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|Cincinnati Financial Corporation Anticipates Strong 2007 First-quarter Results|
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CINCINNATI, April 12 /PRNewswire-FirstCall/ -- Cincinnati Financial Corporation (Nasdaq: CINF) today announced that it expects the first-quarter 2007 GAAP combined ratio to be below 91 percent, with catastrophe losses contributing approximately 0.4 percentage points. In last year's first quarter, the combined ratio was 92.0 percent, including 5.0 percentage points from catastrophe losses.
Chairman and Chief Executive Officer John J. Schiff, Jr., CPCU, commented, "Our emphasis is on the long term, providing the quality service and consistent approach that distinguishes Cincinnati in the insurance marketplace. We believe that first-quarter results will reflect our efforts to sustain healthy profitability at a time when higher loss severity and softer pricing are industrywide challenges."
Schiff noted, "Our ability to produce steady underwriting results and our low level of storm losses for the quarter give us a more optimistic outlook on 2007 profitability. We now believe it is possible that our 2007 full-year GAAP combined ratio could come in at or below the low end of our previously announced target of 97 percent to 99 percent. That would allow for catastrophe losses, net of reinsurance, to contribute approximately 5.0 percentage points to the full-year combined ratio." Net of reinsurance, full-year 2006 catastrophe losses of $175 million added 5.5 percentage points to the combined ratio.
"Along with the favorable underwriting results we expect for the first quarter, premiums for our commercial lines and personal lines of business appear in line with our expectations. For full-year 2007, we continue to expect that total property casualty net written premium growth may be in the low single digits, reflecting market conditions including the heightened commercial lines competition," Schiff said.
Schiff noted, "Our preliminary estimate is for approximately $16 million in pretax catastrophe losses caused by five weather events during the 2007 first quarter, mitigated by reduced estimates of losses from catastrophes in earlier years, in particular the October 2006 hail storm. Even without the benefit of those reduced estimates, first-quarter catastrophe losses would have been at the lowest level we have experienced since the second quarter of 2005."
Based on these preliminary estimates, the first-quarter 2007 net catastrophe losses are expected to be approximately $3 million, adding approximately 0.4 percentage points to the property casualty combined ratio with an impact on earnings of $2 million, or 1 cent per share. For the comparable 2006 quarter, catastrophe losses were $39 million, contributing 5.0 percentage points to the combined ratio, with an impact on earnings of $26 million, or 14 cents per share.
"Investment operations continue to provide an important contribution to our net income," Schiff said. "Investment income growth for the quarter should be in line with the 6.5 percent to 7.0 percent growth rate that is our full- year 2007 target. Seventeen of our 47 publicly traded common stock holdings increased their dividends since the beginning of 2007. In addition, we repurchased 1.5 million of our own common shares at a total cost of $64 million during the first quarter."
Cincinnati Financial plans to report final first-quarter results on Wednesday, May 2. A conference call to discuss the results will be held at 11:00 a.m. ET on that day. Details regarding the Internet broadcast of the conference call are posted on the Investors page of http://www.cinfin.com.
Cincinnati Financial Corporation offers property and casualty insurance, its main business, through The Cincinnati Insurance Company, The Cincinnati Indemnity Company and The Cincinnati Casualty Company. The Cincinnati Life Insurance Company markets life and disability income insurance and annuities. CFC Investment Company offers commercial leasing and financing services. CinFin Capital Management Company provides asset management services to institutions, corporations and individuals. For additional information, please visit the company's Web site at http://www.cinfin.com.
This is our "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2006 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 20. Although we often review or update our forward-looking statements when events warrant, we caution our readers that we undertake no obligation to do so.
Factors that could cause or contribute to such differences include, but are not limited to:
Further, the company's insurance businesses are subject to the effects of changing social, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. The company also is subject to public and regulatory initiatives that can affect the market value for its common stock, such as recent measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.
SOURCE Cincinnati Financial Corporation
CONTACT: Investors, Heather J. Wietzel, +1-513-870-2768, or