Inflation that rapidly escalated at the start of 2021 has moderated the past couple of months, but it will take time for rate increases reflecting higher costs to reach all policyholders, Cincinnati Financial Corp. Chairman and Chief Executive Officer Steve Johnston said during a third-quarter earnings call.
“We are very prospective in terms of how we look at inflation. We do our best to estimate loss costs,” he said.
Cincinnati Financial’s third-quarter net loss narrowed to $99 million from a $416 million net loss a year earlier, helped by an underwriting profit and a smaller investment loss. It had a $112 million consolidated property/casualty underwriting profit, compared with a $66 million underwriting loss in the prior-year period.
Cincinnati Financial is adding distributors and expanding geographically. “So far in 2023, we’ve added 193 new agency reporting locations, bringing that total number above 3,000 for the first time. And, we plan to open Nevada for commercial lines business in the fourth quarter,” Johnston said.
Cincinnati Insurance Cos. President Steve Spray said the company generally adds personal lines agencies when they focus on private clients or high-net-worth business. Over time, he anticipates that niche will achieve higher rates of return reflective of the industry at large.
While personal lines have been pressured by inflation and catastrophes, he said he’s confident rates have been catching up. “I have never seen a harder market than the personal lines market we’re seeing today,” he said.
Asked about the impact of electric vehicles on automobile insurance, Johnson said they are challenging insurers. Batteries that run the vehicles are more expensive to replace, but there are also fewer parts to potentially repair, he said.
Operating entities of Cincinnati Financial Corp. currently have a Best’s Financial Strength Rating of A+ (Superior).