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15 October 2018Insurance

Cincinnati Financial expects $120 million in Q3 cat losses

Property/casualty (P&C) group Cincinnati Financial Corporation expects its third-quarter 2018 results to include pre-tax catastrophe losses of approximately $120 million.

This would represent an impact on the third-quarter 2018 combined ratio of approximately 9.5 to 10.0 percentage points, based on estimated property casualty earned premiums.

The company's 10‑year historical average contribution of catastrophe losses to the combined ratio is 5.6 percentage points for the third quarter.

This estimate for catastrophe losses includes approximately $92 million for hurricane Florence, including approximately $7 million for the company’s reinsurance assumed operations Cincinnati Re.

The estimate for total third-quarter 2018 catastrophe losses incurred is approximately $77 million for the group’s commercial lines insurance segment, $34 million for the personal lines’ insurance segment and $9 million for Cincinnati Re.

The company estimates its third-quarter 2018 P&C combined ratio will be in the range of 96 percent to 98 percent, including the effect of catastrophe losses. The ratio also reflects net favourable reserve development on prior accident years for the company's commercial casualty line of business.

The company also announced that hurricane Michael is expected to impact fourth-quarter 2018 results, but that it currently cannot predict the magnitude, as many damaged areas are not yet accessible. Based on initial claims reports received, most of the claims covered by the company's standard market lines business are for personal lines accounts with nearly half located in Georgia and approximately one-quarter in Alabama.

"Hurricanes Florence and Michael left a wide path of destruction across the southeast, changing lives forever,” said CEO Steven Johnston. “However, it's in these tough times when our field claims representatives shine, helping our agents and policyholders quickly and in-person so that these families and communities can begin to rebuild. We take the responsibility of paying our claims seriously and manage our capital to ensure we have ample capacity to pay insured losses promptly."

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More on this story

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13 August 2019   Cincinnati Financial Corporation has expanded its board of directors to 15 with the appointment of Jill Meyer as an independent director and a member of its audit committee.
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12 October 2018   Cincinnati Financial Corporation is acquiring Munich Re subsidiary MSP Underwriting in an all-cash transaction of £102 million.
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21 August 2018   Jacob Scherer, Jr., chief insurance officer and executive vice president of property/casualty insurance group The Cincinnati Insurance Company, is to retire in August 2019.