Cincinnati sees net operating income up in Q4’24 and improved CoR

Cincinnati Financial Corporation has announced its financial results for the fourth quarter of 2024, reporting a net income of $405 million, down from $1.183 billion seen in the same period the year prior.

According to the report, the change is primarily attributed to a $107 million after-tax decrease in the fair value of equity securities.

For the full-year 2024, Cincinnati reported a net income of $2.292 billion, an increase compared with the $1.843 billion seen in 2023.

Despite the drop in Q4 2024 net income, the company saw a 38% increase in non-GAAP operating income for Q4 2024, rising to $497 million from $359 million in Q4 2023.

The $778 million decrease in net income reflects a $916 million reduction in after-tax net investment gains, partially offset by increases of $79 million in after-tax property casualty underwriting profit and $33 million in net investment income.

Cincinnati Financial’s property and casualty segment demonstrated strong performance, with an improved combined ratio of 84.7%, compared to 87.5% in Q4 2023. This improvement of 2.8 percentage points came despite a 2.7 percentage-point increase in catastrophe losses.

Full-year 2024 property casualty combined ratio was 93.4%, with net written premiums up 15%.

Favourable prior accident year reserve development contributed a 1.0 percentage-point benefit, $25 million, in Q4 2024, compared to 0.1 percentage points ($2 million) in the same period last year.

The company also reported 17% growth in Q4 2024 property casualty net written premiums, driven by price increases, premium growth initiatives, and higher insured exposures.

Cincinnati Re and Cincinnati Global contributed a combined 2 percentage points to this growth, the firm noted. New business written premiums for the quarter totalled $382 million, with agencies appointed since the beginning of 2023 contributing $47 million, or 12% of the total.

Cincinnati Financial’s life insurance subsidiary generated a net income of $28 million in Q4 2024, with a 4% increase in term life insurance earned premiums.

Within its commercial lines segment, net written premiums grew 8% to $1.2 million, primarily due to higher agency renewal written premiums. New business written premiums increased 17%.

The commercial lines combined ratio improved significantly to 84.5% from the 92.2% reported in Q4 2023, despite a slight increase of 0.4 percentage points in catastrophe losses.

Favourable prior accident year reserve development provided a 1.8 percentage-point benefit ($21 million) in Q4 2024, compared to a 0.2 percentage-point unfavourable development ($2 million) in Q4 2023.

Stephen M. Spray, president and chief executive officer, commented: “Our 2024 year-end results show the importance and success of the initiatives we’ve undergone over the past decade to appropriately balance growth and profitability, ensuring we have the financial strength to answer the call of agents and insureds when a disaster strikes.

“Non-GAAP operating income finished the year strong, increasing 26% to $1.197 billion, compared with full-year 2023. While net income took a dip in the fourth quarter due to the challenged equity market, we still finished the year up 24% over full-year 2023, cresting the $2 billion mark.”

He continued: “Property casualty underwriting achieved excellent fourth-quarter results. Underwriting profit for the quarter increased 40% over 2023’s strong result, boosting full-year underwriting profit to $580 million.

“Our full-year 2024 combined ratio improved 1.5 points to 93.4%, benefiting from sound underwriting judgement and catastrophe losses staying in line with the prior year. Our 2024 core combined ratio on a current accident year before catastrophe loss basis was 1.9 points better than full-year 2023.”

In its remarks, Spray also commented that the California wildfires are anticipated to impact Cinicinnati’s first-quarter 2025 financial results.

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