Wednesday, February 07, 2001
Two insurers report losses
Ohio Casualty, Cincinnati Financial hit bumps
By Jeff McKinney
The Cincinnati Enquirer
Operational and regulatory burdens not the typical severe-weather problems made 2000 a bumpy year for two of the Tristate's largest insurance companies.
Both Ohio Casualty Corp. and Cincinnati Financial Corp. posted losses for the fourth quarter as charge-offs for things ranging from unprofitable businesses to court rulings hurt earnings.
The events prompted Ohio Casualty to hire a New York-based consulting firm to review its claims, underwriting and information systems to make them more efficient and improve performance.
We're not at all happy with our results, and we're taking steps to improve them, said Cindy Denney, Ohio Casualty spokeswoman.
The Fairfield-based parent of Ohio Casualty Group had a full-year net loss of $79.2 million, or $1.32 a share, versus a profit of $114.1 million, or $1.87 a share, in 1999. Results from 1999 in cluded a gain of $94 million from the sale of investments.
For the quarter, the property and casualty insurer lost $10.6 million, or 18 cents a share, versus a profit of $13 million, or 22 cents a share, in 1999's fourth quarter.
For the year, Ohio Casualty reported premiums and finance charges earned of $1.5 billion, versus $1.6 billion in 1999. Losses included:
$28.1 million for the write-down of tangible assets.
$14.6 million for premium cessations.
About $36 million for various setbacks, including no underwriting profit in some businesses such as workers' compensation.
Though Ohio Casualty is determined to remain independent, the insurer said it has hired McKinsey & Co. Inc. to review operations and improve performance based on industry peers.
The company also has begun a search for a chief financial officer and treasurer.
Last year also was tough for Cincinnati Financial.
The company said it lost $41.3 million, or 26 cents a share, down from income of $46.9 million, or 28 cents a share, in 1999's fourth quarter. For 2000, Cincinnati Financial earned $118.4 million, or 73 cents a share, including all charges, down from $254.7 million, or $1.52 a share. Its full-year revenue totaled $2.3 billion, versus $2.1 billion in 1999.
The company said its losses for the quarter included increases in reserves of $110 million for two Ohio Supreme Court decisions and $19.8 million in capital losses. The company also took a charge tied to the write-down of an effort to upgrade its computer systems.
Meanwhile, Cincinnati Financial raised its quarterly dividend 10.5 percent to 21 cents a share from 19 cents a share. The Fairfield-based company said the dividend is payable April 16 to investors of record March 24.
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