Cincinnati Financial (CINF) to Incur Q2 Catastrophe Loss

Cincinnati Financial Corporation CINF projects pre-tax catastrophe loss between $160 million and $170 million. The losses primarily stemmed from hail storms in Texas that accounted for one-third of the consolidated loss.

The insurer noted the catastrophe loss will deteriorate the combined ratio by 1440–1530 basis points. This is the first time that the company had to digest an impact of more than 1340 basis points in a decade.

Being a property and casualty insurer, Cincinnati Financial is exposed to losses from natural disasters. This in turn affects its underwriting results. The cat loss incurred will weigh on underwriting profitability and combined ratio in the second quarter. Cincinnati Financial expects combined ratio between 98% and 101% in the second quarter.

The Zacks Consensus Estimate for Cincinnati Financial's second-quarter earnings is currently pegged at 54 cents, translating into a year-over-year decrease of 35%. We expect the estimate to move down as analysts incorporate the impact of catastrophe loss.

Cincinnati Financial is scheduled to release second-quarter results on Jul 26. Our proven model does not conclusively show that the company will beat on earnings. This is because though Cincinnati Financial has a favorable Zacks Rank #3 (Hold), its Earnings ESP of 0.00% makes prediction difficult.
 

CINCINNATI FINL Price

CINCINNATI FINL Price | CINCINNATI FINL Quote

Given that the property and casualty insurance industry is threatened by the vagaries of catastrophe, insurers are coming up with second-quarter catastrophe loss estimate. While Chubb Limited CB projects catastrophe loss of $315 million stemming from various events including U.S. weather incidents, the Japanese and Ecuadorian earthquakes, the Fort McMurray wildfire and the European floods, XL Group plc XL estimates pre-tax catastrophe loss of $240 million from the wildfire in Canada, flooding in Europe, earthquakes in Japan and Ecuador and hailstorms in the United States. Also, Aspen Insurance Holdings Ltd. AHL expects second-quarter catastrophe loss of around $65 million largely due to wildfires in Alberta.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>