It has been about a month since the last earnings report for Cincinnati Financial (CINF). Shares have added about 10.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cincinnati Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cincinnati Financial Q4 Earnings Top on Higher Premiums

Cincinnati Financial reported fourth-quarter 2023 operating income of $2.28 per share, which surpassed the Zacks Consensus Estimate by 18.1%. The bottom line surged 79.5% year over year.

Total operating revenues in the quarter under review were $2.3 billion, which improved 10.8% year over year. Also, the top line beat the consensus mark by 1%.

The strong quarterly results benefited from higher premiums, net investment income and improved combined ratio. Improved Underwriting profit and lower catastrophe losses in the property and casualty segment added to the upside. Higher expenses partially offset the positives.

Operational Update       

Earned premiums climbed 10% year over year to $2.1 billion and beat our estimate by 1.2%. It was driven by premium growth initiatives, price increases and a higher level of insured exposures.

Investment income, net of expenses increased 15% year over year to $239 million and beat our estimate of $226.6 million. The growth was driven by an increase in bond interest income and a rise in stock portfolio dividends. The Zacks Consensus Estimate was pegged at $227 million.

Total benefits and expenses of Cincinnati Financial increased 2.1% year over year to $1.9 billion, primarily due to higher underwriting, acquisitions and insurance expenses and interest expense. Our estimate for the metric was $2 billion.

In its property & casualty insurance business, CINF witnessed an underwriting income of $252 million against an underwriting income of $93 million in the year-ago period. Our estimate of underwriting income was pegged at $135.3 million.

The combined ratio — a measure of underwriting profitability — improved 740 basis points (bps) year over year to 87.5. Our estimate was pinned at 93.3. The Zacks Consensus Estimate was pegged at 92.

Quarterly Segment Update

Commercial Lines Insurance: Total revenues of $1.1 billion increased 4% year over year, which missed the Zacks Consensus Estimate by 1.7%. Our estimate was $1.13 billion. This upside was primarily driven by 4% premiums earned.

Underwriting income was $85 million, which surged more than five-fold year over year. The combined ratio improved 670 bps year over year to 92.2. Our estimate was pegged at 93.6.

Personal Lines Insurance: Total revenues of $561 million increased 26% year over year on account of a 26% rise in premiums earned. Our estimate was $517.9 million, while the Zacks Consensus Estimate was pegged at $544 million.

Underwriting profit was $88 million, which increased more than three-fold year over year. The metric beat our estimate of $77.1 million.

The combined ratio improved 1,100 bps year over year to 84.7. Our estimate was 85.3, while the Zacks Consensus Estimate was pegged at 91.

Excess and Surplus Lines Insurance: Total revenues of $149 million grew 20% year over year, aided by 19% higher earned premiums. Our estimate was $147.3 million, while the Zacks Consensus Estimate was pegged at $143 million.

Underwriting profit increased nearly three-fold year over year to $16 million. Our estimate was pinned at $14.8 million. The combined ratio improved 650 bps year over year to 89.8. Our estimate was 90.6.

Life Insurance: Total revenues were $121 million, up 3% year over year, driven by 7% higher earned premiums, 7% higher investment income, net of expenses and higher fee revenues. The Zacks Consensus Estimate was pegged at $80 million. Our estimate was $79.6 million. Total benefits and expenses increased 14% year over year to $109 million due to higher contract holders’ benefits and underwriting expenses incurred.