July 27 (Reuters) – Property and casualty insurer Cincinnati Financial on Monday reported a fall in second-quarter profit on higher catastrophe losses, sending its shares down 5.1% in extended trading.
Catastrophes are a key source of earnings volatility for insurers as severe weather events can lead to a sharp increase in losses.
Here are the details:
• Cincinnati Financial’s earned premiums rose 6% to $2.64 billion in the quarter from a year earlier.
• “Turning to our insurance business, elevated catastrophe losses played a large part in an uptick in our combined ratio,” said CEO Stephen M. Spray.
• “Ohio was particularly impacted by bad weather this Spring with catastrophe losses reaching nearly four times higher than our 5-year second-quarter average for the state,” Spray added.
• The insurer’s property-casualty combined ratio came in at 100.8% versus 94.9% in the year-ago period. A ratio above 100% indicates an insurer is paying out more money in claims than it is collecting in premiums.
• The company took a $61 million hit from higher after-tax catastrophe losses.
• Cincinnati Financial reported adjusted operating income of $224 million, or $1.43 per share, for the three months ended June 30, compared with $311 million, or $1.97 per share, a year earlier.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Sriraj Kalluvila)
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