Will Catastrophe Loss Weigh on Cincinnati Financial's Q1 Earnings?

Cincinnati Financial Corporation CINF is expected to register an improvement in its top line but a decline in its bottom line when it reports first-quarter 2025 results on April 28, after the closing bell.

The Zacks Consensus Estimate for CINF’s first-quarter revenues is pegged at $2.7 billion, indicating 16.3% growth from the year-ago reported figure.

The consensus estimate for the bottom line is pegged at a loss of 29 cents per share. The Zacks Consensus Estimate for CINF’s first-quarter earnings has moved south by 8 cents in the past seven days. The estimate suggests a year-over-year decrease of 116.9%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What the Zacks Model Unveils for CINF

Our proven model does not conclusively predict an earnings beat for CINF this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) that increases the chances of an earnings beat. This is not the case as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: CINF has an Earnings ESP of -86.48%. This is because the Most Accurate Estimate of a loss of 53 cents per share is wider than the Zacks Consensus Estimate of a loss of 29 cents.

Cincinnati Financial Corporation Price and EPS Surprise

Cincinnati Financial Corporation price-eps-surprise | Cincinnati Financial Corporation Quote

Zacks Rank: CINF carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Shape CINF’s Q1 Results

Premiums in the first quarter of 2025 are likely to have benefited from increased exposure, better pricing, increased property casualty agency and new business written premiums, higher standard lines new business, and improved premiums from Cincinnati Re. We expect earned premiums to be $2.4 billion, up 16.6% from the year-ago reported figure. The Zacks Consensus Estimate is also pegged at $2.4 billion.

The Personal Line is likely to have benefited from rate increases, a higher level of insured exposures, higher policy retention rates and changes in policy deductibles or mix of business. The Zacks Consensus Estimate for Personal Lines revenues is pegged at $763 million, indicating an improvement of 29.5% from the year-ago quarter’s reported figure.

Excess and Surplus lines premiums are expected to have gained from improved agency renewal and new business written premiums due to higher renewal pricing. The Zacks Consensus Estimate for Excess and Surplus lines revenues is pegged at $163 million, indicating an improvement of 16.4% from the year-ago quarter’s reported figure. 

Net investment income is likely to have benefited from strong cash flow from operating activities and higher bond yields. We expect investment income to be $278.4 million, up 12.2% from the year-ago reported quarter. 

Total benefits and expenses are likely to have increased mainly due to higher insurance losses and contract holders' benefits, underwriting, acquisition and insurance expenses, interest expense, and other operating expenses. We expect total expenses to rise 40.2% to $2.8 billion.

Underwriting profitability is likely to have been affected by cat loss, stemming from the California wildfire. CINF expects cat loss between $450 million and $525 million, net of reinsurance. 

The Personal Lines Insurance segment will absorb 73% of the loss, while Cincinnati Re and Cincinnati Global will absorb 24% and 3% of the loss, respectively. The Zacks Consensus Estimate for combined ratio is pegged at 114, while we estimate the same to be 115.

Stocks to Consider

Here are three P&C insurance stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Arch Capital Group ACGL has an Earnings ESP of +2.28% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $1.37, indicating a year-over-year decrease of 44.1%

ACGL’s earnings beat estimates in each of the last four reported quarters.

Palomar Holdings PLMR has an Earnings ESP of +1.57% and a Zacks Rank #2 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $1.59, indicating a year-over-year increase of 45.9%.

PLMR’s earnings beat estimates in each of the last four reported quarters.

ROOT ROOT has an Earnings ESP of +25.84% and a Zacks Rank #1 at present. The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at 45 cents, indicating a year-over-year increase of 207.1%.

ROOT’s earnings beat estimates in each of the last four reported quarters.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research