By Michael Loney

April 30 - (The Insurer) - Cincinnati Financial reported net losses from the California wildfires of $449 million in the first quarter, with a $429 million recovery from its primary property catastrophe reinsurance treaty and a $38 million recovery from Cincinnati Re’s retro program.

In a 10-Q filing for the first quarter, Cincinnati Financial said that the $449 million of net wildfire losses included $325 million from personal lines, $104 million from Cincinnati Re and $20 million from Cincinnati Global.

The recovery from reinsurers on the company’s primary property catastrophe reinsurance treaty related to the California wildfires stood at $429 million based on loss estimates at the end of the quarter.

Recoveries of $38 million were estimated related to the California wildfires from Cincinnati Re’s reinsurance program, which provides retrocession coverage.

During the first quarter of 2025, Cincinnati Financial reinstated the applicable layers of its primary property catastrophe reinsurance treaty to provide coverage for catastrophic events. As a result, the treaty provides the same coverage that was effective on January 1, 2025.

The remaining coverage under Cincinnati Re’s program provides a total available limit of $41 million per occurrence in excess of $80 million as of March 31, 2025.

After markets closed on Monday, Cincinnati Financial reported a non-GAAP operating loss of $37 million for the first quarter, compared with operating income of $272 million in the same period of last year.

The $309 million decrease in operating income was primarily due to a $356 million increase in after-tax catastrophe losses.

The 113.3% P&C combined ratio was up 19.7 percentage points from 93.6% for the first quarter of last year.

Nasdaq-listed Cincinnati Financial’s share price closed up 2.9% on Tuesday, at $139.85.

On an investor call on Tuesday, Cincinnati Financial president and CEO Stephen Spray said: “Despite a bumpy first quarter, we remain optimistic about the future of Cincinnati Financial. We're focused on our long-term strategies and are not swayed by short-term volatility.

“Looking beyond the catastrophes that impacted our business this quarter, we continue to see steady improvement in key metrics we use to evaluate the core of our book.”

The current accident year combined ratio before cat losses improved by 0.6 points to 90.5%, from 91.1% in Q1 2024.

This included an unfavourable 1.4 points for the net effect of $52 million for reinsurance treaty reinstatement premiums related to the California wildfires.

“We were satisfied with premium growth for the quarter, even with the unfavourable effect of the reinstatement premiums for our property catastrophe reinsurance treaty,” said Spray.

Net written premiums increased 11% to $2.50 billion in the first quarter from $2.25 billion.

Also on the investor call, CFO Michael Sewell said that Cincinnati Financial has “probably paid about 65% of the gross claims” from the wildfires.

Spray noted that Cincinnati Financial had gone through about half of its property cat reinsurance tower for 2025 before the reinstatement.

When asked whether the wildfires had changed the outlook for personal lines, Spray said: “I would tell you there is dilution of enthusiasm for any of our lines of business countrywide. We've got a proven business model with our agency distribution. We've got the underwriting talent expertise. We've got pricing sophistication in the segmentation.

“You've probably heard me talk in the past about a once-in-a-lifetime opportunity in personal lines. We still think that exists.”