Cincinnati Financial Corporation has reported a net loss of $808 million for the second quarter of 2022, down from net income of $703 million in the same period last year.
The loss was primarily due to the recognition of an after-tax write-down of $928 million in the fair value of equity securities still held, the firm noted.
The company also reported a $1.511 billion decrease in net income for the second quarter of 2022, compared to the same period last year, primarily due to the net after-tax effect of a $1.323 billion decrease in net investment earnings and a $216 million decrease in after-tax ownership. income from claims underwriting.
The Cincinnati property and casualty segment posted an underwriting loss of $52 million, compared to a second quarter 2021 profit of $221 million, with a weaker combined ratio of 103.2% compared to 85.5% stronger in the same period last year.
Additionally, segment loss and loss expense increased 49% to $1.24 billion compared to $830 million reported in the first quarter of 2021.
Despite this, P&C net written premiums increased 15% from $1.71 billion in the first quarter of 2021 to $1.96 billion in the second quarter of this year.
According to Cincinnati, this growth reflects premium growth initiatives, price increases and a higher level of insured exposure.
Commercial lines also saw an underwriting loss of $62 million in the second quarter of 2022 compared to a profit of $145 million in the same quarter last year.
This resulted in a significantly weaker combined ratio of 106.3%, compared to 84.2% reported in the first quarter of 2021.
However, commercial lines net written premiums increased 10% to $1.07 billion from $977 million in the second quarter of 2021, primarily due to higher renewal written premiums in agency, according to the firm.
Cincinnati also reported net income from the life insurance subsidiary of $21 million in the first quarter of 2022, primarily due to more favorable impacts from interest rate unlocking and other actuarial assumptions, partially offset by higher investment gains low
Steven J. Johnston, President and Chief Executive Officer, commented: “Investment income grew very well producing our main source of profit in the second quarter and brought our total non-GAAP operating income to $357 million during the first half of the year.
“Our insurance business experienced an underwriting loss during the second quarter with a combined ratio of 103.2%, resulting in part from an 8.5 point increase in catastrophe losses compared to the second quarter of 2021.
“While not the result of a single storm, our field claims teams and headquarters claims associates have been busy, responding to 22 declared disasters during the quarter.
“I am proud of their efforts as they brought compassion and expertise to our agents and policyholders, quickly resolving claims and helping affected communities move forward.
This quarter, Cincinnati took “prudent reserve action,” Johnston added, reflecting high inflation in various forms and our belief that various effects of the pandemic have distorted trends in paid loss costs.
According to Johnston, the slowdown in business for many companies, reduced driving and the closing of courts, which delayed progress on some litigated insurance claims, have increased the uncertainty of ultimate losses.
He said: “As a result, incurred loss ratios in the second quarter of 2022 for various lines of business are higher than in recent periods. Commercial umbrella coverages, which are part of our business line of ‘commercial accidents, had a particularly significant impact, although they represented only 7% of our property accident premiums for the whole of 2021.
“Commercial umbrella paid loss experience is inherently variable. Our commercial umbrella insurance coverages have a strong track record of profitability.
“In six months, our insurance business remains profitable with a combined ratio of 96.7%. We are optimistic that continuing to fine-tune our predictive models and focus on price segmentation can lead to better results, which it will allow us to produce a combined ratio for the entire year between the 90s and the 90s.”