualty production from agencies appointed since the beginning of 2020.
• 171 new agency appointments in the first nine months of 2021, including 49 that market only our personal lines products.
• 11.0 percentage-pointthird-quarter 2021 combined ratio improvement and a 12.0 percentage-point improvement for the nine-month period. The lower combined ratios included decreases for losses from catastrophes of
  4.1 points for the third quarter and 5.1 points for the first nine months of 2021.
• 6.4 percentage-pointthird-quarter 2021 benefit from favorable prior accident year reserve development of $102 million, compared with 0.8 points or $11 million for third-quarter 2020.
• 7.2 percentage-pointnine-month 2021 benefit from favorable prior accident year reserve development, compared with 2.1 points for the first nine months of 2020.
• 1.6 percentage-point improvement, to 56.3%, for the nine-month 2021 ratio of current accident year losses and loss expenses before catastrophes, including an increase of 0.2 points in the ratio for current accident year losses of $1 million or more per claim.
• 0.9 percentage-point increase in the third-quarter 2021 underwriting expense ratio, compared with the same period of 2020, primarily due to higher levels of profit-sharing commissions for agencies.

CINF 3Q21 Release

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Commercial Lines Insurance Results

(Dollars in millions)		Three months ended September 30,		Nine months ended September 30,
			2021			2020			% Change			2021			2020			% Change
Earned premiums	$	930	$	865		8	$	2,727	$	2,598		5
Fee revenues			1			1		0			3			3		0
Total revenues			931			866		8			2,730			2,601		5
Loss and loss expenses			451			620		(27)			1,434			1,824		(21)
Underwriting expenses			298			266		12			839			809		4
Underwriting profit (loss)	$	182	$	(20)			nm	$	457	$	(32)			nm
Ratios as a percent of earned premiums:									Pt. Change									Pt. Change
Loss and loss expenses			48.5 %			71.6 %	(23.1)			52.6 %			70.2 %	(17.6)
Underwriting expenses			32.1			30.8			1.3			30.8			31.1			(0.3)
Combined ratio			80.6 %			102.4 %	(21.8)			83.4 %			101.3 %	(17.9)
									% Change									% Change
Agency renewal written premiums	$	775	$	727		7	$	2,525	$	2,363		7
Agency new business written premiums			145			114		27			436			402		8
Other written premiums			(25)			(27)		7			(70)			(71)		1
Net written premiums	$	895	$	814		10	$	2,891	$	2,694		7
Ratios as a percent of earned premiums:									Pt. Change									Pt. Change
Current accident year before catastrophe losses			56.1 %			57.8	%	(1.7)			57.9 %			59.2	%	(1.3)
Current accident year catastrophe losses			3.9			14.7		(10.8)			4.8			13.2		(8.4)
Prior accident years before catastrophe losses			(10.9)			(1.0)		(9.9)			(8.9)			(1.9)		(7.0)
Prior accident years catastrophe losses			(0.6)			0.1			(0.7)			(1.2)			(0.3)			(0.9)
Loss and loss expense ratio			48.5 %			71.6	%	(23.1)			52.6 %			70.2	%	(17.6)
Current accident year combined ratio before			88.2 %			88.6	%		(0.4)			88.7 %			90.3	%		(1.6)
catastrophe losses

• $81 million or 10% growth in third-quarter 2021 commercial lines net written premiums, largely due to higher agency renewal written premiums. Seven percent growth in nine-month net written premiums.
• $48 million or 7% increase in third-quarter renewal written premiums, with commercial lines average renewal pricing increases near the low end of the mid-single-digit percent range.
• $31 million or 27% increase in third-quarter 2021 new business written by agencies, and a nine-month increase of 8%, as we continue to carefully underwrite each policy in a highly competitive market.
• 21.8 percentage-pointthird-quarter 2021 combined ratio improvement and a 17.9 percentage-point improvement for the nine-month period. The lower combined ratios included decreases for losses from catastrophes of
  11.5 points for the third quarter and 9.3 points for the first nine months of 2021.
• 11.5 percentage-pointthird-quarter 2021 benefit from favorable prior accident year reserve development of $107 million, compared with 0.9 points or $8 million for third-quarter 2020.
• 10.1 percentage-pointnine-month 2021 benefit from favorable prior accident year reserve development, compared with 2.2 points for the first nine months of 2020.

CINF 3Q21 Release

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Personal Lines Insurance Results

(Dollars in millions)		Three months ended September 30,		Nine months ended September 30,
			2021			2020			% Change			2021			2020			% Change
Earned premiums	$	388	$	367		6	$	1,146	$	1,090		5
Fee revenues			1			1		0			3			3		0
Total revenues			389			368		6			1,149			1,093		5
Loss and loss expenses			281			265		6			795			782		2
Underwriting expenses			118			105		12			338			335		1
Underwriting profit (loss)	$	(10)	$	(2)		(400)	$	16	$	(24)			nm
Ratios as a percent of earned premiums:									Pt. Change									Pt. Change
Loss and loss expenses			72.4 %			71.9 %	0.5			69.3 %			71.7 %	(2.4)
Underwriting expenses			30.3			28.8			1.5			29.5			30.8			(1.3)
Combined ratio			102.7 %			100.7 %	2.0			98.8 %			102.5 %	(3.7)
									% Change									% Change
Agency renewal written premiums	$	393	$	366		7	$	1,092	$	1,047		4
Agency new business written premiums			53			51		4			152			129		18
Other written premiums			(11)			(10)		(10)			(32)			(27)		(19)
Net written premiums	$	435	$	407		7	$	1,212	$	1,149		5
Ratios as a percent of earned premiums:									Pt. Change									Pt. Change
Current accident year before catastrophe losses			53.1 %			48.5	%	4.6			55.2 %			54.0	%	1.2
Current accident year catastrophe losses			20.1			23.3		(3.2)			17.2			20.2		(3.0)
Prior accident years before catastrophe losses			(0.7)			0.9		(1.6)			(2.7)			(1.8)		(0.9)
Prior accident years catastrophe losses			(0.1)			(0.8)			0.7			(0.4)			(0.7)			0.3
Loss and loss expense ratio			72.4 %			71.9 %	0.5			69.3 %			71.7 %	(2.4)
Current accident year combined ratio before			83.4 %			77.3	%		6.1			84.7 %			84.8	%		(0.1)
catastrophe losses

• $28 million or 7% growth in third-quarter 2021 personal lines net written premiums, including higher
  renewal written premiums that benefited from rate increases. Third-quarter 2021 net written premiums from our agencies' high net worth clients grew 28%, to $180 million. Five percent growth in nine-month personal lines net written premiums.
• $2 million or 4% increase in third-quarter 2021 new business premiums written by agencies and nine-month increase of 18%, largely reflecting expanded use of enhanced pricing precision tools.
• 2.0 percentage-pointthird-quarter 2021 combined ratio increase and a 3.7 percentage-point improvement for the nine-month period. The combined ratios included decreases for losses from catastrophes of 2.5 points for the third quarter and 2.7 points for the first nine months of 2021.
• 0.8 percentage-pointthird-quarter 2021 benefit from favorable prior accident year reserve development of
  $3 million, compared with 0.1 points or less than $1 million of unfavorable development for third-quarter 2020.
• 3.1 percentage-pointnine-month 2021 benefit from favorable prior accident year reserve development, compared with 2.5 points for the first nine months of 2020.

CINF 3Q21 Release

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