Cincinnati Financial’s reinsurance doesn’t attach on hurricane Ian

Cincinnati Financial Corporation looks unlikely to benefit from either reinsurance or retrocession support for its losses from hurricane Ian, as the firm’s exposure to the storm fell within its retentions.

The company said it expects to report pre-tax catastrophe losses of approximately $252 million for the third-quarter of 2022, from across its insurance and reinsurance business.

$200 million of the catastrophe losses suffered during the third-quarter are due to hurricane Ian, Cincinnati Financial explained.

Other, less severe storms made up the remainder of the Q3 cat loss burden.

However, the company noted that it is not likely to benefit from reinsurance support for hurricane Ian.

As of September 30th, the company said its loss estimate for hurricane Ian “did not reach a level applicable to Cincinnati Insurance’s property catastrophe treaty or Cincinnati Re’s property catastrophe excess of loss coverage as both reinsurance arrangements include retention of the first $100 million of any loss.”

Cincinnati Re, the reinsurance underwriting arm, had an $80 million retention for its catastrophe retrocession a year earlier, so perhaps could have attached then and did so for hurricane Ida almost a year ago.

Total third-quarter catastrophe losses are split as follows: $46 million for Cincinnati’s commercial lines insurance segment; $69 million for its personal lines insurance segment; $112 million for Cincinnati Re^; and $25 million for Cincinnati Global Underwriting Ltd.

The company forecasts a Q3 combined ratio of 104% as a result of these catastrophe losses and hurricane Ian.

Steven J. Johnston, chairman and CEO, said, “Our hearts go out to all those who found themselves in the path of Hurricane Ian. We have deployed storm teams – made up of our own associates who volunteer to serve extra during catastrophes so that we can quickly begin the restoration process for our policyholders. This is when our claims associates shine, delivering fast, fair and empathetic service.

“So far this year we’ve seen a variety of challenges – inflation, declining stock and bond markets and a Category 4 hurricane – reinforcing our belief in the importance of maintaining our long-term focus. Our solid financial position ensures our ability to continue executing on our strategic initiatives, growing our agency plant, introducing diversifying products and investing in our talented associates.”