UPDATE 1-Cincinnati Financial sees huge catastrophe losses in Q2

viernes 20 de junio de 2008 00:27 CEST
 

(Recasts, adds details, share movement)

June 19 (Reuters) - Property casualty insurer Cincinnati Financial Corp (CINF.O: Cotización) expects a 10-fold increase in catastrophe losses for the second quarter and said its investment income will be hurt by Fifth Third Bancorp's (FITB.O: Cotización) cut in quarterly dividend.

Cincinnati, which owns about 67.3 million shares in Fifth Third Bancorp, said its pre-tax dividend income will be reduced by $19.5 million in each of the next three quarters due to Fifth Third's dividend cut.

On June 18, Fifth Third slashed its quarterly dividend by 66 percent as it seeks to preserve capital to cope with mounting credit losses.

The company said it expects about $115 million in catastrophe losses in the second quarter, up from the $11 million it posted last year.

"Given that expected level of catastrophe losses, we would anticipate a full-year 2008 combined ratio above 100 percent," Chief Financial Officer Kenneth Stecher said in a statement.

Combined ratio is the percentage of premiums an insurer has to pay out in claims and expenses.

The company had earlier estimated a combined ratio of 96 percent to 98 percent.

Cincinnati Financial shares fell about 2 percent to $28.15 in trading after the bell. The shares had closed at $28.60 in regular session on Nasdaq Thursday. (Reporting by Amiteshwar Singh in Bangalore; Editing by Gopakumar Warrier)