Steven J. Johnston
Chairman and Chief Executive Officer at Cincinnati Financial
Thank you, Dennis, and good morning. Thank you for joining us today to hear more about our results. Net income of $225 million for the first quarter of 2023, rebounded from a net loss position for the same quarter a year ago. As gains and losses from securities still held in our equity portfolio run through net income, we'll continue to experience these swings. Last year, we saw a reduction in portfolio fair value, and this year, we recognize a significant investment gain. We aren't concerned with these quarterly fluctuations in our equity portfolio. We believe the value will continue to grow over the long term. Currently, our equity portfolio holds $5.7 billion in appreciated value.
Non-GAAP operating income of $141 million for the quarter was down $119 million from a year ago, including catastrophe losses that were $163 million higher on an after-tax basis. Our 100.7% first quarter 2023 property casualty combined ratio was 10.8 percentage points higher than last year's first quarter driven by an increase of 11.0 points for catastrophe losses. Our first quarter 90.1% ex-cat accident year combined ratio was 0.8 percentage points worse than the same period a year ago but 0.1 points better than the full 2022 ex-cat accident year combined ratio of 90.2% that we reported at our last conference call. Despite the increase in catastrophe losses and the persistency of elevated inflation effects, we see several reasons to be confident about performance for the remainder of the year.
Pricing during the first quarter of this year was higher than the fourth quarter of last year for each major line of business. To help address inflation, we also make changes to factors that adjust premiums to account for rising property costs. On a current accident year basis, measured at March 31 before catastrophe losses, our 2023 consolidated property casualty loss and loss expense ratio improved from 2022 by 6.7 percentage points on a case-incurred basis, which includes a 1.6 point improvement on a paid basis. However, we increased the incurred but not reported, or IBNR component of the ratio by 9.2 points as we continue to recognize uncertainty regarding ultimate losses remaining prudent in our reserve estimates until longer-term loss cost trends become more clear.
We also earned a small underwriting profit on our commercial umbrella line for the quarter, another positive given recent quarter challenges we and the industry have experienced in various casualty lines of business. We're proud of our underwriters who are working with Cincinnati's appointed insurance agencies to overcome various challenges facing our industry. They continue to emphasize retention of profitable accounts, addressing the ones that we determine have inadequate pricing while also seeking profitable new business. While the first quarter of last year was a record high for new business at that time and created a difficult comparison for growth this year, we believe our associates' pricing and underwriting discipline was also a factor in our 14% reduction in commercial line's new business written premiums in the first quarter of this year.
Turning to net written premiums. The consolidated property casualty result rose 6% for the first quarter. That included a 10% increase in the first quarter renewal written premiums with a significant portion from higher levels of insured exposures as we factor in elevated inflation. Our commercial lines insurance segment had estimated average renewal price increases near the high end of the mid-single-digit range. Our excess and surplus lines insurance segment moved higher in the high single-digit range. And personal lines average renewal price increases were in the mid-single-digit range, including both auto and homeowner. As we previously disclosed, we expect premium rates will continue to rise for our personal auto line of business, reaching a full year 2023 premium rate increase of approximately 10%. I'll briefly highlight premium growth and profitability by insurance segment.
Commercial lines grew first quarter 2023 net written premiums 4%. Its combined ratio was 8.1 percentage points higher than a year ago, including 9.0 points from catastrophe losses. Personal lines grew net written premiums 20%, largely from planned expansion of Cincinnati Private Client business for high net worth clients of our agencies. Its combined ratio was 28.6 percentage points higher than a year ago, including 23.0 points from catastrophe losses. Excess and surplus lines had a combined ratio of 89.9% with net written premiums growing 10%. Its combined ratio was 4.0 percentage points higher than a year ago, including a 16.0 point increase in the IBNR component.
Both Cincinnati Re and Cincinnati Global had an impressive level of profitability for the first quarter of 2023. Cincinnati Re had a 79.6% combined ratio while net written premiums decreased by 9%. We benefited from the firm reinsurance market. Our pricing is stronger relative to the risk we assumed, and we tightened terms and conditions, while also exercising underwriting discipline. We reallocated capacity to participations where seeding companies selected higher loss retention levels and non-renewed certain quota share reinsurance treaties, where we had previously assumed risk on a retrocessional basis. Cincinnati Global's combined ratio was 87.5% with net written premium growing 25%.
Our life insurance subsidiary had another good quarter with net income up 12% from last year's first quarter in term life insurance earned premium growth of 4%. I'll conclude, as usual, with the value creation ratio, our primary measure of long-term financial performance. Our first quarter 2023 VCR was 3.1%. Net income before investment gains or losses contributed 1.3%, while favorable valuation of our investment portfolio added another 1.9%.
Now our Chief Financial Officer, Mike Sewell, will comment on other key factors of our financial performance.
