Cincinnati Financial expects $120 million in Q3 cat losses
Property/casualty (P&C) group Cincinnati Financial Corporation expects its third-quarter 2018 results to include pre-tax catastrophe losses of approximately $120 million.
This would represent an impact on the third-quarter 2018 combined ratio of approximately 9.5 to 10.0 percentage points, based on estimated property casualty earned premiums.
The company's 10‑year historical average contribution of catastrophe losses to the combined ratio is 5.6 percentage points for the third quarter.
This estimate for catastrophe losses includes approximately $92 million for hurricane Florence, including approximately $7 million for the company’s reinsurance assumed operations Cincinnati Re.
The estimate for total third-quarter 2018 catastrophe losses incurred is approximately $77 million for the group’s commercial lines insurance segment, $34 million for the personal lines’ insurance segment and $9 million for Cincinnati Re.
The company estimates its third-quarter 2018 P&C combined ratio will be in the range of 96 percent to 98 percent, including the effect of catastrophe losses. The ratio also reflects net favourable reserve development on prior accident years for the company's commercial casualty line of business.
The company also announced that hurricane Michael is expected to impact fourth-quarter 2018 results, but that it currently cannot predict the magnitude, as many damaged areas are not yet accessible. Based on initial claims reports received, most of the claims covered by the company's standard market lines business are for personal lines accounts with nearly half located in Georgia and approximately one-quarter in Alabama.
"Hurricanes Florence and Michael left a wide path of destruction across the southeast, changing lives forever,” said CEO Steven Johnston. “However, it's in these tough times when our field claims representatives shine, helping our agents and policyholders quickly and in-person so that these families and communities can begin to rebuild. We take the responsibility of paying our claims seriously and manage our capital to ensure we have ample capacity to pay insured losses promptly."
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