10-KPeriod: FY2013

CINCINNATI FINANCIAL CORP Annual Report, Year Ended Dec 31, 2013

Filed February 27, 2014For Securities:CINF

Summary

Cincinnati Financial Corporation (CINF) reported solid results for the fiscal year ending December 31, 2013. The company demonstrated strong premium growth across its property casualty segments, with commercial lines and personal lines both showing double-digit increases in earned premiums. Underwriting profitability improved, evidenced by a combined ratio of 93.8% for consolidated property casualty operations, a significant improvement from the previous year. The company's investment portfolio also performed well, contributing positively to overall results. CINF continues to focus on its strategy of improving insurance profitability and driving premium growth through initiatives aimed at enhancing underwriting expertise, leveraging technology, and strengthening relationships with its independent agency network. The company maintained a strong capital position and financial strength ratings, underscoring its commitment to stability and policyholder confidence.

Financial Highlights

37 data points
Beta

Revenue

$4.53B

Net Income

$517.00M

11.4% Net Margin

EPS (Diluted)

$3.12

Total Assets

$17.66B

Cash & Equivalents

$433.00M

Free Cash Flow

$789.00M

Financial Statements
Beta
Revenue$4.53B
Interest Expense$54.00M
Net Income$517.00M
EPS (Basic)$3.16
EPS (Diluted)$3.12
Shares Outstanding (Basic)163.50M
Shares Outstanding (Diluted)165.40M

Key Highlights

  • 1Earned premiums for the consolidated property casualty operations grew by 11% to $3.71 billion in 2013, driven by higher pricing and growth initiatives.
  • 2The consolidated property casualty combined ratio improved by 2.3 percentage points to 93.8% in 2013, reflecting reduced catastrophe losses and better underlying accident year loss experience.
  • 3Commercial lines segment profit before income taxes increased to $186 million in 2013, with earned premiums rising 11% year-over-year.
  • 4Personal lines segment reported a profit before income taxes of $33 million in 2013, a significant turnaround from a $43 million loss in 2012, largely due to improved underwriting results and reduced catastrophe losses.
  • 5Excess and surplus lines segment showed strong growth, with earned premiums increasing 25% to $116 million in 2013, and the combined ratio improving by 13.2 percentage points to 87.8%.
  • 6The company's investment portfolio generated $529 million in net investment income, and realized net investment gains of $83 million in 2013.
  • 7Shareholders' equity increased by 11% to $6.07 billion, and book value per share rose to $37.21 at year-end 2013, reflecting strong earnings and favorable investment performance.

Frequently Asked Questions

Cincinnati Financial Corporation reported a net income of $517 million, or $3.12 per diluted share, in 2013, compared to $421 million, or $2.57 per diluted share, in 2012. This improvement was driven by strong premium growth, improved underwriting results in property casualty segments, and favorable investment performance.

The property casualty segments showed robust performance. Consolidated property casualty earned premiums grew 11% to $3.71 billion. The combined ratio improved to 93.8% from 96.1% in 2012, indicating better underwriting profitability. Both commercial and personal lines segments saw significant increases in premiums and turned profitable or increased their profitability.

Cincinnati Financial's strategy focuses on two main areas: improving insurance profitability and driving premium growth. This involves enhancing underwriting expertise through data analytics and predictive modeling, streamlining internal processes for efficiency, expanding marketing and service capabilities to support independent agencies, and carefully appointing new agencies to increase distribution points.

The investment portfolio performed well in 2013, generating $529 million in net investment income and $83 million in net realized investment gains. The equity securities portfolio saw strong returns, contributing to an increase in total investment return, while the fixed-maturity portfolio remained stable, though affected by rising interest rates.

The company maintained a strong financial position, with shareholders' equity growing 11% to $6.07 billion. The debt-to-total-capital ratio remained moderate at 12.8% at year-end 2013, well within the company's target range. Insurer financial strength ratings from major agencies remained strong, indicating a stable outlook.