- September 11 pre-tax catastrophe losses, including assumed reinsurance, now estimated at $8.7 million
- Continued high levels of non-catastrophe losses
CINCINNATI, Oct. 12 /PRNewswire/ -- Cincinnati Financial Corporation (Nasdaq: CINF) today reported that it anticipates the combined ratio for its property casualty insurance affiliates for the third quarter ending September 30, 2001 will be approximately 109 percent, reflecting a pure loss ratio of 72.7 percent.
This estimate includes total catastrophe losses, net of reinsurance and before taxes, of $13.4 million, accounting for 2.6 points of the combined ratio, with an estimated after-tax earnings impact of 5 cents per share. The largest net catastrophe loss for the third quarter, currently estimated at $8.7 million, arose from the events of September 11 and the Company's participation in an aviation pool and other reinsurance agreements providing coverage for those events. Reported direct losses included in the $8.7 million estimate are approximately $0.3 million.
Chairman and Chief Executive Officer John J. Schiff, Jr., CPCU, commented, "Even including the September 11 losses, total third-quarter catastrophe losses will be within the expected range for a typical quarter. However, we continue to see non-catastrophe claims at or above the high end of our anticipated range."
New large losses above $250,000 and adverse developments above $250,000 are expected to account for 18.5 points on the combined ratio in the third quarter, with an earnings impact of 39 cents per share, after tax. That compares with an 18.2-point impact on the second quarter 2001 combined ratio (equivalent to 37 cents per share) and a 10.8-point impact on the first- quarter ratio (equivalent to 21 cents per share).
Schiff commented, "While the third-quarter combined ratio puts our 2001 target of 101.3 percent out of probable reach, we are seeing improved pricing for our commercial lines of insurance and receiving approvals of our regulatory filings for personal lines rate increases. Although it is taking more time than previously anticipated, we remain confident that these changes, along with close attention to underwriting, will improve profitability."
Cincinnati Financial plans to report final third-quarter results on Thursday, October 25. A conference call to discuss the results will be held at 2:30 p.m. EDT on that day. Details regarding the Internet broadcast of the conference call can be found at www.cinfin.com on the Investors page.
Cincinnati Financial Corporation offers property and casualty insurance, our main business, through The Cincinnati Insurance Company, The Cincinnati Indemnity Company and The Cincinnati Casualty Company. The Cincinnati Life Insurance Company markets life, disability income and long term care insurance and annuities. CFC Investment Company supports the insurance subsidiaries and their independent agent representatives through commercial leasing and financing activities. CinFin Capital Management provides asset management services to institutions, corporations and individuals.
This is a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Certain forward-looking statements contained herein involve risks and uncertainties. Many factors could cause future results to differ materially from those discussed. Examples of such factors include: variation in catastrophe losses due to changes in weather patterns or other natural causes; changes in insurance regulations, legislation or court decisions that place the Company at a disadvantage in the marketplace; recession, economic conditions or stock market changes affecting pricing or demand for insurance products or the Company's ability to generate investment income; and the ability of the Company, suppliers and agency representatives to adapt to technology changes. Growth and profitability have been and may be potentially materially affected by these and other factors.
SOURCE Cincinnati Financial Corporation
CONTACT: Kenneth W. Stecher, Chief Financial Officer of Cincinnati Financial Corporation, +1-513-603-5236.