CINCINNATI, June 21 /PRNewswire/ -- Cincinnati Financial Corporation (Nasdaq: CINF) today announced that it anticipates, based on information through June 19, that its property casualty insurance subsidiaries will record approximately $29.0 million of pre-tax catastrophe losses and $19.8 million in large losses for the second quarter of 2001.
Catastrophe Loss Impact Estimate at 11 Cents Per Diluted Share,
After Tax
A series of wind and hailstorms over the period of April 6 through April 11 crossed 13 states, mainly in the Midwest, resulting in an estimated $23.5 million in losses. Those storms have been categorized as a single catastrophic event by Property Claim Services, an industry organization that identifies catastrophes, setting applicable dates and geographic ranges to assure uniform tracking and reporting of loss data from multiple insurers. Additionally, the quarter-to-date catastrophe losses include a preliminary estimate of $5.5 million from wind and hailstorms across seven Midwest states on June 11.
Chief Executive Officer John J. Schiff, Jr., commented, "Dayton, Ohio, was the hardest-hit area for Cincinnati Insurance Companies' policyholders, accounting for more than 900 of the 3,500 reported claims and about $9 million of the estimated losses from the April 6-11 storms. We dispatched a storm team to assist Dayton area policyholders, and more than 90 percent of the claims from the April storms have been closed. Following the June 11 storms, another storm team began working in Oshkosh, Wisconsin, where they are providing prompt contact, emergency assistance and claims service."
The $29.0 million in catastrophe losses through June 19 would add approximately 5.7 points to the second-quarter 2001 combined ratio, with an after-tax earnings impact estimated at 11 cents per diluted share. 2000 and 1999 second-quarter catastrophes added 5.2 points and 1.8 points to the combined ratios for those periods, respectively, impacting after-tax earnings by 9 cents per diluted share and 3 cents per diluted share, respectively.
14 Large Losses Reported in Second Quarter
For the second quarter through June 19, 14 large losses above $1 million have been reported, for a total of approximately $19.8 million. At that level, large losses would account for approximately 3.9 points of the combined ratio for the second quarter of 2001 and would impact after-tax earnings for the same period by an estimated 8 cents per diluted share. Second-quarter losses in this category during 2000 and 1999 added 2.7 points and 1.4 points, respectively, to the quarterly ratios, and impacted after-tax earnings by 5 cents per share and 2 cents per share, respectively.
Schiff commented, "We expect increased large losses as a result of business growth. Our field representatives, underwriters and agents are assisting and encouraging commercial accounts to identify and purchase adequate limits to protect them from loss, with adequate pricing to compensate us for the risk we accept. We'll gain even more knowledge about each risk and our 'insurance to value' initiatives will get a boost in the fourth quarter when new property construction valuation tools are introduced."
2001 Combined Ratio Target Remains at 101.3 Percent
Schiff continued, "With two weeks left in the first half, catastrophe losses for the year to date are $35.7 million, which would add 3.6 points to the six-month combined ratio. That's in line with $31.5 million and 3.6 points reported for the first six months of 2000. As our initiatives to improve pricing and carefully underwrite new and renewal business begin to have an impact, we continue to target a full-year 2001 combined ratio of 101.3 percent, barring further large catastrophes."
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 policies and annuities. CFC Investment Company supports the insurance subsidiaries and their independent agent representatives through commercial leasing and financing activities. CinFin Capital Management provides investment management services to institutions, corporations and individuals. For additional information, please visit our Web site at www.cinfin.com .
SOURCE Cincinnati Financial Corporation
CONTACT: Kenneth W. Stecher, Chief Financial Officer of Cincinnati Financial Corporation, 513-603-5236.