Zacks

Cincinnati Financial vs. CNA Financial: Which Scores Higher?

  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
  • Cincinnati Financial vs. CNA Financial: Which Scores Higher?
Zacks Equity Research
Updated

In This Article:

The insurance industry seems well placed at present. Favorable factors like benign catastrophe environment, improving rate environment and economic progression boost insurers for growth.

Underwriting results, the major indicator of profitability for any insurer, are expected to improve on the back of a benign catastrophe environment. Due to a string of cat events such as the unprecedented hurricane activity and the California wildfires, the year 2017 emerged costliest in terms of catastrophe loss, weighing on the underwriting profitability.

As a result of devastating nature’s fury, insurers braved price hikes that had remained flat for quite a while.  

Within the insurance space, the property and casualty insurers are among the major beneficiaries of an improving rate environment. The Fed had promised to make three interest rate raises in 2018 and 2019, reflects the regulatory body’s confidence in the bettering U.S. economy. Last year, the Fed had implemented three rate hikes with the metric being now pegged at 1.5%.

An increased rate is expected to positively impact the net investment income, a major component of an insurer’s top line. A broader invested asset base and alternative asset classes are other upsides.

Also, President Donald Trump’s tax reform policy, an overhaul of tax code after 31 years, lowers the corporate tax burden. Notably, the tax rate lowered to 20% from 35% will likely act add an impetus to the industry players.

Though the Property and Casualty Insurance industry is ranked at #138 (lies at the bottom half of the Zacks Industry Rank for 252 plus industries), it has outperformed the S&P 500 index’s gain of 2.4% year to date, registering a 2.8% rise.



Here we focus on two property and casualty insurers. While CNA Financial Corp. CNA offers commercial P&C insurance products, mainly across the United States, Cincinnati Financial Corp. CINF markets property and casualty insurance as its main business. While CNA Financial has a market capitalization of $14.2 billion, Cincinnati Financial’s metric records $12.4 billion.

Both stocks carry a Zacks Rank #3 (Hold). It will be interesting to note which scores better in terms of fundamentals.

Two better-ranked stocks from the same industry are Alleghany Corp. Y and American Financial Group, Inc. AFG, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1Rank stocks here.

Price Performance

CNA Financial has outpaced the industry with its shares rallying 20.3% in a year’s time while Cincinnati Financial has lagged the same with shares having gained only 4.1%. Here, CNA Financial emerges a clear winner.

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