Cincinnati Financial confronted a drop in net income for its fiscal 2014 first quarter due, in part to higher catastrophe losses, and non-catastrophe losses driven by severe winter weather. But the insurer said strategic initiatives and higher pricing produced a solid increase in net written premiums. Investment income also grew.
Net income for the Cincinnati, Ohio operation came in at $91 million, or 55 cents per share, a 41 percent drop from $154 million, or 94 cents per share, that the company pulled in during the 2013 first quarter.
Why the drop? Executives said a $1 million property/casualty underwriting loss drove income levels down. And the $1 underwriting loss included the impact of $57 million of natural catastrophe losses, which had a 34 cents-per-share impact on the numbers. By comparison, Cincinnati Financial said that its 2013 first quarter produced $51 million of underwriting profit, and that it experienced a $7 million catastrophe impact, or 4 cents per share.
A $12 million drop from net realized investment gains also didn’t help.
For the quarter, Cincinnati Financial’s property/casualty combined ratio came in at 100.3, versus 91.2 in the 2013 first quarter, due largely to those higher losses.
Consolidated net written premiums grew 7 percent during the quarter, however, thanks to that higher pricing, the company said. Property/casualty net written premiums for the company exceeded $1.0 billion for the first quarter, a number itself up 7 percent from $970 million in the year-ago period.
Another plus: total pretax investment income hit $135 million, up 5 percent from $128 million produced in the 2013 first quarter, an achievement that president and CEO Steven Johnston noted helped at least partially counter other cost challenges.
“Steady income from our investment portfolio offset a modest first-quarter underwriting loss as we helped policyholders recover from widespread severe weather,” Johnston said in a statement.