Ohio | 31-0746871 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
6200 S. Gilmore Road, Fairfield, Ohio | 45014-5141 | |
(Address of principal executive offices) | (Zip code) |
Item 1. Financial Statements (unaudited) | |
Financial Results | |
(Dollars in millions, except per share data) | June 30, | December 31, | ||||||
2018 | 2017 | |||||||
Assets | ||||||||
Investments | ||||||||
Fixed maturities, at fair value (amortized cost: 2018—$10,552; 2017—$10,314) | $ | 10,636 | $ | 10,699 | ||||
Equity securities, at fair value (cost: 2018—$3,198; 2017—$3,094) | 6,200 | 6,249 | ||||||
Other invested assets | 108 | 103 | ||||||
Total investments | 16,944 | 17,051 | ||||||
Cash and cash equivalents | 521 | 657 | ||||||
Investment income receivable | 130 | 134 | ||||||
Finance receivable | 66 | 61 | ||||||
Premiums receivable | 1,733 | 1,589 | ||||||
Reinsurance recoverable | 420 | 432 | ||||||
Prepaid reinsurance premiums | 39 | 42 | ||||||
Deferred policy acquisition costs | 728 | 670 | ||||||
Land, building and equipment, net, for company use (accumulated depreciation: 2018—$264; 2017—$253) | 188 | 185 | ||||||
Other assets | 199 | 216 | ||||||
Separate accounts | 792 | 806 | ||||||
Total assets | $ | 21,760 | $ | 21,843 | ||||
Liabilities | ||||||||
Insurance reserves | ||||||||
Loss and loss expense reserves | $ | 5,468 | $ | 5,273 | ||||
Life policy and investment contract reserves | 2,760 | 2,729 | ||||||
Unearned premiums | 2,578 | 2,404 | ||||||
Other liabilities | 707 | 792 | ||||||
Deferred income tax | 650 | 745 | ||||||
Note payable | 61 | 24 | ||||||
Long-term debt and capital lease obligations | 828 | 827 | ||||||
Separate accounts | 792 | 806 | ||||||
Total liabilities | 13,844 | 13,600 | ||||||
Commitments and contingent liabilities (Note 12) | ||||||||
Shareholders' Equity | ||||||||
Common stock, par value—$2 per share; (authorized: 2018 and 2017—500 million shares; issued: 2018 and 2017—198.3 million shares) | 397 | 397 | ||||||
Paid-in capital | 1,266 | 1,265 | ||||||
Retained earnings | 7,696 | 5,180 | ||||||
Accumulated other comprehensive income | 55 | 2,788 | ||||||
Treasury stock at cost (2018—35.7 million shares and 2017—34.4 million shares) | (1,498 | ) | (1,387 | ) | ||||
Total shareholders' equity | 7,916 | 8,243 | ||||||
Total liabilities and shareholders' equity | $ | 21,760 | $ | 21,843 | ||||
(Dollars in millions, except per share data) | Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | |||||||||||||||
Earned premiums | $ | 1,294 | $ | 1,241 | $ | 2,554 | $ | 2,449 | |||||||
Investment income, net of expenses | 154 | 151 | 304 | 300 | |||||||||||
Investment gains and losses, net | 105 | (11 | ) | (86 | ) | 149 | |||||||||
Fee revenues | 4 | 4 | 8 | 9 | |||||||||||
Other revenues | 1 | 1 | 2 | 2 | |||||||||||
Total revenues | 1,558 | 1,386 | 2,782 | 2,909 | |||||||||||
Benefits and Expenses | |||||||||||||||
Insurance losses and contract holders' benefits | 883 | 854 | 1,737 | 1,707 | |||||||||||
Underwriting, acquisition and insurance expenses | 395 | 387 | 798 | 764 | |||||||||||
Interest expense | 13 | 13 | 26 | 26 | |||||||||||
Other operating expenses | 3 | 4 | 7 | 8 | |||||||||||
Total benefits and expenses | 1,294 | 1,258 | 2,568 | 2,505 | |||||||||||
Income Before Income Taxes | 264 | 128 | 214 | 404 | |||||||||||
Provision (Benefit) for Income Taxes | |||||||||||||||
Current | 33 | 31 | 61 | 71 | |||||||||||
Deferred | 14 | (3 | ) | (33 | ) | 32 | |||||||||
Total provision for income taxes | 47 | 28 | 28 | 103 | |||||||||||
Net Income | $ | 217 | $ | 100 | $ | 186 | $ | 301 | |||||||
Per Common Share | |||||||||||||||
Net income—basic | $ | 1.33 | $ | 0.61 | $ | 1.13 | $ | 1.83 | |||||||
Net income—diluted | 1.32 | 0.60 | 1.12 | 1.81 | |||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net Income | $ | 217 | $ | 100 | $ | 186 | $ | 301 | ||||||||
Other Comprehensive Income (Loss) | ||||||||||||||||
Change in unrealized gains on investments, net of tax (benefit) of ($18), $77, ($64) and $123, respectively | (62 | ) | 144 | (237 | ) | 229 | ||||||||||
Amortization of pension actuarial loss and prior service cost, net of tax of $0, $0, $0 and $0, respectively | 1 | — | 1 | 1 | ||||||||||||
Change in life deferred acquisition costs, life policy reserves and other, net of tax of $1, $0, $2 and $1, respectively | 1 | 1 | 6 | 2 | ||||||||||||
Other comprehensive income (loss) | (60 | ) | 145 | (230 | ) | 232 | ||||||||||
Comprehensive Income (Loss) | $ | 157 | $ | 245 | $ | (44 | ) | $ | 533 | |||||||
(Dollars in millions) | Six months ended June 30, | |||||||
2018 | 2017 | |||||||
Common Stock | ||||||||
Beginning of year | $ | 397 | $ | 397 | ||||
Share-based awards | — | — | ||||||
End of period | 397 | 397 | ||||||
Paid-In Capital | ||||||||
Beginning of year | 1,265 | 1,252 | ||||||
Share-based awards | (17 | ) | (18 | ) | ||||
Share-based compensation | 16 | 14 | ||||||
Other | 2 | 1 | ||||||
End of period | 1,266 | 1,249 | ||||||
Retained Earnings | ||||||||
Beginning of year | 5,180 | 5,037 | ||||||
Cumulative effect of change in accounting for equity securities as of January 1, 2018 | 2,503 | — | ||||||
Adjusted beginning of year | 7,683 | 5,037 | ||||||
Net income | 186 | 301 | ||||||
Dividends declared | (173 | ) | (164 | ) | ||||
End of period | 7,696 | 5,174 | ||||||
Accumulated Other Comprehensive Income | ||||||||
Beginning of year | 2,788 | 1,693 | ||||||
Cumulative effect of change in accounting for equity securities as of January 1, 2018 | (2,503 | ) | — | |||||
Adjusted beginning of year | 285 | 1,693 | ||||||
Other comprehensive income (loss) | (230 | ) | 232 | |||||
End of period | 55 | 1,925 | ||||||
Treasury Stock | ||||||||
Beginning of year | (1,387 | ) | (1,319 | ) | ||||
Share-based awards | 16 | 19 | ||||||
Shares acquired - share repurchase authorization | (125 | ) | (70 | ) | ||||
Shares acquired - share-based compensation plans | (3 | ) | (4 | ) | ||||
Other | 1 | 2 | ||||||
End of period | (1,498 | ) | (1,372 | ) | ||||
Total Shareholders' Equity | $ | 7,916 | $ | 7,373 | ||||
(In millions) | ||||||||
Common Stock - Shares Outstanding | ||||||||
Beginning of year | 163.9 | 164.4 | ||||||
Share-based awards | 0.5 | 0.6 | ||||||
Shares acquired - share repurchase authorization | (1.8 | ) | (1.0 | ) | ||||
Shares acquired - share-based compensation plans | — | (0.1 | ) | |||||
End of period | 162.6 | 163.9 | ||||||
(Dollars in millions) | Six months ended June 30, | |||||||
2018 | 2017 | |||||||
Cash Flows From Operating Activities | ||||||||
Net income | $ | 186 | $ | 301 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 32 | 27 | ||||||
Investment gains and losses, net | 90 | (149 | ) | |||||
Share-based compensation | 16 | 14 | ||||||
Interest credited to contract holders' | 23 | 24 | ||||||
Deferred income tax expense | (33 | ) | 32 | |||||
Changes in: | ||||||||
Investment income receivable | 4 | 4 | ||||||
Premiums and reinsurance receivable | (129 | ) | (91 | ) | ||||
Deferred policy acquisition costs | (41 | ) | (45 | ) | ||||
Other assets | (14 | ) | (37 | ) | ||||
Loss and loss expense reserves | 195 | 196 | ||||||
Life policy and investment contract reserves | 47 | 50 | ||||||
Unearned premiums | 174 | 154 | ||||||
Other liabilities | (85 | ) | (82 | ) | ||||
Current income tax receivable/payable | (1 | ) | 47 | |||||
Net cash provided by operating activities | 464 | 445 | ||||||
Cash Flows From Investing Activities | ||||||||
Sale of fixed maturities | 5 | 12 | ||||||
Call or maturity of fixed maturities | 674 | 540 | ||||||
Sale of equity securities | 134 | 288 | ||||||
Purchase of fixed maturities | (905 | ) | (802 | ) | ||||
Purchase of equity securities | (149 | ) | (352 | ) | ||||
Investment in finance receivables | (16 | ) | (14 | ) | ||||
Collection of finance receivables | 12 | 11 | ||||||
Investment in buildings and equipment | (9 | ) | (9 | ) | ||||
Change in other invested assets, net | (11 | ) | (7 | ) | ||||
Net cash used in investing activities | (265 | ) | (333 | ) | ||||
Cash Flows From Financing Activities | ||||||||
Payment of cash dividends to shareholders | (166 | ) | (158 | ) | ||||
Shares acquired - share repurchase authorization | (125 | ) | (70 | ) | ||||
Changes in note payable | 37 | (3 | ) | |||||
Proceeds from stock options exercised | 5 | 8 | ||||||
Contract holders' funds deposited | 43 | 42 | ||||||
Contract holders' funds withdrawn | (88 | ) | (83 | ) | ||||
Other | (41 | ) | (19 | ) | ||||
Net cash used in financing activities | (335 | ) | (283 | ) | ||||
Net change in cash and cash equivalents | (136 | ) | (171 | ) | ||||
Cash and cash equivalents at beginning of year | 657 | 777 | ||||||
Cash and cash equivalents at end of period | $ | 521 | $ | 606 | ||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Interest paid | $ | 26 | $ | 26 | ||||
Income taxes paid | 60 | 23 | ||||||
Noncash Activities | ||||||||
Conversion of securities | $ | 3 | $ | 5 | ||||
Equipment acquired under capital lease obligations | 8 | 6 | ||||||
Cashless exercise of stock options | 3 | 4 | ||||||
Other assets and other liabilities | 28 | 70 | ||||||
(Dollars in millions) | Cost or amortized cost | Gross unrealized | Fair value | |||||||||||||
At June 30, 2018 | gains | losses | ||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate | $ | 5,625 | $ | 110 | $ | 57 | $ | 5,678 | ||||||||
States, municipalities and political subdivisions | 4,316 | 78 | 36 | 4,358 | ||||||||||||
Commercial mortgage-backed | 283 | 2 | 4 | 281 | ||||||||||||
Government-sponsored enterprises | 277 | — | 8 | 269 | ||||||||||||
United States government | 41 | — | 1 | 40 | ||||||||||||
Foreign government | 10 | — | — | 10 | ||||||||||||
Total | $ | 10,552 | $ | 190 | $ | 106 | $ | 10,636 | ||||||||
At December 31, 2017 | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
Corporate | $ | 5,420 | $ | 246 | $ | 13 | $ | 5,653 | ||||||||
States, municipalities and political subdivisions | 4,316 | 155 | 6 | 4,465 | ||||||||||||
Commercial mortgage-backed | 280 | 7 | 1 | 286 | ||||||||||||
Government-sponsored enterprises | 257 | 1 | 4 | 254 | ||||||||||||
United States government | 31 | — | — | 31 | ||||||||||||
Foreign government | 10 | — | — | 10 | ||||||||||||
Subtotal | 10,314 | 409 | 24 | 10,699 | ||||||||||||
Equity securities: | ||||||||||||||||
Common equities | 2,918 | 3,135 | 14 | 6,039 | ||||||||||||
Nonredeemable preferred equities | 176 | 34 | — | 210 | ||||||||||||
Subtotal | 3,094 | 3,169 | 14 | 6,249 | ||||||||||||
Total | $ | 13,408 | $ | 3,578 | $ | 38 | $ | 16,948 | ||||||||
(Dollars in millions) | Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
At June 30, 2018 | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate | $ | 1,836 | $ | 39 | $ | 283 | $ | 18 | $ | 2,119 | $ | 57 | ||||||||||||
States, municipalities and political subdivisions | 1,070 | 22 | 262 | 14 | 1,332 | 36 | ||||||||||||||||||
Commercial mortgage-backed securities | 113 | 2 | 35 | 2 | 148 | 4 | ||||||||||||||||||
Government-sponsored enterprises | 110 | 2 | 158 | 6 | 268 | 8 | ||||||||||||||||||
Foreign government | 10 | — | — | — | 10 | — | ||||||||||||||||||
United States government | 23 | 1 | 11 | — | 34 | 1 | ||||||||||||||||||
Total | $ | 3,162 | $ | 66 | $ | 749 | $ | 40 | $ | 3,911 | $ | 106 | ||||||||||||
At December 31, 2017 | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate | $ | 330 | $ | 4 | $ | 252 | $ | 9 | $ | 582 | $ | 13 | ||||||||||||
States, municipalities and political subdivisions | 88 | 1 | 264 | 5 | 352 | 6 | ||||||||||||||||||
Commercial mortgage-backed | 33 | — | 36 | 1 | 69 | 1 | ||||||||||||||||||
Government-sponsored enterprises | 96 | 1 | 124 | 3 | 220 | 4 | ||||||||||||||||||
Foreign government | 10 | — | — | — | 10 | — | ||||||||||||||||||
United States government | 23 | — | 6 | — | 29 | — | ||||||||||||||||||
Subtotal | 580 | 6 | 682 | 18 | 1,262 | 24 | ||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Common equities | 229 | 14 | — | — | 229 | 14 | ||||||||||||||||||
Subtotal | 229 | 14 | — | — | 229 | 14 | ||||||||||||||||||
Total | $ | 809 | $ | 20 | $ | 682 | $ | 18 | $ | 1,491 | $ | 38 | ||||||||||||
(Dollars in millions) | Amortized cost | Fair value | % of fair value | ||||||||
At June 30, 2018 | |||||||||||
Maturity dates: | |||||||||||
Due in one year or less | $ | 720 | $ | 733 | 6.9 | % | |||||
Due after one year through five years | 2,745 | 2,781 | 26.1 | ||||||||
Due after five years through ten years | 3,630 | 3,641 | 34.3 | ||||||||
Due after ten years | 3,457 | 3,481 | 32.7 | ||||||||
Total | $ | 10,552 | $ | 10,636 | 100.0 | % | |||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Investment income: | |||||||||||||||
Interest | $ | 112 | $ | 111 | $ | 222 | $ | 222 | |||||||
Dividends | 44 | 42 | 86 | 81 | |||||||||||
Other | 1 | 1 | 2 | 2 | |||||||||||
Total | 157 | 154 | 310 | 305 | |||||||||||
Less investment expenses | 3 | 3 | 6 | 5 | |||||||||||
Total | $ | 154 | $ | 151 | $ | 304 | $ | 300 | |||||||
Investment gains and losses, net: | |||||||||||||||
Equity securities: | |||||||||||||||
Investment gains and losses on securities sold, net | $ | 4 | $ | — | $ | 7 | $ | — | |||||||
Unrealized gains and losses on securities still held, net | 101 | — | (97 | ) | — | ||||||||||
Gross realized gains | — | 6 | — | 159 | |||||||||||
Gross realized losses | — | (10 | ) | — | (14 | ) | |||||||||
Other-than-temporary impairments | — | (3 | ) | — | (3 | ) | |||||||||
Subtotal | 105 | (7 | ) | (90 | ) | 142 | |||||||||
Fixed maturities: | |||||||||||||||
Gross realized gains | 3 | 3 | 7 | 13 | |||||||||||
Gross realized losses | (1 | ) | — | (1 | ) | — | |||||||||
Other-than-temporary impairments | — | (6 | ) | — | (6 | ) | |||||||||
Subtotal | 2 | (3 | ) | 6 | 7 | ||||||||||
Other | (2 | ) | (1 | ) | (2 | ) | — | ||||||||
Total | $ | 105 | $ | (11 | ) | $ | (86 | ) | $ | 149 | |||||
(Dollars in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | ||||||||||||
At June 30, 2018 | ||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||
Corporate | $ | — | $ | 5,677 | $ | 1 | $ | 5,678 | ||||||||
States, municipalities and political subdivisions | — | 4,354 | 4 | 4,358 | ||||||||||||
Commercial mortgage-backed | — | 281 | — | 281 | ||||||||||||
Government-sponsored enterprises | — | 269 | — | 269 | ||||||||||||
United States government | 40 | — | — | 40 | ||||||||||||
Foreign government | — | 10 | — | 10 | ||||||||||||
Subtotal | 40 | 10,591 | 5 | 10,636 | ||||||||||||
Common equities | 6,008 | — | — | 6,008 | ||||||||||||
Nonredeemable preferred equities | — | 192 | — | 192 | ||||||||||||
Separate accounts taxable fixed maturities | — | 781 | — | 781 | ||||||||||||
Top Hat savings plan mutual funds and common equity (included in Other assets) | 33 | — | — | 33 | ||||||||||||
Total | $ | 6,081 | $ | 11,564 | $ | 5 | $ | 17,650 | ||||||||
At December 31, 2017 | ||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||
Corporate | $ | — | $ | 5,652 | $ | 1 | $ | 5,653 | ||||||||
States, municipalities and political subdivisions | — | 4,460 | 5 | 4,465 | ||||||||||||
Commercial mortgage-backed | — | 286 | — | 286 | ||||||||||||
Government-sponsored enterprises | — | 254 | — | 254 | ||||||||||||
United States government | 31 | — | — | 31 | ||||||||||||
Foreign government | — | 10 | — | 10 | ||||||||||||
Subtotal | 31 | 10,662 | 6 | 10,699 | ||||||||||||
Common equities, available for sale | 6,039 | — | — | 6,039 | ||||||||||||
Nonredeemable preferred equities, available for sale | — | 210 | — | 210 | ||||||||||||
Separate accounts taxable fixed maturities | — | 795 | — | 795 | ||||||||||||
Top Hat savings plan mutual funds and common equity (included in Other assets) | 31 | — | — | 31 | ||||||||||||
Total | $ | 6,101 | $ | 11,667 | $ | 6 | $ | 17,774 | ||||||||
(Dollars in millions) | Asset fair value measurements using significant unobservable inputs | |||||||||||
Corporate fixed maturities | States, municipalities and political subdivisions fixed maturities | Total | ||||||||||
Beginning balance, April 1, 2018 | $ | 1 | $ | 4 | $ | 5 | ||||||
Total gains or losses (realized/unrealized): | ||||||||||||
Included in net income | — | — | — | |||||||||
Included in other comprehensive income | — | — | — | |||||||||
Purchases | — | — | — | |||||||||
Sales | — | — | — | |||||||||
Transfers into Level 3 | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Ending balance, June 30, 2018 | $ | 1 | $ | 4 | $ | 5 | ||||||
Beginning balance, April 1, 2017 | $ | 1 | $ | — | $ | 1 | ||||||
Total gains or losses (realized/unrealized): | ||||||||||||
Included in net income | — | — | — | |||||||||
Included in other comprehensive income | — | — | — | |||||||||
Purchases | — | — | — | |||||||||
Sales | — | — | — | |||||||||
Transfers into Level 3 | — | 5 | 5 | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Ending balance, June 30, 2017 | $ | 1 | $ | 5 | $ | 6 | ||||||
(Dollars in millions) | Asset fair value measurements using significant unobservable inputs | |||||||||||
Corporate fixed maturities | States, municipalities and political subdivisions fixed maturities | Total | ||||||||||
Beginning balance, January 1, 2018 | $ | 1 | $ | 5 | $ | 6 | ||||||
Total gains or losses (realized/unrealized): | ||||||||||||
Included in net income | — | — | — | |||||||||
Included in other comprehensive income | — | (1 | ) | (1 | ) | |||||||
Purchases | — | — | — | |||||||||
Sales | — | — | — | |||||||||
Transfers into Level 3 | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Ending balance, June 30, 2018 | $ | 1 | $ | 4 | $ | 5 | ||||||
Beginning balance, January 1, 2017 | $ | 78 | $ | — | $ | 78 | ||||||
Total gains or losses (realized/unrealized): | ||||||||||||
Included in net income | — | — | — | |||||||||
Included in other comprehensive income | — | — | — | |||||||||
Purchases | — | 5 | 5 | |||||||||
Sales | — | — | — | |||||||||
Transfers into Level 3 | — | — | — | |||||||||
Transfers out of Level 3 | (77 | ) | — | (77 | ) | |||||||
Ending balance, June 30, 2017 | $ | 1 | $ | 5 | $ | 6 | ||||||
(Dollars in millions) | Book value | Principal amount | |||||||||||||||||||
Interest rate | Year of issue | June 30, | December 31, | June 30, | December 31, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
6.900 | % | 1998 | Senior debentures, due 2028 | $ | 26 | $ | 26 | $ | 28 | $ | 28 | ||||||||||
6.920 | % | 2005 | Senior debentures, due 2028 | 391 | 391 | 391 | 391 | ||||||||||||||
6.125 | % | 2004 | Senior notes, due 2034 | 370 | 370 | 374 | 374 | ||||||||||||||
Total | $ | 787 | $ | 787 | $ | 793 | $ | 793 | |||||||||||||
(Dollars in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | ||||||||||||
At June 30, 2018 | ||||||||||||||||
Note payable | $ | — | $ | 61 | $ | — | $ | 61 | ||||||||
6.900% senior debentures, due 2028 | — | 32 | — | 32 | ||||||||||||
6.920% senior debentures, due 2028 | — | 478 | — | 478 | ||||||||||||
6.125% senior notes, due 2034 | — | 448 | — | 448 | ||||||||||||
Total | $ | — | $ | 1,019 | $ | — | $ | 1,019 | ||||||||
At December 31, 2017 | ||||||||||||||||
Note payable | $ | — | $ | 24 | $ | — | $ | 24 | ||||||||
6.900% senior debentures, due 2028 | — | 34 | — | 34 | ||||||||||||
6.920% senior debentures, due 2028 | — | 505 | — | 505 | ||||||||||||
6.125% senior notes, due 2034 | — | 477 | — | 477 | ||||||||||||
Total | $ | — | $ | 1,040 | $ | — | $ | 1,040 | ||||||||
(Dollars in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | ||||||||||||
At June 30, 2018 | ||||||||||||||||
Life policy loans | $ | — | $ | — | $ | 40 | $ | 40 | ||||||||
Deferred annuities | — | — | 769 | 769 | ||||||||||||
Structured settlements | — | 192 | — | 192 | ||||||||||||
Total | $ | — | $ | 192 | $ | 769 | $ | 961 | ||||||||
At December 31, 2017 | ||||||||||||||||
Life policy loans | $ | — | $ | — | $ | 41 | $ | 41 | ||||||||
Deferred annuities | — | — | 834 | 834 | ||||||||||||
Structured settlements | — | 210 | — | 210 | ||||||||||||
Total | $ | — | $ | 210 | $ | 834 | $ | 1,044 | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Gross loss and loss expense reserves, beginning of period | $ | 5,293 | $ | 5,128 | $ | 5,219 | $ | 5,035 | ||||||||
Less reinsurance recoverable | 184 | 297 | 187 | 298 | ||||||||||||
Net loss and loss expense reserves, beginning of period | 5,109 | 4,831 | 5,032 | 4,737 | ||||||||||||
Net incurred loss and loss expenses related to: | ||||||||||||||||
Current accident year | 852 | 832 | 1,691 | 1,658 | ||||||||||||
Prior accident years | (31 | ) | (38 | ) | (79 | ) | (76 | ) | ||||||||
Total incurred | 821 | 794 | 1,612 | 1,582 | ||||||||||||
Net paid loss and loss expenses related to: | ||||||||||||||||
Current accident year | 341 | 373 | 536 | 558 | ||||||||||||
Prior accident years | 354 | 322 | 873 | 831 | ||||||||||||
Total paid | 695 | 695 | 1,409 | 1,389 | ||||||||||||
Net loss and loss expense reserves, end of period | 5,235 | 4,930 | 5,235 | 4,930 | ||||||||||||
Plus reinsurance recoverable | 188 | 283 | 188 | 283 | ||||||||||||
Gross loss and loss expense reserves, end of period | $ | 5,423 | $ | 5,213 | $ | 5,423 | $ | 5,213 | ||||||||
(Dollars in millions) | June 30, 2018 | December 31, 2017 | ||||||
Life policy reserves: | ||||||||
Ordinary/traditional life | $ | 1,118 | $ | 1,080 | ||||
Other | 48 | 47 | ||||||
Subtotal | 1,166 | 1,127 | ||||||
Investment contract reserves: | ||||||||
Deferred annuities | 813 | 835 | ||||||
Universal life | 616 | 601 | ||||||
Structured settlements | 159 | 160 | ||||||
Other | 6 | 6 | ||||||
Subtotal | 1,594 | 1,602 | ||||||
Total life policy and investment contract reserves | $ | 2,760 | $ | 2,729 | ||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Property casualty: | |||||||||||||||
Deferred policy acquisition costs asset, beginning of period | $ | 446 | $ | 428 | $ | 438 | $ | 408 | |||||||
Capitalized deferred policy acquisition costs | 251 | 237 | 483 | 463 | |||||||||||
Amortized deferred policy acquisition costs | (225 | ) | (217 | ) | (449 | ) | (423 | ) | |||||||
Deferred policy acquisition costs asset, end of period | $ | 472 | $ | 448 | $ | 472 | $ | 448 | |||||||
Life: | |||||||||||||||
Deferred policy acquisition costs asset, beginning of period | $ | 245 | $ | 232 | $ | 232 | $ | 229 | |||||||
Capitalized deferred policy acquisition costs | 15 | 12 | 28 | 25 | |||||||||||
Amortized deferred policy acquisition costs | (11 | ) | (12 | ) | (21 | ) | (20 | ) | |||||||
Amortized shadow deferred policy acquisition costs | 7 | (2 | ) | 17 | (4 | ) | |||||||||
Deferred policy acquisition costs asset, end of period | $ | 256 | $ | 230 | $ | 256 | $ | 230 | |||||||
Consolidated: | |||||||||||||||
Deferred policy acquisition costs asset, beginning of period | $ | 691 | $ | 660 | $ | 670 | $ | 637 | |||||||
Capitalized deferred policy acquisition costs | 266 | 249 | 511 | 488 | |||||||||||
Amortized deferred policy acquisition costs | (236 | ) | (229 | ) | (470 | ) | (443 | ) | |||||||
Amortized shadow deferred policy acquisition costs | 7 | (2 | ) | 17 | (4 | ) | |||||||||
Deferred policy acquisition costs asset, end of period | $ | 728 | $ | 678 | $ | 728 | $ | 678 | |||||||
(Dollars in millions) | Three months ended June 30, | ||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||
Before tax | Income tax | Net | Before tax | Income tax | Net | ||||||||||||||||||||
Investments: | |||||||||||||||||||||||||
AOCI, beginning of period | $ | 164 | $ | 35 | $ | 129 | $ | 2,756 | $ | 954 | $ | 1,802 | |||||||||||||
OCI before investment gains and losses, net, recognized in net income | (78 | ) | (18 | ) | (60 | ) | 211 | 74 | 137 | ||||||||||||||||
Investment gains and losses, net, recognized in net income | (2 | ) | — | (2 | ) | 10 | 3 | 7 | |||||||||||||||||
OCI | (80 | ) | (18 | ) | (62 | ) | 221 | 77 | 144 | ||||||||||||||||
AOCI, end of period | $ | 84 | $ | 17 | $ | 67 | $ | 2,977 | $ | 1,031 | $ | 1,946 | |||||||||||||
Pension obligations: | |||||||||||||||||||||||||
AOCI, beginning of period | $ | (12 | ) | $ | (1 | ) | $ | (11 | ) | $ | (25 | ) | $ | (8 | ) | $ | (17 | ) | |||||||
OCI excluding amortization recognized in net income | — | — | — | — | — | — | |||||||||||||||||||
Amortization recognized in net income | 1 | — | 1 | — | — | — | |||||||||||||||||||
OCI | 1 | — | 1 | — | — | — | |||||||||||||||||||
AOCI, end of period | $ | (11 | ) | $ | (1 | ) | $ | (10 | ) | $ | (25 | ) | $ | (8 | ) | $ | (17 | ) | |||||||
Life deferred acquisition costs, life policy reserves and other: | |||||||||||||||||||||||||
AOCI, beginning of period | $ | (4 | ) | $ | (1 | ) | $ | (3 | ) | $ | (7 | ) | $ | (2 | ) | $ | (5 | ) | |||||||
OCI before investment gains and losses, net, recognized in net income | — | — | — | — | (1 | ) | 1 | ||||||||||||||||||
Investment gains and losses, net, recognized in net income | 2 | 1 | 1 | 1 | 1 | — | |||||||||||||||||||
OCI | 2 | 1 | 1 | 1 | — | 1 | |||||||||||||||||||
AOCI, end of period | $ | (2 | ) | $ | — | $ | (2 | ) | $ | (6 | ) | $ | (2 | ) | $ | (4 | ) | ||||||||
Summary of AOCI: | |||||||||||||||||||||||||
AOCI, beginning of period | $ | 148 | $ | 33 | $ | 115 | $ | 2,724 | $ | 944 | $ | 1,780 | |||||||||||||
Investments OCI | (80 | ) | (18 | ) | (62 | ) | 221 | 77 | 144 | ||||||||||||||||
Pension obligations OCI | 1 | — | 1 | — | — | — | |||||||||||||||||||
Life deferred acquisition costs, life policy reserves and other OCI | 2 | 1 | 1 | 1 | — | 1 | |||||||||||||||||||
Total OCI | (77 | ) | (17 | ) | (60 | ) | 222 | 77 | 145 | ||||||||||||||||
AOCI, end of period | $ | 71 | $ | 16 | $ | 55 | $ | 2,946 | $ | 1,021 | $ | 1,925 | |||||||||||||
(Dollars in millions) | Six months ended June 30, | |||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Before tax | Income tax | Net | Before tax | Income tax | Net | |||||||||||||||||||
Investments: | ||||||||||||||||||||||||
AOCI, beginning of period | $ | 3,540 | $ | 733 | $ | 2,807 | $ | 2,625 | $ | 908 | $ | 1,717 | ||||||||||||
Cumulative effect of change in accounting for equity securities as of January 1, 2018 | (3,155 | ) | (652 | ) | (2,503 | ) | — | — | — | |||||||||||||||
Adjusted AOCI, beginning of period | 385 | 81 | 304 | 2,625 | 908 | 1,717 | ||||||||||||||||||
OCI before investment gains and losses, net, recognized in net income | (295 | ) | (63 | ) | (232 | ) | 501 | 176 | 325 | |||||||||||||||
Investment gains and losses, net, recognized in net income | (6 | ) | (1 | ) | (5 | ) | (149 | ) | (53 | ) | (96 | ) | ||||||||||||
OCI | (301 | ) | (64 | ) | (237 | ) | 352 | 123 | 229 | |||||||||||||||
AOCI, end of period | $ | 84 | $ | 17 | $ | 67 | $ | 2,977 | $ | 1,031 | $ | 1,946 | ||||||||||||
Pension obligations: | ||||||||||||||||||||||||
AOCI, beginning of period | $ | (12 | ) | $ | (1 | ) | $ | (11 | ) | $ | (26 | ) | $ | (8 | ) | $ | (18 | ) | ||||||
OCI excluding amortization recognized in net income | — | — | — | — | — | — | ||||||||||||||||||
Amortization recognized in net income | 1 | — | 1 | 1 | — | 1 | ||||||||||||||||||
OCI | 1 | — | 1 | 1 | — | 1 | ||||||||||||||||||
AOCI, end of period | $ | (11 | ) | $ | (1 | ) | $ | (10 | ) | $ | (25 | ) | $ | (8 | ) | $ | (17 | ) | ||||||
Life deferred acquisition costs, life policy reserves and other: | ||||||||||||||||||||||||
AOCI, beginning of period | $ | (10 | ) | $ | (2 | ) | $ | (8 | ) | $ | (9 | ) | $ | (3 | ) | $ | (6 | ) | ||||||
OCI before investment gains and losses, net, recognized in net income | 6 | 1 | 5 | 3 | 1 | 2 | ||||||||||||||||||
Investment gains and losses, net, recognized in net income | 2 | 1 | 1 | — | — | — | ||||||||||||||||||
OCI | 8 | 2 | 6 | 3 | 1 | 2 | ||||||||||||||||||
AOCI, end of period | $ | (2 | ) | $ | — | $ | (2 | ) | $ | (6 | ) | $ | (2 | ) | $ | (4 | ) | |||||||
Summary of AOCI: | ||||||||||||||||||||||||
AOCI, beginning of period | $ | 3,518 | $ | 730 | $ | 2,788 | $ | 2,590 | $ | 897 | $ | 1,693 | ||||||||||||
Cumulative effect of change in accounting for equity securities as of January 1, 2018 | (3,155 | ) | (652 | ) | (2,503 | ) | — | — | — | |||||||||||||||
Adjusted AOCI, beginning of period | 363 | 78 | 285 | 2,590 | 897 | 1,693 | ||||||||||||||||||
Investments OCI | (301 | ) | (64 | ) | (237 | ) | 352 | 123 | 229 | |||||||||||||||
Pension obligations OCI | 1 | — | 1 | 1 | — | 1 | ||||||||||||||||||
Life deferred acquisition costs, life policy reserves and other OCI | 8 | 2 | 6 | 3 | 1 | 2 | ||||||||||||||||||
Total OCI | (292 | ) | (62 | ) | (230 | ) | 356 | 124 | 232 | |||||||||||||||
AOCI, end of period | $ | 71 | $ | 16 | $ | 55 | $ | 2,946 | $ | 1,021 | $ | 1,925 | ||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Direct written premiums | $ | 1,336 | $ | 1,265 | $ | 2,583 | $ | 2,491 | ||||||||
Assumed written premiums | 52 | 42 | 101 | 75 | ||||||||||||
Ceded written premiums | (39 | ) | (36 | ) | (77 | ) | (64 | ) | ||||||||
Net written premiums | $ | 1,349 | $ | 1,271 | $ | 2,607 | $ | 2,502 | ||||||||
Direct earned premiums | $ | 1,235 | $ | 1,189 | $ | 2,442 | $ | 2,352 | ||||||||
Assumed earned premiums | 36 | 33 | 69 | 60 | ||||||||||||
Ceded earned premiums | (41 | ) | (41 | ) | (81 | ) | (80 | ) | ||||||||
Earned premiums | $ | 1,230 | $ | 1,181 | $ | 2,430 | $ | 2,332 | ||||||||
Direct incurred loss and loss expenses | $ | 821 | $ | 770 | $ | 1,602 | $ | 1,558 | ||||||||
Assumed incurred loss and loss expenses | 13 | 20 | 29 | 35 | ||||||||||||
Ceded incurred loss and loss expenses | (13 | ) | 4 | (19 | ) | (11 | ) | |||||||||
Incurred loss and loss expenses | $ | 821 | $ | 794 | $ | 1,612 | $ | 1,582 | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Direct earned premiums | $ | 81 | $ | 77 | $ | 158 | $ | 151 | ||||||||
Ceded earned premiums | (17 | ) | (17 | ) | (34 | ) | (34 | ) | ||||||||
Earned premiums | $ | 64 | $ | 60 | $ | 124 | $ | 117 | ||||||||
Direct contract holders' benefits incurred | 70 | 87 | 146 | 163 | ||||||||||||
Ceded contract holders' benefits incurred | (8 | ) | (27 | ) | (21 | ) | (38 | ) | ||||||||
Contract holders' benefits incurred | $ | 62 | $ | 60 | $ | 125 | $ | 125 | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Tax at statutory rate: | $ | 56 | 21.0 | % | $ | 44 | 35.0 | % | $ | 45 | 21.0 | % | $ | 141 | 35.0 | % | ||||||||||||
Increase (decrease) resulting from: | ||||||||||||||||||||||||||||
Tax-exempt income from municipal bonds | (5 | ) | (1.9 | ) | (9 | ) | (7.0 | ) | (10 | ) | (4.7 | ) | (18 | ) | (4.5 | ) | ||||||||||||
Dividend received exclusion | (5 | ) | (1.5 | ) | (9 | ) | (7.0 | ) | (8 | ) | (3.7 | ) | (17 | ) | (4.2 | ) | ||||||||||||
Other | 1 | 0.2 | 2 | 0.9 | 1 | 0.5 | (3 | ) | (0.8 | ) | ||||||||||||||||||
Provision for income taxes | $ | 47 | 17.8 | % | $ | 28 | 21.9 | % | $ | 28 | 13.1 | % | $ | 103 | 25.5 | % | ||||||||||||
(In millions, except per share data) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Numerator: | ||||||||||||||||
Net income—basic and diluted | $ | 217 | $ | 100 | $ | 186 | $ | 301 | ||||||||
Denominator: | ||||||||||||||||
Basic weighted-average common shares outstanding | 163.2 | 164.3 | 163.6 | 164.4 | ||||||||||||
Effect of share-based awards: | ||||||||||||||||
Stock options | 0.8 | 1.0 | 0.9 | 1.1 | ||||||||||||
Nonvested shares | 0.5 | 0.7 | 0.5 | 0.7 | ||||||||||||
Diluted weighted-average shares | 164.5 | 166.0 | 165.0 | 166.2 | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.33 | $ | 0.61 | $ | 1.13 | $ | 1.83 | ||||||||
Diluted | $ | 1.32 | $ | 0.60 | $ | 1.12 | $ | 1.81 | ||||||||
Number of anti-dilutive share-based awards | 1.3 | 0.6 | 1.3 | 0.7 | ||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Service cost | $ | 2 | $ | 2 | $ | 5 | $ | 5 | ||||||||
Non-service costs (benefit): | ||||||||||||||||
Interest cost | 3 | 4 | 6 | 7 | ||||||||||||
Expected return on plan assets | (6 | ) | (5 | ) | (11 | ) | (10 | ) | ||||||||
Amortization of actuarial loss and prior service cost | 1 | — | 1 | 1 | ||||||||||||
Total non-service benefit | (2 | ) | (1 | ) | (4 | ) | (2 | ) | ||||||||
Net periodic benefit cost | $ | — | $ | 1 | $ | 1 | $ | 3 | ||||||||
• | Commercial lines insurance |
• | Personal lines insurance |
• | Excess and surplus lines insurance |
• | Life insurance |
• | Investments |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Commercial lines insurance | ||||||||||||||||
Commercial casualty | $ | 272 | $ | 271 | $ | 537 | $ | 536 | ||||||||
Commercial property | 231 | 226 | 459 | 449 | ||||||||||||
Commercial auto | 166 | 158 | 327 | 313 | ||||||||||||
Workers' compensation | 85 | 86 | 165 | 170 | ||||||||||||
Other commercial | 58 | 55 | 114 | 109 | ||||||||||||
Commercial lines insurance premiums | 812 | 796 | 1,602 | 1,577 | ||||||||||||
Fee revenues | — | 1 | 2 | 2 | ||||||||||||
Total commercial lines insurance | 812 | 797 | 1,604 | 1,579 | ||||||||||||
Personal lines insurance | ||||||||||||||||
Personal auto | 153 | 144 | 304 | 285 | ||||||||||||
Homeowner | 139 | 128 | 275 | 253 | ||||||||||||
Other personal | 39 | 35 | 77 | 69 | ||||||||||||
Personal lines insurance premiums | 331 | 307 | 656 | 607 | ||||||||||||
Fee revenues | 2 | 1 | 3 | 3 | ||||||||||||
Total personal lines insurance | 333 | 308 | 659 | 610 | ||||||||||||
Excess and surplus lines insurance | 57 | 52 | 113 | 100 | ||||||||||||
Fee revenues | 1 | 1 | 1 | 1 | ||||||||||||
Total excess and surplus lines insurance | 58 | 53 | 114 | 101 | ||||||||||||
Life insurance premiums | 64 | 60 | 124 | 117 | ||||||||||||
Fee revenues | 1 | 1 | 2 | 3 | ||||||||||||
Total life insurance | 65 | 61 | 126 | 120 | ||||||||||||
Investments | ||||||||||||||||
Investment income, net of expenses | 154 | 151 | 304 | 300 | ||||||||||||
Investment gains and losses, net | 105 | (11 | ) | (86 | ) | 149 | ||||||||||
Total investment revenue | 259 | 140 | 218 | 449 | ||||||||||||
Other | ||||||||||||||||
Cincinnati Re insurance premiums | 30 | 26 | 59 | 48 | ||||||||||||
Other | 1 | 1 | 2 | 2 | ||||||||||||
Total other revenues | 31 | 27 | 61 | 50 | ||||||||||||
Total revenues | $ | 1,558 | $ | 1,386 | $ | 2,782 | $ | 2,909 | ||||||||
Income (loss) before income taxes: | ||||||||||||||||
Insurance underwriting results | ||||||||||||||||
Commercial lines insurance | $ | 47 | $ | 24 | $ | 62 | $ | 22 | ||||||||
Personal lines insurance | (32 | ) | (24 | ) | (41 | ) | (39 | ) | ||||||||
Excess and surplus lines insurance | 13 | 19 | 31 | 37 | ||||||||||||
Life insurance | 8 | 4 | 10 | 4 | ||||||||||||
Investments | 235 | 117 | 170 | 403 | ||||||||||||
Other | (7 | ) | (12 | ) | (18 | ) | (23 | ) | ||||||||
$ | 264 | $ | 128 | $ | 214 | $ | 404 |
Identifiable assets: | June 30, 2018 | December 31, 2017 | ||||||
Property casualty insurance | $ | 3,011 | $ | 2,863 | ||||
Life insurance | 1,406 | 1,409 | ||||||
Investments | 16,972 | 17,112 | ||||||
Other | 371 | 459 | ||||||
Total | $ | 21,760 | $ | 21,843 | ||||
• | Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes |
• | Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance |
• | Inadequate estimates, assumptions or reliance on third-party data used for critical accounting estimates |
• | Declines in overall stock market values negatively affecting the company’s equity portfolio and book value |
• | Prolonged low interest rate environment or other factors that limit the company’s ability to generate growth in investment income or interest rate fluctuations that result in declining values of fixed-maturity investments, including declines in accounts in which we hold bank-owned life insurance contract assets |
• | Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to: |
◦ | Significant or prolonged decline in the fair value of a particular security or group of securities and impairment of the asset(s) |
◦ | Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities |
◦ | Significant rise in losses from surety and director and officer policies written for financial institutions or other insured entities |
• | Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies |
• | Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability under federal and state laws |
• | Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products |
• | Delays, inadequate data developed internally or from third parties, or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness |
• | Increased competition that could result in a significant reduction in the company’s premium volume |
• | Changing consumer insurance-buying habits and consolidation of independent insurance agencies that could alter our competitive advantages |
• | Inability to obtain adequate ceded reinsurance on acceptable terms, amount of reinsurance coverage purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers |
• | Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability |
• | Inability of our subsidiaries to pay dividends consistent with current or past levels |
• | Events or conditions that could weaken or harm the company’s relationships with its independent agencies and hamper opportunities to add new agencies, resulting in limitations on the company’s opportunities for growth, such as: |
◦ | Downgrades of the company’s financial strength ratings |
◦ | Concerns that doing business with the company is too difficult |
◦ | Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace |
◦ | Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace |
• | Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that: |
◦ | Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates |
◦ | Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations |
◦ | Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business |
◦ | Add assessments for guaranty funds, other insurance‑related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes |
◦ | Increase our provision for federal income taxes due to changes in tax law |
◦ | Increase our other expenses |
◦ | Limit our ability to set fair, adequate and reasonable rates |
◦ | Place us at a disadvantage in the marketplace |
◦ | Restrict our ability to execute our business model, including the way we compensate agents |
• | Adverse outcomes from litigation or administrative proceedings |
• | Events or actions, including unauthorized intentional circumvention of controls, that reduce the company’s future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002 |
• | Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others |
• | Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location |
(Dollars in millions, except per share data) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Earned premiums | $ | 1,294 | $ | 1,241 | 4 | $ | 2,554 | $ | 2,449 | 4 | ||||||||||||
Investment income, net of expenses (pretax) | 154 | 151 | 2 | 304 | 300 | 1 | ||||||||||||||||
Investment gains and losses, net (pretax) | 105 | (11 | ) | nm | (86 | ) | 149 | nm | ||||||||||||||
Total revenues | 1,558 | 1,386 | 12 | 2,782 | 2,909 | (4 | ) | |||||||||||||||
Net income | 217 | 100 | 117 | 186 | 301 | (38 | ) | |||||||||||||||
Comprehensive income (loss) | 157 | 245 | (36 | ) | (44 | ) | 533 | nm | ||||||||||||||
Net income per share—diluted | 1.32 | 0.60 | 120 | 1.12 | 1.81 | (38 | ) | |||||||||||||||
Cash dividends declared per share | 0.53 | 0.50 | 6 | 1.06 | 1.00 | 6 | ||||||||||||||||
Diluted weighted average shares outstanding | 164.5 | 166.0 | (1 | ) | 165.0 | 166.2 | (1 | ) | ||||||||||||||
(Dollars in millions, except share data) | At June 30, | At December 31, | ||||||
2018 | 2017 | |||||||
Total investments | $ | 16,944 | $ | 17,051 | ||||
Total assets | 21,760 | 21,843 | ||||||
Short-term debt | 61 | 24 | ||||||
Long-term debt | 787 | 787 | ||||||
Shareholders' equity | 7,916 | 8,243 | ||||||
Book value per share | 48.68 | 50.29 | ||||||
Debt-to-total-capital ratio | 9.7 | % | 9.0 | % | ||||
Three months ended June 30, | Six months ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Value creation ratio major components: | ||||||||||||
Net income before investment gains | 1.7 | % | 1.5 | % | 3.1 | % | 2.9 | % | ||||
Change in fixed-maturity securities, realized and unrealized gains | (0.8 | ) | 0.7 | (2.8 | ) | 1.1 | ||||||
Change in equity securities, investment gains | 1.0 | 1.2 | (0.9 | ) | 3.5 | |||||||
Other | (0.3 | ) | (0.2 | ) | (0.5 | ) | (0.5 | ) | ||||
Value creation ratio | 1.6 | % | 3.2 | % | (1.1 | )% | 7.0 | % | ||||
(Dollars are per share) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Value creation ratio: | ||||||||||||||||
End of period book value* | $ | 48.68 | $ | 44.97 | $ | 48.68 | $ | 44.97 | ||||||||
Less beginning of period book value | 48.42 | 44.07 | 50.29 | 42.95 | ||||||||||||
Change in book value | 0.26 | 0.90 | (1.61 | ) | 2.02 | |||||||||||
Dividend declared to shareholders | 0.53 | 0.50 | 1.06 | 1.00 | ||||||||||||
Total value creation | $ | 0.79 | $ | 1.40 | $ | (0.55 | ) | $ | 3.02 | |||||||
Value creation ratio from change in book value** | 0.5 | % | 2.1 | % | (3.2 | )% | 4.7 | % | ||||||||
Value creation ratio from dividends declared to shareholders*** | 1.1 | 1.1 | 2.1 | 2.3 | ||||||||||||
Value creation ratio | 1.6 | % | 3.2 | % | (1.1 | )% | 7.0 | % | ||||||||
* Book value per share is calculated by dividing end of period total shareholders' equity by end of period shares outstanding | ||||||||||||||||
** Change in book value divided by the beginning of period book value | ||||||||||||||||
*** Dividend declared to shareholders divided by beginning of period book value |
• | Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average. For the first six months of 2018, our consolidated property casualty net written premium year-over-year growth was slightly more than 4 percent. As of February 2018, A.M. Best projected the industry's full-year 2018 written premium growth at approximately 4 percent. For the five-year period 2013 through 2017, our growth rate was nearly double that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business. |
• | Combined ratio – We believe our underwriting philosophy and initiatives can generate a GAAP combined ratio over any five-year period that is consistently within the range of 95 percent to 100 percent. For the first six months of 2018, our GAAP combined ratio was 97.5 percent and our statutory combined ratio was 96.1 percent, both including 6.1 percentage points of current accident year catastrophe losses partially offset by 3.3 percentage points of favorable loss reserve development on prior accident years. As of February 2018, A.M. Best projected the industry's full-year 2018 statutory combined ratio at approximately 100 percent, including approximately 5 percentage points of catastrophe losses and a favorable effect of approximately 1 percentage point of loss reserve development on prior accident years. The industry's ratio again excludes its mortgage and financial guaranty lines of business. |
• | Investment contribution – We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor’s 500 Index. For the first six months of 2018, pretax investment income was $304 million, up 1 percent compared with the same period in 2017. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential. |
• | Manage insurance profitability – Implementation of these initiatives is intended to enhance underwriting expertise and knowledge, thereby increasing our ability to manage our business while also gaining efficiency. Better profit margins can arise from additional information and more focused action on underperforming product lines, plus pricing capabilities we are expanding through the use of technology and analytics. In addition to enhancing company efficiency, improving internal processes also supports the ability of the independent agencies that represent us to grow profitably by allowing them to serve clients faster and to more efficiently manage agency expenses. |
• | Drive premium growth – Implementation of these initiatives is intended to further penetrate each market we serve through our independent agencies. Strategies aimed at specific market opportunities, along with service enhancements, can help our agents grow and increase our share of their business. Premium growth initiatives also include expansion of Cincinnati ReSM – our reinsurance assumed operation. Diversified growth also may reduce variability of losses from weather-related catastrophes. |
Insurer Financial Strength Ratings | ||||||||||
Rating agency | Standard market property casualty insurance subsidiaries | Life insurance subsidiary | Excess and surplus lines insurance subsidiary | Outlook | ||||||
Rating tier | Rating tier | Rating tier | ||||||||
A.M. Best Co. ambest.com | A+ | Superior | 2 of 16 | A | Excellent | 3 of 16 | A+ | Superior | 2 of 16 | Stable/ Positive/ Stable |
Fitch Ratings fitchratings.com | A+ | Strong | 5 of 21 | A+ | Strong | 5 of 21 | - | - | - | Stable |
Moody's Investors Service moodys.com | A1 | Good | 5 of 21 | - | - | - | - | - | - | Stable |
S&P Global Ratings spratings.com | A+ | Strong | 5 of 21 | A+ | Strong | 5 of 21 | - | - | - | Stable |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Earned premiums | $ | 1,230 | $ | 1,181 | 4 | $ | 2,430 | $ | 2,332 | 4 | ||||||||||||
Fee revenues | 3 | 3 | 0 | 6 | 6 | 0 | ||||||||||||||||
Total revenues | 1,233 | 1,184 | 4 | 2,436 | 2,338 | 4 | ||||||||||||||||
Loss and loss expenses from: | ||||||||||||||||||||||
Current accident year before catastrophe losses | 765 | 714 | 7 | 1,544 | 1,423 | 9 | ||||||||||||||||
Current accident year catastrophe losses | 87 | 118 | (26 | ) | 147 | 235 | (37 | ) | ||||||||||||||
Prior accident years before catastrophe losses | (31 | ) | (35 | ) | 11 | (72 | ) | (62 | ) | (16 | ) | |||||||||||
Prior accident years catastrophe losses | — | (3 | ) | 100 | (7 | ) | (14 | ) | 50 | |||||||||||||
Loss and loss expenses | 821 | 794 | 3 | 1,612 | 1,582 | 2 | ||||||||||||||||
Underwriting expenses | 376 | 367 | 2 | 759 | 727 | 4 | ||||||||||||||||
Underwriting profit | $ | 36 | $ | 23 | 57 | $ | 65 | $ | 29 | 124 | ||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year before catastrophe losses | 62.2 | % | 60.5 | % | 1.7 | 63.5 | % | 61.0 | % | 2.5 | ||||||||||||
Current accident year catastrophe losses | 7.1 | 10.0 | (2.9 | ) | 6.1 | 10.1 | (4.0 | ) | ||||||||||||||
Prior accident years before catastrophe losses | (2.6 | ) | (3.0 | ) | 0.4 | (3.0 | ) | (2.7 | ) | (0.3 | ) | |||||||||||
Prior accident years catastrophe losses | 0.0 | (0.2 | ) | 0.2 | (0.3 | ) | (0.6 | ) | 0.3 | |||||||||||||
Loss and loss expenses | 66.7 | 67.3 | (0.6 | ) | 66.3 | 67.8 | (1.5 | ) | ||||||||||||||
Underwriting expenses | 30.5 | 31.0 | (0.5 | ) | 31.2 | 31.2 | 0.0 | |||||||||||||||
Combined ratio | 97.2 | % | 98.3 | % | (1.1 | ) | 97.5 | % | 99.0 | % | (1.5 | ) | ||||||||||
Combined ratio | 97.2 | % | 98.3 | % | (1.1 | ) | 97.5 | % | 99.0 | % | (1.5 | ) | ||||||||||
Contribution from catastrophe losses and prior years reserve development | 4.5 | 6.8 | (2.3 | ) | 2.8 | 6.8 | (4.0 | ) | ||||||||||||||
Combined ratio before catastrophe losses and prior years reserve development | 92.7 | % | 91.5 | % | 1.2 | 94.7 | % | 92.2 | % | 2.5 | ||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Agency renewal written premiums | $ | 1,150 | $ | 1,090 | 6 | $ | 2,233 | $ | 2,147 | 4 | ||||||||||||
Agency new business written premiums | 181 | 165 | 10 | 340 | 318 | 7 | ||||||||||||||||
Cincinnati Re net written premiums | 48 | 40 | 20 | 94 | 80 | 18 | ||||||||||||||||
Other written premiums | (30 | ) | (24 | ) | (25 | ) | (60 | ) | (43 | ) | (40 | ) | ||||||||||
Net written premiums | 1,349 | 1,271 | 6 | 2,607 | 2,502 | 4 | ||||||||||||||||
Unearned premium change | (119 | ) | (90 | ) | (32 | ) | (177 | ) | (170 | ) | (4 | ) | ||||||||||
Earned premiums | $ | 1,230 | $ | 1,181 | 4 | $ | 2,430 | $ | 2,332 | 4 | ||||||||||||
(Dollars in millions, net of reinsurance) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||||||
Comm. | Pers. | E&S | Cin. | Comm. | Pers. | E&S | Cin. | |||||||||||||||||||||||||||||||||
Dates | Region | lines | lines | lines | Re | Total | lines | lines | lines | Re | Total | |||||||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||||||||||||||||||
Jan. 8-10 | West | $ | — | $ | (1 | ) | $ | — | $ | — | $ | (1 | ) | $ | — | $ | 10 | $ | — | $ | — | $ | 10 | |||||||||||||||||
Mar. 1-3 | Northeast, South | — | — | — | — | — | 6 | 6 | — | — | 12 | |||||||||||||||||||||||||||||
Mar. 18-21 | South | 4 | 1 | — | — | 5 | 21 | 7 | 1 | — | 29 | |||||||||||||||||||||||||||||
Apr. 13-17 | Midwest, Northeast, South | 22 | 7 | — | — | 29 | 22 | 7 | — | — | 29 | |||||||||||||||||||||||||||||
All other 2018 catastrophes | 29 | 25 | — | — | 54 | 36 | 31 | — | — | 67 | ||||||||||||||||||||||||||||||
Development on 2017 and prior catastrophes | (2 | ) | 2 | — | — | — | (9 | ) | 2 | — | — | (7 | ) | |||||||||||||||||||||||||||
Calendar year incurred total | $ | 53 | $ | 34 | $ | — | $ | — | $ | 87 | $ | 76 | $ | 63 | $ | 1 | $ | — | $ | 140 | ||||||||||||||||||||
2017 | ||||||||||||||||||||||||||||||||||||||||
Feb. 28-Mar. 1 | Midwest, South | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | $ | 22 | $ | 22 | $ | — | $ | — | $ | 44 | |||||||||||||||||||
Mar. 6-9 | Midwest, Northeast, South | 2 | (2 | ) | — | — | — | 24 | 11 | — | — | 35 | ||||||||||||||||||||||||||||
Mar. 21-22 | South | 9 | (1 | ) | — | — | 8 | 22 | 9 | — | — | 31 | ||||||||||||||||||||||||||||
Apr. 4-6 | Midwest, South | 8 | 12 | — | — | 20 | 8 | 12 | — | — | 20 | |||||||||||||||||||||||||||||
May 8-11 | Midwest, South, West | 14 | — | 1 | — | 15 | 14 | — | 1 | — | 15 | |||||||||||||||||||||||||||||
Jun. 11 | Midwest | 4 | 13 | — | — | 17 | 4 | 13 | — | — | 17 | |||||||||||||||||||||||||||||
All other 2017 catastrophes | 33 | 25 | (1 | ) | — | 57 | 44 | 29 | — | — | 73 | |||||||||||||||||||||||||||||
Development on 2016 and prior catastrophes | (2 | ) | (1 | ) | — | — | (3 | ) | (11 | ) | (2 | ) | — | (1 | ) | (14 | ) | |||||||||||||||||||||||
Calendar year incurred total | $ | 68 | $ | 47 | $ | — | $ | — | $ | 115 | $ | 127 | $ | 94 | $ | 1 | $ | (1 | ) | $ | 221 | |||||||||||||||||||
(Dollars in millions, net of reinsurance) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Current accident year losses greater than $5 million | $ | 6 | $ | — | nm | $ | 21 | $ | 28 | (25 | ) | |||||||||||
Current accident year losses $1 million - $5 million | 62 | 48 | 29 | 94 | 77 | 22 | ||||||||||||||||
Large loss prior accident year reserve development | 4 | 21 | (81 | ) | 38 | 38 | — | |||||||||||||||
Total large losses incurred | 72 | 69 | 4 | 153 | 143 | 7 | ||||||||||||||||
Losses incurred but not reported | 87 | (1 | ) | nm | 97 | 3 | nm | |||||||||||||||
Other losses excluding catastrophe losses | 433 | 487 | (11 | ) | 953 | 954 | — | |||||||||||||||
Catastrophe losses | 83 | 112 | (26 | ) | 134 | 215 | (38 | ) | ||||||||||||||
Total losses incurred | $ | 675 | $ | 667 | 1 | $ | 1,337 | $ | 1,315 | 2 | ||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year losses greater than $5 million | 0.4 | % | — | % | 0.4 | 0.8 | % | 1.2 | % | (0.4 | ) | |||||||||||
Current accident year losses $1 million - $5 million | 5.1 | 4.1 | 1.0 | 3.9 | 3.3 | 0.6 | ||||||||||||||||
Large loss prior accident year reserve development | 0.3 | 1.8 | (1.5 | ) | 1.6 | 1.6 | 0.0 | |||||||||||||||
Total large loss ratio | 5.8 | 5.9 | (0.1 | ) | 6.3 | 6.1 | 0.2 | |||||||||||||||
Losses incurred but not reported | 7.1 | (0.1 | ) | 7.2 | 4.0 | 0.1 | 3.9 | |||||||||||||||
Other losses excluding catastrophe losses | 35.1 | 41.3 | (6.2 | ) | 39.2 | 40.9 | (1.7 | ) | ||||||||||||||
Catastrophe losses | 6.8 | 9.4 | (2.6 | ) | 5.5 | 9.3 | (3.8 | ) | ||||||||||||||
Total loss ratio | 54.8 | % | 56.5 | % | (1.7 | ) | 55.0 | % | 56.4 | % | (1.4 | ) | ||||||||||
• | Commercial lines insurance |
• | Personal lines insurance |
• | Excess and surplus lines insurance |
• | Life insurance |
• | Investments |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Earned premiums | $ | 812 | $ | 796 | 2 | $ | 1,602 | $ | 1,577 | 2 | ||||||||||||
Fee revenues | — | 1 | (100 | ) | 2 | 2 | 0 | |||||||||||||||
Total revenues | 812 | 797 | 2 | 1,604 | 1,579 | 2 | ||||||||||||||||
Loss and loss expenses from: | ||||||||||||||||||||||
Current accident year before catastrophe losses | 497 | 475 | 5 | 1,021 | 953 | 7 | ||||||||||||||||
Current accident year catastrophe losses | 55 | 70 | (21 | ) | 85 | 138 | (38 | ) | ||||||||||||||
Prior accident years before catastrophe losses | (40 | ) | (24 | ) | (67 | ) | (68 | ) | (26 | ) | (162 | ) | ||||||||||
Prior accident years catastrophe losses | (2 | ) | (2 | ) | 0 | (9 | ) | (11 | ) | 18 | ||||||||||||
Loss and loss expenses | 510 | 519 | (2 | ) | 1,029 | 1,054 | (2 | ) | ||||||||||||||
Underwriting expenses | 255 | 254 | 0 | 513 | 503 | 2 | ||||||||||||||||
Underwriting profit | $ | 47 | $ | 24 | 96 | $ | 62 | $ | 22 | 182 | ||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year before catastrophe losses | 61.3 | % | 59.7 | % | 1.6 | 63.7 | % | 60.4 | % | 3.3 | ||||||||||||
Current accident year catastrophe losses | 6.8 | 8.7 | (1.9 | ) | 5.3 | 8.7 | (3.4 | ) | ||||||||||||||
Prior accident years before catastrophe losses | (4.9 | ) | (3.0 | ) | (1.9 | ) | (4.2 | ) | (1.6 | ) | (2.6 | ) | ||||||||||
Prior accident years catastrophe losses | (0.3 | ) | (0.2 | ) | (0.1 | ) | (0.6 | ) | (0.6 | ) | 0.0 | |||||||||||
Loss and loss expenses | 62.9 | 65.2 | (2.3 | ) | 64.2 | 66.9 | (2.7 | ) | ||||||||||||||
Underwriting expenses | 31.3 | 31.9 | (0.6 | ) | 32.0 | 31.9 | 0.1 | |||||||||||||||
Combined ratio | 94.2 | % | 97.1 | % | (2.9 | ) | 96.2 | % | 98.8 | % | (2.6 | ) | ||||||||||
Combined ratio | 94.2 | % | 97.1 | % | (2.9 | ) | 96.2 | % | 98.8 | % | (2.6 | ) | ||||||||||
Contribution from catastrophe losses and prior years reserve development | 1.6 | 5.5 | (3.9 | ) | 0.5 | 6.5 | (6.0 | ) | ||||||||||||||
Combined ratio before catastrophe losses and prior years reserve development | 92.6 | % | 91.6 | % | 1.0 | 95.7 | % | 92.3 | % | 3.4 | ||||||||||||
• | Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the second quarter and first six months of 2018, in part due to renewal written premium growth that continued to include higher average pricing. The table below analyzes the primary components of premiums. We continue to use predictive analytics tools to improve pricing precision and segmentation while leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a case-by-case basis whether to write or renew a policy. |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Agency renewal written premiums | $ | 758 | $ | 729 | 4 | $ | 1,529 | $ | 1,501 | 2 | ||||||||||||
Agency new business written premiums | 118 | 99 | 19 | 222 | 202 | 10 | ||||||||||||||||
Other written premiums | (20 | ) | (15 | ) | (33 | ) | (41 | ) | (25 | ) | (64 | ) | ||||||||||
Net written premiums | 856 | 813 | 5 | 1,710 | 1,678 | 2 | ||||||||||||||||
Unearned premium change | (44 | ) | (17 | ) | (159 | ) | (108 | ) | (101 | ) | (7 | ) | ||||||||||
Earned premiums | $ | 812 | $ | 796 | 2 | $ | 1,602 | $ | 1,577 | 2 | ||||||||||||
• | Combined ratio – The commercial lines combined ratio decreased 2.9 percentage points for the second quarter of 2018, compared with the same period a year ago, largely due to a decline in losses from natural catastrophes. For the first six months of 2018, the combined ratio decreased 2.6 percentage points, compared with the same period a year ago, largely reflecting a lower level of losses from natural catastrophes that was partially offset by higher noncatastrophe weather-related losses. |
(Dollars in millions, net of reinsurance) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Current accident year losses greater than $5 million | $ | 6 | $ | — | nm | $ | 21 | $ | 28 | (25 | ) | |||||||||||
Current accident year losses $1 million - $5 million | 51 | 33 | 55 | 73 | 59 | 24 | ||||||||||||||||
Large loss prior accident year reserve development | 1 | 19 | (95 | ) | 30 | 36 | (17 | ) | ||||||||||||||
Total large losses incurred | 58 | 52 | 12 | 124 | 123 | 1 | ||||||||||||||||
Losses incurred but not reported | 53 | 21 | 152 | 69 | 16 | nm | ||||||||||||||||
Other losses excluding catastrophe losses | 247 | 292 | (15 | ) | 572 | 598 | (4 | ) | ||||||||||||||
Catastrophe losses | 51 | 64 | (20 | ) | 73 | 122 | (40 | ) | ||||||||||||||
Total losses incurred | $ | 409 | $ | 429 | (5 | ) | $ | 838 | $ | 859 | (2 | ) | ||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year losses greater than $5 million | 0.7 | % | — | % | 0.7 | 1.3 | % | 1.8 | % | (0.5 | ) | |||||||||||
Current accident year losses $1 million - $5 million | 6.2 | 4.2 | 2.0 | 4.6 | 3.7 | 0.9 | ||||||||||||||||
Large loss prior accident year reserve development | 0.2 | 2.3 | (2.1 | ) | 1.8 | 2.3 | (0.5 | ) | ||||||||||||||
Total large loss ratio | 7.1 | 6.5 | 0.6 | 7.7 | 7.8 | (0.1 | ) | |||||||||||||||
Losses incurred but not reported | 6.5 | 2.7 | 3.8 | 4.3 | 1.0 | 3.3 | ||||||||||||||||
Other losses excluding catastrophe losses | 30.4 | 36.5 | (6.1 | ) | 35.7 | 37.9 | (2.2 | ) | ||||||||||||||
Catastrophe losses | 6.3 | 8.1 | (1.8 | ) | 4.6 | 7.7 | (3.1 | ) | ||||||||||||||
Total loss ratio | 50.3 | % | 53.8 | % | (3.5 | ) | 52.3 | % | 54.4 | % | (2.1 | ) | ||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Earned premiums | $ | 331 | $ | 307 | 8 | $ | 656 | $ | 607 | 8 | ||||||||||||
Fee revenues | 2 | 1 | 100 | 3 | 3 | 0 | ||||||||||||||||
Total revenues | 333 | 308 | 8 | 659 | 610 | 8 | ||||||||||||||||
Loss and loss expenses from: | ||||||||||||||||||||||
Current accident year before catastrophe losses | 220 | 197 | 12 | 430 | 390 | 10 | ||||||||||||||||
Current accident year catastrophe losses | 32 | 48 | (33 | ) | 61 | 96 | (36 | ) | ||||||||||||||
Prior accident years before catastrophe losses | 15 | (2 | ) | nm | 14 | (11 | ) | nm | ||||||||||||||
Prior accident years catastrophe losses | 2 | (1 | ) | nm | 2 | (2 | ) | nm | ||||||||||||||
Loss and loss expenses | 269 | 242 | 11 | 507 | 473 | 7 | ||||||||||||||||
Underwriting expenses | 96 | 90 | 7 | 193 | 176 | 10 | ||||||||||||||||
Underwriting loss | $ | (32 | ) | $ | (24 | ) | (33 | ) | $ | (41 | ) | $ | (39 | ) | (5 | ) | ||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year before catastrophe losses | 66.6 | % | 64.6 | % | 2.0 | 65.5 | % | 64.3 | % | 1.2 | ||||||||||||
Current accident year catastrophe losses | 9.6 | 15.8 | (6.2 | ) | 9.3 | 15.9 | (6.6 | ) | ||||||||||||||
Prior accident years before catastrophe losses | 4.3 | (0.9 | ) | 5.2 | 2.1 | (1.8 | ) | 3.9 | ||||||||||||||
Prior accident years catastrophe losses | 0.6 | (0.4 | ) | 1.0 | 0.3 | (0.4 | ) | 0.7 | ||||||||||||||
Loss and loss expenses | 81.1 | 79.1 | 2.0 | 77.2 | 78.0 | (0.8 | ) | |||||||||||||||
Underwriting expenses | 29.0 | 29.3 | (0.3 | ) | 29.5 | 29.0 | 0.5 | |||||||||||||||
Combined ratio | 110.1 | % | 108.4 | % | 1.7 | 106.7 | % | 107.0 | % | (0.3 | ) | |||||||||||
Combined ratio | 110.1 | % | 108.4 | % | 1.7 | 106.7 | % | 107.0 | % | (0.3 | ) | |||||||||||
Contribution from catastrophe losses and prior years reserve development | 14.5 | 14.5 | 0.0 | 11.7 | 13.7 | (2.0 | ) | |||||||||||||||
Combined ratio before catastrophe losses and prior years reserve development | 95.6 | % | 93.9 | % | 1.7 | 95.0 | % | 93.3 | % | 1.7 | ||||||||||||
• | Premiums – Personal lines earned premiums and net written premiums for the second quarter and first six months of 2018 continued to grow, reflecting increases in renewal written premiums and new business written premiums from agencies that represent us. Price increases and a high level of policy retention were the main drivers of renewal premium growth. The table below analyzes the primary components of premiums. |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Agency renewal written premiums | $ | 342 | $ | 318 | 8 | $ | 606 | $ | 563 | 8 | ||||||||||||
Agency new business written premiums | 46 | 45 | 2 | 85 | 79 | 8 | ||||||||||||||||
Other written premiums | (7 | ) | (6 | ) | (17 | ) | (13 | ) | (12 | ) | (8 | ) | ||||||||||
Net written premiums | 381 | 357 | 7 | 678 | 630 | 8 | ||||||||||||||||
Unearned premium change | (50 | ) | (50 | ) | 0 | (22 | ) | (23 | ) | 4 | ||||||||||||
Earned premiums | $ | 331 | $ | 307 | 8 | $ | 656 | $ | 607 | 8 | ||||||||||||
• | Combined ratio – Our personal lines combined ratio increased by 1.7 percentage points for the second quarter of 2018, compared with the same period a year ago. The increase was primarily due to unfavorable reserve development on prior accident years that offset a decrease of 5.2 percentage points in the ratio for weather-related natural catastrophe losses and loss expenses. The combined ratio decreased 0.3 percentage points for the first six months of 2018, compared with the first six months of 2017, primarily due to a decrease of 5.9 percentage points in the ratio for weather-related natural catastrophe losses and loss expenses. The lower ratio for catastrophe effects for the first six months of 2018 was partially offset by higher noncatastrophe weather-related losses. |
(Dollars in millions, net of reinsurance) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Current accident year losses greater than $5 million | $ | — | $ | — | nm | $ | — | $ | — | nm | ||||||||||||
Current accident year losses $1 million - $5 million | 11 | 15 | (27 | ) | 21 | 18 | 17 | |||||||||||||||
Large loss prior accident year reserve development | 3 | 1 | 200 | 8 | 1 | nm | ||||||||||||||||
Total large losses incurred | 14 | 16 | (13 | ) | 29 | 19 | 53 | |||||||||||||||
Losses incurred but not reported | 31 | (12 | ) | nm | 30 | (2 | ) | nm | ||||||||||||||
Other losses excluding catastrophe losses | 157 | 164 | (4 | ) | 324 | 308 | 5 | |||||||||||||||
Catastrophe losses | 33 | 47 | (30 | ) | 62 | 93 | (33 | ) | ||||||||||||||
Total losses incurred | $ | 235 | $ | 215 | 9 | $ | 445 | $ | 418 | 6 | ||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year losses greater than $5 million | — | % | — | % | 0.0 | — | % | — | % | 0.0 | ||||||||||||
Current accident year losses $1 million - $5 million | 3.5 | 4.8 | (1.3 | ) | 3.2 | 2.9 | 0.3 | |||||||||||||||
Large loss prior accident year reserve development | 0.8 | 0.6 | 0.2 | 1.2 | 0.2 | 1.0 | ||||||||||||||||
Total large loss ratio | 4.3 | 5.4 | (1.1 | ) | 4.4 | 3.1 | 1.3 | |||||||||||||||
Losses incurred but not reported | 9.4 | (4.0 | ) | 13.4 | 4.6 | (0.4 | ) | 5.0 | ||||||||||||||
Other losses excluding catastrophe losses | 47.3 | 53.7 | (6.4 | ) | 49.4 | 50.9 | (1.5 | ) | ||||||||||||||
Catastrophe losses | 10.0 | 15.2 | (5.2 | ) | 9.4 | 15.3 | (5.9 | ) | ||||||||||||||
Total loss ratio | 71.0 | % | 70.3 | % | 0.7 | 67.8 | % | 68.9 | % | (1.1 | ) | |||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Earned premiums | $ | 57 | $ | 52 | 10 | $ | 113 | $ | 100 | 13 | ||||||||||||
Fee revenues | 1 | 1 | 0 | 1 | 1 | 0 | ||||||||||||||||
Total revenues | 58 | 53 | 9 | 114 | 101 | 13 | ||||||||||||||||
Loss and loss expenses from: | ||||||||||||||||||||||
Current accident year before catastrophe losses | 33 | 29 | 14 | 63 | 55 | 15 | ||||||||||||||||
Current accident year catastrophe losses | — | — | 0 | 1 | 1 | 0 | ||||||||||||||||
Prior accident years before catastrophe losses | (4 | ) | (9 | ) | 56 | (14 | ) | (22 | ) | 36 | ||||||||||||
Prior accident years catastrophe losses | — | — | 0 | — | — | 0 | ||||||||||||||||
Loss and loss expenses | 29 | 20 | 45 | 50 | 34 | 47 | ||||||||||||||||
Underwriting expenses | 16 | 14 | 14 | 33 | 30 | 10 | ||||||||||||||||
Underwriting profit | $ | 13 | $ | 19 | (32 | ) | $ | 31 | $ | 37 | (16 | ) | ||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year before catastrophe losses | 56.9 | % | 54.2 | % | 2.7 | 55.8 | % | 54.8 | % | 1.0 | ||||||||||||
Current accident year catastrophe losses | 1.0 | 0.9 | 0.1 | 1.4 | 1.1 | 0.3 | ||||||||||||||||
Prior accident years before catastrophe losses | (9.6 | ) | (17.0 | ) | 7.4 | (13.3 | ) | (22.0 | ) | 8.7 | ||||||||||||
Prior accident years catastrophe losses | 0.2 | 0.4 | (0.2 | ) | 0.1 | 0.0 | 0.1 | |||||||||||||||
Loss and loss expenses | 48.5 | 38.5 | 10.0 | 44.0 | 33.9 | 10.1 | ||||||||||||||||
Underwriting expenses | 29.1 | 27.7 | 1.4 | 29.3 | 30.4 | (1.1 | ) | |||||||||||||||
Combined ratio | 77.6 | % | 66.2 | % | 11.4 | 73.3 | % | 64.3 | % | 9.0 | ||||||||||||
Combined ratio | 77.6 | % | 66.2 | % | 11.4 | 73.3 | % | 64.3 | % | 9.0 | ||||||||||||
Contribution from catastrophe losses and prior years reserve development | (8.4 | ) | (15.7 | ) | 7.3 | (11.8 | ) | (20.9 | ) | 9.1 | ||||||||||||
Combined ratio before catastrophe losses and prior years reserve development | 86.0 | % | 81.9 | % | 4.1 | 85.1 | % | 85.2 | % | (0.1 | ) | |||||||||||
• | Premiums – Excess and surplus lines net written premiums continued to grow during the second quarter and first six months of 2018, driven by increases in renewal written premiums, which rose 16 percent and 18 percent compared with the same periods of 2017. Growth in renewal written premiums reflected the opportunity to renew many accounts for the first time, as well as higher renewal pricing. For the first six months of 2018, excess and surplus lines policy renewals experienced estimated average price increases at percentages in the low-single-digit range. We measure average changes in excess and surplus lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for respective policies. |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Agency renewal written premiums | $ | 50 | $ | 43 | 16 | $ | 98 | $ | 83 | 18 | ||||||||||||
Agency new business written premiums | 17 | 21 | (19 | ) | 33 | 37 | (11 | ) | ||||||||||||||
Other written premiums | (3 | ) | (3 | ) | 0 | (6 | ) | (6 | ) | 0 | ||||||||||||
Net written premiums | 64 | 61 | 5 | 125 | 114 | 10 | ||||||||||||||||
Unearned premium change | (7 | ) | (9 | ) | 22 | (12 | ) | (14 | ) | 14 | ||||||||||||
Earned premiums | $ | 57 | $ | 52 | 10 | $ | 113 | $ | 100 | 13 | ||||||||||||
• | Combined ratio – The excess and surplus lines combined ratio increased by 11.4 and 9.0 percentage points for the second quarter and first six months of 2018, compared with the same periods of 2017, primarily due to less favorable reserve development on prior accident years. |
(Dollars in millions, net of reinsurance) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Current accident year losses greater than $5 million | $ | — | $ | — | nm | $ | — | $ | — | nm | ||||||||||||
Current accident year losses $1 million - $5 million | — | — | nm | — | — | nm | ||||||||||||||||
Large loss prior accident year reserve development | — | 1 | nm | — | 1 | nm | ||||||||||||||||
Total large losses incurred | — | 1 | nm | — | 1 | nm | ||||||||||||||||
Losses incurred but not reported | 3 | (10 | ) | nm | (2 | ) | (11 | ) | 82 | |||||||||||||
Other losses excluding catastrophe losses | 17 | 19 | (11 | ) | 31 | 27 | 15 | |||||||||||||||
Catastrophe losses | — | 1 | nm | 1 | 1 | — | ||||||||||||||||
Total losses incurred | $ | 20 | $ | 11 | 82 | $ | 30 | $ | 18 | 67 | ||||||||||||
Ratios as a percent of earned premiums: | Pt. Change | Pt. Change | ||||||||||||||||||||
Current accident year losses greater than $5 million | — | % | — | % | 0.0 | — | % | — | % | 0.0 | ||||||||||||
Current accident year losses $1 million - $5 million | — | — | 0.0 | — | — | 0.0 | ||||||||||||||||
Large loss prior accident year reserve development | (0.2 | ) | 2.3 | (2.5 | ) | (0.3 | ) | 1.1 | (1.4 | ) | ||||||||||||
Total large loss ratio | (0.2 | ) | 2.3 | (2.5 | ) | (0.3 | ) | 1.1 | (1.4 | ) | ||||||||||||
Losses incurred but not reported | 4.5 | (20.2 | ) | 24.7 | (2.1 | ) | (11.3 | ) | 9.2 | |||||||||||||
Other losses excluding catastrophe losses | 28.6 | 37.0 | (8.4 | ) | 27.4 | 27.4 | 0.0 | |||||||||||||||
Catastrophe losses | 1.0 | 1.2 | (0.2 | ) | 1.4 | 1.0 | 0.4 | |||||||||||||||
Total loss ratio | 33.9 | % | 20.3 | % | 13.6 | 26.4 | % | 18.2 | % | 8.2 | ||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Earned premiums | $ | 64 | $ | 60 | 7 | $ | 124 | $ | 117 | 6 | ||||||||||||
Fee revenues | 1 | 1 | 0 | 2 | 3 | (33 | ) | |||||||||||||||
Total revenues | 65 | 61 | 7 | 126 | 120 | 5 | ||||||||||||||||
Contract holders' benefits incurred | 62 | 60 | 3 | 125 | 125 | 0 | ||||||||||||||||
Investment interest credited to contract holders' | (24 | ) | (23 | ) | (4 | ) | (48 | ) | (46 | ) | (4 | ) | ||||||||||
Underwriting expenses incurred | 19 | 20 | (5 | ) | 39 | 37 | 5 | |||||||||||||||
Total benefits and expenses | 57 | 57 | 0 | 116 | 116 | 0 | ||||||||||||||||
Life insurance segment profit | $ | 8 | $ | 4 | 100 | $ | 10 | $ | 4 | 150 | ||||||||||||
• | Revenues – Revenues increased for the six months ended June 30, 2018, primarily due to higher earned premiums from term life insurance, our largest life insurance product line. |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Term life insurance | $ | 44 | $ | 41 | 7 | $ | 85 | $ | 79 | 8 | ||||||||||||
Universal life insurance | 9 | 11 | (18 | ) | 18 | 21 | (14 | ) | ||||||||||||||
Other life insurance, annuity and disability income products | 11 | 8 | 38 | 21 | 17 | 24 | ||||||||||||||||
Net earned premiums | $ | 64 | $ | 60 | 7 | $ | 124 | $ | 117 | 6 | ||||||||||||
• | Profitability – Our life insurance segment typically reports a small profit or loss on a GAAP basis because profits from investment income spreads are included in our investment segment results. We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in our life insurance segment results. A gain of $10 million for our life insurance segment in the first six months of 2018, compared with a gain of $4 million for the same period of 2017, was due to growth in earned premiums while total benefits and expenses remained flat, in addition to more favorable effects from the unlocking of actuarial assumptions. |
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Total investment income, net of expenses | $ | 154 | $ | 151 | 2 | $ | 304 | $ | 300 | 1 | ||||||||||||
Investment interest credited to contract holders' | (24 | ) | (23 | ) | (4 | ) | (48 | ) | (46 | ) | (4 | ) | ||||||||||
Investment gains and losses, net | 105 | (11 | ) | nm | (86 | ) | 149 | nm | ||||||||||||||
Investments profit, pretax | $ | 235 | $ | 117 | 101 | $ | 170 | $ | 403 | (58 | ) | |||||||||||
(Dollars in millions) | % Yield | Principal redemptions | |||
At June 30, 2018 | |||||
Fixed-maturity pretax yield profile: | |||||
Expected to mature during the remainder of 2018 | 5.36 | $ | 321 | ||
Expected to mature during 2019 | 6.03 | 646 | |||
Expected to mature during 2020 | 4.75 | 659 | |||
Average yield and total expected redemptions from the remainder of 2018 through 2020 | 5.38 | $ | 1,626 | ||
Three months ended June 30, | Six months ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Average pretax yield-to-amortized cost on new fixed-maturities: | |||||||||||
Acquired taxable fixed-maturities | 4.68 | % | 3.75 | % | 4.40 | % | 4.08 | % | |||
Acquired tax-exempt fixed-maturities | 3.72 | 3.33 | 3.51 | 3.39 | |||||||
Average total fixed-maturities acquired | 4.59 | 3.53 | 4.30 | 3.73 | |||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Investment income: | ||||||||||||||||||||||
Interest | $ | 112 | $ | 111 | 1 | $ | 222 | $ | 222 | 0 | ||||||||||||
Dividends | 44 | 42 | 5 | 86 | 81 | 6 | ||||||||||||||||
Other | 1 | 1 | 0 | 2 | 2 | 0 | ||||||||||||||||
Less investment expenses | 3 | 3 | 0 | 6 | 5 | 20 | ||||||||||||||||
Investment income, pretax | 154 | 151 | 2 | 304 | 300 | 1 | ||||||||||||||||
Less income taxes | 23 | 36 | (36 | ) | 46 | 71 | (35 | ) | ||||||||||||||
Total investment income, after-tax | $ | 131 | $ | 115 | 14 | $ | 258 | $ | 229 | 13 | ||||||||||||
Investment returns: | ||||||||||||||||||||||
Average invested assets plus cash and cash equivalents | $ | 17,271 | $ | 16,447 | $ | 17,352 | $ | 16,298 | ||||||||||||||
Average yield pretax | 3.57 | % | 3.67 | % | 3.50 | % | 3.68 | % | ||||||||||||||
Average yield after-tax | 3.03 | 2.80 | 2.97 | 2.81 | ||||||||||||||||||
Effective tax rate | 15.2 | 23.7 | 15.3 | 23.6 | ||||||||||||||||||
Fixed-maturity returns: | ||||||||||||||||||||||
Average amortized cost | $ | 10,458 | $ | 10,044 | $ | 10,433 | $ | 9,953 | ||||||||||||||
Average yield pretax | 4.28 | % | 4.42 | % | 4.26 | % | 4.46 | % | ||||||||||||||
Average yield after-tax | 3.58 | 3.23 | 3.56 | 3.26 | ||||||||||||||||||
Effective tax rate | 16.3 | 26.8 | 16.3 | 26.9 | ||||||||||||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Investment gains and losses: | ||||||||||||||||
Equity securities: | ||||||||||||||||
Investment gains and losses on securities sold, net | $ | 4 | $ | — | $ | 7 | $ | — | ||||||||
Unrealized investment gains and losses on securities still held, net | 101 | — | (97 | ) | — | |||||||||||
Gross realized gains | — | 6 | — | 159 | ||||||||||||
Gross realized losses | — | (10 | ) | — | (14 | ) | ||||||||||
Other-than-temporary impairments | — | (3 | ) | — | (3 | ) | ||||||||||
Subtotal | 105 | (7 | ) | (90 | ) | 142 | ||||||||||
Fixed maturities: | ||||||||||||||||
Gross realized gains | 3 | 3 | 7 | 13 | ||||||||||||
Gross realized losses | (1 | ) | — | (1 | ) | — | ||||||||||
Other-than-temporary impairments | — | (6 | ) | — | (6 | ) | ||||||||||
Subtotal | 2 | (3 | ) | 6 | 7 | |||||||||||
Other | (2 | ) | (1 | ) | (2 | ) | — | |||||||||
Total investment gains and losses reported in net income | 105 | (11 | ) | (86 | ) | 149 | ||||||||||
Change in unrealized investment gains and losses: | ||||||||||||||||
Equity Securities | — | 145 | — | 242 | ||||||||||||
Fixed Maturities | (80 | ) | 76 | (301 | ) | 110 | ||||||||||
Total unrealized investment gains and losses reported in OCI | (80 | ) | 221 | (301 | ) | 352 | ||||||||||
Total | $ | 25 | $ | 210 | $ | (387 | ) | $ | 501 | |||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Fixed maturities: | ||||||||||||||||
Banking | $ | — | $ | 6 | $ | — | $ | 6 | ||||||||
Total fixed maturities | — | 6 | — | 6 | ||||||||||||
Common equities: | ||||||||||||||||
Energy | — | 3 | — | 3 | ||||||||||||
Total common equities | — | 3 | — | 3 | ||||||||||||
Total | $ | — | $ | 9 | $ | — | $ | 9 | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Interest and fees on loans and leases | $ | 1 | $ | 1 | 0 | $ | 2 | $ | 2 | 0 | ||||||||||||
Earned premiums | 30 | 26 | 15 | 59 | 48 | 23 | ||||||||||||||||
Total revenues | 31 | 27 | 15 | 61 | 50 | 22 | ||||||||||||||||
Interest expense | 13 | 13 | 0 | 26 | 26 | 0 | ||||||||||||||||
Loss and loss expenses | 13 | 13 | 0 | 26 | 21 | 24 | ||||||||||||||||
Underwriting expenses | 9 | 9 | 0 | 20 | 18 | 11 | ||||||||||||||||
Operating expenses | 3 | 4 | (25 | ) | 7 | 8 | (13 | ) | ||||||||||||||
Total expenses | 38 | 39 | (3 | ) | 79 | 73 | 8 | |||||||||||||||
Other loss | $ | (7 | ) | $ | (12 | ) | 42 | $ | (18 | ) | $ | (23 | ) | 22 | ||||||||
(Dollars in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||
Premiums collected | $ | 1,310 | $ | 1,265 | 4 | $ | 2,579 | $ | 2,506 | 3 | ||||||||||||
Loss and loss expenses paid | (695 | ) | (695 | ) | — | (1,409 | ) | (1,389 | ) | (1 | ) | |||||||||||
Commissions and other underwriting expenses paid | (352 | ) | (333 | ) | (6 | ) | (871 | ) | (830 | ) | (5 | ) | ||||||||||
Cash flow from underwriting | 263 | 237 | 11 | 299 | 287 | 4 | ||||||||||||||||
Investment income received | 103 | 97 | 6 | 211 | 202 | 4 | ||||||||||||||||
Cash flow from operations | $ | 366 | $ | 334 | 10 | $ | 510 | $ | 489 | 4 | ||||||||||||
• | Commissions – Commissions paid were $537 million in the first six months of 2018. Commission payments generally track with written premiums, except for annual profit-sharing commissions typically paid during the first quarter of the year. |
• | Other underwriting expenses – Many of our underwriting expenses are not contractual obligations, but reflect the ongoing expenses of our business. Noncommission underwriting expenses paid were $334 million in the first six months of 2018. |
• | Technology costs – In addition to contractual obligations for hardware and software, we anticipate capitalizing up to $6 million in spending for key technology initiatives in 2018. Capitalized development costs related to key technology initiatives were $3 million in the first six months of 2018. These activities are conducted at our discretion, and we have no material contractual obligations for activities planned as part of these projects. |
(Dollars in millions) | Loss reserves | Loss expense reserves | Total gross reserves | ||||||||||||||||
Case reserves | IBNR reserves | Percent of total | |||||||||||||||||
At June 30, 2018 | |||||||||||||||||||
Commercial lines insurance: | |||||||||||||||||||
Commercial casualty | $ | 928 | $ | 655 | $ | 591 | $ | 2,174 | 40.1 | % | |||||||||
Commercial property | 236 | 29 | 57 | 322 | 5.9 | ||||||||||||||
Commercial auto | 408 | 138 | 134 | 680 | 12.5 | ||||||||||||||
Workers' compensation | 389 | 533 | 91 | 1,013 | 18.7 | ||||||||||||||
Other commercial | 102 | 14 | 62 | 178 | 3.3 | ||||||||||||||
Subtotal | 2,063 | 1,369 | 935 | 4,367 | 80.5 | ||||||||||||||
Personal lines insurance: | |||||||||||||||||||
Personal auto | 240 | 44 | 71 | 355 | 6.6 | ||||||||||||||
Homeowner | 122 | 22 | 39 | 183 | 3.4 | ||||||||||||||
Other personal | 55 | 51 | 5 | 111 | 2.0 | ||||||||||||||
Subtotal | 417 | 117 | 115 | 649 | 12.0 | ||||||||||||||
Excess and surplus lines | 113 | 85 | 80 | 278 | 5.1 | ||||||||||||||
Cincinnati Re | 30 | 97 | 2 | 129 | 2.4 | ||||||||||||||
Total | $ | 2,623 | $ | 1,668 | $ | 1,132 | $ | 5,423 | 100.0 | % | |||||||||
At December 31, 2017 | |||||||||||||||||||
Commercial lines insurance: | |||||||||||||||||||
Commercial casualty | $ | 890 | $ | 611 | $ | 570 | $ | 2,071 | 39.7 | % | |||||||||
Commercial property | 232 | 18 | 65 | 315 | 6.0 | ||||||||||||||
Commercial auto | 401 | 119 | 125 | 645 | 12.4 | ||||||||||||||
Workers' compensation | 393 | 533 | 96 | 1,022 | 19.6 | ||||||||||||||
Other commercial | 108 | 14 | 61 | 183 | 3.5 | ||||||||||||||
Subtotal | 2,024 | 1,295 | 917 | 4,236 | 81.2 | ||||||||||||||
Personal lines insurance: | |||||||||||||||||||
Personal auto | 240 | 35 | 70 | 345 | 6.6 | ||||||||||||||
Homeowner | 101 | 2 | 33 | 136 | 2.6 | ||||||||||||||
Other personal | 55 | 46 | 5 | 106 | 2.0 | ||||||||||||||
Subtotal | 396 | 83 | 108 | 587 | 11.2 | ||||||||||||||
Excess and surplus lines | 104 | 87 | 73 | 264 | 5.1 | ||||||||||||||
Cincinnati Re | 20 | 110 | 2 | 132 | 2.5 | ||||||||||||||
Total | $ | 2,544 | $ | 1,575 | $ | 1,100 | $ | 5,219 | 100.0 | % | |||||||||
(Dollars in millions) | At June 30, 2018 | At December 31, 2017 | |||||||||||||||||||||
Cost or adjusted cost | Percent of total | Fair value | Percent of total | Cost or adjusted cost | Percent of total | Fair value | Percent of total | ||||||||||||||||
Taxable fixed maturities | $ | 6,688 | 48.6 | % | $ | 6,742 | 40.0 | % | $ | 6,383 | 47.6 | % | $ | 6,637 | 39.2 | % | |||||||
Tax-exempt fixed maturities | 3,864 | 28.1 | 3,894 | 23.1 | 3,931 | 29.3 | 4,062 | 24.0 | |||||||||||||||
Common equity securities | 3,025 | 22.0 | 6,008 | 35.7 | 2,918 | 21.8 | 6,039 | 35.6 | |||||||||||||||
Nonredeemable preferred equity securities | 173 | 1.3 | 192 | 1.2 | 176 | 1.3 | 210 | 1.2 | |||||||||||||||
Total | $ | 13,750 | 100.0 | % | $ | 16,836 | 100.0 | % | $ | 13,408 | 100.0 | % | $ | 16,948 | 100.0 | % | |||||||
At June 30, 2018 | At December 31, 2017 | |||||
Weighted average yield-to-amortized cost | 4.22 | % | 4.40 | % | ||
Weighted average maturity | 7.7 | yrs | 7.7 | yrs | ||
Effective duration | 5.3 | yrs | 5.2 | yrs | ||
(Dollars in millions) | At June 30, 2018 | At December 31, 2017 | ||||||
Investment-grade corporate | $ | 5,379 | $ | 5,252 | ||||
States, municipalities and political subdivisions | 464 | 403 | ||||||
Noninvestment-grade corporate | 299 | 401 | ||||||
Commercial mortgage-backed | 281 | 286 | ||||||
Government sponsored enterprises | 269 | 254 | ||||||
United States government | 40 | 31 | ||||||
Foreign government | 10 | 10 | ||||||
Total | $ | 6,742 | $ | 6,637 | ||||
(Dollars in millions) | Effect from interest rate change in basis points | |||||||||||||||||||
-200 | -100 | - | 100 | 200 | ||||||||||||||||
At June 30, 2018 | $ | 11,763 | $ | 11,205 | $ | 10,636 | $ | 10,059 | $ | 9,511 | ||||||||||
At December 31, 2017 | $ | 11,803 | $ | 11,249 | $ | 10,699 | $ | 10,133 | $ | 9,589 | ||||||||||
(Dollars in millions) | Effect from market price change in percent | |||||||||||||||||||||||||||
-30% | -20% | -10% | — | 10% | 20% | 30% | ||||||||||||||||||||||
At June 30, 2018 | $ | 4,340 | $ | 4,960 | $ | 5,580 | $ | 6,200 | $ | 6,820 | $ | 7,440 | $ | 8,060 | ||||||||||||||
At December 31, 2017 | $ | 4,374 | $ | 4,999 | $ | 5,624 | $ | 6,249 | $ | 6,874 | $ | 7,499 | $ | 8,124 | ||||||||||||||
Percent of common stock portfolio | |||||||||||
At June 30, 2018 | At December 31, 2017 | ||||||||||
Cincinnati Financial | S&P 500 Industry Weightings | Cincinnati Financial | S&P 500 Industry Weightings | ||||||||
Sector: | |||||||||||
Information technology | 21.4 | % | 26.0 | % | 19.5 | % | 23.7 | % | |||
Financial | 15.8 | 13.8 | 16.2 | 14.8 | |||||||
Consumer discretionary | 13.5 | 12.9 | 13.6 | 12.2 | |||||||
Healthcare | 13.1 | 14.1 | 13.2 | 13.8 | |||||||
Industrials | 12.6 | 9.5 | 14.3 | 10.3 | |||||||
Energy | 8.0 | 6.3 | 7.3 | 6.1 | |||||||
Consumer staples | 5.3 | 7.0 | 6.2 | 8.2 | |||||||
Materials | 5.0 | 2.6 | 5.6 | 3.0 | |||||||
Utilities | 2.4 | 2.9 | 2.1 | 2.9 | |||||||
Telecomm services | 1.5 | 2.0 | 1.7 | 2.1 | |||||||
Real Estate | 1.4 | 2.9 | 0.3 | 2.9 | |||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
• | 1,268 of the 1,279 holdings had fair value between 90 percent and 100 percent of amortized cost at |
• | 11 of the 1,279 fixed-maturity holdings had fair value between 70 percent and 90 percent of amortized cost at June 30, 2018. We believe the 11 fixed-maturity securities will continue to pay interest and ultimately pay principal upon maturity. The issuers of these 11 securities have strong cash flow to service their debt and meet their contractual obligation to make principal payments. The fair value of these securities was $42 million, and they accounted for $7 million in unrealized losses. |
• | There were no fixed-maturity securities with a fair value below 70 percent of amortized cost at June 30, 2018. |
(Dollars in millions) | Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
At June 30, 2018 | value | losses | value | losses | value | losses | ||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate | $ | 1,836 | $ | 39 | $ | 283 | $ | 18 | $ | 2,119 | $ | 57 | ||||||||||||
States, municipalities and political subdivisions | 1,070 | 22 | 262 | 14 | 1,332 | 36 | ||||||||||||||||||
Commercial mortgage-backed securities | 113 | 2 | 35 | 2 | 148 | 4 | ||||||||||||||||||
Government-sponsored enterprises | 110 | 2 | 158 | 6 | 268 | 8 | ||||||||||||||||||
Foreign government | 10 | — | — | — | 10 | — | ||||||||||||||||||
United States government | 23 | 1 | 11 | — | 34 | 1 | ||||||||||||||||||
Total | $ | 3,162 | $ | 66 | $ | 749 | $ | 40 | $ | 3,911 | $ | 106 | ||||||||||||
At December 31, 2017 | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate | $ | 330 | $ | 4 | $ | 252 | $ | 9 | $ | 582 | $ | 13 | ||||||||||||
States, municipalities and political subdivisions | 88 | 1 | 264 | 5 | 352 | 6 | ||||||||||||||||||
Commercial mortgage-backed | 33 | — | 36 | 1 | 69 | 1 | ||||||||||||||||||
Government-sponsored enterprises | 96 | 1 | 124 | 3 | 220 | 4 | ||||||||||||||||||
Foreign government | 10 | — | — | — | 10 | — | ||||||||||||||||||
United States government | 23 | — | 6 | — | 29 | — | ||||||||||||||||||
Subtotal | 580 | 6 | 682 | 18 | 1,262 | 24 | ||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Common equities | 229 | 14 | — | — | 229 | 14 | ||||||||||||||||||
Subtotal | 229 | 14 | — | — | 229 | 14 | ||||||||||||||||||
Total | $ | 809 | $ | 20 | $ | 682 | $ | 18 | $ | 1,491 | $ | 38 | ||||||||||||
(Dollars in millions) | Number of issues | Cost or amortized cost | Fair value | Gross unrealized gain (loss) | Gross investment income | ||||||||||||||
At June 30, 2018 | |||||||||||||||||||
Taxable fixed maturities: | |||||||||||||||||||
Fair valued below 70% of amortized cost | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Fair valued at 70% to less than 100% of amortized cost | 666 | 2,783 | 2,709 | (74 | ) | 47 | |||||||||||||
Fair valued at 100% and above of amortized cost | 882 | 3,905 | 4,033 | 128 | 102 | ||||||||||||||
Investment income on securities sold in current year | — | — | — | — | 7 | ||||||||||||||
Total | 1,548 | 6,688 | 6,742 | 54 | 156 | ||||||||||||||
Tax-exempt fixed maturities: | |||||||||||||||||||
Fair valued below 70% of amortized cost | — | — | — | — | — | ||||||||||||||
Fair valued at 70% to less than 100% of amortized cost | 613 | 1,234 | 1,202 | (32 | ) | 18 | |||||||||||||
Fair valued at 100% and above of amortized cost | 1,393 | 2,630 | 2,692 | 62 | 45 | ||||||||||||||
Investment income on securities sold in current year | — | — | — | — | 2 | ||||||||||||||
Total | 2,006 | 3,864 | 3,894 | 30 | 65 | ||||||||||||||
Fixed-maturities summary: | |||||||||||||||||||
Fair valued below 70% of cost or amortized cost | — | — | — | — | — | ||||||||||||||
Fair valued at 70% to less than 100% of cost or amortized cost | 1,279 | 4,017 | 3,911 | (106 | ) | 65 | |||||||||||||
Fair valued at 100% and above of cost or amortized cost | 2,275 | 6,535 | 6,725 | 190 | 147 | ||||||||||||||
Investment income on securities sold in current year | — | — | — | — | 9 | ||||||||||||||
Total | 3,554 | $ | 10,552 | $ | 10,636 | $ | 84 | $ | 221 | ||||||||||
At December 31, 2017 | |||||||||||||||||||
Portfolio summary: | |||||||||||||||||||
Fair valued below 70% of cost or amortized cost | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Fair valued at 70% to less than 100% of cost or amortized cost | 440 | 1,529 | 1,491 | (38 | ) | 37 | |||||||||||||
Fair valued at 100% and above of cost or amortized cost | 3,158 | 11,879 | 15,457 | 3,578 | 533 | ||||||||||||||
Investment income on securities sold in current year | — | — | — | — | 45 | ||||||||||||||
Total | 3,598 | $ | 13,408 | $ | 16,948 | $ | 3,540 | $ | 615 | ||||||||||
• | that information required to be disclosed in the company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and |
• | that such information is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | |||||||||
April 1-30, 2018 | 241,624 | $ | 71.32 | 241,624 | 16,800,441 | ||||||||
May 1-31, 2018 | 1,191,016 | 70.44 | 1,191,016 | 15,609,425 | |||||||||
June 1-30, 2018 | 132,640 | 70.36 | 132,640 | 15,476,785 | |||||||||
Totals | 1,565,280 | 70.57 | 1,565,280 | ||||||||||
Exhibit No. | Exhibit Description | |
3.1 | ||
3.2 | ||
31A | ||
31B | ||
32 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
CINCINNATI FINANCIAL CORPORATION |
Date: July 26, 2018 |
/S/ Michael J. Sewell |
Michael J. Sewell, CPA |
Chief Financial Officer, Senior Vice President and Treasurer |
(Principal Accounting Officer) |
(i) | “affiliate” or “affiliates” shall have the meaning ascribed thereto in Rule 405 under the Securities Act of 1933, as amended, and the rules and regulations thereunder; and |
(ii) | a shareholder shall be deemed to “own” only those outstanding shares of the Corporation as to which the shareholder itself possesses both (A) the full voting and investment rights pertaining to the shares and (B) the full economic interest in (including the opportunity for profit and risk of loss on) such shares. The number of shares calculated in accordance with the foregoing clauses (A) and (B) shall be deemed not to include (and to the extent any of the following arrangements have been entered into by affiliates of the shareholder, shall be reduced by) any shares (x) sold by such shareholder (or any of its affiliates) in any transaction that has not been settled or closed, including any short sale, (y) borrowed by such shareholder (or any of its affiliates) for any purposes or purchased by such shareholder (or any of its affiliates) pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such shareholder (or any of its affiliates), whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of the Corporation’s shares, in any such case which instrument or agreement has, or is intended to have, or if exercised by either party |
(i) | the number of Shareholder Nominees that were submitted by an Eligible Shareholder for inclusion in the Corporation’s proxy materials pursuant to this Section 8 but are subsequently withdrawn; |
(ii) | the number of directors in office who have been nominated and elected pursuant to this Section 8 with respect to any of the two (2) immediately preceding annual meetings; and |
(iii) | director candidates for which the Corporation shall have received one or |
(i) | one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year (3 year) holding period) verifying that, as of a date within seven (7) calendar days prior to the date the Proxy Access Notice is timely delivered to the Corporation, such person owns, and has owned continuously for the preceding three (3) years, the Proxy Access Required Shares, and such person’s agreement to provide immediate notice if the Eligible Shareholder ceases to own any of the Proxy Access Required Shares prior to the date of the applicable annual meeting of shareholders; |
(A) | file with the Securities and Exchange Commission any solicitation by the Eligible Shareholder of shareholders of the Corporation relating to the annual meeting at which the Shareholder Nominee will be nominated; |
(B) | comply with all other laws and regulations applicable to any solicitation in connection with the annual shareholder meeting; and |
(C) | provide to the Corporation prior to the annual shareholder meeting such additional information as necessary with respect thereto. |
(A) | is independent under the listing standards of each principal U.S. exchange upon which the shares of the Corporation are listed, any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s directors; |
(B) | has any direct or indirect relationship with the Corporation other than those relationships that have been deemed categorically immaterial pursuant to the Corporation’s Corporate Governance Guidelines; and |
(C) | would, by serving on the Board of Directors, violate or cause the Corporation to be in violation of the Corporation’s Articles of Incorporation or Regulations, the rules and listing standards of the principal U.S. exchange upon which the shares of the Corporation are listed or any applicable law, rule or regulation. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Cincinnati Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ Steven J. Johnston |
Steven J. Johnston, FCAS, MAAA, CFA, CERA |
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Cincinnati Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ Michael J. Sewell |
Michael J. Sewell, CPA |
Chief Financial Officer, Senior Vice President and Treasurer |
(Principal Accounting Officer) |
1. | the report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
2. | the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Cincinnati Financial Corporation. |
/S/ Steven J. Johnston |
Steven J. Johnston, FCAS, MAAA, CFA, CERA |
President and Chief Executive Officer |
/S/ Michael J. Sewell |
Michael J. Sewell, CPA |
Chief Financial Officer, Senior Vice President and Treasurer |
(Principal Accounting Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 20, 2018 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | CINF | |
Entity Registrant Name | CINCINNATI FINANCIAL CORP | |
Entity Central Index Key | 0000020286 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 162,652,281 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities, amortized cost | $ 10,552 | $ 10,314 |
Available-for-sale Equity Securities, Amortized Cost Basis | 3,198 | 3,094 |
Land, building and equipment, accumulated depreciation | $ 264 | $ 253 |
Common stock, par value | $ 2 | $ 2 |
Common stock, authorized | 500.0 | 500.0 |
Common stock, issued | 198.3 | 198.3 |
Common stock, outstanding | 198.3 | 198.3 |
Treasury stock, shares | 35.7 | 34.4 |
Condensed Consolidated Statements of Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues [Abstract] | ||||
Earned premiums | $ 1,294 | $ 1,241 | $ 2,554 | $ 2,449 |
Investment income, net of expenses | 154 | 151 | 304 | 300 |
Investment gains and losses, net | 105 | (11) | (86) | 149 |
Fee revenues | 4 | 4 | 8 | 9 |
Other revenues | 1 | 1 | 2 | 2 |
Total revenues | 1,558 | 1,386 | 2,782 | 2,909 |
Benefits and Expenses | ||||
Insurance losses and contract holders' benefits | 883 | 854 | 1,737 | 1,707 |
Underwriting, acquisition and insurance expenses | 395 | 387 | 798 | 764 |
Interest expense | 13 | 13 | 26 | 26 |
Other operating expenses | 3 | 4 | 7 | 8 |
Total benefits and expenses | 1,294 | 1,258 | 2,568 | 2,505 |
Income Before Income Taxes | 264 | 128 | 214 | 404 |
Provision (Benefit) for Income Taxes | ||||
Current | 33 | 31 | 61 | 71 |
Deferred | 14 | (3) | (33) | 32 |
Total provision for income taxes | 47 | 28 | 28 | 103 |
Net Income | $ 217 | $ 100 | $ 186 | $ 301 |
Per Common Share | ||||
Net income—basic | $ 1.33 | $ 0.61 | $ 1.13 | $ 1.83 |
Net income—diluted | $ 1.32 | $ 0.60 | $ 1.12 | $ 1.81 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Net Income | $ 217 | $ 100 | $ 186 | $ 301 |
Change in unrealized gains on investments, net of tax (benefit) of ($18), $77, ($64) and $123, respectively | (62) | 144 | (237) | 229 |
Amortization of pension actuarial loss and prior service cost, net of tax of $0, $0, $0 and $0, respectively | 1 | 0 | 1 | 1 |
Change in life deferred acquisition costs, life policy reserves and other, net of tax of $1, $0, $2 and $1, respectively | 1 | 1 | 6 | 2 |
Other comprehensive income (loss) | (60) | 145 | (230) | 232 |
Comprehensive Income (Loss) | $ 157 | $ 245 | $ (44) | $ 533 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $ (18) | $ 77 | $ (64) | $ 123 |
Other Comprehensive Income Loss, Pension And Other Postretirement Benefit Plans, Net Actuarial Loss And Prior Service Cost Arising During Period, Tax | 0 | 0 | 0 | 0 |
Other Comprehensive Income, Change in Life Deferred Acquisition Costs, Life Policy Reserves and Other, Tax | $ 1 | $ 0 | $ 2 | $ 1 |
Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Accounting Policies | NOTE 1 — Accounting Policies The condensed consolidated financial statements include the accounts of Cincinnati Financial Corporation and its consolidated subsidiaries, each of which is wholly owned. These statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Our actual results could differ from those estimates. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been condensed or omitted. Our June 30, 2018, condensed consolidated financial statements are unaudited. We believe that we have made all adjustments, consisting only of normal recurring accruals, that are necessary for fair presentation. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our 2017 Annual Report on Form 10-K. The results of operations for interim periods do not necessarily indicate results to be expected for the full year. Adopted Accounting Updates ASU 2014-09 Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Insurance contracts do not fall within the scope of this ASU. The effective date of ASU 2014-09 was for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU effective January 1, 2018, and it did not have a material impact on the company's consolidated financial position, cash flows or results of operations. ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 revised the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The effective date of ASU 2016-01 was for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU on January 1, 2018, and applied it prospectively without prior period amounts restated. As a result of the adoption, $2.503 billion of after-tax unrealized gains on equity securities was reclassified on January 1, 2018, from accumulated other comprehensive income to retained earnings. Results of operations were impacted as changes in fair value of equity securities are now reported in net income instead of reported in other comprehensive income. As a result of the adoption of this ASU, for the three and six months ended June 30, 2018, net investment gains of $105 million and net investment losses of $86 million in the condensed consolidated statements of income included an increase of $101 million and a decrease of $97 million from the fair value change of equity securities, respectively. ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of ASU 2016-15 is for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU effective January 1, 2018, and it did not have a material impact on our company's consolidated financial position, cash flows or results of operations. ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Postretirement Benefit Costs. ASU 2017-07 provides guidance on how to present the components of net periodic benefit costs in the income statement for pension plans and other post-retirement benefit plans and allows only the service cost component of net benefit cost to be eligible for capitalization when applicable. The effective date of ASU 2017-07 is for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU effective January 1, 2018, and disclosed the line items used in the statements of income to present the service and non-service components of net periodic benefit costs in Note 11, Employee Retirement Benefits, to these consolidated financial statements. The adoption did not have a material impact on our company's consolidated financial position, cash flows or results of operations. ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies when to account for a change to the terms or conditions of a share based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The effective date of ASU 2017-09 was for interim and annual reporting periods, beginning after December 15, 2017, and was applied prospectively. The company adopted this ASU effective January 1, 2018, and it did not have a material impact on our company's consolidated financial position, cash flows or results of operations. Pending Accounting Updates ASU 2016-02, Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The main provision of ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The effective date of ASU 2016-02 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company’s consolidated financial position, cash flows or results of operations. ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU 2016-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted. Management is currently evaluating the impact on our company's consolidated financial position, cash flows or results of operations. ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU 2017-08 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations. ASU 2018-07, Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718, Compensation - Stock Compensation, which currently only includes share-based payments issued to employees, to include share-based payments issued to nonemployees for the acquisition of goods and services. The effective date of ASU 2018-07 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations. |
Investments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments On January 1, 2018, we adopted ASU 2016-01, which resulted in changes in the fair value of equity securities still held, being reported in net income instead of being reported in other comprehensive income. See Note 1, Accounting Policies, for additional discussion. The following table provides cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity and equity securities:
The net unrealized investment gains in our fixed-maturity portfolio at June 30, 2018, are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa1/AA at June 30, 2018, and December 31, 2017. At June 30, 2018, Apple Inc. (Nasdaq:AAPL) was our largest single equity holding with a fair value of $259 million, which was 4.3 percent of our publicly traded common equities portfolio and 1.5 percent of the total investment portfolio. The table below provides fair values and gross unrealized losses by investment category and by the duration of the securities’ continuous unrealized loss positions:
Contractual maturity dates for fixed-maturity investments were:
Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties. The following table provides investment income and investment gains and losses, net:
During the three and six months ended June 30, 2018, there were no fixed-maturity securities other-than-temporarily impaired. During the three and six months ended June 30, 2017, there were five equity securities and one fixed-maturity security other-than-temporarily impaired. There were no credit losses on fixed-maturity securities for which a portion of other-than-temporary impairment (OTTI) has been recognized in other comprehensive income for the three and six months ended June 30, 2018 and 2017. At June 30, 2018, 263 fixed-maturity securities with a total unrealized loss of $40 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity security had a fair value below 70 percent of amortized cost. At December 31, 2017, 249 fixed-maturity securities with a total unrealized loss of $18 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity securities had fair values below 70 percent of amortized cost. There were no equity securities in an unrealized loss position for 12 months or more as of December 31, 2017. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements In accordance with accounting guidance for fair value measurements and disclosures, we categorized our financial instruments, based on the priority of the observable and market-based data for the valuation technique used, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest observable input that has a significant impact on fair value measurement is used. Our valuation techniques have not changed from those used at December 31, 2017, and ultimately management determines fair value. See our 2017 Annual Report on Form 10-K, Item 8, Note 3, Fair Value Measurements, Page 132, for information on characteristics and valuation techniques used in determining fair value. Fair Value Disclosures for Assets The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at June 30, 2018, and December 31, 2017. We do not have any liabilities carried at fair value. There were no transfers between Level 1 and Level 2.
Each financial instrument that was deemed to have significant unobservable inputs when determining valuation is identified in the following tables by security type with a summary of changes in fair value as of June 30, 2018. Total Level 3 assets continue to be less than 1 percent of financial assets measured at fair value in the condensed consolidated balance sheets. Assets presented in the table below were valued based primarily on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. Transfers out of Level 3 included situations where a broker quote was used without observable inputs or data that could be corroborated by our pricing vendors in the prior period and significant other observable inputs were identified in the current period. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to us. The following table provides the change in Level 3 assets for the three months ended June 30:
The following table provides the change in Level 3 assets for the six months ended June 30:
With the exception of the above tables, additional disclosures for the Level 3 category are not material and therefore not provided. Fair Value Disclosures for Assets and Liabilities Not Carried at Fair Value The disclosures below are presented to provide information about the effects of current market conditions on financial instruments that are not reported at fair value in our condensed consolidated financial statements. This table summarizes the book value and principal amounts of our long-term debt:
The following table shows fair values of our note payable and long-term debt:
The following table shows the fair value of our life policy loans included in other invested assets and the fair values of our deferred annuities and structured settlements included in life policy and investment contract reserves:
Outstanding principal and interest for these life policy loans totaled $32 million and $31 million at June 30, 2018, and December 31, 2017, respectively. Recorded reserves for the deferred annuities were $813 million and $835 million at June 30, 2018, and December 31, 2017, respectively. Recorded reserves for the structured settlements were $159 million and $161 million at June 30, 2018, and December 31, 2017, respectively. |
Property Casualty Loss and Loss Expenses |
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Property Casualty Loss And Loss Expenses | Property Casualty Loss and Loss Expenses This table summarizes activity for our consolidated property casualty loss and loss expense reserves:
We use actuarial methods, models and judgment to estimate, as of a financial statement date, the property casualty loss and loss expense reserves required to pay for and settle all outstanding insured claims, including incurred but not reported (IBNR) claims, as of that date. The actuarial estimate is subject to review and adjustment by an inter-departmental committee that includes actuarial, claims, underwriting, loss prevention and accounting management. This committee is familiar with relevant company and industry business, claims and underwriting trends, as well as general economic and legal trends that could affect future loss and loss expense payments. The amount we will actually have to pay for claims can be highly uncertain. This uncertainty, together with the size of our reserves, makes the loss and loss expense reserves our most significant estimate. The reserve for loss and loss expenses in the condensed consolidated balance sheets also included $45 million at June 30, 2018, and $68 million at June 30, 2017, for certain life and health loss and loss expense reserves. For the three months ended June 30, 2018, we experienced $31 million of favorable development on prior accident years, including $42 million of favorable development in commercial lines, $17 million of unfavorable development in personal lines, $4 million of favorable development in excess and surplus lines and $2 million of favorable development in our reinsurance assumed operations. Within commercial lines, we recognized favorable reserve development of $18 million for the workers' compensation line, $14 million for the commercial casualty line, $7 million for the commercial property line and $8 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $5 million for the commercial auto line. Within personal lines, we recognized unfavorable reserve development of $14 million for the homeowner line of business due primarily to higher-than-anticipated loss emergence on known claims. For the six months ended June 30, 2018, we experienced $79 million of favorable development on prior accident years, including $77 million of favorable development in commercial lines, $16 million of unfavorable development in personal lines, $14 million of favorable development in excess and surplus lines and $4 million of favorable development in our reinsurance assumed operations. This included $7 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of $31 million for the workers' compensation line, $28 million for the commercial property line, $10 million for the commercial casualty line and $12 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $4 million for the commercial auto line. Within personal lines, we recognized unfavorable reserve development of $17 million for the homeowner line of business due primarily to higher-than-anticipated loss emergence on known claims. For the three months ended June 30, 2017, we experienced $38 million of favorable development on prior accident years, including $26 million of favorable development in commercial lines, $3 million of favorable development in personal lines and $9 million of favorable development in excess and surplus lines. This included $3 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of $12 million for the workers' compensation line, $7 million for the commercial casualty line, $5 million for the commercial property line and $11 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $9 million for the commercial auto line. For the six months ended June 30, 2017, we experienced $76 million of favorable development on prior accident years, including $37 million of favorable development in commercial lines, $13 million of favorable development in personal lines, $22 million of favorable development in excess and surplus lines and $4 million of favorable development in our reinsurance assumed operations. This included $14 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of $31 million for the workers' compensation line, $15 million for the commercial property line and $19 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expenses for these lines. This was partially offset by unfavorable reserve development of $20 million for the commercial auto line and $8 million for the commercial casualty line. Commercial auto developed unfavorably due to higher loss cost effects in recent accident years, resulting in an increase of our reserve estimate for claims that have not yet been settled. The unfavorable reserve development for commercial casualty reflected higher than usual large loss activity. |
Life Policy and Investment Contract Reserves |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Future Policy Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Life Policy And Investment Contract Reserves | Life Policy and Investment Contract Reserves We establish the reserves for traditional life insurance policies based on expected expenses, mortality, morbidity, withdrawal rates, timing of claim presentation and investment yields, including a provision for uncertainty. Once these assumptions are established, they generally are maintained throughout the lives of the contracts. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our assumptions for expected mortality, morbidity and withdrawal rates as well as for expected expenses. We base our assumptions for expected investment income on our own experience adjusted for current economic conditions. We establish reserves for the company’s deferred annuity, universal life and structured settlement policies equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance, based on expected no-lapse guarantee benefits and expected policy assessments. This table summarizes our life policy and investment contract reserves:
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Deferred Acquisition Costs |
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Deferred Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Acquisition Costs | Deferred Policy Acquisition Costs Expenses directly related to successfully acquired insurance policies – primarily commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience, and we evaluate the costs for recoverability. The table below shows the deferred policy acquisition costs and asset reconciliation.
No premium deficiencies were recorded in the condensed consolidated statements of income, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income. |
Accumulated Other Comprehensive Income |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note | Accumulated Other Comprehensive Income Accumulated other comprehensive income (AOCI) includes changes in unrealized gains and losses on investments, changes in pension obligations and changes in life deferred acquisition costs, life policy reserves and other as follows:
Investment gains and losses, net and life deferred acquisition costs, life policy reserves and other investment gains and losses, net, are recorded in the investment gains and losses, net, line item in the condensed consolidated statements of income. Amortization on pension obligations is recorded in the insurance losses and contract holders' benefits and underwriting, acquisition and insurance expenses in the condensed consolidated statements of income. |
Reinsurance |
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Reinsurance Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance Primary components of our property casualty reinsurance assumed operations include involuntary and voluntary assumed risks as well as contracts from our reinsurance assumed operations, known as Cincinnati Re. Primary components of our ceded reinsurance include a property per risk treaty, property excess treaty, casualty per occurrence treaty, casualty excess treaty, property catastrophe treaty and catastrophe bonds and retrocessions on our reinsurance assumed operations. Management's decisions about the appropriate level of risk retention are affected by various factors, including changes in our underwriting practices, capacity to retain risks and reinsurance market conditions. The table below summarizes our consolidated property casualty insurance net written premiums, earned premiums and incurred loss and loss expenses:
Our life insurance company purchases reinsurance for protection of a portion of the risks that are written. Primary components of our life reinsurance program include individual mortality coverage, aggregate catastrophe and accidental death coverage in excess of certain deductibles. The table below summarizes our consolidated life insurance earned premiums and contract holders' benefits incurred:
The ceded benefits incurred can vary depending on the type of life insurance policy held and the year the policy was issued. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes As of June 30, 2018, and December 31, 2017, we had no liability for unrecognized tax benefits. The differences between the 21 percent and 35 percent statutory federal income tax rates and our effective income tax rate were as follows:
The provision for federal income taxes is based upon filing a consolidated income tax return for the company and its subsidiaries. See our 2017 Annual Report on Form 10-K, Item 8, Note 11, Income Taxes, Page 153, which discusses enactment of the Tax Cuts and Jobs Act (the “Tax Act”) on December 22, 2017, and its impact on our financial results for that period. Interpretive guidance of the Tax Act will be received throughout 2018, and we expect to update our estimates and our disclosure on a quarterly basis as interpretative guidance is received within each quarter that it is received. During the period ended June 30, 2018, the U.S. Treasury Department and the Internal Revenue Service have not issued further clarification or guidance for the items for which our accounting for the Tax Act is incomplete. We expect to complete determination of the effects of the Tax Act on our deferred tax assets and liabilities as part of the annual income tax return filing process. As of June 30, 2018, we had no operating or capital loss carryforwards. |
Net Income Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common Share | Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are computed based on the weighted average number of common and dilutive potential common shares outstanding using the treasury stock method. The table shows calculations for basic and diluted earnings per share:
The sources of dilution of our common shares are certain equity-based awards. See our 2017 Annual Report on Form 10-K, Item 8, Note 17, Share-Based Associate Compensation Plans, Page 161, for information about share-based awards. The above table shows the number of anti-dilutive share-based awards for the three and six months ended June 30, 2018 and 2017. These share-based awards were not included in the computation of net income per common share (diluted) because their exercise would have anti-dilutive effects. |
Employee Retirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Retirement Benefits | Employee Retirement Benefits The following summarizes the components of net periodic benefit cost for our qualified and supplemental pension plans:
See our 2017 Annual Report on Form 10-K, Item 8, Note 13, Employee Retirement Benefits, Page 156, for information on our retirement benefits. Service costs and non-service costs (benefit) are allocated in the same proportion primarily to the underwriting, acquisition and insurance expenses line item with the remainder allocated to the insurance losses and contract holders' benefits line item on the condensed consolidated statements of income for both 2018 and 2017. We made matching contributions totaling $4 million and $3 million to our 401(k) and Top Hat savings plans during the second quarter of 2018 and 2017 and contributions of $10 million and $9 million for the first half of 2018 and 2017, respectively. We contributed $5 million to our qualified pension plan during the first six months of 2018. |
Commitments and Contingent Liabilities |
6 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingent Liabilities | Commitments and Contingent Liabilities In the ordinary course of conducting business, the company and its subsidiaries are named as defendants in various legal proceedings. Most of these proceedings are claims litigation involving the company's insurance subsidiaries in which the company is either defending or providing indemnity for third-party claims brought against insureds or litigating first-party coverage claims. The company accounts for such activity through the establishment of unpaid loss and loss expense reserves. We believe that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, is immaterial to our consolidated financial condition, results of operations and cash flows. The company and its subsidiaries also are occasionally involved in other legal and regulatory proceedings, some of which assert claims for substantial amounts. These actions include, among others, putative class actions seeking certification of a state or national class. Such proceedings have alleged, for example, breach of an alleged duty to search national databases to ascertain unreported deaths of insureds under life insurance policies. The company's insurance subsidiaries also are occasionally parties to individual actions in which extra-contractual damages, punitive damages or penalties are sought, such as claims alleging bad faith handling of insurance claims or writing unauthorized coverage or claims alleging discrimination by former or current associates. On a quarterly basis, we review these outstanding matters. Under current accounting guidance, we establish accruals when it is probable that a loss has been incurred and we can reasonably estimate its potential exposure. The company accounts for such probable and estimable losses, if any, through the establishment of legal expense reserves. Based on our quarterly review, we believe that our accruals for probable and estimable losses are reasonable and that the amounts accrued do not have a material effect on our consolidated financial condition or results of operations. However, if any one or more of these matters results in a judgment against us or settlement for an amount that is significantly greater than the amount accrued, the resulting liability could have a material effect on the company's consolidated results of operations or cash flows. Based on our most recent review, our estimate for any other matters for which the risk of loss is not probable, but more than remote, is immaterial. |
Segment Information |
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Segment Information | Segment Information We operate primarily in two industries, property casualty insurance and life insurance. Our chief operating decision maker regularly reviews our reporting segments to make decisions about allocating resources and assessing performance. Our reporting segments are:
We report as Other the noninvestment operations of the parent company and its noninsurer subsidiary, CFC Investment Company and Cincinnati Re, our reinsurance assumed operations. See our 2017 Annual Report on Form 10-K, Item 8, Note 18, Segment Information, Page 164, for a description of revenue, income or loss before income taxes and identifiable assets for each of the five segments. Segment information is summarized in the following table:
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Accounting Policies Pending Accounting Updates (Policies) |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Adopted Accounting Updates and Pending Accounting Updates | Adopted Accounting Updates ASU 2014-09 Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Insurance contracts do not fall within the scope of this ASU. The effective date of ASU 2014-09 was for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU effective January 1, 2018, and it did not have a material impact on the company's consolidated financial position, cash flows or results of operations. ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 revised the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The effective date of ASU 2016-01 was for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU on January 1, 2018, and applied it prospectively without prior period amounts restated. As a result of the adoption, $2.503 billion of after-tax unrealized gains on equity securities was reclassified on January 1, 2018, from accumulated other comprehensive income to retained earnings. Results of operations were impacted as changes in fair value of equity securities are now reported in net income instead of reported in other comprehensive income. As a result of the adoption of this ASU, for the three and six months ended June 30, 2018, net investment gains of $105 million and net investment losses of $86 million in the condensed consolidated statements of income included an increase of $101 million and a decrease of $97 million from the fair value change of equity securities, respectively. ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of ASU 2016-15 is for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU effective January 1, 2018, and it did not have a material impact on our company's consolidated financial position, cash flows or results of operations. ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Postretirement Benefit Costs. ASU 2017-07 provides guidance on how to present the components of net periodic benefit costs in the income statement for pension plans and other post-retirement benefit plans and allows only the service cost component of net benefit cost to be eligible for capitalization when applicable. The effective date of ASU 2017-07 is for interim and annual reporting periods beginning after December 15, 2017. The company adopted this ASU effective January 1, 2018, and disclosed the line items used in the statements of income to present the service and non-service components of net periodic benefit costs in Note 11, Employee Retirement Benefits, to these consolidated financial statements. The adoption did not have a material impact on our company's consolidated financial position, cash flows or results of operations. ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies when to account for a change to the terms or conditions of a share based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The effective date of ASU 2017-09 was for interim and annual reporting periods, beginning after December 15, 2017, and was applied prospectively. The company adopted this ASU effective January 1, 2018, and it did not have a material impact on our company's consolidated financial position, cash flows or results of operations. Pending Accounting Updates ASU 2016-02, Leases (Topic 842) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The main provision of ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The effective date of ASU 2016-02 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company’s consolidated financial position, cash flows or results of operations. ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU 2016-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted. Management is currently evaluating the impact on our company's consolidated financial position, cash flows or results of operations. ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU 2017-08 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations. ASU 2018-07, Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718, Compensation - Stock Compensation, which currently only includes share-based payments issued to employees, to include share-based payments issued to nonemployees for the acquisition of goods and services. The effective date of ASU 2018-07 is for interim and annual reporting periods beginning after December 15, 2018. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations. |
Investments (Tables) |
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Analysis Of Cost Or Amortized Cost, Gross Unrealized Gains And Losses And Fair Value for Investments | The following table provides cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity and equity securities:
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Fair Values And Unrealized Losses by Investment Category And By The Duration Of The Securities' Continuous Unrealized Loss Position | The table below provides fair values and gross unrealized losses by investment category and by the duration of the securities’ continuous unrealized loss positions:
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Investments Classified by Contractual Maturity Date [Table Text Block] | Contractual maturity dates for fixed-maturity investments were:
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Investment Income, Realized Investment Gains And Losses And Change In Unrealized Investment Gains And Losses | The following table provides investment income and investment gains and losses, net:
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Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Hierarchy for Assets Measured at Fair Value on a Recurring Basis | The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at June 30, 2018, and December 31, 2017. We do not have any liabilities carried at fair value. There were no transfers between Level 1 and Level 2.
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Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
The following table provides the change in Level 3 assets for the six months ended June 30:
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] | This table summarizes the book value and principal amounts of our long-term debt:
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Fair Value of Life Policy Loans | The following table shows the fair value of our life policy loans included in other invested assets and the fair values of our deferred annuities and structured settlements included in life policy and investment contract reserves:
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Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Deferred Annuities, Structured Settlements and Other Items | The following table shows fair values of our note payable and long-term debt:
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Property Casualty Loss and Loss Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premiums Written, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Property Casualty Loss And Loss Expense Reserves | This table summarizes activity for our consolidated property casualty loss and loss expense reserves:
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Life Policy and Investment Contract Reserves (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability for Future Policy Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve For Losses Loss Adjustment Expenses Table [Text Block] | This table summarizes our life policy and investment contract reserves:
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Deferred Acquisition Costs (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs And Asset Reconciliation, Including the Amortized Deferred Policy Acquisition Costs | The table below shows the deferred policy acquisition costs and asset reconciliation.
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Accumulated Other Comprehensive Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) |
|
Reinsurance (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Casualty Insurance Assumed And Ceded Business | The table below summarizes our consolidated property casualty insurance net written premiums, earned premiums and incurred loss and loss expenses:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Life Insurance Assumed and Ceded Business |
|
Income Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differences Between The 35 Percent Statutory Income Tax Rate And Effective Income Tax Rate | The differences between the 21 percent and 35 percent statutory federal income tax rates and our effective income tax rate were as follows:
|
Net Income Per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculations For Basic And Diluted Earnings Per Share | The table shows calculations for basic and diluted earnings per share:
|
Employee Retirement Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures | The following summarizes the components of net periodic benefit cost for our qualified and supplemental pension plans:
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment information is summarized in the following table:
|
Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Available-for-sale Equity Securities, Unrealized Gain, After Tax | $ 2,503 | $ 0 | $ 2,503 | $ 0 |
Net investment gain (loss) | 105 | (11) | (86) | 149 |
Equity securities | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net investment gain (loss) | 105 | (7) | (90) | 142 |
Unrealized Gain (Loss) on Investments | $ 101 | $ 0 | $ (97) | $ 0 |
Investments - Schedule of Contractual Maturities of Investments (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Amortized cost | ||
Due in one year or less | $ 720 | |
Due after one year through five years | 2,745 | |
Due after five years through ten years | 3,630 | |
Due after ten years | 3,457 | |
Total | 10,552 | $ 10,314 |
Fair value | ||
Due in one year or less | 733 | |
Due after one year through five years | 2,781 | |
Due after five years through ten years | 3,641 | |
Due after ten years | 3,481 | |
Total | $ 10,636 | $ 10,699 |
% of fair value | ||
Due in one year or less | 6.90% | |
Due after one year through five years | 26.10% | |
Due after five years through ten years | 34.30% | |
Due after ten years | 32.70% | |
Total | 100.00% |
Fair Value Measurements - Summary of Book Value and Principal Amounts of Long-Term Debt (Detail) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | ||
Book value | $ 787 | $ 787 |
Principal amount of debt | $ 793 | $ 793 |
Senior Debentures 6.900% Due 2028 | ||
Debt Instrument [Line Items] | ||
Interest rate | 6.90% | 6.90% |
Debt issuance year | 1998 | 1998 |
Book value | $ 26 | $ 26 |
Principal amount of debt | $ 28 | $ 28 |
Senior Debentures 6.920% Due 2028 | ||
Debt Instrument [Line Items] | ||
Interest rate | 6.92% | 6.92% |
Debt issuance year | 2005 | 2005 |
Book value | $ 391 | $ 391 |
Principal amount of debt | $ 391 | $ 391 |
Senior Notes 6.125% Due 2034 | ||
Debt Instrument [Line Items] | ||
Interest rate | 6.125% | 6.125% |
Debt issuance year | 2004 | 2004 |
Book value | $ 370 | $ 370 |
Principal amount of debt | $ 374 | $ 374 |
Property Casualty Loss and Loss Expenses - Consolidated Property Casualty Loss and Loss Expense Reserves (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Summary of Consolidated Property Casualty Loss and Loss Expense Reserves [Roll Forward] | ||||
Gross loss and loss expense reserves, beginning of period | $ 5,293 | $ 5,128 | $ 5,219 | $ 5,035 |
Less reinsurance recoverable | 184 | 297 | 187 | 298 |
Net loss and loss expense reserves, beginning of period | 5,109 | 4,831 | 5,032 | 4,737 |
Current accident year | 852 | 832 | 1,691 | 1,658 |
Prior accident years | (31) | (38) | (79) | (76) |
Total incurred | 821 | 794 | 1,612 | 1,582 |
Current accident year | 341 | 373 | 536 | 558 |
Prior accident years | 354 | 322 | 873 | 831 |
Total paid | 695 | 695 | 1,409 | 1,389 |
Net loss and loss expense reserves, end of period | 5,235 | 4,930 | 5,235 | 4,930 |
Plus reinsurance recoverable | 188 | 283 | 188 | 283 |
Gross loss and loss expense reserves, end of period | $ 5,423 | $ 5,213 | $ 5,423 | $ 5,213 |
Reinsurance - Life Insurance Ceded Business (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Reinsurance for Insurance Companies, by Product Segment [Line Items] | ||||
Insurance losses and contract holders' benefits | $ 883 | $ 854 | $ 1,737 | $ 1,707 |
Life Insurance Segment | ||||
Reinsurance for Insurance Companies, by Product Segment [Line Items] | ||||
Direct earned premiums | 81 | 77 | 158 | 151 |
Ceded earned premiums | (17) | (17) | (34) | (34) |
Earned premiums | 64 | 60 | 124 | 117 |
Direct contract holders' benefits incurred | 70 | 87 | 146 | 163 |
Ceded contract holders' benefits incurred | (8) | (27) | (21) | (38) |
Insurance losses and contract holders' benefits | $ 62 | $ 60 | $ 125 | $ 125 |
Income Taxes - Differences Between Statutory Income Tax Rate and Effective Income Tax Rate (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Tax at statutory rate | $ 56 | $ 44 | $ 45 | $ 141 |
Increase (decrease) resulting from: | ||||
Tax-exempt income from municipal bonds | (5) | (9) | (10) | (18) |
Dividend received exclusion | (5) | (9) | (8) | (17) |
Other | 1 | 2 | 1 | (3) |
Total provision for income taxes | $ 47 | $ 28 | $ 28 | $ 103 |
Tax at statutory rate | 21.00% | 35.00% | 21.00% | 35.00% |
Increase (decrease) resulting from: | ||||
Tax-exempt income from municipal bonds | (1.90%) | (7.00%) | (4.70%) | (4.50%) |
Dividend received exclusion | (1.50%) | (7.00%) | (3.70%) | (4.20%) |
Other | 0.20% | 0.90% | 0.50% | (0.80%) |
Provision for income taxes | 17.80% | 21.90% | 13.10% | 25.50% |
Income Taxes (Narrative) (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Tax at statutory rate, percentage | 21.00% | 35.00% | 21.00% | 35.00% |
Net Income Per Common Share - Calculations for Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Numerator: | ||||
Net income—basic and diluted | $ 217 | $ 100 | $ 186 | $ 301 |
Denominator: | ||||
Basic weighted-average common shares outstanding (in shares) | 163.2 | 164.3 | 163.6 | 164.4 |
Diluted weighted-average shares | 164.5 | 166.0 | 165.0 | 166.2 |
Earnings per share: | ||||
Basic (in USD per share) | $ 1.33 | $ 0.61 | $ 1.13 | $ 1.83 |
Diluted (in USD per share) | $ 1.32 | $ 0.60 | $ 1.12 | $ 1.81 |
Number of anti-dilutive stock-based awards (in shares) | 1.3 | 0.6 | 1.3 | 0.7 |
Stock Options | ||||
Denominator: | ||||
Effect of stock-based awards (in shares) | 0.8 | 1.0 | 0.9 | 1.1 |
Nonvested shares | ||||
Denominator: | ||||
Effect of stock-based awards (in shares) | 0.5 | 0.7 | 0.5 | 0.7 |
Employee Retirement Benefits - Components of Net Periodic Costs for Qualified and Supplemental Pension Plans (Detail) - Qualified Pension Plans [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 2 | $ 2 | $ 5 | $ 5 |
Interest cost | 3 | 4 | 6 | 7 |
Expected return on plan assets | (6) | (5) | (11) | (10) |
Amortization of actuarial loss and prior service cost | 1 | 0 | 1 | 1 |
Net periodic benefit cost | $ 0 | $ 1 | $ 1 | $ 3 |
Employee Retirement Benefits - Defined Contribution Plan (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Matching contributions to 401(k) and Top Hat plans | $ 4 | $ 3 | $ 10 | $ 9 |
Qualified Pension Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Pension contributions | $ 5 |
Segment Information - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
industry
| |
Segment Reporting [Abstract] | |
Number of Industries Operating In | industry | 2 |
Number of Reportable Segments | segment | 5 |
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