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On this call, you’ll first hear from Steve Johnston, President and Chief Executive Officer; and then, Chief Financial Officer, Mike Sewell. After their prepared remarks, investors participating on the call may ask their questions. At that time, some responses may be made by others in the room here with us, including Executive Committee Chairman, Jack Schiff Jr.; Chairman of the Board, Ken Stecher; Executive Vice President, 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 to 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 the statuary accounting rules and therefore were not reconciled to GAAP. With that, I’ll turn the call over to Steve. Steven J. Johnston Good morning. It’s a pleasure to speak with you today from (inaudible), where we will meet with agents this afternoon. This is the fourth state among 22 in total that we are visiting during the first and second quarters. Our agents with their optimism, their commitment to our partnership and share goals really energize us. After three state quarters of heavy catastrophe losses, the fourth quarter was profitable, with commercial line, personal line, excess of surplus lines, life insurance and investments all contributing to strong operating earnings. Essentially, all our indicators of longer-term performance are moving in the right direction and that bodes well for creating shareholder value. Various strategic initiatives are having a positive effect and I’ll highlight several key areas. As we discussed during our last quarterly conference call, better insurance pricings is a top priority. We are experiencing improvement through a combination of our diligence, plus somewhat more favorable conditions in several markets. Our pricing precision for each policy continues to improve as we gain more experience with our pricing models.
More thinly price risks are getting significantly higher prices. Fourth quarter increases in renewal pricing occurred for each property casualty segment and also, for each major line of business within segments.As we pre-announced, commercial lines renewal pricing accelerated during the quarter with average increases in the low to mid-single digit range. Just over 80% of our commercial lines renewed at flat or higher prices. For our excess of surplus line segment, renewal prices continue to increase and are solidly in the mid-single digit range. Pricing changes for that segment have been positive for the last 16 consecutive months. For personal lines, we believe our 10% increase in 2011 renewal premiums is roughly half from higher rates and half from higher policy accounts. Policy retention has remain fairly steady over the past two years with fourth quarter retention in the high upper 80% range for commercialized policies, and then our low to mid 90% range for personal line policies. Our agents are able to sell the value of our products and services. They continue to work with us to implement price increases where they are needed. The market remains competitive, particularly for new business, while agencies appointed since the beginning of 2010, drove our 6% new business premium increase for 2011. New business written premiums for agents appointed prior to 2010 decreased approximately 2%. We are seeing plenty of opportunities to grow profitably and are comfortable declining new business opportunities we believe are underpriced. We also continue to gain confidence that our pricing analytics are helping us to distinguish the more attractive new business offerings from the last attractive ones. In 2011, we appointed 133 new agencies in areas we consider unreserved about a dozen more than we planned at the beginning of the year. During 2012, we planned to appoint around 130 agencies. It takes several years for our new agency to develop the double-digit market share we enjoyed with agencies appointed for 10 years or longer. The accelerated pace of appointments in recent years, plus our commitment to serving all our agencies and our clients put us on a path where we believe we can achieve $5 billion of direct written premium by 2015. Read the rest of this transcript for free on seekingalpha.com