Cincinnati Financial - Q1 2024
April 26, 2024
Transcript
Operator (participant)
Good day, and welcome to the Cincinnati Financial first quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.
Dennis McDaniel (VP of Investor Relations)
Hello, this is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our first quarter 2024 earnings conference call. Late 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 investor website, cinfin.com/investors. The shortest route to the information is the Quarterly Results link in the navigation menu on the far left. On this call, you'll first hear from Chairman and Chief Executive Officer, Steve Johnston, and then from Executive Vice President and Chief Financial Officer, Mike Sewell. After their prepared remarks, investors participating on the call may ask questions.
At that time, some responses may be made by others in the room with us, including President Steve Spray, Chief Investment Officer Steve Soloria, and Cincinnati Insurance's Chief Claims Officer, Marc Schambow, and Senior Vice President of Corporate Finance, Theresa Hoffer. First, please note that some of the matters to be discussed today are forward-looking. 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 SEC. 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.
Steve Johnston (Chairman and CEO)
Good morning, and thank you for joining us today to hear more about our results. In short, we are off to a great start. Our first quarter results reflect the success of our initiatives to continue balancing the profit and growth of our insurance operations, coupled with strong investment income. Net income of $755 million for the first quarter of 2024 included recognition of $484 million on an after-tax basis for the increase in fair value of equity securities still held, representing about three-quarters of the increase in net income. Strong operating results generated the rest of the increase. Non-GAAP operating income of $272 million for the first quarter nearly doubled last year's $141 million, including a decrease in catastrophe losses of $93 million on an after-tax basis.
The 93.6% first quarter 2024 property casualty combined ratio was 7.1 points better than the first quarter of last year, including a decrease of 6.9 points for catastrophe losses. While our combined ratio for accident year 2024 before catastrophe losses was a percentage point higher than accident year 2023 at three months, if we exclude Cincinnati Re and Cincinnati Global, the ratio improved by 1 point. Accident year 2024 also improved on a case incurred basis. However, we increased incurred but not reported, or IBNR reserves, as we continue to recognize uncertainty regarding ultimate losses and remain prudent in our reserve estimates until longer-term loss cost trends become more clear. We are also pleased with other measures indicating good momentum in our operating performance.
Another quarter of pricing segmentation by risk, plus average price increases, helped to improve our underwriting profitability, combining with careful risk selection and other efforts to address elevated inflation effects on incurred losses. Agencies representing Cincinnati Insurance, supported by our experienced and professional associates, produced another quarter of profitable business for us. Our underwriters continue to emphasize retaining profitable accounts and managing ones that we determine have inadequate pricing based on our risk selection and pricing expertise. Estimated average renewal price increases for the first quarter continued at a healthy pace, with commercial lines near the low end of a high single-digit percentage range, excess and surplus lines in the high single-digit range, personal auto in the low double-digit range, and homeowner in the high single-digit range.
Our consolidated property casualty net written premiums grew 11% for the quarter, with what we believe was a nice mix of new business and renewals. I'll briefly review operating performance by insurance segment, highlighting premium growth and improved profitability compared to a year ago. Commercial lines grew net written premiums 7% in the first quarter, with a 96.5% combined ratio that improved by 3.9 percentage points, including 4.2 points from lower catastrophe losses. Personal lines grew net written premiums 33%, including growth in middle market accounts, in addition to private client business for our agency's high net worth clients, Its combined ratio was a very profitable 93.9%, 18.6 percentage points better than last year, including 15.9 points from lower catastrophe losses.
Excess and surplus lines also produced a profitable combined ratio of 91.9%, rising 2 percentage points from the first quarter a year ago, along with net written premium growth of 7%. Both Cincinnati Re and Cincinnati Global continued to produce significant underwriting profit, reflecting our efforts to diversify risk and further improve income stability. Cincinnati Re's combined ratio for the first quarter of 2024 was an excellent 78.6%. That includes IBNR that we routinely carry for expected losses from reinsurance treaties. We believe our potential exposure for losses from the Baltimore bridge collapse is immaterial. Cincinnati Re's net written premiums decreased by 12% overall, driven by a shifting casualty portfolio mix in response to changing market conditions. Property and specialty premiums increased due to attractive opportunities in pricing. Cincinnati Global's combined ratio was also excellent at 69.8%.
They again reported strong growth, with net written premiums up 28%. Our life insurance subsidiary continued its strong performance, including first quarter 2024 net income of $19 million and operating income growth of 17%. Term life insurance earned premiums grew 2%. I'll conclude with our primary measure of long-term financial performance, the value creation ratio. Our first quarter 2024 VCR was a strong 5.9%. Net income before investment gains or losses for the quarter contributed 2.3%. Higher overall valuation of our investment portfolio and other items contributed 3.6%. Next, Chief Financial Officer Mike Sewell will add comments to highlight other parts of our financial performance.
Mike Sewell (EVP and CFO)
Thank you, Steve, and thanks for all of you for joining us today. Investment income growth continued at a strong pace, up 17% for the first quarter of 2024 compared with the first quarter of 2023. Dividend income was up 9% for the quarter, despite net equity security sales for the first three months of 2024 that totaled $40 million. Bond interest income grew 21% for the first quarter this year. We continued to add more fixed maturity securities to our investment portfolio, with net purchases totaling $374 million for the first three months of the year. The first quarter pre-tax average yield of 4.65% for the fixed maturity portfolio was up 40 basis points compared with last year.
The average pre-tax yield for the total of purchased taxable and tax-exempt bonds during the first quarter of 2024 was 5.79%. Valuation changes in aggregate for the first quarter of 2024 were favorable for our equity portfolio and unfavorable for our bond portfolio. Before tax effects, the net gain was $602 million for the equity portfolio, partially offset by a net loss of $65 million for the bond portfolio. At the end of the quarter, total investment portfolio net appreciated value was approximately $6.6 billion. The equity portfolio was in a net gain position of $7.2 billion, while the fixed maturity portfolio was in a net loss position of $625 million. Cash flow continued to benefit investment income in addition to higher bond yields.
Cash flow from operating activities for the first three months of 2024 was $353 million, up 41% from a year ago. Our expense management objectives include an appropriate balance between controlling expenses and making strategic investments in our business. The first quarter of 2024 property casualty underwriting expense ratio was 0.7 percentage points higher than last year, primarily related to higher levels of profit-sharing commissions for agencies. Regarding loss reserves, our approach remains consistent and aims for net amounts in the upper half of the actuarially estimated range of net loss and loss expense reserves. As we do each quarter, we consider new information, such as paid losses and case reserves. Then, we updated estimated ultimate losses and loss expenses by accident year and line of business.
For the first three months of 2024, our net addition to property casualty loss, loss expense reserves was $233 million, including $272 million for the IBNR portion. During the first quarter, we experienced $100 million of property casualty net favorable reserve development on prior accident years. That benefited the combined ratio by 5.0 percentage points, Almost every line of business had favorable development, except for commercial casualty, which was unfavorable by just $254,000. We added reserves to several older prior accident years and reduced reserves for the three most recent accident years.
On an all lines basis by accident year, net reserve development for the first three months of 2024 included favorable $184 million for 2023, favorable $24 million for 2022, and an unfavorable $108 million in aggregate for accident years prior to 2022. The unfavorable amount reflects our slowing the release of IBNR reserves for those older accident years. I'll conclude my comments with capital management highlights, another area where we have a consistent long-term approach. We paid $116 million in dividends to shareholders during the first quarter of 2024. We also repurchased 680,000 shares at an average price per share of $109.89. We think our financial flexibility and our financial strength are both in excellent shape.
Parent company cash and marketable securities at quarter end was nearly $5 billion. Debt to total capital continued to be under 10%, and our quarter end book value was a record high, $80.83 per share, with $12.7 billion of GAAP consolidated shareholders' equity, providing plenty of capacity for profitable growth of our insurance operations. Now, I'll turn the call back over to Steve.
Steve Johnston (Chairman and CEO)
Thank you, Mike. As we've previously announced, this is my last conference call as CEO. Effective at our annual meeting of shareholders next Saturday, President Steve Spray will add the role of Chief Executive Officer. As I've mentioned before, Steve is the right person to build on our decade of profitable growth. He understands the importance of our agency-centered strategy and the unique advantages it brings. I'm confident in his abilities to bring innovative ideas together with the hallmarks of Cincinnati Insurance to create opportunities for shareholders, agents, and associates. I look forward to continuing to work with him as chairman of the board. As a reminder, with Mike and me today are Steve Spray, Steve Soloria, Marc Schambow, and Theresa Hoffer. Raka, please open the call for questions.
Operator (participant)
Yes, sir. If you would like to ask a question, please press star then one. To remove yourself from queue, please press star then two. Our first question comes from Charlie Lederer with Citi. Please go ahead.
Charlie Lederer (VP and Research Analyst)
Hey, thanks. Good morning. You gave some helpful color on your loss picks, but curious, how should we think about your loss picks in Commercial Casualty? Have you made any changes to your view of loss trend, just given the trajectory of the current ex-year loss ratio? Are you baking in additional caution? Should we expect you to hold a bit more of a buffer near term, given uncertainty?
Steve Johnston (Chairman and CEO)
Yes, we feel confident, Charlie, with the loss pick that we have. We are reflecting uncertainty. There's a lot of good going on in the commercial casualty with rates, we feel, you know, exceeding our loss cost trends. However, you know, for a first quarter where there's additional uncertainty, we are recognizing that in our loss pick.
Charlie Lederer (VP and Research Analyst)
Got it. Thank you. Maybe in workers' comp, it looks like pricing took an incremental step down in your initial loss pick there, too. Is there anything in that pick, I guess, beyond pricing being down more? Or, I guess, are you seeing anything there?
Steve Johnston (Chairman and CEO)
No, we're just continuing to see the same trends that we have been seeing with, you know, rates under pressure there, but also strong performance, you know, historically from the line. We are, though, recognizing the uncertainty that it comes with the rate decreases with a little bit higher loss pick for the current year.
Charlie Lederer (VP and Research Analyst)
Okay. Thank you.
Steve Johnston (Chairman and CEO)
Thank you. Thank you.
Operator (participant)
Our next question comes from Mike Zaremski with BMO. Please go ahead.
Mike Zaremski (Managing Director and Senior Equity Research Analyst)
Hey, thanks. In the earnings release, you talked about the underlying loss ratio for commercial improving a point, but you said excluding Cincinnati Re and Global. Was there a reason you pointed that out? You know, why did, I'm not sure, I may have missed it, why did the Cincinnati Re and Global underlying loss ratio increase so much?
Steve Johnston (Chairman and CEO)
Yeah, I think the point of pointing this out is we have the three segments, Commercial Lines, Personal Lines, and Excess and Surplus Lines. To get to the consolidated, you also have to add the other portion, which includes Cincinnati Re and Cincinnati Global. So since the first three segments I mentioned had improvements, we pointed out those in the other segment. I will emphasize that things are going great for both Cincinnati Re and Cincinnati Global. I think one of the things that is, you know, as we mentioned, we don't think we have material exposure to the bridge collapse in Baltimore. We have been shaping the Cincinnati Re book in a very positive manner in terms of de-risking.
And so I think one of the things that caused the attritional to go up, if we compare it to the same quarter a year ago, is that the mix has shifted to a little bit more of a pro rata or proportional reinsurance, which would have less risk margin in it. It would have a higher attritional pick, but there would be less volatility there. And so I think that would be driving, you know, what we're seeing there in Cincinnati Re. Very strong, though, zero cats for the quarter, 10.4 points of favorable development versus 7.7 of adverse a year ago. I think the $14 million in favorable development that we show, about $13 million of it came from 2023.
With the full-year combined ratio of 2023 at 77.7, in this first quarter, it is strong 78.6. This hard work in reshaping the book has really paid off. The inception to date combined ratio at the end of the year 2022 was 101.2. With those two strong marks in the full-year of 2023 and the first quarter here now, in just over a year, our inception to date is at 94.5. So I think the action is paying off, and it does show a higher pick in the current accident year, but I think it's a less risky portfolio at this point. I think the same thing for, you know, Cincinnati.
Well, go if you want to talk a little bit more about Cincinnati Re. For Cincinnati Global, same thing, you know, strong 69.8. They have had three consecutive years now as a top quartile Lloyd's underwriter, and while they've done that, they've been diversifying in terms of their footprint by product line, by geography, and they're also providing an additional avenue for access to Lloyd's for the agents that are appointed by CIC. So a lot of positives at CGU, reflected with strong results. And again, you know, it's pretty tough at Lloyd's to be top quartile three years in a row, the way they've done.
Also, this quarter, zero cats versus 11.1 a year ago, and then the reserve development is favorable by 25.6 points this year versus adverse by 3.2 a year ago. So I think in both of those businesses, there's a ton of positive going on, and we've only pointed it out, you know, so that the math would be easier, as you saw the consolidated CLD, Commercial Lines Department, the personal lines, and the excess and surplus, and then to add the other portion to get to the consolidated.
Mike Zaremski (Managing Director and Senior Equity Research Analyst)
Okay, that's helpful color. And I guess, would you then say, because of some of the business mix shift in Cincinnati Re, then we should be thinking about the underlying loss ratio structurally being maybe a little bit higher, but then, you know, but less potential volatility around the overall combined ratio?
Steve Johnston (Chairman and CEO)
That's correct.
Mike Zaremski (Managing Director and Senior Equity Research Analyst)
Okay. Did I interject? Did you guys want to keep, say something else, or I'll move on to the, my follow-up?
Steve Johnston (Chairman and CEO)
No, please, please move on to the follow-up.
Mike Zaremski (Managing Director and Senior Equity Research Analyst)
Okay, thanks. So just, you know, thinking about going commercial lines X reinsurance in global. You know, you've been along this path of taking action to add, you know, I guess, reserves or just conservatism into your picks, given the inflationary environment, which you're, you know, clearly is persisting a bit. If I look at, like, overall top-line growth, and maybe I'll, You know, you can talk about the whole segment, but I'll just focus on commercial casualty, because that's been, you know, one of the areas where inflation's been, you know, higher than expected.
You know, if I look at just overall top-line growth, net premiums written growth, you know, it's still not at, you know, I think your historical levels relative to the industry, but it has been ticking up a bit. You know, so given you're still, you know, in an environment where you seem to be kind of adding more IBNR, are you getting to a point, is pricing at a level, or is, you know, the environment there where you want to start playing more offense, or are we still kind of in the, you know, it's best to be cautious in terms of your top-line growth?
Steve Johnston (Chairman and CEO)
So yeah, I think that we can balance the two. I think we feel good about our growth, you know, double digit overall at 11%. Really strong growth in Personal Lines. Excuse me. And with each of our lines, we write it on a package basis for Commercial Lines. And so there's gonna be a little bit of variance, you know, between the different lines. But we think we are in a good place with our pricing. But we realize that, you know, you need to stick to adequate rate pricing, and you can't fall into a trap where if others are underpricing business, that you follow that pack.
So we're gonna maintain the discipline, charge the adequate rate on a risk-by-risk basis, and we think that offers us plenty of opportunity to grow the company.
Mike Zaremski (Managing Director and Senior Equity Research Analyst)
And one quick follow-up, and I might have asked this in the past, but, you know, within your Commercial Casualty, you know, the U.S., non-global and reinsurance portfolio, I believe, you know, you might think about things between small, very small commercial versus mid versus large, or maybe I'm incorrect. But just curious if, now that you've had more time to reflect on results, does the inflationary issues you have brought up have they been emanating from any certain parts of the business mix other than just the high level?
Steve Johnston (Chairman and CEO)
Yeah. I think, I think we're doing a good job of pricing adequately in all, in all those areas. I do think, and I've pointed out on the calls before, you really do have to pay close attention to the higher levels because there's a leveraged effect of inflation. You know, with every layer that you go up for a constant ground-up inflation rate, there'll be more or higher inflation with each layer as you go up because of the layer below inflating into the higher layer. But we've been on this for some time. We've, we've got some really talented actuaries that are working with our larger risks, and we, we felt we were addressing it early on from the beginning, and that we're in a good position across the board.
Mike Zaremski (Managing Director and Senior Equity Research Analyst)
Thanks for the color.
Steve Johnston (Chairman and CEO)
Thank you.
Steve Spray (President)
Thank you. Our next question comes from Michael Phillips with Oppenheimer. Please go ahead.
Michael Phillips (Managing Director and Insurance Analyst)
Thanks. Good morning. Turn to personal auto. Your comments, Steve, in the beginning, were pretty similar in terms of pricing from, from last quarter. You had a bit of an uptick back in the, in the loss ratio there. I guess, can you remind us where you expect this year to kind of pan out in terms of, just the, the profitability of personal auto, and, when you think your pricing will, maybe peak and start to come back down? It looks like, you know, I know you don't give it, but, you know, you're, you're probably still above 100% combined ratio there. So when do you expect kind of profitability personal auto?
Steve Johnston (Chairman and CEO)
I think we're in a good position, personal lines across the board. It is sold a lot on a package, you know, in a package position. The first quarter was, you know, for a current accident year, was actually down a little bit from first quarter a year ago, and pretty, you know, flat with the full-year. So we feel good about the pricing that we've been able to get in auto, home, and in the other lines. And, you know, we think it will reap benefits. I think Steve's got a little to add on.
Steve Spray (President)
Yeah, thanks for the question, Mike. You know, I think one of the, one of the strengths that we have going, it's, and it's been a plan we've been executing on, continue to work on for the last several years, so it's nothing new. But I think it, it's adding value to the company and to our agents, is that we've become a premium or a premier writer for our agents, both in the middle market space and in the high net worth. And that gives us both product diversification as well as geographic diversification. Our high net worth, while we write it everywhere, tends to be maybe a little more focused in certain geographies. High net worth or private client is heavier on the property side.
And then on the middle market, we get geographic diversification, as that book is primarily, I'll call it, a Midwestern, Southeastern part of the U.S. book of business, and it's heavier in auto. So we're getting, one, being that much more important to each of our agents, being able to attract more of their business, but at the same time, get the diversification both geographically and by line of business.
Steve Johnston (Chairman and CEO)
Yeah, I think, too, just the history of personal lines in general, you know, with, you know, the sub-95 combined this year. Last year, we were over, just a touch over 100, and then it was, what? The four prior years to 2023, we were under 100. So we've really, you know, we've, I think we've demonstrated a history of being able to price personal lines pretty darn well across the spectrum, as Steve mentions.
Steve Spray (President)
I might add, we've got our, you know, we've got the E&S capability that we can provide solutions for our agents and their clients, and that's now active in nine states. So we just feel really good about all personal lines, the growth there, the momentum that we have. So, you know, feel very bullish on personal lines.
Michael Phillips (Managing Director and Insurance Analyst)
Okay, thank you. Next one is just back on the Commercial Lines, and this is kind of a number-specific question, so if it requires a follow-up, I'm happy to do so. But, if I look at your reported claim counts that you give in your statutory data for other liability, it's down significantly for 2023 Accident Year. I mean, more so than the 2020 Accident Year COVID-related. You know, so I don't know if there's a data thing there or not, but your reported claim counts at 12 months are, you know, 15% down in other liability. I don't know if that's something that you've seen or expect, or can you comment on that?
Again, paid losses aren't, but the reported claim counts for GL, I, other liability are down significantly at age 12.
Steve Johnston (Chairman and CEO)
Yeah, they are, and I think that's very helpful in terms of the way we're underwriting the book. It is a severity issue that we're seeing there.
Michael Phillips (Managing Director and Insurance Analyst)
So you recognize the frequency is down significantly then for other liabilities, Steve?
Steve Johnston (Chairman and CEO)
Yes, we do.
Michael Phillips (Managing Director and Insurance Analyst)
Okay. All right. Thank you.
Operator (participant)
Our next question today comes from Gregory Peters at Raymond James. Please go ahead.
Gregory Peters (Managing Director)
Good morning, everyone. So the first question I'll focus on is just growth in the commercial lines business, because it seems like you're, you know, when you look at the stats from a new business production, you're having a lot of success there. And I was wondering if you could give us some sense on how your quote-to-bind ratio is working, or give us some parameters to think about it, because, you know, I guess, given the results, we'd expect, you know, some increased competition at some point, and it doesn't seem to necessarily be reflecting in your numbers, so.
Steve Spray (President)
Yeah. Thanks for the question, Greg. Steve Spray. If you recall last year, throughout 2023, especially starting the year, our new commercial lines business was under pressure, really for that first six months, and we were down quite a bit on the same over 2022. We were really executing on underwriting terms and conditions, pricing discipline through that first six months. We stuck to our guns. I think some others maybe just had a little different view of the risk, and our new business was under pressure. On the back half of 2023, we continued to see our new business improve, and we stuck to our guns as well. We stayed disciplined in the pricing, the underwriting terms and conditions. Back half of 2023, new business really picked up.
That is obviously, that trend has obviously continued into 2024. The beauty of it is that, you know, like Steve said, we're a package underwriter. We look at every single risk on its own merits, and we have the tools to price the business with predictive analytics for each major line of business, look at it by line of business, and then for the total account. So, you know, I see runway still for new business and commercial lines in 2024, but like Steve said, the key is that we stay disciplined with our underwriting and our pricing and earn the business, not buy it.
Gregory Peters (Managing Director)
Yeah, that makes sense. So another topic that's come up that you guys have talked about is the concept of a multiyear policy that I know you guys use in certain lines of business. Can you give us an update on, you know, where you are with, you know, the three-year policies, you know, where which lines of business, and has it increased as a percentage of your total book, etc?
Steve Spray (President)
I mean, you may have to follow up on that, which percentage has increased, Greg, but yeah, just the three-year policy in general. You know, it's a differentiator for us. It's something that we have, been very committed to for many years and, and remain committed today. I think it's even better that we write three-year policies today because we have the sophisticated segmented pricing that we do. So our underwriters, when they quote a three, whether it be new or renewal, just as a reminder, even though we have a three-year package policy, about 75% of the premium that we have in commercial lines is adjusted on an annual basis. So it'd be those accounts that, you know, are coming off of a three-year, they're actually renewing. Our commercial auto, our commercial umbrella, and then workers' compensation are all adjusted annually.
It's really just the property, the general liability, crime, and the marine, where that rate is guaranteed. I will tell you this, too. Our three year policy, on a loss ratio standpoint, from a loss ratio standpoint, outperforms our one year policy. So our underwriters are executing with our agents on the, not only the science of underwriting, but the art, and intuitively, they are, picking our best business, our best priced business to put on a three year package, and the results show that. So we're committed to it. Our retentions are much better on a three year policy and, you know, in the middle of that three year policy, so I think that helps, agents' retentions, it helps ours, it's an expense. You know, it certainly helps on the expense side.
Then I think most importantly, it shows our agents and it shows our policyholders that we're a company that, you know, is looking for long-term relationships. We're committed to the three year, and we think it gives us an advantage in the marketplace.
Gregory Peters (Managing Director)
Yeah, the percentage question, just that I feel like this would be the time to be using more of that in this market, considering the market conditions. And so I was just curious if it's, you know, from a commercial standpoint. We can take it offline, but that's where I was thinking, what I was thinking about when I was asking for percentages.
Steve Spray (President)
Yeah, okay. No, I got it. That makes total sense, Greg. Yeah, wherever we feel like we can get the adequate price on an account, we are wanting to use our three year package policy.
Gregory Peters (Managing Director)
Got it. Thanks for the answers.
Steve Spray (President)
Thank you.
Operator (participant)
Our next question comes from Grace Carter at Bank of America. Please go ahead.
Grace Carter (VP of Equity Research)
Hi, everyone.
Steve Spray (President)
Hi, Grace.
Grace Carter (VP of Equity Research)
Looking at the commercial casualty core loss ratio, just given that it's a bit higher than it ran in the latter part of last year, as well as the commentary on increased IBNR. I was just curious if that's primarily driven by GL or excess casualty, or if it's a mix of both this quarter. And I was just curious if there's if y'all could comment on how you're thinking about rate adequacy across both of those pieces of the book.
Steve Johnston (Chairman and CEO)
You know, I think it's kind of across the board, Grace. I do think that, you know, that higher PIC is something that we would do in a first quarter. Typically, we have run the first quarter a little bit higher than the full-year prior, just due to the newness of the accident year. But we feel very good. We feel very good about the way that we are pricing the GL and really across the spectrum there, including Umbrella.
Grace Carter (VP of Equity Research)
Thank you. I guess on the Commercial Auto side, it looks like growth picked up a little bit this quarter. I was just wondering if that indicates that maybe y'all are starting to add some additional units rather than just top-line growth being primarily driven by rate. Just kind of curious on how y'all are thinking about potential growth in that environment, just given that it has been such a challenging line for the industry for so long.
Steve Spray (President)
Yeah. Thanks for the question, Grace. Again, Steve Spray. It's a little bit of both. Candidly, it's, we're still getting rate through that commercial book, and we are growing the new business. Again, we're a package writer, so we don't write monoline auto. That auto would come along with the rest of the package. You know, again, feel really good about the pricing that we have in commercial auto and our direction there. If you recall back, I think it was back to 2016, 2017, when we really undertook some real tough action on our commercial auto book, both in risk selection and then primarily in pricing, and really had commercial auto in a good place.
Inflation came along and we had to, we obviously had to, work with that, but feel really good about where that commercial auto book is, both from a pricing and risk selection, and we're looking to grow that book as well, along with our package business. Again, risk by risk and adequate pricing.
Grace Carter (VP of Equity Research)
Thank you.
Steve Spray (President)
Thank you, Grace.
Steve Johnston (Chairman and CEO)
Thank you, Grace.
Operator (participant)
Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then one. Our next question comes from Meyer Shields with KBW. Please go ahead.
Meyer Shields (Managing Director)
Great, thanks so much. To go back to the Cincinnati Global, and reinsurance side of things, I just, I'm not sure I understand. When you talk about lower volatility, is that a function of less seasonality or less, catastrophic exposure?
Steve Johnston (Chairman and CEO)
It would be less catastrophic exposure.
Meyer Shields (Managing Director)
Okay, perfect. Second question, sort of related. Can you talk about what you're seeing in terms of the year-over-year, I guess, trend or the observed claim inflation rate for commercial property? Is that decelerating at all compared to last year?
Steve Johnston (Chairman and CEO)
You know, it's. I think we still see inflation. We look at so much on a risk-by-risk basis that, you know, I don't know that I have a good number for you across the board on what we're seeing in with inflation. And it's been a sticky thing, and the inflation rates on insurance-related items, you know, building materials and wages and so forth, have been higher than the general CPI. So we take, you know, a cautious view, but certainly the rate of the increase or the second derivative has been slowing down.
Meyer Shields (Managing Director)
Okay, perfect. That's very helpful. Steve, congratulations, and thanks for everything.
Steve Johnston (Chairman and CEO)
Well, thank you, Meyer. It's been, it's been great.
Operator (participant)
Thank you. This concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.
Steve Johnston (Chairman and CEO)
Okay, thank you to everyone for their excellent questions, and thank you for joining us today. We hope to see some of you at our shareholder meeting next Saturday, May the fourth, at the Cincinnati Financial headquarters office here. You're welcome to listen to our webcast of the meeting, also available at cinfin.com/investors. Steve and Mike look forward to speaking with you again on our second quarter call.
Operator (participant)
Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.