Cincinnati Financial's (CINF) Q1 Earnings: Cat Loss To Hurt?
Zacks Investment Research | Apr 23, 2018 12:03AM ET
Cincinnati Financial Corporation (NASDAQ:CINF) is slated to report first-quarter 2018 results on Apr 25 after the market closes. Last quarter, the company delivered a positive surprise of 8.14%.
Let’s see, how things are shaping up for this announcement.
Factors to be Considered This Quarter
Cincinnati Financial as a property and casualty (P&C) insurer has been exposed to unpredictable weather-related events and a considerable catastrophe loss. Therefore, the company has possibly incurred cat loss in the first quarter, which in turn might dent its underwriting results and also impact the combined ratio.
Further, the company has likely reported an increase in total benefits and expenses, mainly driven by higher insurance loss and contract holders’ benefits, underwriting, acquisition plus insurance expenses. This in turn might restrict the P&C insurer’s operating margin expansion.
Nonetheless, Cincinnati Financial is expected to report top-line growth in the soon-to-be-reported quarter, fueled by higher premiums earned. This apart, a gradual improvement in insurance rates and several growth initiatives are anticipated to have contributed to this probable upside.
The Zacks Consensus Estimate for revenues is pegged at $1.4 billion, representing an improvement of 4.5% from the prior-year quarter.
The company is likely to witness an increase in premiums written in the first quarter, attributable to a controlled expansion of Cincinnati Re that forms a substantial contributor to the P&C insurer’s earnings.
Cincinnati Financial is estimated to have witnessed considerable growth in net investment income in the yet-to-be-reported quarter, mainly owing to improved interest rates as well as higher interest and dividend income.
The tax cut, which reduced the tax rate to 21% from 35%, will aid the companies’ bottom line, boosting margins directly.
The Zacks Consensus Estimate for earnings is pegged at 82 cents, reflecting a rise of 38.9% on a year-over-year basis.
Cincinnati Financial Corporation Price and EPS Surprise
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