Cincinnati Financial 4th Quarter Profit Up

By E. E. Mazier

NU Online News Service, Feb. 6, 4:26 p.m.EST?Cincinnati Financial Corp. today reported that itsfourth quarter 2001 profits were up due to vigorous growth ininsurance premiums and investment income.

John J. "Jack" Schiff, Jr., CFC chairman and chief executiveofficer, said CFC's focus on underwriting and profitability hadresulted in strong growth in many lines of property-casualtyinsurance. But he added that losses in major lines such as workers'compensation and commercial automobile offset this growth.

Ohio-based CFC also reported that its net income rose to $36million, or 22 cents per share, in the three months ended inDecember. This compares to a net loss of $41 million, or 26 centsper share, for the same period a year ago.

Net operating income was 36 cents per share for the quarter. Mr.Schiff noted that this was "in line with what everyone wasexpecting." Net operating income for the same period a year ago wasminus 14 cents per share.

Total revenues for the fourth quarter rose 12.5 percent to $654million.

"We are on track," declared Mr. Schiff. He said that thefourth-quarter results "give us reason for optimism as well asfurther confidence in our ability to return long-term performanceto its historic level."

Mr. Schiff added that CFC also is encouraged by signs in theproperty-casualty industry of "firmer and more rationalpricing."

Net premiums written by the property-casualty insurance groupgrew 14.2 percent for the fourth quarter. The p-c group consists ofThe Cincinnati Insurance Co., The Cincinnati Casualty Co. and TheCincinnati Indemnity Co.

Mr. Schiff said that the main source of premium growth wasfirmer pricing on new and renewal commercial business. He addedthat CFC was able to identify previously underpriced accounts andto write "good business that others have missed because of theirwholesale approach."

CFC said its fourth-quarter and full-year 2000 results includeda $110 million pre-tax addition to reserves for uninsured motoristlosses reported or paid in 2001 and after.

Net pre-tax catastrophe losses for fourth quarter 2001 were $9million, or 4 cents a share after taxes, compared with $3 million,or 1 cent per share in fourth quarter 2000.

CFC said a single wind and hail event in October had caused $8million in damage to about 1,000 policyholders in eight southernand midwestern states.

Mr. Schiff also characterized CFC's Sept. 11 losses as"relatively minor at $9 million."

CFC's combined ratio of 102.6 percent for the fourth quarterrepresented an improvement from 129.1 percent for the same periodlast year.

CFC indicated that it is tackling its least profitablelines?workers' compensation, commercial automobile andhomeowners?with rate increases, underwriting guidelines, productrefinements and new building-cost estimating tools.