10-KPeriod: FY2014

CINCINNATI FINANCIAL CORP Annual Report, Year Ended Dec 31, 2014

Filed February 27, 2015For Securities:CINF

Summary

Cincinnati Financial Corporation's 2014 10-K filing reveals a stable year for the property casualty insurer, marked by a 6% growth in net written premiums to $4.14 billion and a solid underwriting profit of $186 million. The company's strategy continues to focus on profitable growth through its exclusive reliance on independent insurance agencies, emphasizing financial strength, local decision-making, and superior claims service. Key drivers for the year included premium increases across its commercial, personal, and excess & surplus lines segments, although a rise in weather-related losses impacted the combined ratio, which increased to 95.6%. The company's investment portfolio remains robust, contributing positively to overall financial performance. Management remains committed to enhancing shareholder value through a consistent dividend policy and share repurchase program, while also focusing on initiatives to improve underwriting expertise and expand market penetration.

Financial Highlights

38 data points
Beta

Revenue

$4.95B

Net Income

$525.00M

10.6% Net Margin

EPS (Diluted)

$3.18

Total Assets

$18.75B

Cash & Equivalents

$591.00M

Free Cash Flow

$864.00M

Financial Statements
Beta
Revenue$4.95B
Interest Expense$53.00M
Net Income$525.00M
EPS (Basic)$3.21
EPS (Diluted)$3.18
Shares Outstanding (Basic)163.50M
Shares Outstanding (Diluted)165.10M

Key Highlights

  • 1Net written premiums grew by 6% to $4.14 billion, driven by rate increases and premium growth initiatives.
  • 2Property casualty operations delivered an underwriting profit of $186 million, though this was down 20% from the prior year due to increased weather-related losses.
  • 3The company's combined ratio for property casualty operations increased to 95.6% from 93.8% in the prior year, primarily due to higher catastrophe and non-catastrophe weather losses.
  • 4The investment portfolio generated strong returns, with pretax investment income up 4% to $549 million and realized investment gains of $133 million.
  • 5Shareholders' equity increased by 8% to $6.57 billion, and book value per share rose to $40.14.
  • 6The company continued its long-standing practice of increasing cash dividends to shareholders, marking the 54th consecutive year of increases.
  • 7Cincinnati Financial Corporation maintained strong insurer financial strength ratings across its subsidiaries from major rating agencies.

Frequently Asked Questions

Cincinnati Financial Corporation operates primarily in property casualty insurance, offering commercial lines, personal lines, and excess and surplus lines insurance. It also has a life insurance segment and an investments segment.

The company exclusively markets its standard market property casualty insurance products through a select group of independent insurance agencies in 39 states. It also offers life insurance through these agencies and other independent life agencies.

Cincinnati Financial Corporation focuses on improving insurance profitability by enhancing underwriting expertise and knowledge, leveraging data and analytics for better pricing precision, and streamlining internal processes to increase efficiency.

Weather-related losses, both designated catastrophe losses and non-catastrophe weather losses, increased in 2014 compared to 2013, negatively impacting underwriting results and contributing to a higher combined ratio. Specifically, a $32 million increase in natural catastrophe losses and a $52 million increase in non-catastrophe weather losses were noted.