Q3 2020 Cincinnati Financial Corp Earnings Call
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Your conference is scheduled to begin in just a few minutes until that time your lines will once again be placed on hold thank you very much for your patience.
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Ladies and gentlemen, thank you for standing by and welcome to the Cincinnati Financial Corporation's third quarter 2020 earnings Conference call. At this time all participants are in a listen only mode. After the speakers presentation, there will be a question and answer session.
Ask a question during the session you'll need to press Star then one on your telephone. Please be advised that todays conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Dennis Mcdaniel Investor Relations Officer. Thank you. Please go ahead Sir.
Hello, This is Dennis Mcdaniel like second adding financial.
Thank you for joining us for our third quarter 2020 earnings conference call.
Yesterday, we issued a news release on our results along with our supplemental financial package, including our quarter end investment portfolio.
To find copies of any of these documents. Please visit our website Santander dot com slash investors the shortest route to the information as a quarterly results link.
In the navigation menu on the far left.
On this call your first hear from Chairman, President and Chief Executive Officer, Steve Johnston, and then from Chief Financial Officer, Mike. So.
After their prepared remarks investors participating on the call may ask questions.
At that time, some responses, maybe made by others that a room with us, including Chief investment Officer, Marty Hollenbeck, and Cincinnati insurance as Chief 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 in there he.
These forward looking statements involve certain risks and uncertainties.
With respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the FCC.
Also a reconciliation of non-GAAP measures was provided with the news release.
Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP.
Now I'll turn over the call to Steve.
Thank you Dennis good.
Good morning, everyone and thank you for joining US today, we continue to confidently execute our agency centered strategy bolstered by the steady improvement we see in our core book of business.
The third quarter was active in terms of weather events and developments in the litigation landscape of the pandemic related business interruption claims.
[noise] recently courts have granted some of our motions to dismiss based on lack of physical damage to property, while some others have been voluntarily dismissed by plaintiffs.
And the cases that have preceded passed initial motions. We continue to believe that business interruption coverage under our policy does not apply in that the courts ultimately should decide that economic loss alone without physical alteration of property does not trigger coverage under a property policy of insurance.
We're confident in our legal strategy given our understanding of the law in decisions and the majority of business interruption court cases rendered to date.
To the extent, we have set backs will continue to pursue the judicial process.
We remain focused on executing our long term plans net income for the third quarter of 2020 rose, 95% compared with the third quarter, a year ago, reflecting increases in the fair value of our equity security portfolio.
Non-GAAP operating income was down $116 million for the quarter with higher catastrophe losses, reducing it by $152 million more than last year on an after tax basis.
Our 103.6% property casualty combined ratio was 9.4 percentage points higher than a year ago with the elevated catastrophe losses, representing 13.0 points of the increase.
The current accident year loss and loss expense ratio before catastrophe losses continued to improve and was 3.1 percentage points better than last year on a nine month basis.
We see an ongoing benefit to our results from efforts to diversify risks by product line and geography, and likewise from segmentation of risks as we underwrite in price policies.
While economic effects of the pandemic and pricing discipline continue to slow our premium growth. We believe we are growing our business profitably in our relationships with the independent agents, who represent us remain very strong.
Consolidated property casualty net written premiums rose, 3% in the third quarter of 2020.
As a comparison growth was 6% in the second quarter and 10% for both the first quarter of the year and full year 2019.
We see indicators of good underwriting and pricing discipline.
[noise] renewal pricing during the third quarter continued to be ahead of our estimate for perspective loss cost trends for each property casualty segment with each one again experiencing mid single digit percent range estimated average price increases.
Average pricing was a little higher than in the second quarter for our largest lines of business commercial casualty in commercial property and those property policies renewing during the quarter averaged in the high single digit range.
New business written premium volume was again, a key factor, causing slower premium growth.
While overall submissions from agencies for us to quote premiums for policies during the third quarter were higher than last year for commercial risks, our underwriters decline submissions at a higher rate.
The combined ratio for our commercial lines segment was 9.0 percentage points higher than compared.
Compared with third quarter, a year ago, reflecting the 10.7 point increase in the catastrophe loss ratio.
Our personal line segment grew third quarter net written premiums by 5% and our high net worth business continues to progress as planned.
The combined ratio for personal lines was 1.1 percentage points higher than the third quarter, a year ago with underlying improve performance masked by catastrophe losses that were 15.8 points higher.
Our excess and surplus line segment returned to producing an underwriting profit with an 86.7% combined ratio and grew third quarter net written premiums by 8%.
As previously reported both Cincinnati re in Cincinnati global experienced significant catastrophe losses, and their combined ratios exceeded 100%.
Nearly 80% of their third quarter 2020, total catastrophe losses were from Hurricane Laura where our agency produced business had only $4 million of catastrophe losses.
Our life insurance subsidiary reported outstanding results with third quarter net income up 50% from last year and non-GAAP operating income up 31%.
It grew term life insurance earned premium by 4%.
My prepared remarks conclude with the value creation ratio our primary measure of long term financial performance our.
Our VCR was 6.3% for the third quarter of 2020, including 5.5 percentage points contributed by improved valuation of our investment portfolio.
That brought our VCR to three for 3.0% for the first nine months of this year.
Now, our Chief Financial Officer, Mike Sewell will comment on other important areas of our financial results.
Thank you, Steve and thanks to all of you for joining US today, our third quarter 2020 investment performance was good including investment income growing by 4% for both the quarter and on a nine month basis matching the rate of growth for full year 2019.
Dividend income rose, 10% for the third quarter.
For the first nine months of 2020 net purchases for the equity portfolio totaled $169 million.
Interest income from our bond portfolio grew 3% compared with the same quarter a year ago.
The pre tax average yield was 4.03% matching the third quarter of last year.
The average pretax yield for the total of purchase taxable and tax exempt bonds. During the third quarter was 3.42% we.
We continue to invest in the fixed maturity portfolio listen up purchases during the first nine months of the year totaling $236 million.
Investment portfolio valuation changes for the third quarter of 2020 were again favorable for both our bond and stock portfolios.
Overall, net gain was $645 million before tax effects, including $530 million for equity portfolio and a $115 million for our bond portfolio.
We ended the quarter with total investment portfolio net appreciated value of nearly $4.9 billion, including almost $4 billion and our equity portfolio.
Cash flow continues to help us grow investment income.
Cash flow from operating activities for the first nine months of 2020 was very good and generated $1.1 billion up 27% from a year ago.
Expense management remains a priority as we work to balance strategic business investments with expense controls.
The third quarter 2020 property casualty underwriting expense ratio was 1.6 percentage points lower than.
Last years third quarter.
The pandemic has caused lower spending for several items such as business travel.
We expect some of those expenses to return to a normal rate in future quarters as governmental restrictions these and.
In addition, catastrophe losses at levels closer to our historical average should cause agency profit sharing ratios to return to a more usual level.
Turning to loss reserves, our consistent approach aim for net amounts in the upper half of the Actuarially estimated range of net loss and loss expense reserves.
During the third quarter of 2020, we experienced property casualty net favorable development on prior accident years.
The combined ratio effect was 0.8% for the quarter were $11 million and was still favorable overall, but lower than a typical quarter.
Each quarter, we consider new information such as paid losses, and estimate ultimate losses and loss expenses by accident year and line of business.
As we obtain and study new data during the year, we update estimates is needed.
While most other major lines of business and our excess and surplus lines segment experienced favorable reserve development during the third quarter.
The updated estimates resulted in an unfavorable amount of $10 million for our commercial auto line of business.
While the ratio effect for the quarter was noticeable the total dollar amount was less than 2% of total outstanding reserves for the commercial auto.
The development was driven by large losses for accident years, 2018 and 16.
Because commercial auto case incurred losses for those periods were higher than we expected. We again took prudent action and kept I'd be in our reserves at a level that increased our estimated ultimate loss for those accident years.
On an all lines basis by accident year net reserve development for the first nine months of the year was favorable for the two most recent accident years was $71 million for 2019 and $42 million for 2018.
And aggregate accident years prior to 2018 were unfavorable by $22 million.
Capital Management is another important company function, we believe that our financial strength remains excellent, including plenty of financial flexibility.
As I always do I'll end my prepared remarks, with a summary of the third quarter contributions to book value per share. They represent the main drivers of our value creation ratio property casualty underwriting decreased book value by 25 cents life insurance operation.
<unk> increased book value 11 cents investment income other than life insurance and reduced by non insurance operations added 58 cents.
Net investment gains and losses for the fixed income portfolio increased book value per share by 57 cents.
Net investment gains and losses for the equity portfolio increased book value by $2.60.
And we declared 60 cents per share in dividends to shareholders. The net effect was a book value increase of $3.01 per share during the third quarter to a record high $60.57 per share.
And now I'll turn the call back over to Steve. Thank.
Thank you Mike.
While severe weather again challenged our results we see reasons for optimism the dedication demonstrated by our associates is one reason I'm optimistic while most of our headquarters associates continued to work from home. They are proving that they are equipped and motivated to continue providing outstanding service to agents and their client.
Yes.
Our associates have continued to move technology initiatives forward.
Through their efforts we earned two awards from Ivens Division of applied systems that were announced in September.
The Ivens digital insurer program recognizes carriers that are committed to supporting independent agents needs for digital connectivity using modern technologies.
We are one of only seven Gold award winners and personal lines and also a silver award winner and commercial lines.
Our field associates continue to work closely with agents. Each time, we are able to help our agents manage risk for their clients or make a policyholder hole. After a covered loss were inspired to refocus our efforts delivering outstanding empathetic service and building financial strength for the future.
As a reminder, with Mike and me today are Steve spray, Marty Mullen, and Marty Hollenbeck and Theresa Hoffer.
Jason Please open the call for questions.
As a reminder, in order to ask a question. We ask that you. Please press Star then the number one on your telephone keypad, we'll pause for just a moment to compile thank you and then last year.
Your first question comes from the line of cells to follow from Deutsche Bank. Your line is open.
Yeah, Thanks, and good morning.
Did you get a little more color on the drop off in favorable development for commercial lines.
As a a for example.
If I look at commercial auto.
5.5 points of adverse in the quarter.
But the underlying loss ratio improved you know something like 10 11 point.
How should we be thinking about the reconciliation of these two seemingly opposing trends.
Yes, Great question. This is a this is Mike.
You know when looking at our favorable development for the quarter overall.
Obviously, it was down to 0.8 points as I noted commercial auto.
Having really one of the larger effects have been adverse for $10 million and some of that is really from larger losses.
You indicated in some older accident years, and so as the case incurred there. What we did is we kept the IB NR up until we see the ultimate payments.
For those two.
So really play out so current accident years, improving it was really what we were seeing in 2018 and 16.
That was what was causing that so.
Well, we'll see how the rest of the year plays out.
If I think about overall reserve development for the last several years, we've been running I'll say, two and a half to five points of favorable development full year 2017 was 4.7 on a year to date basis right now we're at 2.1, so we're going to do.
Follow a consistent basis, let's wait and see what the fourth quarter has in store for us and follow our actuaries consistent approach okay.
Okay, and then maybe thinking more generally about underlying loss ratios can you remind us how you're contemplating rate versus trend and the current environment and to what extent.
Should we think about an underlying benefit coming through versus the the conservatism and the waiting for this business the season to make sure that the pricing was indeed, an excess of loss trend.
That's a that's a key point Phil.
Steve Johnston and we do feel is as we've mentioned that loss cost that the rates are ahead of our loss cost trends.
And we think we're seeing that as we've seen continued improvement in our.
Core book with our underlined.
Core accident year ex cat combined ratio improving by 6.2 points I believe.
I think the key point is it's difficult to precisely bifurcate the improvement that we've seen in the loss experience between this co that period and.
The actions that we've been taking over a number of years to improve that loss experience. There. They are kind of blended in there together and I think the key point is to look prospectively rate, making his perspective right now our actuaries are working on what the appropriate rate level should be fine.
Filed for effective dates in 2021.
And so they will be doing that on a state by state very granular state by state coverage by coverage basis, they will be looking at.
A number of quarters of past added to come up with their trends.
To come up with the rate. So we're confident that the key point is as we go forward.
That we continue to have our rates in the in in an adequate position and also in a position in which we can grow.
Just as we've had here the last several years we've been.
Growing faster than the industry with the combined ratio lower than the industry for eight or nine years in a row now and so the key is I think to look forward use the data that we have to understand that during this pandemic period.
There are some distortions in there and just make sure that we can hit the sweet spot with our rates next year that put us in a position to grow and grow profitably.
Got it Okay and then the last one I'll I'll.
Ill ask about and that.
The opening remarks kind of dug into this but theres this judgment and North Carolina that obviously broke against you.
How does it change the the posturing of your defense moving forward have you seen any claims start to get re filed now that we attend.
Potentially have a plaintive argument that that works against you.
How should we get comfortable with the potential exposure here.
From our seats any color you can provide will be truly appreciate it.
Sure. Good good question and we remain confident in our legal position.
Plan to appeal. The decision we continue to believe that the business interruption coverage under our our policy in this case does not apply because there was no structural alteration to property.
Failing view by courts around the country has been that economic loss alone Doesnt qualify is direct physical damage or loss to property, which is the trigger trigger for.
Business interruption coverage, so theres no change in in the legal strategy.
And also we havent seen any uptick.
Uptick to this point in claims being reported.
Okay, I've been watching Mike injunctions much more closely thank you guys and best of luck.
Thank you.
Your next question comes from the line of Paul Newsome from Piper Sandler Your line is open.
Good morning, that's on the quarter.
Morning, Paul I wanted to revisit the reserve issue just a little bit I think I heard you say that the reserves prior to two.
2018, all in.
In aggregate negative.
Could you that's a little bit different than what Youve. Historically reported can you talk about some of the trends back in that section and were there any kind of mass torts in their best interest or anything like that that would disagree with that.
I guess 2017 in prior.
Number.
Right. Paul This is this is Steve again.
It is.
It really was.
I think generated by some large losses in those prior accident years.
So we still you know as always feel confident in.
The reserve that we booked our estimate our best estimate that our reserves are in a good position as they've always been.
It's a little bit less than weve.
Seen in other quarters, we're still showing favorable development year to date at 2.1% and that's not that far out of the range of where we've been in.
Previous full years I think if we go back to 2014, we've had a couple of years, where we've been in the 2% to 2% range of favorable development. So.
I think one thing for the quarter just of note also when you compare to the third quarter a year ago is workers' comp, which is a big.
One of our bigger reserved lines it developed favorably third quarter, a year ago by 27% still a strong number at 9.6% this quarter, but you know thats.
In terms of the difference and dollars that that's a big difference between this year and last.
With that Bill no mass towards near just the big losses that would distort that two.
2017 prior okay.
Thank you.
Well to a two to identify that question and yes, it's no mass towards.
Great.
Any updates on some of these new businesses like the reinsurance business in the Lloyds of London business.
Our notable in the quarter.
Have you.
Increase impact as well.
Business units, yes, I mean, we're confident in both they're both growing nicely as you saw from the numbers in total about 26%.
Very confident in the underwriting we know theres going to be some volatility there in terms of results I think both on an inception to date basis, even through this really tough time for those lines of business. They are both that.
Breakeven or a little bit better than breakeven.
Both are looking for ways that they can.
Take advantage of affirming market too.
Right right new business and.
We feel good about about both of those businesses.
Okay. Thank you very much.
Thank you Paul.
Your next question comes from the line of Mike Zaremski from Credit Suisse. Your line is open.
[noise] once again. Your next question comes from the line of Mike Syrups skewed from out of its research. Your line is open. Thanks.
Thanks, so much.
A couple of follow ups on some of the previous questions. Now so clearly it's great underlying accident year loss ratio in <unk> and a lot of lines and so just want to kind of equally or should we be kind of.
Hey, you know assuming that there's been a kind of a somewhat of a distortions I think you said, it's a benefit from Kobe in terms of lower lower frequencies, especially in some of the the longer tail lines and just so so maybe we shouldn't run rate that or do you think that there's potential for.
Some of that to be.
You know sustainable may be at a lesser level in the near term just trying to just.
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Get a little bit more color given.
How how good it locked.
Yes, I think that this is Steve again, I I think that there was some benefit.
From the pandemic related slowdown that you would see is just we've also been working and Steve spray may want to talk about this a little bit more we've really been working hard to improve the core results that's been our mantra through this whole.
Covert period is that we want all of our people to not be distracted by everything thats out in the environment and to really focus on improving the core book of business and Steve can touch on some of those reasons. So we think that.
A lot of the improvement is is independent of what we've seen from the pandemic slow down it's just hard to.
Split those accurately into two pieces so going forward, we're confident that we can hit the.
Profitability targets and growth targets that weve coming.
Communicated to you over the long term and Steve you might want to comment on some of the specifics yeah sure Hi, Mike as Steve right difficult to bifurcate it.
But its continued execution that we're seeing out of both our field underwriters in the in our headquarters underwriters and segmenting the book.
By line of business and then by account and.
Just focused on getting.
The run rate on a risk adjusted basis account by account.
Getting more rate on those that that we feel give us less opportunity for making up or a profit and then really focusing on retaining that business that we feel gives us in a better shot at that margin. So it's it's.
It continues to evolve the underwriters continue to get better and better at execution working with our agents.
I think that's an advantage for us as well Mike is the fact that through something like this it almost 2000 of our associates.
Already work from their homes in the communities, where our agents are making decisions locally and we think that that contact that those deep relationships with fewer agents are going to help carry us forward to with growth and profitability.
Okay got it and then that this is helpful.
I understand its difficult. So then with this tie in a little bit to you. It seems like the tone in the 10-Q and and kind of on some of the growth metrics slowed down a little bit kind of we talked about.
You know, even though submissions were up you declined more so say you I feel I have you guys just trying to be a little bit more cautious now it seems like it was a little change in tone versus last quarter. When it felt like in playing a little bit more offense anything I should read into intended.
This quarter or is it is it just normal volatility.
Yeah, I think its normal volatility, but I would tell you. This we are still playing offense. We've got plenty of capital. We are out there looking to help our agents grow I think it goes back to your kind of your prior question to Mike is we just got such a better look into the book and we continue to evolve with these pricing sophistication pricing precision.
Tools that our underwriters, both field and headquarters or just are executing on discipline to walk away. So that's why the declination ratio would be higher theres. Many reasons why it an underwriter would.
Decline a risk it could be distressed from prior losses, they could do an inspection and find the promises to be unacceptable a lot of times, it's just terms and conditions and they'll get an indication of what the renewal pricing is going to be and just say that.
Like we were talking before that they just don't feel that they can make a risk adjusted return.
Risk by risk so we.
We think that that's creating some you know the market is kind of bouncing around its based on mix of business based on size of account, where where you will see more from pricing in the marketplace. So it's that's easier I think creating some volatility is a is a fair it was but it was stated.
Okay and.
Follow up on the on the North Carolina Appeals.
Process do you any color on it.
Just.
Peels process take many quarters or is this kind of something that could be could hear a resolution on in the <unk> in it you know.
For year end at any any color there.
Good question and I'm not a lawyer I think our notice of appeal is due here in the first part of November.
And into my understand is after that the court will establish a schedule for briefing and oral arguments and then we you know it's just uncertain after that we don't expect a decision.
By the North Carolina Court of Appeals.
Maybe until into early 2021, but thats, all like say I'm not a lawyer that's uncertain I'd say just the one thing that I would know is that you know, we'll we'll get our.
Notice of appeal and here in the first part of November.
Okay, Great and I guess last one last one I'm not can I haven't checked this yet any change on the on the paid to incurred a loss levels that maybe got got you guys to trend.
Trend wise that kind of cost you guys set to release, a little less than them or you still are largely already kind of taco enough on the call and giving up just disclosure on kind of what happened.
Yeah. That's a good question no I think that there there was not something that would be necessarily in the in the.
The paid to incurred ratios that that had to do with this the.
I do think it's more looking at some of the larger losses in the older accident years and.
Just being prudent in that regard.
Thank you very much.
Your next question comes from the line of their shields from KBW. Your line is open.
Thanks, I want to follow up I can on until the final question and that is in both personal and commercial auto we saw better year over year underlying loss ratio improvement in the third quarter than the second quarter and I think the general sense. We've had it that it was probably more driving.
In the third quarter, so, hoping and clarify whether you know what what drove that sequential improvement in the year over year improvement.
Yeah, that's a good point Marriott and we did see we follow the Google analytics in terms of the you know what they report in driving activity. That's public information and there was a you know an uptick in driving through the third quarter.
So thats what gives us some confidence that the actions that we're taking or are taking root and and also having a.
You know a good a good influence we just you know we don't want to be a.
Overconfident in that as we go forward and that's why we're being.
Maybe a little bit cautious or subdued in our comments.
No. That's fair was there any adjustment to the first half of the year in the auto lines in the third quarter loss ratio.
Well I don't have that number.
We usually look at prior year developments I'm not sure about any development from first and second quarter into third quarter.
Okay, and then a broader question or I guess more of a request obviously, there's a lot of interest in how the business interruption.
Plays out is there any way we could.
Get access to let's say the appeals of the other documents that you'll be filing just so we can see how that's playing out.
Oh that falls into may not be in a lawyer mayor I don't know I [laughter] about my lawyers old our lawyers or tell us, but I'm not sure I'm not sure where they get it I.
You've got me on that one.
Okay fair enough not a lawyer either thank you so much.
[noise]. Thank you once again.
Once again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Your next question comes from the line of Mark what we from RBC capital markets. Your line is open.
Yes, good morning.
I think a lot of people have been asking around the same question, let me let.
Let me try and a different way.
When I'm looking at the personal line segment the accident year margin from the second quarter to the third quarter improved by about 10 points.
Fiber that relates to the expense ratio, but what what are the factors in the other five points of improvement.
There is a similar one point improvement in the third quarter to second quarter comes.
Commercial combined ratio and again it expense ratio has little to do with it. So I'm just trying to reconcile those two points why was the third quarter better than the second quarter.
Yes, it's just a a mixture of things that it's just deferred difficult for us to separate them out we know that we got rate. We know that that was ahead of loss cost trend. We also know that you know even in the personal lines, we talk about our segmentation quite a bit in the commercial lines, but they've really been.
I'm working hard in the personal lines side as well we have a.
New rating company.
That we're deploying cash.
Well since nay casualty.
That takes our predictive modeling up to a new generation really focuses on.
You know.
Really trying to write to best risks.
Getting good growth in that new writing company. So I think the mix is helping in that in that regard, it's just difficult for us to enter.
In this environment too.
You know really precisely attribute.
The improvement to one point or another.
Were there any notable differences in things like non cat weather or anything like that.
Oh, the non cat weather was fairly stable you know and.
In fact, you know maybe a little bit less non cat weather.
In the third quarter.
Okay. So I guess that could have a little bit of a <unk> of a explanation.
Okay.
This is Steve spray as well just we for several quarters, we have been taking.
More stringent underwriting ask action in personal lines in specific states.
That's a we.
We think that that is culminating it's we've getting through those books and we think we're starting to see that kind of the fruits of that labor to.
Okay. That's helpful.
On commercial lines premiums.
You talked about you know.
Some of the submissions and new business I guess I would've thought that you're continuing to see a lot of you know premium.
Premium return as a result of economic conditions.
Cancellations people going out of business, whatever I guess I would've thought that you incurred most of the economic graph in the second quarter and that the third quarter.
We would have had certainly not a negative trend maybe not an improving trend, but it was a little bit contrary to expectations. There could you maybe help drill down a little bit on what was going on underneath the hood.
Hey, This is Mike let me, maybe I'll start with that and maybe just make a few comments about audit premiums and where that has gone and then if others want to.
Want to chime in but we've been generating.
During the third quarter about $3 million to $5 million per month, and audit premiums and that is down a little bit from previous quarters. If I look back at the second quarter. It was probably about four to 6 million.
So you per per month, so we're down.
Three three plus million or so.
Related to the audit premium so.
Our premiums are declining as we're auditing the the.
The policies.
During the as we're getting deeper into the pandemic period, the largest decreases in there were coming from the.
General liability lines, but we're also seeing decreases in the workers comp.
Area also.
N.S. audit premiums really has not been impacted so.
So far so we.
We do take a look out at 'em than we've got an accrual for future audits and we did decrease that a that accrual this quarter by 7 million.
Dollar so that you know.
That's affecting it at all so we have taken that accrual down 3 million during the second quarter. So in total $10 million with most of it coming in the <unk> in the third quarter.
So you know that.
Thats, where it is on audit premiums so let's see if others have other comments.
Well put Mike.
Okay. Your next time comes from the line Oh My apologies. Please go ahead.
Mark are you still on your next question.
Mr. Mr Dwelley and still on.
Oh, sorry, I thought I thought it was moved on [laughter] I [laughter].
The last question that I had that I had related to the Iowa losses, the duration losses.
I mean, we understand that was a large event is a fairly significant scope and I guess I wasn't surprised that there were losses, but a $100 million single event loss for you guys is sufficiently unusual that I guess I thought I'd ask the question in terms of to what degree is that tally you know primarily IBX.
Our or is it primarily all claims that are are well in the pipeline and are in the process of being resolved.
I would think there they are in the process of being resolved, but I think Marty Mullen that may have.
Some information on that but it's just that those were hurricane.
Type wins that went right through you know, Iowa and write up you know into Chicago right.
Right and that you know any company that writes in the Midwest, where we're going to have.
We're we're going to have exposure.
I think you know that we are doing a pretty good job of managing our exposure there but from time to time, we're going to have a loss of that magnitude here in the Midwest.
Yeah. Mark this is Marty had kind of an unusual event for us in the Midwest, a along with us hurricane winds not the actual.
Count for the claims was 37% for commercial lines and 62% personal lines on account. However, when you look at the last 84% of the incurred loss was commercialized. So I'll just hit us in an area about where are we had a commercial presence and the losses were of a nature, where they were a more severe than you might expect and.
And when asked for that type of win win loss I'm.
So I think we've got a great handle on that event losses have been inspected reserved and ultimate established as you saw in the release and I think that's one event that we can put behind us and move forward.
I appreciate the additional color. Thanks, that's all my questions.
Thank you Mark.
Or youre.
Your next question comes from the line of Mike surrender Ski from Credit Suisse. Your line is open.
Oh, Thanks, ER for the lobbying for follow up I'm, just one follow up on it.
It wouldnt be any other policy being up a appealed sorry to decision being appealed the North Carolina. No is it is it fair to say that.
That policy is similar to two a lot of the Cincinnati financial policies or is that one more you would you say kind of more unique in that and maybe an outlier.
Well I think you know given that we're filing an appeal and that.
You know were in litigation on this one.
I think you can understand I, just don't want to talk anything about the specifics on the advice of counsel to you know the the specific provisions of any of the policies.
Okay, Yes, I understood I, just they've got some questions I figured I'd try and ask okay. Thank you again for all the insights.
Thank you Mike.
There are no further questions at this time I turn the call back to Mr. Johnson for closing remarks.
Thank you Jason and thanks.
Thanks to all of you for joining US today, we look forward to speaking you with you again on our fourth quarter call have a great day.
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