Cincinnati Financial Well Poised: Is It In Your Portfolio?

On Jun 9, 2016, we issued an updated research report on Cincinnati Financial Corporation (NASDAQ:CINF) .

In the first quarter of 2016, Cincinnati Financial’s operating earnings outperformed the Zacks Consensus Estimate and surged year over year. The solid performance came on the back of solid underwriting results and higher investment income. With respect to earnings surprise, this Zacks Rank #1 (Strong Buy) company delivered positive surprises in the last four quarters, with an average beat of 51.4%.

Cincinnati Financial remains optimistic on its Commercial Lines Property Casualty Insurance segment that has been consistently witnessing top-line growth over the past several quarters and its Excess and Surplus line that has been generating underwriting income for the last 14 consecutive quarters. Given the company’s implementation of predictive analytics to improve its pricing precision as well as its constant efforts to improve local relationships with agents and its excess and surplus lines market, we expect the segments to continue outperforming.

Given Cincinnati Financial’s agent-centered business model, appointing new agencies was one of the several strategic initiatives that it adopted. The insurer plans to appoint 100 agencies in 2016. Cincinnati Financial also has plans to appoint agencies that will focus on high net worth personal lines’ clients as the company is eyeing $25 million in high net worth new business written premiums in 2016.

Banking on its operational strength, this Zacks Rank #1 (Strong Buy) insurer has been consistently increasing its yearly dividend for the past 56 years, a record matched by only eight other publicly-traded companies in the U.S. Its leverage ratio also remains low.

However, concentration of business in the Midwest region which is prone to catastrophes subjects the company’s earnings to volatility. Also, adverse regulatory developments associated with Universal Life products with secondary guarantees and continued turmoil in group benefits associated with the Affordable Care Act is expected to weigh on the life insurance segment’s results.

Nonetheless, riding on the positives, the Zacks Consensus Estimate for 2016 and 2017 moved up in the last 60 days by 7.4% to $2.90 and 7.7% to $2.80, respectively.

Other Stocks to Consider

Investors interested in property and casualty insurers can also consider stocks like Markel Corp. (NYSE:MKL) , NMI Holdings, Inc. (NASDAQ:NMIH) and National General Holdings Corp. (NASDAQ:NGHC) . Each of these stocks sport the same Zacks Rank as Cincinnati Financial.


CINCINNATI FINL (CINF): Free Stock Analysis Report

MARKEL CORP (MKL): Free Stock Analysis Report

NMI HOLDINGS-A (NMIH): Free Stock Analysis Report

NATIONAL GNL HL (NGHC): Free Stock Analysis Report

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