Primary insurer Cincinnati Financial improved its property damage ratio to 87.3% in the fourth quarter of 2020, despite suffering above-average catastrophe claims.
The combined ratio improved 4.3 points from 91.6% in the fourth quarter of 2019, while underwriting profit rose 57% to $ 187 million over the same period.
This despite a catastrophe loss in the fourth quarter, which was 2.1 percentage points above the 10-year average.
Underwriting growth helped Cincinnati net income of $ 1.05 billion for the quarter, up 68% from the $ 626 million reported in the fourth quarter of 2019.
During the fourth quarter, the company saw net written premium growth of 7% driven by price increases and premium growth initiatives.
Investment income also increased 2% to $ 172 million, including a 7% growth in dividends on equity portfolios and a 2% growth in interest income.
However, looking at the full year, Cincinnati net income decreased 39% from $ 2.00 billion to $ 1.22 billion, while underwriting profit decreased 65% from $ 341 million to $ 119 million.
The combined ratio also deteriorated 4.3 points for the full year from 93.8% to 98.1%, although investment income increased 4% to $ 670 million.
“Spring storms in the Midwest, hurricanes in the southeast, and forest fires in the west: weather-related disasters in our country were relentless in 2020,” said Steven J. Johnston, President and CEO of Cincinnati. “Amid a global pandemic, our seasoned claims professionals got the opportunity and responded quickly and compassionately.”
“This year it has been more important than ever to focus our attention on our proven strategies for improving the profitability of our core business,” he continued.
“A steady increase in renewal premiums led to growth in net premiums written, which we believe is again above the industry average. We successfully managed pricing on commercial lines and improved it over the year to achieve mid-single-digit average increases in the fourth quarter. “