Cincinnati Financial announces $235m of Q1 pre-tax catastrophe losses
Cincinnati Financial Corporation has announced an expectation that it will report pretax catastrophe losses of approximately $235 million, with severe US storms and tornadoes in March the main drivers.
The insurance and reinsurance group said that this will add roughly 12.8 percentage points to its combined ratio for the first-quarter of 2023, more than double the 6.3 point average for Q1 catastrophe losses over the last five years.
In total, $171 million of aggregate catastrophe losses are expected from three March storms that produced tornadoes in several US states, the company explained today, with the remainder coming from less severe storms experienced during the quarter.
The Q1 catastrophe losses break down as $110 million for Cincinnati Financial’s commercial lines insurance segment, $115 million for its personal lines insurance segment, $1 million for excess and surplus lines, $3 million for its reinsurance unit Cincinnati Re and $6 million for its Cincinnati Global Underwriting Ltd. operations.
Steven J. Johnston, chairman and CEO, commented, “March roared in and left just as loudly with storm systems that impacted at least a dozen states each. Our claims service, delivered by teams of Cincinnati associates, continues to support agents and lead to satisfied policyholders as we quickly inspected losses and issued payments.
“We take the responsibility of paying our claims seriously and manage our capital to ensure we have ample capacity to absorb insured losses. Our long-term focus allows us to partner with the best independent agents in the country and to provide the highest quality service during the claims handling process.”
As a result of these catastrophe losses, Cincinnati Financial expects its Q1 combined ratio to be between 99% and 103%, while it also anticipates reporting net written premium growth of an estimated 6% for the quarter.
It doesn’t appear that the Q1 catastrophe losses will attach Cincinnati Insurance’s property catastrophe treaty or Cincinnati Re’s property catastrophe excess of loss retrocession coverage, as both had retentions of $100 million of any loss as of last year.
Aon recently estimated Q1 severe convective storm losses in the US of around $5.4 billion, but cautioned on the chance of those developing.
While broker BMS Group suggested the total insured losses for severe convective storms in Q1 could see significant development, with as much as $9.5 billion from that peril alone.
