Cincinnati Financial Corp. in July announced it anticipates its property/casualty insurance subsidiaries will record approximately $45 million of pre-tax catastrophe losses and $35 million in losses greater than $1 million for the second quarter of 2002. These estimates compare with $35 million and $21 million, respectively, in the second quarter of 2001.Wind, hailstorms and associated flooding during April, May and June, primarily in Midwest and Mid-Atlantic states, are expected to result in an estimated $45 million in catastrophe losses. While the largest event at $22.8 million was a late April storm affecting policyholders across 13 states, five other storms contributed to the loss total, including three June events with preliminary loss estimates totaling $15.6 million.
"We dispatched storm teams to Kearney, Nebraska, and to Mason City, Iowa, to assist our local field claims representatives. We are in the business to pay claims promptly, fairly and personally, and our claims teams have done a good job of delivering on that promise," said John Schiff, Jr., CEO of Cincinnati Financial.
The recent catastrophe losses are expected to contribute approximately 7.8 points to the second-quarter 2002 combined ratio.
"Business growth and rising loss severity continue to lead to higher total large losses," Schiff added. "When we also experience higher frequency of these larger losses, the impact on our quarterly combined ratio can move outside the range that we have been experiencing.
"As we continue our efforts to ensure adequate pricing to compensate us for the risks we accept, we believe that over the longer term we will be able to maintain the ratio of larger losses to the total business in an acceptable range," he said.
Cincinnati Financial's catastrophe losses for the first six months of 2002 are estimated at $59 million, which would contribute approximately 5.2 points to the year-to-date combined ratio. This compares with $41.7 million and 4.2 points reported for the first six months of 2001.
