Cincinnati Financial Quarterly Income Hit $130 Million

By Michael Ha

NU Online News Service, Feb. 5, 10:41 a.m.EST

For the full-year 2003, the auto and home insurer's net incomereached $374 million, up from $238 million in profit reported for2002.

"Full-year 2003 revenue and income reached record levels,"commented Cincinnati Financial Chief Executive John Schiff. Mr.Schiff also noted the healthier equity markets, coupled with thecompany's strong insurance results, led to record assets, equityand book value.

"Our 94.7 percent combined ratio was the best it has been inmore than 10 years," Mr. Schiff said.

The insurer's statutory net written premiums for theproperty-casualty insurance units rose 14.2 percent to $698 millionfor the fourth quarter, up from $612 million reported for the 2002fourth quarter. For the full-year 2003, statutory net writtenpremiums on an adjusted basis went up 11.8 percent to $2.789billion from $2.496 billion during 2002, the company reported.

Cincinnati Financial's overall underwriting profit for the 2003fourth quarter was $75 million, compared with $32 million inunderwriting profit reported during the same quarter in 2002. Forthe full year, the insurer's p-c underwriting profit rose to $140million, from $7 million for 2002.

The insurer's fourth-quarter earnings also were helped by therelease of $38 million, pretax, in previously established uninsuredand underinsured motorists (UM/UIM) reserves, which added $25million to the fourth-quarter net income.

Cincinnati Financial said that up to $37 million in additionalcase reserves may be released in coming quarters as the companycontinues to review pending claims.

Looking at individual lines, statutory net written premiums forthe commercial lines rose 14.7 percent to $507 million for thefourth quarter, up from $443 million during the 2002 fourthquarter. Full-year commercial lines statutory net written premiumsrose 11.9 percent to $2 billion.

In personal lines, statutory net written premiums rose 12.8percent to $191 million for the quarter, from $169 million reportedduring last year's fourth quarter. Full-year personal linesstatutory net written premiums rose 11.4 percent to $780million.

"The combined ratio for the full year marked our best commerciallines results in many years," Mr. Schiff said. "We believe marketconditions will allow us to further improve on that mark in 2004while continuing to achieve satisfactory growth."

Mr. Schiff also observed that while there may be "strikingdifferences in market conditions" from one area to another,disciplined underwriting remains the norm, not the exception, inmost markets. "There is more competition for high-quality accounts,particularly from other regional carriers, but there seems to belittle inclination to aggressively price average accounts," Mr.Schiff noted.

Based in Fairfield, Ohio, Cincinnati Financial is the parentcompany of Cincinnati Insurance, which includes Cincinnati Casualtyand Cincinnati Indemnity. Through its subsidiaries, CincinnatiFinancial sells commercial property, liability, auto, bond and fireinsurance, and its personal lines include homeowners and liabilityproducts.