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Cincinnati Financial Corp CINF
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/26/2013

Operator: Good morning. My name is Brad, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2013 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

I will now turn the call over to Dennis McDaniel, Investor Relations Officer, you may begin your conference.

Dennis E. McDaniel - VP, IR Officer: Hello. This is Dennis McDaniel, from Cincinnati Financial. Thank you for joining us for our first quarter 2013 earnings conference call. Late yesterday we issued a news release on our results along with our supplemental financial package, including our quarter end investment portfolio. To find copies of any of these documents, please visit our Investor website, www.cinfin.com/investors. The shortest route to the information is the quarterly results link in the navigation menu on the far left.

On this call, you'll first hear from Steve Johnston, President and Chief Executive Officer; and then from Chief Financial Officer, Mike Sewell. After their prepared remarks, investors participating on the call may ask questions. At that time, some responses maybe made by others in the room with us, including Executive Committee Chairman, Jack Schiff Jr.; Chairman of the Board, Ken Stecher; Chief Insurance Officer, J. F. Scherer; Principal Accounting Officer, Eric Matthews; Chief Investment Officer, Marty Hollenbeck; and Chief Claims Officer, Marty Mullen.

Please note that some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties. With respect to these risks and uncertainties, we direct your attention to our news release and our various filings with the SEC.

Also, a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules, and therefore is not reconciled to GAAP.

So with that I'll turn the call over to Steve.

Steven J. Johnston - President and CEO: Good morning, and thank you for joining us today to hear more about our first quarter results. We are very pleased with our strong operating results for the quarter. They continue to reflect the steadily growing benefits of initiatives designed to improve insurance profitability, drive premium growth and create shareholder value over time. The continuing improvements resulted in a 91.2% combined ratio and 15% growth in net written premiums.

Catastrophe losses contributed just 1.2 loss ratio points, down from 11.1 points in the same quarter a year ago. The favorable trend in ex-catastrophe current accident year result continued. The ex-cat current accident year combined ratio for the first quarter was 90.3%, reflecting a 9.4 point improvement over the first quarter a year ago, a 6.5 point improvement over the full accident year 2012, and it was 2.9 points better than the second half of 2012.

Loss and loss expense reserves for all prior accident years in aggregate developed favorably during the first quarter of 2013 benefiting the combined ratio by 1.1 points. The comparable number a year ago was 14.5 points. While that's quite a change in the amount of benefit, we follow a well-defined and consistent process every quarter. With just a few weeks passing since our year end analysis of accident years 2012 and prior, our estimate for those years, in total, did not change much resulting in the lower than usual 1.1 point of favorable development in the quarter.

Read our Earnings Call Transcript disclaimer.
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