Q2 2020 Cincinnati Financial Corp Earnings Call

July 28, 2020

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Ladies and gentlemen, this is the operator today's conference is scheduled to begin and approximately two minutes.

Until that time your lunch will again be placed on musical. Thank you for your patience.

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Ladies and gentlemen, thank you for standing by and welcome to the Cincinnati Financial Corporation's second quarter 2020, <unk> earnings Conference call.

At this time all participant lines have been placed in a listen only mode.

Later, we will open the floor for your questions.

Who asked the question at that time simply press Star then the number one on your telephone keypad.

To withdraw your question that's dependent <unk>.

Lastly, if you shouldn't require operator assistance, please press star too.

Thank you. It's now my pleasure to turn the call over to Dennis Mcdaniel Investor Relations Officer to begin. Please go ahead Sir.

Hello. This is Dennis Mcdaniel at Cincinnati financial Thank you for joining us for our second quarter 2020, <unk> earnings Conference call.

Like yesterday, we issued a news release on our results along with our supplemental financial package, including our quarter end of investment portfolio to find copies of any of these documents. Please visit our investor Web sites, and then dot com slash investors.

The shortest route to the information is the quarterly results link in the navigation menu on the part of that.

On this call your first hear from Steve Johnston, Chairman, President and Chief Executive Officer, and then from Chief Financial Officer, Mike School. After their prepared remarks investors participating on the call me ask questions.

That time, some responses, maybe maybe by others in a room with us, including Chief Investment Officer, Marty Hollenbeck, and Cincinnati insurance is cheap insurance officer, Steve spray Chief claims officer, Marty Mullen, and senior Vice President Corporate Finance Theresa Hoffer.

First please note that some of the matters to be discussed today are forward looking.

These forward looking statements involve risks and uncertainties.

With respect to these risks and uncertainties, we direct your attention to our news release Android various filings with the FCC.

Also a reconciliation of non-GAAP measures was provided with the news.

Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP now I'll turn the call over to Steve.

Good morning, everyone and thank you for joining us today as we shared in or pre release, the second quarter was a challenging one but we also saw reasons for optimism.

That optimism stems from the proven track record of our agency centered strategy and our investment approach plus our ability to execute our plans.

Operating performance was satisfactory, considering how catastrophe effects for any given quarter can cause income variability.

Net income for the quarter more than doubled the same period, a year ago and it was nice to see the positive effects of a recovering stock market during the second quarter of 2020.

Well non-GAAP operating income was 60 month $69 million less than the second quarter, a year ago 79 million dollar after tax increase in catastrophe losses drove that change.

Our 103.1% property casualty combined ratio was 6.6 percentage points higher than a year ago with elevated catastrophe losses, representing 6.5 points of the increase.

The pandemic related losses and expenses, we reported increase the second quarter combined ratio by 4.6 points well several several other factors had the effect of improving that ratio.

The current accident year loss and loss expense ratio before catastrophe loss effects improved by 2.5 percentage points or the six month basis.

Importantly, we continued our steady approach aimed at adequately reserving for losses as Mike will further explain with his prepared remarks.

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Operating results continue to benefit from efforts to diversify risks by product line and geography, and also from ongoing segmentation of risks.

Our underwriters and agencies are working well together as in the past Susan to segment pricing on a policy by policy basis, improving pricing is needed.

When we determine profit margins our own satisfactory, we remain confident and declining new business or renewal opportunities.

Independent insurance agents, who represented our company are among the best in the industry and our excellent relationships with them helped us continue to grow profitably even in the midst of the pandemic.

Our consolidated property casualty net written premiums rose, 6% in the second quarter of Twentytwenty and we had good growth in each insurance segment.

The rate of growth is slower than the 10% we reported both for the first quarter of the year and full year 2019, reflecting the effects of the pandemic.

[noise] renewal pricing during the quarter was generally at higher levels than in the first quarter of this year and each insurance segment in the mid single digit percentage range for average price increases.

New business written premium volume was the main area, where pandemic effects were evident.

Well new business submissions from agencies for the first half of second quarter 2020 were down compared to last year submissions accelerated to more than a year ago. During the second half of the quarter.

For renewal business in our commercial lines segment second quarter Twentytwenty estimated average price increases were near the low end of the mid single digit percent range higher than first quarter pricing.

The combined ratio for commercial lines Rose 0.5 percentage points compared with the second quarter a year ago.

The ratio before catastrophe effects improved by 1.8 percentage points, while net written premium grew 3%.

A personalized segment also continued to experience average rate increases as indicated by renewal written premiums growing 6% for the quarter.

The combined ratio for personal lines was 13.4 percentage points higher than the second quarter, a year ago, driven by catastrophe losses that were 15.1 points higher.

Current accident year results for the personal lines segment continued to improve as planned.

Our excess and surplus line segment grew net written premiums by 17% during the second quarter of 2020, it's combined ratio rose by nearly 26 percentage points in reflected more prudent reserving as Mike will explain further.

We remain confident in our prospects for profitable growth in excess and surplus lines.

As previously reported both Cincinnati re in Cincinnati Global experience pandemic related losses that drove their combined ratios a few points over 100%.

In both grew net written premium at a double digit pace in a very disciplined fashion.

Our life insurance subsidiary had a good second quarter with net income up 50% from a year ago and non-GAAP operating income up 22%. It also grew term life insurance earned premiums by 9%.

I'll wrap up by highlighting the value creation ratio, our primary measure of long term financial performance.

Our VCR of 16.3% for the second quarter of 2020 reverse most of the negative result.

For the first quarter.

With improved valuation of our investment portfolio boosting our results 15.5 percentage points.

Despite short term variability investing in stocks remains an important part of our long term strategy to create value for shareholders.

Now our Chief Financial Officer, Mike School will highlight other significant aspects of our financial results.

Thank you, Steve and thanks to all of you for joining us today investment performance during the quarter provide a more reasons for confidence in our proven business strategy. The pandemic has not changed how we approach investment management and we believe that we'll continue to serve shareholders policyholders.

And others well over the long term.

Investment income continued its steady growth of 4% for the second quarter end first six months of 2020 matching the rate of growth for full year 2019.

Dividend income grew 6% for the second quarter.

For the first half of the year net purchases for the equity portfolio totaled $149 million.

Interest income from our bond portfolio grew 3% compared with the same quarter a year ago.

So the average yield was 4.11% down one basis point from the second quarter last year.

The average pretax yield for our total a purchase taxable and tax exempt bonds during the second quarter was 4.4%.

We also continued to add to the fixed maturity portfolio with net purchases during the first half of the year totaling $107 million.

Investment portfolio valuation changes for the second quarter of 2020 were favorable for both our bond and stock portfolios.

Much of the fair value decreases during the first quarter of the year in our stock portfolio recovered during the second quarter of 2020.

On an after tax basis, the second quarter fair value increase for the equity Securities still held was $825 million.

For our bond portfolio, the second quarter net increase in unrealized gains was $400 million.

We ended the quarter with total investment portfolio net appreciated in value of $4.3 billion, including nearly $3.6 billion and our equity portfolio.

Cash flow continues to be an important factor and growing investment income cash flow from operating activities was strong for the second quarter of 2020 and generated $447 million up 62% from a year ago.

Turning to expense management always one of our priorities, we understand the balance of strategic business investments and expense containment.

The second quarter 2020 property casualty underwriting expense ratio was 0.4 percentage points higher than last year's second quarter.

As we disclosed the drivers of that increase where the stay at home policyholder credit for personal auto policies and higher credit losses due to uncollectable premiums.

Partially offsetting those increases was lower spending for several items such as business travel.

We expect some of those expenses to return to a normal rate in the future quarters as governmental restrictions ease.

Next I'll comment on loss reserves, our approach is consistent and targets net amounts in the upper half of the Actuarially estimated range of net loss and loss expense reserves.

During the second quarter 2020, we experienced property casualty net favorable development on prior accident years.

The combined ratio effect of 3.3% for the quarter was very similar to the 3.5% annual average during 2018 through 2019.

On an all lines basis by accident year net reserve development for the first half of the year was favorable for the two most recent accident years was $60 million for 2019 and $35 million for 2018.

In aggregate accident years prior to 2018 were unfavorable by $15 million.

Every quarter, we consider new information such as paid losses, and estimate ultimate losses and loss expenses by accident year in line of business.

As we obtain and study new data during the year, we update estimates as needed.

An example of how our estimate for ultimate losses can change is how we increased reserves for older accident years, and our excess and surplus lines segment during the second quarter.

We provided several related details in our 10-Q and supplemental financial package.

It is important to understand that of the $13 million net change in second quarter prior accident year reserve development for that segment.

9 million was related to IB in our reserves.

Regarding capital management, we still believe that our financial strength is excellent and that we have plenty of financial flexibility.

I'll end my prepared remarks as usual with a summary of the second quarter contributions to book value per share. They represent the main drivers of our value accretion ratio.

Property casualty underwriting decreased booked value by 20 cents.

Life insurance operations added seven cents.

Investment income other than life insurance and reduced by Noninsurance items increased book value by 53 cents.

Net investment gains and losses for the fixed income portfolio increased book value per share by $2.49.

Net investment gains and losses for the equity portfolio increased book value by $5.25 and we declared 60 cents per share in dividends to shareholders.

The net effect was a book value increase of $7.54 during the second quarter $257 in 56 cents per share and now I'll turn the call back over to Steve.

Thanks, Mike.

The second quarter is often the challenge in one and this year second quarter was certainly no exception I applaud the efforts of our associates to stay focused on our insurance business, serving independent agents underwriting risks and paying claims, while creating and embracing new ways to do so safely effectively and.

Efficiently.

This focus on the execution of our proven strategy will continue to help us grow profitably overtime for the benefit of all stakeholders, while also creating shareholder value.

As a reminder, with my can meet today are Steve spray, Marty Mullen, and Marty Hollenbeck and Theresa Hoffer.

Maria Please open the call for questions.

Thank you very minor ladies and gentlemen, if you wish to ask a question. Please press Star then the number one on your telephone keypad.

If at any point. Your question has been answered. Your question is yourself from the Q that's the pelkey.

He's holes, we pull for questions.

Our first question comes from the line like same ski of credit Suisse.

Hey, good to everybody.

Good morning, Mike.

Good morning, No first question.

I think that we're all kind of curious whether you feel the underlying loss ratio, it's it's getting actual and actually any benefit from.

Coal bed in terms of potentially just less loss activity due to the you know.

Certain areas being shut down in courts, and justice less economic activity.

That's my first question.

I think you know we would have gotten some benefit during the second quarter I think as I mentioned the activity really did pick up a in the second half of the second quarter, but I also think a driver of the improve performance was just the hard work that was done by our associates in the agents in terms of.

The improved pricing improvement segmentation of risks.

You know inspection of properties in basically just executing our strategy.

Okay. So there could have been some benefit in depending how the economy shapes up.

The year progress is there it could it could remain a slight.

It is well is that fair.

That's fair will continue to monitor its hard to predict how things are going as we monitor activity and you know even look at it outside sources like the the a Google Motorola mobility data, which is public or it does seem that things are on the improvement, but we'll keep an eye on it I just thought.

I think that.

You know the most important thing is that we focus on our business focused on executing our strategy and just keep our entire associate.

Workforce and all the agents focused.

On not being distracted by outside things into really execute our proven strategy.

Okay understood.

Moving to the the reinsurance segment that was a when you preannounced. There was a you called it related or it's just interruption I think charges in there to dose. It did those policies have a buyer's exclusion.

Well the for the reinsurance Cincinnati re there they.

Had some pandemic related losses that we did reflect in our pre release day scoured their policies.

Looking for instances, where there would be affirmative coverage you know I think it.

You know resulted both from the property book today, right and from the <unk> professional liability booked at the right.

Oh, Okay actually up affirmative then would just being that theres that wouldn't be an exclusion. It's it's doable copper.

Hi related to two tickled that that would that means.

Yes, the it means that there would be and nothing in the policy language that would say that they're needed to be direct physical damage or lost a property.

Okay got it.

And my guess my last question, maybe I'll go back in the Q, It's just kind of on the on the on the broad pricing environment. It feels like.

In the small and medium sized business space, where or cincy focus is on it it feels like.

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There are certain competitors pushing for more rate than others do you feel there's a a big need for rate because we kind of look at how most firms are doing financially over the past couple of years State. You know you know your your results seem to being pretty.

Decent shape, obviously call that it's going to have a negative impact just I guess I'm trying to get out as you know I investors had been kind of.

Interested in the pricing contractually kind of moving more north and then that and originally expected I think it feels like it's due to cobot uncertainty yeah, if coated losses end up being manageable as I think many participants industry expect including like a your team is there.

Do you expect pricing to stay elevated or or could we see a.

You know the trajectory move downward.

From what we see the trajectory is moving upward.

As we mentioned our pricing on average is gone higher than it has been a in the second quarter and I think the key point with US as we continue to look at every policy one by one.

And we want to make sure that we get an adequate risk adjusted price.

Given everything that we bring to the table from our predictive models to our underwriting to our what claims brings to the table loss inspection.

We just want to make sure we understand the risks that we write that we price that next risk that we write adequately on a risk adjusted basis. It does seem that the average of that has been moving up and we would anticipate it continues to move up.

But we also focus on the distribution around that average a make sure that were properly segmenting. The book in looking at each policy on a one by one basis.

Okay. Thank you put the answers.

Thank you Mike.

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Our next question comes from like Paul Newsome of Piper Sandler.

Good morning.

Good morning, Paul [laughter], you Wonder if you can talk a little bit more detail about the components of gross I think I got the math right but.

It looks like there's two accounting.

Forces you price increases plus.

I would have economic impact was a little bit surprised with the growth because I I would've expected there.

A little bit more for an impact from the recession in companies doing business, but maybe you could just focus on what you see there.

As well as through the topline and how that's.

It would likely tumors in the future.

Sure I and I think it's a continuation of a comment ahead from the first quarter call is that.

And I'll be still in Steve sprays line here in he'll probably good chance to use it in a minute that our business model seems to be built for this kind of disruption with relationships that we have and.

The way I described it in the last call is if you think of the economy is like a pie.

That pie may shrink in times that we saw in the first half of the quarter. It made then start to grow as things rebound.

But I think based on our business model I think where the premium credit growth comes from is just the execution of our strategy and we feel a in all circumstances through the quarter, we were getting a little bit bigger piece of that pie.

Then we than we otherwise would because of our business model. The fact that all of our field Representatives claims representatives everybody out there in the field already worked from their homes in the communities with our great independent agents had their relationships in place and we were really able to.

React very quickly to agency needs.

It so we're really what's going on from the agent Count perspective, He became gimmick had any impact on you want foods to expand geographically.

You know we continue to to appoint agents, it's very interesting the way you can do things virtually now in.

Really I think we've capitalized on again in the field people really knowing their territories, they're responsible for understanding.

There.

Their whole territory with all the agents not just the ones that represent us they're able to make contacted to do things virtually and it's a big credit to Steve spray and Angie Delaney and the people out in the field that have really kept their focus because it's so easy with all this.

Distraction around us to lose focus and there's really been a tremendous emphasis throughout the company to keep everybody focused on on the business on the task at hand and not to be.

Distracted by everything.

Yeah.

Thank you I keep saying.

Thank you Paul you too.

Our next question that's from one of their shields KBW.

I remember at all.

Yeah.

Good how are you.

Well, Thanks, I was hoping to get a little more color on the sequential improvement in commercial casualty physically be asking your cat loss ratio.

You mentioned steep spray I think it just falls along with what Steve was saying earlier is just implementation and execution of a segmentation strategy that we've got across all lines of business, obviously nowhere package underwriter.

And I think the market if anything.

The market is giving us some runway, especially in the excess casualty area that that I would call that market excess umbrella.

Pretty hard market.

So we're seeking out opportunities there.

Underwriting pricing and so I just think it's again, it's basic blocking and tackling and.

Just execution by all associates working with our agents honor segmentation strategy.

Okay. So that means that there is no oh. This is my words substantial reliant on maybe depressed actual claim counts in in the quarter. It sounds like there are other factors that are driving that improvement.

I would say that's true, particularly for the commercial casualty.

Okay No that's very helpful. Thank you.

Second is basically an accounting question for things like the domestic business interruption defense and the credit score uncollectible premium.

The reason to those.

To continue in the third quarter.

The <unk> I'll tackle the reserve question and turned over the premium part to Mike and basically.

We just booked our best estimate of the ultimate expense.

As of June Thirtyth with the information that we have for for all the the claims through June Thirtyth. So it is our best estimate of the ultimate.

Expense number.

And then this is Mike as it relates to the premiums.

Yeah anything that's related to uncollectable premiums as we look at the aging.

The moratoriums is that cools off some states of might have continue some of that so we are watching.

The aging of that so we will evaluate that.

At the end of each quarter that we that we report out.

And so that will be adjusted accordingly.

That at that time.

In the past its been I'm very minor what we've had and so this is to little bit elevated, but we've shown you the numbers.

That we were that we've reported.

Okay. That's helpful. Thanks, so much.

You're welcome Thank you Mary.

Our next question comes from one of my swelling of RBC capital markets.

Yeah. Good morning couple of questions.

Maury My first I'm [noise].

I'm on the workers comp line of business, there was a pretty significant decline in premiums and I don't think that was entirely a surprise would you be alberta to kind of split that break that not decline in to sort of rate decreases volume decreases and premium.

Credits or something to just kind of give a flavor of maybe what some of the underlying pieces are so I'm sure. There's a lot going on in that number.

Well I think as to the key is there's a lot going on there and we can't say that the the rate changes continued in the the negative mid single digit range.

We had seen I think what makes it difficult I think we had.

Then executing underwriting discipline.

In segmenting the policies up until the pandemic in so we'd seen a decline in exposures and had debt.

Trend going it may have accelerated a little bit as we came into the pandemic, but I'm hard pressed to.

I'll give you a percentage breakout in that regard. It's just it's just awfully tough.

Well I mean, it that pricing is at least a little bit of can help.

Turning over to BNS line, there was a little bit of a reserve addition, bear again I think that's the since the third quarter in a row theres been at least a small addition.

Let's talk a little bit more detail about what you're seeing there and I mean, it's it's unusual for you guys have a reserve out for more than one quarter in a row. So three kind of bears some extra attention at least in my mind.

No. That's that's a good point mark doing a good question.

As I look at it if you go back to our 10-K and in.

The development happened on accident years 2016, and prior so if we look into in the K and and node on reserves.

For accident years 2011 through 2016, if we look at those years from the initial pick through year end 19.

They had developed favorably by $156 million.

In the first half of 2020, we've added back 11 million across those accident years. So you know one point is the initial picks are still you know where we are now versus the initial picks it we're still in a favorite <unk> favorable position. It's just that we did see a modest increase in the loss payments during this.

This this calendar year on those accident years versus what we expected and some of those.

Mature years. So we acted prudently is is we always try to do we increased our reserves by the 11 million.

You know so we're we're confident in.

The prospects of see issue, we're confident in our best estimate or the reserves that we booked here in the second quarter and in a while the accident year combined ratio, including catastrophe losses is higher.

This quarter it still run a 91.0 for the quarter and 89.4 for the full year. So that continues to be quite good, particularly you know in the N.S. World and we're getting now strong double digit or I'm, sorry, we're getting strong double digit premium growth.

Constantly increased rates and that's that's actually accelerated in the quarter. We're doing I think a good job managing limits in terms and conditions. So we're confident in in the prospects of the see issue in Es business, but we did see the need as as we will when we solve the the pay.

Payments in those accident years prior to 2017, a pick up more than what we would have expected during the first half of the year.

Oh, so that's very helpful color, that's definitely put the Fremont situation.

One more at one more question if I may.

No no second quarter is normally your highest quarter for catastrophe losses, but this quarter was even higher than a normal high corridor and I know there were.

Fair number of volume of of PCR sedans, you just talk about what you were seeing where you know whether they were geography user types of storms or maybe just provide a little bit more depth to the cat number to help understand that and what made it so much higher than kind of what it had been even in others had the second quarters.

Yeah, Let me just throw out a couple of numbers and then I think Marty will probably a one to give a little bit more color, but thinking about the second quarter of this year. There was about 20 cats.

We're in there compared to about 16.

Last year.

Two other cats were about this about the same size about 50 million a piece and those were both occurring right. There at the beginning of April and when when you look at the the states at those were in.

There is about 15 states were more.

For each of those and so you know for particular region. You know, it's gonna be across the board or the next largest was about 27 million and then we had the a civil unrest and of course that has you know what's a kind of across the country. So maybe Marty has got a little bit more information.

Mark or color you'd like to add sure. Thanks, Mike and Mike. This is Marty Mullen of course, the I just didn't they had a little bit more color on Mike's description, there mainly was minimal south east, Tennessee in Arkansas, <unk> hail events and the tornadic wins.

So it was really a weather events related to those two causes of loss a pretty proud of the fact that during his coven situation, we were able to respond with our cat teens and mobilize them to those areas and handle that within our cat a strategy of personal handling of those claims within the <unk>.

Course, the safety precautions that weren't work or given and taking care of.

It's it's I think it just an unusual that it was large hale.

I had some of the areas of our commercial footprint, which which we responded to and again I think we handle them considering the environment man and the amount of the claims that were submitted I think we responded in a standing fashion or receiving a lot of favorable comments from our agents in our policyholders.

Hopefully that provide some color or any other questions on that Mike.

Hi, I think that's a that's some good additional detail appreciate them.

[laughter].

Our next question comes from line as Mike Sandusky of Credit Suisse.

Hey, thanks for the follow ups.

I'll Oh asked some questions on business interruption.

Hi, guys. It since any changing any that terms and conditions to add a buyer is exclusion on a new business.

What we're continually looking at that at this point, we do not have plans to add the virus exclusion a we feel that our standard policy language is strong we feel confident in it our standard commercial property policies did not provide coverage for busy.

This interruption claims unless there is direct physical damage or lost a property and because the virus does not produce direct physical damage or loss or property. We believe strongly that no coverage exists for this peril and now a two judges one in Michigan and one in New York recently voice their agreement that viruses do not.

That's fine the direct physical damage requirement.

Okay understood ER and.

Some of the reinsurers.

I've been saying that they've been adding communicable disease exclusion curious if you had any reinsurance for new lately and and that language was was added.

Not that I'm aware of no our general property policies renew January onest.

Catastrophe and per excess.

Okay, that's what I thought and lastly.

Sometimes investors ask about one I'm since he is unique policy a advantages is that some clients. It's half for a three year term can you kind of remind us how to think about the through your term in the context out of how rate earn Jan.

Yes, Mike Steve spray.

Our three year policy provides first of all we think it's a it's a big advantage in the marketplace. We think it shows a you know our desire for long term relationships consistency stability.

It's always.

Moving to be an advantage for us our retentions at the first and second anniversary of a three year policy are about 10 points higher than when we actually have a renewal.

As far as how that the premium guarantee or excuse me the rate guarantee works is your property your general liability your crime your own marine coverages would have a brief guarantee now the premium could go up or down based on exposure, but the rates would be guaranteed obviously your auto your workers compensation your umbrella.

Those can be adjusted annually I believe.

With renewals and with those lines of business like I've got my number right here that about 75% of our premiums are subject to anniversary adjustment.

But.

The three year policy is it's a hallmark of Cincinnati and like I said, we think it's consistent with our with our value proposition for long term.

Sustained relationships.

Yeah, and just curious when do you think it has anything to deal with why you know I think your topline is held in better than expected. It maybe agents anecdotally are kinda gravitating. It's the consensus is pricing is going to go higher maybe.

Hi agents are are kind of gravitating more of that product or is it just more so you know some of your competitors might be a retrenching little bit you guys aren't.

I think it's I think it's a good question, it's probably a little bit of both I think agents and policyholders. Appreciate you know that contrary to popular believe policyholders don't like to go through the renewal process every year I think it helps them from an efficiency standpoint again it shows a long term commitment.

Both agents in the policyholders I think the.

With the rising pricing I think are all of our tools, we have today like Steve said.

Allow us to price each risk on a risk adjusted basis at levels that.

That we think are satisfactory for returning a profit and I can tell you the pricing metrics on or new business have continued to get better and better and I think a lot of that has to do with execution, but I also think the market is providing us a little bit of lift as well.

Okay, I understood and thanks again for the insights.

Yeah.

As a reminder, ladies and gentlemen, if you wish to ask a question simply press Star then the number one on your telephone keypad.

Our next question comes from line fill stephano after such a bank.

Yeah, Thanks, and good morning.

Though.

Just following up on a <unk> earlier question around the potential frequency benefit.

Commercial from the economic slowdown I guess, you know in my mind when her but it doesn't belabored the point, but that the frequency impact might be more notable in a short tail line versus the long tail wind I was hoping you could just.

He used to be you can parse out many of the commentary on the the duration of the business I'd appreciate that.

Okay feel good good question.

I'm not you know I'm sure I can't give a number answer to that <unk>.

But I do think just as with most things with a property.

Coverage in terms of that business activity and so forth you would know soon or it's a shorter tail then the longer tail casualty lines and I think all of that you know as we put out our best estimates for reserves and so forth is considered and there's always you know consideration when you do reserving between.

And.

You know some stability and responsiveness and so I think our actuaries have done a good job there and we've put together a quarter here with our best estimate on the reserves and I think you bring up a good point and asking about the property versus the casually.

Okay and so in response to another earlier question you talked about.

The blocking and tackling that you you have with the relationships with ages and how that's how helping to sustained production.

How can we think about this from a.

Are you taking up on larger share of new business or are the agent steering more renewables that your direction what are the moving parts Oh, how about that relationship benefit is manifesting.

Yeah, Phil Steve spread again, and again, it's a little bit a little bit of both I think what Steve said earlier really is what's happening is the fact that you know our business model is it's really good in good times, but I think it's proving to be a very resilient in effect.

In these difficult times as well and so the fact that we have fewer relationships.

But very deep.

The allows us to to manage that a little better. The fact that our field associates, who all have a 30 to make decisions regardless is there a for all of our disciplines.

Being local in the community having.

Fewer agencies to call on having close relationships I think it's creating we've got such great Trust with each other than I think its opening the dialogue and I think if if if theres an account that another carrier takes action on that that the agent doesn't necessarily feel is appropriate.

We are there.

They can get hold of us we're in the community where responsive or field associates are coming up with all different kinds of ways to to reach out to agencies be creative be present. So I think that's I think that's what's given us lift. So I think it has some some its new new we would call it near to the agency new.

Yes, I think we're getting opportunities on a on some other carriers renewals as well.

And Phil I would just I agree with everything Steve said would just add commentary as we move through the quarter and new business as you can see from our numbers versus other quarters was impacted but while the submissions from our agencies in the first half of the second quarter were down.

Well, we got into the second half of the second quarter, we actually saw more submissions coming in than we had in the second half of the second quarter a year ago.

You're not going to lead me to my last question I know it. It's early but is there any july read on how that submission activity has trended and you know I'm wondering if you know we've kind of pull back in some states now is as the shelter in place comes back into play has that put any.

And digital pressure on submission activity.

I haven't seen it <unk> <unk> and in fact, I really hesitate to comment on the on the third quarter, yet since so much as an influx still.

But I I haven't seen.

The pullback, but that's not to say that it wouldn't be there and there's a bit of a pipeline as his business comes in so I should really probably be pretty careful about column in it at all on the on the third quarter here.

No. It clearly it's unfair to ask your but I appreciate it.

Yeah.

Thanks, so much that'd be well.

Thank you you too.

Our next question comes from a lot of mayor Shields KBW.

Oh, thank them as fast as the first time around I apologize for forgetting it but given the overall trend of economy towards reopening can you give us some insight in terms of how.

Disruption claim filings anything here again domestically, how do trended over the course of the quarter.

You know, we don't comment a lot on the detail of.

The number of claims or the or the.

Sequence of <unk> of individual claims over the quarter there.

I would say they did trail off towards the.

You know as time went on.

Yeah, My or this is Marty Mullen, there's a comment I think what we're seeing some of the courts as a they're focusing on criminal prosecution and follow up because those and take priority because during the cold shutdown the courts, where an active so the criminal cases I think in most dockets are taking president precedent over there.

Well cases, not saying that they aren't seeing resuming attention, but I know, there's a lot of energy, but of course to <unk> to make sure that they can turn on the criminal prosecution suffers.

Okay. Thank you.

Our next question comes from line of Ron Bobman of capital returns.

Hi, John Hope, everyone is well sounds like it fun.

I was wondering it with all the stress in the world and particularly.

In in your markets are you seeing any reduction in claim settlement values.

I have not notice that Ron.

Okay. Thank you.

Thank you.

At this time there appears to be enough for the question I'd like to turn the floor back over to Mr. Johnson front end just closing remarks.

Thank you Maria and thanks to all of you for joining US today, we look forward to speaking with you again on our third quarter call have a great day.

Thank you ladies and gentlemen, this does conclude today's conference call. You may now disconnect have a wonderful day.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Cincinnati Financial Corporation's second quarter 2020, <unk> earnings Conference call.

This time, all participant lines have the placed into listen only mode.

Later, we will open the floor for your questions.

To ask a question at that time simply pest starts on the number one on your telephone keypad.

To withdraw your question that's the pelkey.

Lastly, if you shouldn't require operator assistance please press star.

Thank you, it's all my pleasure to turn the call over to data.

Investor Relations officer to begin please go ahead Sir.

Hello. This is Dennis Mcdaniel, what Cincinnati financial Thank you for joining us for a second quarter 20, <unk> earnings Conference call.

Like yesterday, we issued a news release on our results along with our supplemental financial package.

Putting our quarter on investment portfolio.

Hi copies of any of these documents.

After web sites, and then dot com slash investors.

Artist route to the information is the quarterly results like navigation menu on our luck.

On this call your first hear from Steve Johnston, Chairman, President and Chief Executive Officer, and then from Chief Financial Officer, Mike. So.

After their prepared remarks investors participating on the call me ask questions.

Time, some responses, maybe maybe by others and a room with us, including Chief investment Officer, Marty Hollenbeck.

Without insurance is cheap insurance officer, Steve Wright, Chief claims Officer, Marty Mullen, and senior Vice President Corporate Finance Theresa Hoffer.

First please note that some of them out as to be discussed today are forward looking.

These forward looking statements involve risks and uncertainties.

With respect to these risks and uncertainties, we direct your attention to our news release add to our various filings with the FCC.

Also a reconciliation of non-GAAP measures with provided with the news.

Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP now I'll turn the call over to Steve.

Good morning, everyone and thank you for joining us today as we shared at our pre release the second quarter was a challenging on but we also saw reasons for optimism.