Cincinnati Financial Corporation Announces Reduced Estimate of $20-24M for Prior-Quarter Storm Losses

Cincinnati Financial Corporation

today announced on a preliminary basis that The Cincinnati Insurance Companies' property casualty group expects to report favorable impacts on its fourth-quarter results, to be released on February 8, due to a reduced catastrophe loss estimate, pricing improvements and higher market values of securities in its investment portfolio as of December 31, 2011. The property casualty group reduced its pre-tax loss estimate for several catastrophe events that occurred prior to the fourth quarter of 2011. As a result of that lower estimate, along with better weather during the fourth quarter, the group expects to report a positive contribution of approximately $20 million to $24 million to insurance underwriting income. That contribution is expected to improve the fourth-quarter combined ratio, reducing it by approximately 2.5 to 3.1 percentage points based on estimated fourth-quarter 2011 property casualty earned premiums of approximately $785 million. Over the past 10 years, catastrophe losses have increased the fourth-quarter combined ratio by an average of 1.6 percentage points. The combined ratio is the percentage of incurred losses plus all expenses per each earned premium dollar. A lower ratio indicates better performance and represents an underwriting profit when it is below 100 percent.