Cincinnati Financial Corporation

07/28/2025 | Press release | Distributed by Public on 07/28/2025 14:19

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion highlights significant factors influencing the condensed consolidated results of operations and financial position of Cincinnati Financial Corporation. It should be read in conjunction with the consolidated financial statements and related notes included in our 2024 Annual Report on Form 10-K. Unless otherwise noted, the industry data is prepared by A.M. Best Co., a leading insurance industry statistical, analytical and financial strength rating organization. Information from A.M. Best is presented on a statutory basis for insurance company regulation in the United States of America. When we provide our results on a comparable statutory basis, we label it as such; all other company data is presented in accordance with accounting principles generally accepted in the United States of America (GAAP).
We present per share data on a diluted basis unless otherwise noted, adjusting those amounts for all stock splits and dividends. Dollar amounts are rounded to millions; calculations of percent changes are based on dollar amounts rounded to the nearest million. Certain percentage changes are identified as not meaningful (nm).
SAFE HARBOR STATEMENT
Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by forward-looking statements. Any forward-looking statements contained herein, are based upon our current estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words like "seek," "expect," "will," "should," "could," "might," "anticipate," "believe," "estimate," "intend," "likely," "future," or other similar expressions. Forward-looking statements speak only as of the date they were made; we assume no obligation to update such statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include, but are not limited to:
Insurance-Related Risks
•Risks and uncertainties associated with our loss reserves or actual claim costs exceeding reserves
•Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance
•Unusually high levels of catastrophe losses due to risk concentrations or changes in weather patterns, environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes; and our ability to manage catastrophe risk
•Risks associated with analytical models in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance, and catastrophe risk management
•Inadequate estimates or assumptions, or reliance on third-party data used for critical accounting estimates
•Events or conditions that could weaken or harm our relationships with our independent agencies and hamper opportunities to add new agencies, resulting in limitations on our opportunities for growth
•Mergers, acquisitions, and other consolidations of agencies that result in a concentration of a significant amount of premium in one agency or agency group and/or alter our competitive advantages
•Our inability to manage business opportunities, growth prospects, and expenses for our ongoing operations
•Changing consumer insurance-buying habits
•The inability to obtain adequate ceded reinsurance on acceptable terms, for acceptable amounts, and from financially strong reinsurers; and the potential for nonpayment or delay in payment by reinsurers
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 33
•Domestic and global events, such as the wars in Ukraine and in the Middle East, future pandemics, inflationary trends, changes in U.S. trade and tariff policy, and disruptions in the banking and financial services industry, resulting in insurance losses, capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:
◦Securities market disruption or volatility and related effects such as decreased economic activity and continued supply chain disruptions that affect our investment portfolio and book value
◦Significant or prolonged decline in the fair value of securities and impairment of the assets
◦Significant decline in investment income due to reduced or eliminated dividend payouts from securities
◦Significant rise in losses from surety or director and officer policies written for financial institutions or other insured entities or in losses from policies written by Cincinnati Re or Cincinnati Global
◦An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses
◦Decreased premium revenue and cash flow from disruption to our distribution channel of independent agents, consumer self-isolation, travel limitations, business restrictions and decreased economic activity
◦The inability of our workforce, agencies, or vendors to perform necessary business functions
Financial, Economic, and Investment Risks
•Declines in overall stock market values negatively affecting our equity portfolio and book value
•Downgrades in our financial strength ratings
•Interest rate fluctuations or other factors that could significantly affect:
◦Our ability to generate growth in investment income
◦Values of our fixed-maturity investments and accounts in which we hold bank-owned life insurance contract assets
◦Our traditional life policy reserves
•Economic volatility and illiquidity associated with our alternative investments in private equity, private credit, real property, and limited partnerships
•Failure to comply with covenants and other requirements under our credit facilities, senior debt, and other debt obligations
•Recession, prolonged elevated inflation, or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies
•The inability of our subsidiaries to pay dividends consistent with current or past levels impacting our ability to pay shareholder dividends or repurchase shares
General Business, Technology, and Operational Risks
•Ineffective information technology systems or failing to develop and implement improvements in technology
•Difficulties with technology or data security breaches, including cyberattacks, could negatively affect our, or our agents', ability to conduct business; disrupt our relationships with agents, policyholders, and others; cause reputational damage, mitigation expenses, data loss, and expose us to liability
•Difficulties with our operations and technology that may negatively impact our ability to conduct business, including cloud-based data information storage, data security, remote working capabilities, and/or outsourcing relationships and third-party operations and data security
•Disruption of the insurance market caused by technology innovations - such as driverless cars - that could decrease consumer demand for insurance products
•Delays, inadequate data developed internally or from third parties, or performance inadequacies from ongoing development and implementation of underwriting and pricing models and methods, including usage-based insurance methods, automation, artificial intelligence, or technology projects and enhancements expected to increase our efficiency, pricing accuracy, underwriting profit, and competitiveness
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 34
•Intense competition, and the impact of innovation, emerging technologies, artificial intelligence and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and profitability
•Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that the segment could not achieve sustainable profitability
•Unforeseen departure of certain executive officers or other key employees that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others
•Our inability, or the inability of our independent agents, to attract and retain personnel
•Events, such as a pandemic, an epidemic, natural catastrophe, or terrorism, which could hamper our ability to assemble our workforce, work effectively in a remote environment, or other failures of business continuity or disaster recovery programs
Regulatory, Compliance, and Legal Risks
•Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:
◦Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates
◦Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules, and regulations
◦Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business
◦Increase assessments for guaranty funds, other insurance-related assessments, or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes
◦Increase our provision for federal income taxes due to changes in tax laws, regulations, or interpretations
◦Increase other expenses
◦Limit our ability to set fair, adequate, and reasonable rates
◦Restrict our ability to cancel policies
◦Impose new underwriting standards
◦Place us at a disadvantage in the marketplace
◦Restrict our ability to execute our business model, including the way we compensate agents
•Adverse outcomes from litigation, environmental claims, mass torts or administrative proceedings, including effects of social inflation and third-party litigation funding on the size and frequency of litigation awards
•Events or actions, including unauthorized intentional circumvention of controls, which reduce our future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002
•Effects of changing social, global, economic, and regulatory environments
•Additional measures affecting corporate financial reporting and governance that can affect the market value of our common stock
Risks and uncertainties are further discussed in other filings with the Securities and Exchange Commission, including our 2024 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 30.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 35
CORPORATE FINANCIAL HIGHLIGHTS
Net Income and Comprehensive Income Data
(Dollars in millions, except per share data) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Earned premiums $ 2,480 $ 2,156 15 $ 4,824 $ 4,227 14
Investment income, net of expenses (pretax) 285 242 18 565 487 16
Investment gains and losses, net (pretax) 473 137 245 406 749 (46)
Total revenues 3,248 2,544 28 5,814 5,479 6
Net income 685 312 120 595 1,067 (44)
Comprehensive income 707 284 149 655 1,032 (37)
Net income per share-diluted 4.34 1.98 119 3.77 6.77 (44)
Cash dividends declared per share 0.87 0.81 7 1.74 1.62 7
Diluted weighted average shares outstanding 157.8 157.5 0 157.8 157.7 0
Total revenues increased $704 million for the second quarter of 2025, compared with the second quarter of 2024, including higher net investment gains, earned premiums and investment income. For the first six months of 2025, compared with the same period of 2024, total revenues increased $335 million, primarily due to higher earned premiums and investment income offset by a decrease in net investment gains. Premium and investment revenue trends are discussed further in the respective sections of Financial Results.
Investment gains and losses are recognized on the sales of investments, on certain changes in fair values of securities even though we continue to hold the securities or as otherwise required by GAAP. We have substantial discretion in the timing of investment sales, and that timing generally is independent of the insurance underwriting process. The change in fair value of securities is also generally independent of the insurance underwriting process.
Net income for the second quarter of 2025, compared with the second quarter of 2024, increased $373 million, including increases of $266 million in after-tax net investment gains and losses, $73 million in after-tax property casualty underwriting profit and $34 million in after-tax investment income. Catastrophe losses for the second quarter of 2025, mostly weather related, were $45 million higher after taxes and unfavorably affected both net income and property casualty underwriting profit. Life insurance segment results decreased by $3 million on a pretax basis.
For the first six months of 2025, net income decreased $472 million, compared with the first six months of 2024,
including decreases of $270 million in after-tax investment gains and losses and $265 million in after-tax property casualty underwriting income, partially offset by an increase of $62 million in after-tax investment income. The property casualty underwriting income decrease included an unfavorable $401 million after-tax effect from higher catastrophe losses. Life insurance segment results decreased by $4 million on a pretax basis.
Performance by segment is discussed below in Financial Results. As discussed in our 2024 Annual Report on Form 10-K, Item 7, Executive Summary, Page 46, there are several reasons why our performance during 2025 may ultimately be below our long-term targets.
The board of directors is committed to rewarding shareholders directly through cash dividends and through share repurchase authorizations. Through 2024, the company had increased the annual cash dividend rate for 64 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2025, the board of directors increased the regular quarterly dividend to 87 cents per share, setting the stage for our 65thconsecutive year of increasing cash dividends. During the first six months of 2025, cash dividends declared by the company increased 7% compared with the same period of 2024. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2025 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 36
Balance Sheet Data and Performance Measures
(Dollars in millions, except share data) At June 30, At December 31,
2025 2024
Total investments $ 29,569 $ 28,378
Total assets 38,842 36,501
Short-term debt 25 25
Long-term debt 790 790
Shareholders' equity 14,301 13,935
Book value per share 91.46 89.11
Debt-to-total-capital ratio 5.4 % 5.5 %
Total assets at June 30, 2025, increased 6% compared with year-end 2024, and included an increase of 4% in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio. Shareholders' equity increased 3% and book value per share also increased 3% during the first six months of 2025. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased slightly compared with year-end 2024.
Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was 4.6% for the first six months of 2025, compared with 8.2% for the same period in 2024. The decrease was primarily due to a reduction in overall net gains from our investment portfolio and an underwriting loss from our insurance operations. Book value per share increased $2.35 during the first six months of 2025 and contributed 2.6 percentage points to the value creation ratio, while dividends declared at $1.74 per share contributed 2.0 points. Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.
Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
Value creation ratio major contributors:
Net income before investment gains 2.3 % 1.6 % 2.0 % 4.0 %
Change in fixed-maturity securities, realized and unrealized gains 0.1 (0.6) 0.5 (1.0)
Change in equity securities, investment gains 2.7 0.9 2.3 4.9
Other 0.1 0.3 (0.2) 0.3
Value creation ratio 5.2 % 2.2 % 4.6 % 8.2 %
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 37
(Dollars are per share) Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
Value creation ratio:
End of period book value* $ 91.46 $ 81.79 $ 91.46 $ 81.79
Less beginning of period book value 87.78 80.83 89.11 77.06
Change in book value 3.68 0.96 2.35 4.73
Dividend declared to shareholders 0.87 0.81 1.74 1.62
Total value creation $ 4.55 $ 1.77 $ 4.09 $ 6.35
Value creation ratio from change in book value** 4.2 % 1.2 % 2.6 % 6.1 %
Value creation ratio from dividends declared to shareholders*** 1.0 1.0 2.0 2.1
Value creation ratio 5.2 % 2.2 % 4.6 % 8.2 %
* Book value per share is calculated by dividing end of period total shareholders' equity by end of period shares outstanding
** Change in book value divided by the beginning of period book value
*** Dividend declared to shareholders divided by beginning of period book value
DRIVERS OF LONG-TERM VALUE CREATION
Operating through The Cincinnati Insurance Company, Cincinnati Financial Corporation is one of the 25 largest property casualty insurers in the nation, based on 2024 net written premiums for approximately 2,000 U.S. stock and mutual insurer groups. We market our insurance products through a select group of independent insurance agencies as discussed in our 2024 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At June 30, 2025, we actively marketed through 2,258 agencies located in 46 states. We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.
To measure our long-term progress in creating shareholder value, our value creation ratio is our primary financial performance target. As discussed in our 2024 Annual Report on Form 10-K, Item 7, Executive Summary, Page 46, management believes this measure is a meaningful indicator of our long-term progress in creating shareholder value and has three primary performance drivers:
•Premium growth - We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average. For the first six months of 2025, our consolidated property casualty net written premium year-over-year growth was 11%. As of February 2025, A.M. Best projected the industry's full-year 2025 written premium growth at approximately 7%. For the five-year period 2020 through 2024, our growth rate exceeded that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business.
•Combined ratio - We believe our underwriting philosophy and initiatives can generate an average GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%. For the first six months of 2025, our GAAP combined ratio was 103.8%, including 19.4 percentage points of current accident year catastrophe losses partially offset by 3.3 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 102.6% for the first six months of 2025. As of February 2025, A.M. Best projected the industry's full-year 2025 statutory combined ratio at approximately 99%, including approximately 9 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years. The industry's ratio again excludes its mortgage and financial guaranty lines of business.
•Investment contribution - We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor's 500 Index. For the first six months of 2025, pretax investment income was $565 million, up 16% compared with the same period in 2024. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 38
Financial Strength
An important part of our long-term strategy is financial strength, which is described in our 2024 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Financial Strength, Page 8. One aspect of our financial strength is prudent use of reinsurance ceded to help manage financial performance variability due to catastrophe loss experience. A description of how we use reinsurance ceded is included in our 2024 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, 2025 Reinsurance Ceded Programs, Page 105. Another aspect of our financial strength is our investment portfolio, which remains well-diversified as discussed in this quarterly report in Item 3, Quantitative and Qualitative Disclosures About Market Risk. Our strong parent-company liquidity and financial strength increase our flexibility to maintain a cash dividend through all periods and to continue to invest in and expand our insurance operations.
At June 30, 2025, we held $5.094 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.719 billion, or 92.6%, was invested in common stocks, and $70 million, or 1.4%, was cash or cash equivalents. Our debt-to-total-capital ratio was 5.4% at June 30, 2025. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.1-to-1 for the 12 months ended June 30, 2025, compared with 1.0-to-1 at year-end 2024.
Financial strength ratings assigned to us by independent rating firms also are important. In addition to rating our parent company's senior debt, four firms award insurer financial strength ratings to one or more of our insurance subsidiary companies based on their quantitative and qualitative analyses. These ratings primarily assess an insurer's ability to meet financial obligations to policyholders and do not necessarily address all of the matters that may be important to investors. Ratings are under continuous review and subject to change or withdrawal at any time by the rating agency. Each rating should be evaluated independently of any other rating; please see each rating agency's website for its most recent report on our ratings.
At July 25, 2025, our insurance subsidiaries continued to be highly rated.
Insurer Financial Strength Ratings
Rating
agency 		Standard market property casualty insurance subsidiaries Life insurance
subsidiary 		Excess and surplus lines insurance subsidiary Outlook
Rating
tier 		Rating
tier 		Rating
tier
A.M. Best Co.
ambest.com
A+ Superior 2 of 16 A+ Superior 2 of 16 A+ Superior 2 of 16 Stable
Fitch Ratings
fitchratings.com
A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Positive
Moody's Investors Service
moodys.com
A1 Good 5 of 21 - - - - - - Stable
S&P Global Ratings
spratings.com
A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Stable
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 39
CONSOLIDATED PROPERTY CASUALTY INSURANCE HIGHLIGHTS
Consolidated property casualty insurance results include premiums and expenses for our standard market insurance segments (commercial lines and personal lines), our excess and surplus lines segment, Cincinnati Re® and our London-based global specialty underwriter Cincinnati Global Underwriting Ltd.SM(Cincinnati Global).
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Earned premiums $ 2,397 $ 2,075 16 $ 4,661 $ 4,067 15
Fee revenues 3 3 0 7 6 17
Total revenues 2,400 2,078 15 4,668 4,073 15
Loss and loss expenses from:
Current accident year before catastrophe losses 1,354 1,198 13 2,724 2,419 13
Current accident year catastrophe losses 296 254 17 904 403 124
Prior accident years before catastrophe losses (57) (19) (200) (107) (87) (23)
Prior accident years catastrophe losses (6) (21) 71 (47) (53) 11
Loss and loss expenses 1,587 1,412 12 3,474 2,682 30
Underwriting expenses 685 631 9 1,364 1,225 11
Underwriting profit (loss) $ 128 $ 35 266 $ (170) $ 166 nm
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year before catastrophe losses 56.5 % 57.8 % (1.3) 58.4 % 59.5 % (1.1)
Current accident year catastrophe losses 12.4 12.2 0.2 19.4 9.9 9.5
Prior accident years before catastrophe losses (2.4) (0.9) (1.5) (2.3) (2.1) (0.2)
Prior accident years catastrophe losses (0.2) (1.0) 0.8 (1.0) (1.3) 0.3
Loss and loss expenses 66.3 68.1 (1.8) 74.5 66.0 8.5
Underwriting expenses 28.6 30.4 (1.8) 29.3 30.1 (0.8)
Combined ratio 94.9 % 98.5 % (3.6) 103.8 % 96.1 % 7.7
Combined ratio 94.9 % 98.5 % (3.6) 103.8 % 96.1 % 7.7
Contribution from catastrophe losses and prior years reserve development 9.8 10.3 (0.5) 16.1 6.5 9.6
Combined ratio before catastrophe losses and prior years reserve development 85.1 % 88.2 % (3.1) 87.7 % 89.6 % (1.9)
Our consolidated property casualty insurance operations generated an underwriting profit of $128 million for the second quarter of 2025 and an underwriting loss of $170 million for the first six months of 2025. The second-quarter 2025 underwriting profit increase of $93 million, compared with second-quarter 2024, included an unfavorable increase of $57 million in losses from catastrophes, mostly caused by severe weather, and a higher amount of total favorable reserve development on prior accident years. The change in underwriting profitability for the second quarter of 2025 also included a favorable effect from higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums. The six-month underwriting loss of $170 million, compared with an underwriting profit of $166 million for the first six months of 2024, included an unfavorable increase of $501 million in current accident year catastrophe losses, mostly caused by the January 2025 wildfires in southern California, partially offset by a higher amount of total favorable reserve development on prior accident years. For the first six months of 2025, the combined ratio before catastrophe losses and prior years reserve development improved by 1.9 percentage points compared with the same period of 2024.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 40
Underwriting results for the second quarter and first six months of 2025 included improved current accident year loss experience before catastrophe losses, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation. Elevated inflation was a driver of higher losses and loss expenses in recent years as costs have increased significantly to repair damaged autos or other property that we insure. We also experienced higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear. The higher loss experience is discussed in Financial Results by property casualty insurance segment. We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices.
For all property casualty lines of business in aggregate, net loss and loss expense reserves at June 30, 2025, were $829 million, or 9%, higher than at year-end 2024, including an increase of $711 million for the incurred but not reported (IBNR) portion.
We measure and analyze property casualty underwriting results primarily by the combined ratio and its component ratios. The GAAP-basis combined ratio is the percentage of incurred losses plus all expenses per each earned premium dollar - the lower the ratio, the better the performance. An underwriting profit results when the combined ratio is below 100%. A combined ratio above 100% indicates that an insurance company's losses and expenses exceeded premiums.
Our consolidated property casualty combined ratio for the second quarter of 2025 decreased by 3.6 percentage points, compared with the same period of 2024, including an increase of 1.0 points from catastrophe losses and loss expenses. For the first six months of 2025, compared with the 2024 six-month period, our combined ratio increased by 7.7 percentage points, including an increase of 9.8 points from catastrophe losses and loss expenses. Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.
The combined ratio can be affected significantly by natural catastrophe losses and other large losses as discussed in detail below. The combined ratio can also be affected by updated estimates of loss and loss expense reserves established for claims that occurred in prior periods, referred to as prior accident years. Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 3.3 percentage points in the first six months of 2025, compared with 3.4 percentage points in the same period of 2024. Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.
The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first six months of 2025. That 58.4% ratio was 1.1 percentage points lower, compared with the 59.5% accident year 2024 ratio measured as of June 30, 2024, including an increase of 0.2 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio improvement of 1.1 percentage points included an increase of 1.9 points for the IBNR portion and a decrease of 3.0 points for the case incurred portion. It also included an unfavorable 0.6 points for the net effect of $52 million for reinsurance treaty reinstatement premiums related to the January 2025 wildfires in southern California.
The underwriting expense ratio decreased for the second quarter and first six months of 2025, compared with the same periods a year ago. The decreases were primarily due to premium growth outpacing growth in various expenses. The six-month 2025 ratio also included an unfavorable 0.3 points for the effect of reinstatement premiums. The ratio for both periods also included ongoing expense management efforts.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 41
Consolidated Property Casualty Insurance Premiums
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Agency renewal written premiums $ 2,135 $ 1,843 16 $ 4,047 $ 3,526 15
Agency new business written premiums 404 407 (1) 787 753 5
Other written premiums 194 209 (7) 394 428 (8)
Net written premiums 2,733 2,459 11 5,228 4,707 11
Unearned premium change (336) (384) 13 (567) (640) 11
Earned premiums $ 2,397 $ 2,075 16 $ 4,661 $ 4,067 15
The trends in net written premiums and earned premiums summarized in the table above include the effects of price increases. Price change trends that heavily influence renewal written premium increases or decreases, along with other premium growth drivers for 2025, are discussed in more detail by segment below in Financial Results.
Consolidated property casualty net written premiums for the second quarter and six months ended June 30, 2025, grew $274 million and $521 million compared with the same periods of 2024. Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.
Consolidated property casualty agency new business written premiums decreased by $3 million for the second quarter and increased by $34 million for the first six months of 2025, compared with the same periods of 2024. The second quarter decrease was driven by the personal lines segment. Personal lines new business written premiums for second-quarter 2025 decreased 13% compared with a 54% increase in the second quarter of 2024. New agency appointments during 2025 and 2024 produced a $55 million increase in standard lines new business for the first six months of 2025 compared with the same period of 2024. As we appoint new agencies that choose to move accounts to us, we report these accounts as new business. While this business is new to us, in many cases it is not new to the agent. We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent.
Net written premiums for Cincinnati Re, included in other written premiums, decreased by $43 million in the second quarter and increased $10 million for the six months ended June 30, 2025, compared with the same periods of 2024, to $164 million and $418 million, respectively. Cincinnati Re assumes risks through reinsurance treaties and in some cases cedes part of the risk and related premiums to one or more unaffiliated reinsurance companies through transactions known as retrocessions.
Cincinnati Global is also included in other written premiums. Net written premiums for Cincinnati Global increased by $30 million in the second quarter and $24 million for the six months ended June 30, 2025, to $97 million and $173 million, respectively, compared with the same periods of 2024.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 42
Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. A decrease in ceded premiums increased net written premiums by $4 million for the second quarter and an increase in ceded premiums decreased net written premiums by $76 million for the first six months of 2025, compared with the same periods of 2024. Other written premiums for the first six months of 2025 included a net unfavorable amount of $52 million for reinsurance treaty reinstatement premiums related to the California wildfires, including a favorable $12 million for Cincinnati Re and an unfavorable $64 million for our personal lines insurance segment.
Catastrophe losses and loss expenses typically have a material effect on property casualty results and can vary significantly from period to period. Losses from catastrophes contributed 12.2 and 18.4 percentage points to the combined ratio in the second quarter and first six months of 2025, compared with 11.2 and 8.6 percentage points in the same periods of 2024. During the second quarter of 2025, there were no material changes to our estimates of ultimate losses related to the California wildfires.
Net losses from catastrophes for the first six months of 2025 included recoveries from reinsurers that participate in our primary property catastrophe reinsurance treaty. There were no material changes during the second quarter to the estimated recovery of $429 million as of March 31, 2025, related to the California wildfires.
Effective July 1, 2025, we purchased an additional layer on our property catastrophe reinsurance treaty with a limit of $300 million, increasing the total limit from $1.500 billion to $1.800 billion. We retain 57.2% of losses between $1.500 billion and $1.800 billion. The provisions of this additional layer are similar to those included in the other layers. The annual ceded premiums for this additional coverage are estimated to be less than $5 million.
Effective June 1, 2025, we renewed the reinsurance program for Cincinnati Re only, which provides retrocession coverages with various triggers, exclusions and unique features. The program includes property catastrophe excess of loss coverage in excess of $90 million per occurrence with a total available limit of $73 million per occurrence. Ceded premiums for the one-year renewal period of coverage from the program are estimated to be approximately $16 million. There were no material changes during the second quarter to the estimated recovery of $38 million as of March 31, 2025, related to the California wildfires for the Cincinnati Re only program effective June 1, 2024, which expired during the second quarter.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 43
The following table shows consolidated property casualty insurance catastrophe losses and loss expenses incurred, net of reinsurance, as well as the effect of loss development on prior period catastrophe events. We individually list declared catastrophe events for which our incurred losses reached or exceeded $25 million.
Consolidated Property Casualty Insurance Catastrophe Losses and Loss Expenses Incurred
(Dollars in millions, net of reinsurance) Three months ended June 30, Six months ended June 30,
Comm. Pers. E&S Comm. Pers. E&S
Dates Region lines lines lines Other Total lines lines lines Other Total
2025
Jan. 7-28 West $ - $ (1) $ - $ - $ (1) $ - $ 324 $ - $ 124 $ 448
Mar. 14-17 Midwest, Northeast, South 5 13 - 2 20 47 88 1 2 138
Apr. 1-7 Midwest, South 20 40 - - 60 20 40 - - 60
May 15-16 Midwest, Northeast 23 65 - - 88 23 65 - - 88
All other 2025 catastrophes 40 87 2 - 129 54 110 3 3 170
Development on 2024 and prior
catastrophes 		(3) (13) - 10 (6) (17) (26) (1) (3) (47)
Calendar year incurred total $ 85 $ 191 $ 2 $ 12 $ 290 $ 127 $ 601 $ 3 $ 126 $ 857
2024
Jan. 8-10 Midwest, Northeast, South $ (2) $ 1 $ - $ - $ (1) $ 16 $ 9 $ - $ - $ 25
Mar. 12-17 Midwest, South 2 5 - - 7 35 27 - - 62
Mar. 31 - Apr. 4 Midwest, Northeast, South 13 23 - - 36 13 23 - - 36
May 6-10 Midwest, South 19 28 - - 47 19 28 - - 47
May 25-26 Midwest, South 37 28 1 - 66 37 28 1 - 66
All other 2024 catastrophes 42 52 2 3 99 66 95 3 3 167
Development on 2023 and prior
catastrophes 		(7) (6) 1 (9) (21) (15) (27) - (11) (53)
Calendar year incurred total $ 104 $ 131 $ 4 $ (6) $ 233 $ 171 $ 183 $ 4 $ (8) $ 350
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 44
The following table includes data for losses incurred of $2 million or more per claim, net of reinsurance.
Consolidated Property Casualty Insurance Losses Incurred by Size
(Dollars in millions, net of reinsurance) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Current accident year losses greater than $5 million $ 15 $ 31 (52) $ 41 $ 31 32
Current accident year losses $2 million - $5 million 40 28 43 60 50 20
Large loss prior accident year reserve development 27 15 80 83 37 124
Total large losses incurred 82 74 11 184 118 56
Losses incurred but not reported 213 165 29 492 416 18
Other losses excluding catastrophe losses 741 741 0 1,429 1,418 1
Catastrophe losses 280 228 23 838 339 147
Total losses incurred $ 1,316 $ 1,208 9 $ 2,943 $ 2,291 28
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year losses greater than $5 million 0.6 % 1.5 % (0.9) 0.9 % 0.8 % 0.1
Current accident year losses $2 million - $5 million 1.7 1.4 0.3 1.3 1.2 0.1
Large loss prior accident year reserve development 1.1 0.7 0.4 1.8 0.9 0.9
Total large loss ratio 3.4 3.6 (0.2) 4.0 2.9 1.1
Losses incurred but not reported 8.9 8.0 0.9 10.5 10.2 0.3
Other losses excluding catastrophe losses 30.9 35.6 (4.7) 30.6 34.9 (4.3)
Catastrophe losses 11.7 11.0 0.7 18.0 8.3 9.7
Total loss ratio 54.9 % 58.2 % (3.3) 63.1 % 56.3 % 6.8
We believe the inherent variability of aggregate loss experience for our portfolio of larger policies is greater than that of our portfolio of smaller policies, and we continue to monitor the variability in addition to general inflationary trends in loss costs. Our analysis continues to indicate no unexpected concentration of large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The second-quarter 2025 property casualty total large losses incurred of $82 million, net of reinsurance, was higher than the $70 million quarterly average during full-year 2024 and the $74 million experienced for the second quarter of 2024. The ratio for these large losses was 0.2 percentage points lower compared with last year's second quarter. The second-quarter 2025 amount of total large losses incurred unfavorably contributed to the increase in the six-month 2025 total large loss ratio, compared with 2024, in addition to a first-quarter 2025 ratio that was 2.3 points higher than the first quarter of 2024. We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Losses by size are discussed in further detail in results of operations by property casualty insurance segment.
FINANCIAL RESULTS
Consolidated results reflect the operating results of each of our five segments along with the parent company, Cincinnati Re, Cincinnati Global and other activities reported as "Other." The five segments are:
•Commercial lines insurance
•Personal lines insurance
•Excess and surplus lines insurance
•Life insurance
•Investments
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 45
COMMERCIAL LINES INSURANCE RESULTS
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Earned premiums $ 1,212 $ 1,107 9 $ 2,391 $ 2,189 9
Fee revenues - 1 (100) 2 2 0
Total revenues 1,212 1,108 9 2,393 2,191 9
Loss and loss expenses from:
Current accident year before catastrophe losses 721 664 9 1,443 1,346 7
Current accident year catastrophe losses 88 111 (21) 144 186 (23)
Prior accident years before catastrophe losses (39) (22) (77) (68) (52) (31)
Prior accident years catastrophe losses (3) (7) 57 (17) (15) (13)
Loss and loss expenses 767 746 3 1,502 1,465 3
Underwriting expenses 358 352 2 707 677 4
Underwriting profit $ 87 $ 10 770 $ 184 $ 49 276
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year before catastrophe losses 59.6 % 60.0 % (0.4) 60.3 % 61.5 % (1.2)
Current accident year catastrophe losses 7.2 10.0 (2.8) 6.1 8.5 (2.4)
Prior accident years before catastrophe losses (3.3) (1.9) (1.4) (2.9) (2.3) (0.6)
Prior accident years catastrophe losses (0.2) (0.7) 0.5 (0.7) (0.7) 0.0
Loss and loss expenses 63.3 67.4 (4.1) 62.8 67.0 (4.2)
Underwriting expenses 29.6 31.7 (2.1) 29.6 30.9 (1.3)
Combined ratio 92.9 % 99.1 % (6.2) 92.4 % 97.9 % (5.5)
Combined ratio 92.9 % 99.1 % (6.2) 92.4 % 97.9 % (5.5)
Contribution from catastrophe losses and prior years reserve development 3.7 7.4 (3.7) 2.5 5.5 (3.0)
Combined ratio before catastrophe losses and prior years reserve development 89.2 % 91.7 % (2.5) 89.9 % 92.4 % (2.5)
Overview
Performance highlights for the commercial lines segment include:
•Premiums - Earned premiums and net written premiums for the commercial lines segment grew during the second quarter and first six months of 2025, compared with the same periods a year ago, primarily due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums. The table below analyzes the primary components of premiums. We continue to use predictive analytics tools to improve pricing precision and segmentation while leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy.
Agency renewal written premiums increased 9% for the second quarter and 8% for the first six months of 2025, compared with the same periods of 2024, including price increases. During the second quarter of 2025, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the high end of the mid-single-digit range. We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing. Conversely, we have been seeking stricter renewal terms and conditions on policies we believe have relatively weaker pricing, thus retaining fewer of those policies. We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 46
Our average overall commercial lines renewal pricing change includes the impact of flat pricing for certain coverages within package policies written for a three-year term that were in force but did not expire during the period being measured. Therefore, our reported change in average commercial lines renewal pricing reflects a blend of three-year policies that did not expire and other policies that did expire during the measurement period. For commercial lines policies that did expire and were then renewed during the second quarter of 2025, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty and commercial property lines of business and in the mid-single-digit range for our commercial auto line of business. The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.
Our commercial lines segment's increase in agency renewal written premiums for the first six months of 2025 also included changes in the level of insured exposures. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged commercial structures. We use building valuation software to automate much of that underwriting process and may also manually adjust premiums to reflect property costs.
Renewal premiums for certain policies, primarily our commercial casualty and workers' compensation lines of business, include the results of policy audits that adjust initial premium amounts based on differences between estimated and actual sales or payroll related to a specific policy. Audits completed during the first six months of 2025 contributed $48 million to net written premiums, compared with $54 million for the same period of 2024.
New business written premiums for commercial lines increased $7 million and $28 million during the second quarter and first six months of 2025, compared with the same periods of 2024, as we continued to carefully underwrite each policy in a highly competitive market. Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability. That variability is often driven by larger policies with annual premiums greater than $100,000.
Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. For our commercial lines insurance segment, a decrease in ceded premiums increased net written premiums by approximately $3 million and $6 million for the second quarter and first six months of 2025, compared with the same periods of 2024.
Commercial Lines Insurance Premiums
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Agency renewal written premiums $ 1,116 $ 1,023 9 $ 2,268 $ 2,099 8
Agency new business written premiums 200 193 4 403 375 7
Other written premiums (26) (30) 13 (56) (65) 14
Net written premiums 1,290 1,186 9 2,615 2,409 9
Unearned premium change (78) (79) 1 (224) (220) (2)
Earned premiums $ 1,212 $ 1,107 9 $ 2,391 $ 2,189 9
•Combined ratio - The second-quarter 2025 commercial lines combined ratio improved by 6.2 percentage points, compared with the second quarter of 2024, including a decrease of 2.3 points in losses from catastrophes. The second-quarter combined ratio decreased by 0.4 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 4.9 points for the IBNR portion and a decrease of 5.3 points for the case incurred portion. For the first six months of 2025, the combined ratio improved by 5.5 percentage points, compared with the same period a year ago, including a decrease of 2.4 points in losses from catastrophes. The six-month 2025 combined ratio also included a decrease of 1.2 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.8 points for the IBNR portion and a decrease of 4.0 points for the case incurred portion. Underwriting results also included favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of June 30 of the respective years and included a decrease of 0.4 percentage points for the first six months of 2025 in the ratio for large losses of $2 million or more per claim, discussed below.
When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends for inflation, historical paid and reported losses, large loss activity and other data or information for the industry
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 47
or our company. Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged business properties or autos that we insure, in addition to higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.
Catastrophe losses and loss expenses accounted for 7.0 and 5.4 percentage points of the combined ratio for the second quarter and first six months of 2025, compared with 9.3 and 7.8 percentage points for the same periods a year ago. Through 2024, the 10-year annual average for that catastrophe measure for the commercial lines segment was 6.0 percentage points, and the five-year annual average was 6.6 percentage points.
The net effect of reserve development on prior accident years during the second quarter and first six months of 2025 was favorable for commercial lines overall by $42 million and $85 million, compared with $29 million and $67 million for the same periods in 2024. For the first six months of 2025, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development, while our commercial auto line of business included net unfavorable development. The net favorable reserve development recognized during the first six months of 2025 for our commercial lines insurance segment was mainly for accident years 2024 and 2023 and was primarily due to lower-than-anticipated loss emergence on known claims. Our commercial casualty line of business included $3 million of favorable reserve development on prior accident years for the first six months of 2025. Reserve estimates are inherently uncertain as described in our 2024 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 51.
The commercial lines underwriting expense ratio decreased for the second quarter and first six months of 2025, compared with the same periods a year ago. The decreases were primarily due to premium growth outpacing growth in various expenses. The ratio for both periods also included ongoing expense management efforts.
Commercial Lines Insurance Losses Incurred by Size
(Dollars in millions, net of reinsurance) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Current accident year losses greater than $5 million $ 5 $ 31 (84) $ 12 $ 31 (61)
Current accident year losses $2 million - $5 million 22 11 100 37 22 68
Large loss prior accident year reserve development 14 22 (36) 58 34 71
Total large losses incurred 41 64 (36) 107 87 23
Losses incurred but not reported 106 92 15 269 248 8
Other losses excluding catastrophe losses 383 384 0 701 752 (7)
Catastrophe losses 83 101 (18) 123 165 (25)
Total losses incurred $ 613 $ 641 (4) $ 1,200 $ 1,252 (4)
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year losses greater than $5 million 0.5 % 2.8 % (2.3) 0.5 % 1.4 % (0.9)
Current accident year losses $2 million - $5 million 1.8 1.0 0.8 1.5 1.0 0.5
Large loss prior accident year reserve development 1.2 2.0 (0.8) 2.5 1.6 0.9
Total large loss ratio 3.5 5.8 (2.3) 4.5 4.0 0.5
Losses incurred but not reported 8.7 8.3 0.4 11.3 11.3 0.0
Other losses excluding catastrophe losses 31.6 34.6 (3.0) 29.3 34.3 (5.0)
Catastrophe losses 6.8 9.1 (2.3) 5.1 7.6 (2.5)
Total loss ratio 50.6 % 57.8 % (7.2) 50.2 % 57.2 % (7.0)
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 48
We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The second-quarter 2025 commercial lines total large losses incurred of $41 million, net of reinsurance, was lower than the quarterly average of $49 million during full-year 2024 and the $64 million of total large losses incurred for the second quarter of 2024. The increase in commercial lines large losses for the first six months of 2025 was primarily due to our commercial property line of business. The second-quarter 2025 ratio for commercial lines total large losses was 2.3 percentage points lower than last year's second-quarter ratio. The second-quarter 2025 amount of total large losses incurred contributed to the increase in the six-month 2025 total large loss ratio, compared with 2024, partially offsetting a first-quarter 2025 ratio that was 3.5 points higher than the first quarter of 2024. We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.
PERSONAL LINES INSURANCE RESULTS
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Earned premiums $ 804 $ 631 27 $ 1,502 $ 1,219 23
Fee revenues 2 1 100 3 2 50
Total revenues 806 632 28 1,505 1,221 23
Loss and loss expenses from:
Current accident year before catastrophe losses 413 346 19 855 685 25
Current accident year catastrophe losses 204 137 49 627 210 199
Prior accident years before catastrophe losses (6) 12 nm (12) - nm
Prior accident years catastrophe losses (13) (6) (117) (26) (27) 4
Loss and loss expenses 598 489 22 1,444 868 66
Underwriting expenses 222 185 20 432 358 21
Underwriting loss $ (14) $ (42) 67 $ (371) $ (5) nm
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year before catastrophe losses 51.3 % 54.9 % (3.6) 56.9 % 56.2 % 0.7
Current accident year catastrophe losses 25.4 21.8 3.6 41.7 17.2 24.5
Prior accident years before catastrophe losses (0.7) 1.8 (2.5) (0.8) 0.0 (0.8)
Prior accident years catastrophe losses (1.6) (0.9) (0.7) (1.7) (2.2) 0.5
Loss and loss expenses 74.4 77.6 (3.2) 96.1 71.2 24.9
Underwriting expenses 27.6 29.3 (1.7) 28.8 29.4 (0.6)
Combined ratio 102.0 % 106.9 % (4.9) 124.9 % 100.6 % 24.3
Combined ratio 102.0 % 106.9 % (4.9) 124.9 % 100.6 % 24.3
Contribution from catastrophe losses and prior years reserve development 23.1 22.7 0.4 39.2 15.0 24.2
Combined ratio before catastrophe losses and prior years reserve development 78.9 % 84.2 % (5.3) 85.7 % 85.6 % 0.1
Overview
Performance highlights for the personal lines segment include:
•Premiums - Personal lines earned premiums and net written premiums continued to grow during the second quarter and first six months of 2025, primarily due to agency renewal written premium growth that included higher average pricing. Cincinnati Private ClientSMnet written premiums included in the personal lines insurance segment results totaled approximately $592 million and $954 million for the second quarter and first six months of 2025, compared with $472 million and $802 million for the same periods of 2024. Direct written premiums for Cincinnati Private Client policies grew 26% for the first six months of 2025 compared with the same period of
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 49
2024. Cincinnati Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $48 million in the second quarter and $47 million in the first six months of 2025, compared with $51 million in the second quarter and $85 million in the first six months of 2024. The table below analyzes the primary components of premiums.
Agency renewal written premiums increased 27% and 28% for the second quarter and first six months of 2025, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as changes in policy deductibles or mix of business. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials used to repair damaged homes.
We estimate that premium rates for our personal auto line of business increased at average percentages in the high-single-digit range during the first six months of 2025. For our homeowner line of business, we estimate that premium rates for the first six months of 2025 also increased at average percentages in the low-double-digit range. For both our personal auto and homeowner lines of business, some individual policies experienced lower or higher rate changes based on each risk's specific characteristics and enhanced pricing precision enabled by predictive models.
Personal lines new business written premiums decreased $22 million or 13% for the second quarter of 2025, compared with the same period of 2024, including approximately $11 million from Cincinnati Private Client policies and $11 million from middle-market policies. Cincinnati Private Client new business premiums from California decreased approximately $13 million for the second quarter of 2025 compared with the prior year. For the first six months of 2025, compared with the same period of 2024, personal lines new business written premiums decreased $17 million, or 6%, including approximately $3 million from Cincinnati Private Client policies and $14 million from middle-market policies. We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools.
Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. For our personal lines insurance segment, an increase in 2025 ceded premiums reduced net written premiums by approximately $2 million and $70 million for the second quarter and first six months of 2025, compared with the same periods of 2024. Ceded premiums for the first six months of 2025 included a net amount of $64 million for reinsurance reinstatement premiums related to the January 2025 wildfires in southern California. The $64 million of reinstatement premiums included $61 million for our homeowner line of business.
Personal Lines Insurance Premiums
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Agency renewal written premiums $ 866 $ 681 27 $ 1,500 $ 1,175 28
Agency new business written premiums 141 163 (13) 268 285 (6)
Other written premiums (27) (25) (8) (116) (46) (152)
Net written premiums 980 819 20 1,652 1,414 17
Unearned premium change (176) (188) 6 (150) (195) 23
Earned premiums $ 804 $ 631 27 $ 1,502 $ 1,219 23
•Combined ratio - Our personal lines combined ratio for the second quarter of 2025 improved by 4.9 percentage points, compared with second-quarter 2024, despite an increase of 2.9 points in losses from catastrophes. The second-quarter 2025 combined ratio improvement also included a decrease of 3.6 percentage points from current accident year loss and loss expenses before catastrophe losses, including an increase of 4.2 points for the IBNR portion and a decrease of 7.8 points for the case incurred portion. For the first six months of 2025, the combined ratio increased by 24.3 percentage points, compared with the same period a year ago, including an increase of 25.0 points in losses from catastrophes. The six-month 2025 combined ratio also included an increase of 0.7 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 4.2 points in the IBNR portion and a decrease of 3.5 points for the case incurred portion. The six-month 2025 current accident year ratio before catastrophe losses included an unfavorable 2.3 points for the effect of reinstatement premiums. The total current accident year ratios before catastrophe losses were measured as of June 30 of the respective years and included an increase of 1.4 percentage points for the first six months of 2025 in the ratio for large losses of $2 million or more per claim, discussed below.
When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends for inflation, historical paid and reported losses, large loss activity and other data or information for the industry
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 50
or our company. Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged autos or homes that we insure. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.
Catastrophe losses and loss expenses accounted for 23.8 and 40.0 percentage points of the combined ratio for the second quarter and first six months of 2025, compared with 20.9 and 15.0 points for the same periods a year ago. The 10-year annual average catastrophe loss ratio for the personal lines segment through 2024 was 12.1 percentage points, and the five-year annual average was 13.9 percentage points.
In addition to the average rate increases discussed above, we continue to refine our pricing to better match premiums to the risk of loss on individual policies. Improved pricing precision and broad-based rate increases are expected to help position the combined ratio at a profitable level over the long term. In addition, greater geographic diversification is expected to reduce the volatility of homeowner loss ratios attributable to weather-related catastrophe losses over time.
The net effect of reserve development on prior accident years during the second quarter and first six months of 2025 was favorable for personal lines overall by $19 million and $38 million, compared with $6 million unfavorable and $27 million favorable for the same periods of 2024. Our homeowner line of business was the main contributor to the personal lines net favorable reserve development for the first six months of 2025. The net favorable reserve development was primarily due to lower-than-anticipated loss emergence on known claims. Reserve estimates are inherently uncertain as described in our 2024 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 51.
The personal lines underwriting expense ratio decreased for the second quarter and first six months of 2025, compared with the same periods a year ago. The second-quarter and six-month decreases were primarily due to growth in premiums outpacing growth in various expenses. The six-month 2025 ratio also included an unfavorable 1.2 points for the effect of reinstatement premiums. The ratios for both periods also included ongoing expense management efforts.
Personal Lines Insurance Losses Incurred by Size
(Dollars in millions, net of reinsurance) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Current accident year losses greater than $5 million $ 10 $ - nm $ 29 $ - nm
Current accident year losses $2 million - $5 million 18 15 20 23 26 (12)
Large loss prior accident year reserve development 13 (7) nm 25 3 733
Total large losses incurred 41 8 413 77 29 166
Losses incurred but not reported 37 31 19 111 53 109
Other losses excluding catastrophe losses 257 256 0 511 487 5
Catastrophe losses 186 129 44 591 179 230
Total losses incurred $ 521 $ 424 23 $ 1,290 $ 748 72
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year losses greater than $5 million 1.3 % - % 1.3 2.0 % - % 2.0
Current accident year losses $2 million - $5 million 2.2 2.4 (0.2) 1.5 2.1 (0.6)
Large loss prior accident year reserve development 1.5 (1.1) 2.6 1.6 0.3 1.3
Total large loss ratio 5.0 1.3 3.7 5.1 2.4 2.7
Losses incurred but not reported 4.7 4.8 (0.1) 7.4 4.3 3.1
Other losses excluding catastrophe losses 32.0 40.5 (8.5) 34.1 39.9 (5.8)
Catastrophe losses 23.1 20.5 2.6 39.3 14.7 24.6
Total loss ratio 64.8 % 67.1 % (2.3) 85.9 % 61.3 % 24.6
We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. In the second quarter of 2025, the personal lines total
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 51
large loss ratio, net of reinsurance, was 3.7 percentage points higher than last year's second quarter. The increase in personal lines total large losses incurred for the first six months of 2025 occurred primarily for our homeowner line of business and inland marine coverages in our other personal line of business. The second-quarter 2025 amount of total large losses incurred unfavorably contributed to the increase in the six-month 2025 total large loss ratio, compared with 2024, in addition to a first-quarter 2025 ratio that was 1.7 points higher than the first quarter of 2024. We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.
EXCESS AND SURPLUS LINES INSURANCE RESULTS
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Earned premiums $ 174 $ 151 15 $ 336 $ 290 16
Fee revenues 1 1 0 2 2 0
Total revenues 175 152 15 338 292 16
Loss and loss expenses from:
Current accident year before catastrophe losses 113 96 18 219 188 16
Current accident year catastrophe losses 2 3 (33) 4 4 0
Prior accident years before catastrophe losses (5) 2 nm (13) - nm
Prior accident years catastrophe losses - 1 (100) (1) - nm
Loss and loss expenses 110 102 8 209 192 9
Underwriting expenses 49 42 17 93 80 16
Underwriting profit $ 16 $ 8 100 $ 36 $ 20 80
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year before catastrophe losses 64.9 % 64.0 % 0.9 65.2 % 64.8 % 0.4
Current accident year catastrophe losses 1.6 1.4 0.2 1.2 1.2 0.0
Prior accident years before catastrophe losses (2.7) 1.6 (4.3) (3.8) 0.0 (3.8)
Prior accident years catastrophe losses (0.3) 0.5 (0.8) (0.3) 0.0 (0.3)
Loss and loss expenses 63.5 67.5 (4.0) 62.3 66.0 (3.7)
Underwriting expenses 27.6 27.9 (0.3) 27.5 27.7 (0.2)
Combined ratio 91.1 % 95.4 % (4.3) 89.8 % 93.7 % (3.9)
Combined ratio 91.1 % 95.4 % (4.3) 89.8 % 93.7 % (3.9)
Contribution from catastrophe losses and prior years reserve development (1.4) 3.5 (4.9) (2.9) 1.2 (4.1)
Combined ratio before catastrophe losses and prior years reserve development 92.5 % 91.9 % 0.6 92.7 % 92.5 % 0.2
Overview
Performance highlights for the excess and surplus lines segment include:
•Premiums - Excess and surplus lines earned premiums and net written premiums continued to grow during the second quarter and first six months of 2025, compared with the same period a year ago, including increases in both agency renewal and new business written premiums. Renewal written premiums rose 10% for the second quarter and 11% for the six months ended June 30, 2025, compared with the same periods of 2024, largely due to higher renewal pricing. For both 2025 periods, excess and surplus lines policy renewals experienced estimated average price increases at percentages in the high-single-digit range. We measure average changes in excess and surplus lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for respective policies.
New business written premiums produced by agencies increased by 24% for the second quarter and 25% for the first six months of 2025 compared with the same periods of 2024, as we continued to carefully underwrite
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 52
each policy in a highly competitive market. Some of what we report as new business came from accounts that were not new to our agents. We believe our agents' seasoned accounts tend to be priced more accurately than business that may be less familiar to them.
Excess and Surplus Lines Insurance Premiums
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Agency renewal written premiums $ 153 $ 139 10 $ 279 $ 252 11
Agency new business written premiums 63 51 24 116 93 25
Other written premiums (14) (10) (40) (25) (19) (32)
Net written premiums 202 180 12 370 326 13
Unearned premium change (28) (29) 3 (34) (36) 6
Earned premiums $ 174 $ 151 15 $ 336 $ 290 16
•Combined ratio - The excess and surplus lines combined ratio improved by 4.3 percentage points for the second quarter and 3.9 points for the first six months of 2025, compared with the same periods of 2024. The improvements were primarily due to favorable reserve development on prior accident year loss and loss expenses for the three and six months ended June 30, 2025, compared with unfavorable development for the same periods of 2024.
The 64.9% second-quarter 2025 ratio for current accident year loss and loss expenses before catastrophe losses was 0.9 percentage points higher, compared with the 64.0% accident year 2024 ratio measured as of June 30, 2024, including an increase of 7.8 points for the IBNR portion and a decrease of 6.9 points for the case incurred portion. The six-month 2025 ratio for current accident year loss and loss expenses before catastrophe losses was 0.4 percentage points higher, compared with the 64.8% accident year 2024 ratio measured as of June 30, 2024, including an increase of 5.4 points for the IBNR portion and a decrease of 5.0 points for the case incurred portion.
Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was favorable by 3.0% for the second quarter and 4.1% for the first six months of 2025, compared with unfavorable 2.1% and less than 0.1% for the same periods of 2024. Reserve estimates are inherently uncertain as described in our 2024 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 51.
The excess and surplus lines underwriting expense ratio decreased for the second quarter and first six months of 2025 compared with the same periods a year ago. The ratio for both periods largely benefited from ongoing expense management efforts and premium growth.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 53
Excess and Surplus Lines Insurance Losses Incurred by Size
(Dollars in millions, net of reinsurance) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Current accident year losses greater than $5 million $ - $ - nm $ - $ - nm
Current accident year losses $2 million - $5 million - 2 (100) - 2 (100)
Large loss prior accident year reserve development - - nm - - nm
Total large losses incurred - 2 (100) - 2 (100)
Losses incurred but not reported 31 17 82 77 47 64
Other losses excluding catastrophe losses 42 51 (18) 66 88 (25)
Catastrophe losses 3 3 0 3 4 (25)
Total losses incurred $ 76 $ 73 4 $ 146 $ 141 4
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year losses greater than $5 million - % - % 0.0 - % - % 0.0
Current accident year losses $2 million - $5 million - 1.3 (1.3) - 0.7 (0.7)
Large loss prior accident year reserve development - - 0.0 - - 0.0
Total large loss ratio - 1.3 (1.3) - 0.7 (0.7)
Losses incurred but not reported 18.1 11.6 6.5 23.0 16.4 6.6
Other losses excluding catastrophe losses 24.4 33.8 (9.4) 19.7 30.4 (10.7)
Catastrophe losses 1.3 1.9 (0.6) 0.8 1.2 (0.4)
Total loss ratio 43.8 % 48.6 % (4.8) 43.5 % 48.7 % (5.2)
We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. In the second quarter of 2025, the excess and surplus lines total ratio for large losses, net of reinsurance, was 1.3 percentage points lower than last year's second quarter. The second-quarter 2025 amount of total large losses incurred contributed favorably to the decrease in the six-month 2025 total large loss ratio, compared with 2024, in addition to a first-quarter 2025 ratio that matched the first quarter of 2024. We believe results for the three- and six month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 54
LIFE INSURANCE RESULTS
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Earned premiums $ 83 $ 81 2 $ 163 $ 160 2
Fee revenues 2 2 0 3 3 0
Total revenues 85 83 2 166 163 2
Contract holders' benefits incurred 73 68 7 154 147 5
Investment interest credited to contract holders (31) (31) 0 (63) (62) (2)
Underwriting expenses incurred 24 24 0 47 46 2
Total benefits and expenses 66 61 8 138 131 5
Life insurance segment profit $ 19 $ 22 (14) $ 28 $ 32 (13)
Overview
Performance highlights for the life insurance segment include:
•Revenues - Revenues increased for the six months ended June 30, 2025, compared with the same period a year ago, driven by higher earned premiums from term life insurance, our largest life insurance product line.
Net in-force life insurance policy face amounts increased 1% to $85.472 billion at June 30, 2025, from $84.245 billion at year-end 2024.
Fixed annuity deposits received for the three and six months ended June 30, 2025, were $8 million and $12 million, compared with $10 million and $19 million for the same periods of 2024. Fixed annuity deposits have a minimal impact on earned premiums because deposits received are initially recorded as liabilities. Profit is earned over time by way of interest rate spreads. We do not write variable or equity-indexed annuities.
Life Insurance Premiums
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Term life insurance $ 61 $ 59 3 $ 118 $ 116 2
Whole life insurance 13 13 0 26 26 0
Universal life and other 9 9 0 19 18 6
Net earned premiums $ 83 $ 81 2 $ 163 $ 160 2
•Profitability - Our life insurance segment typically reports a smaller profit compared with the life insurance subsidiary because profits from investment income spreads are included in our investments segment results. We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in our life insurance segment results. A profit of $28 million for our life insurance segment in the first six months of 2025, compared with a profit of $32 million for the same period of 2024, was primarily due to less favorable impacts from the unlocking of interest rate and other actuarial assumptions.
Life insurance segment benefits and expenses consist principally of contract holders' (policyholders') benefits incurred related to traditional life and interest-sensitive products and operating expenses incurred, net of deferred acquisition costs. Total benefits increased in the first six months of 2025 primarily due to less favorable impacts from the unlocking of interest rate and other actuarial assumptions.
Underwriting expenses for the first six months of 2025 increased compared with the same period a year ago, largely due to higher general insurance expense levels compared to the same period of 2024.
We recognize that assets under management, capital appreciation and investment income are integral to evaluating the success of the life insurance segment because of the long duration of life products. On a basis that includes investment income and investment gains or losses from life-insurance-related
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 55
invested assets, the life insurance subsidiary reported net income of $26 million and $47 million for the three and six months ended June 30, 2025, compared with $24 million and $43 million for the three and six months ended June 30, 2024. The life insurance subsidiary portfolio had net after-tax investment losses of $3 million and $4 million for the three and six months ended June 30, 2025, compared with $5 million and $7 million for the three and six months ended June 30, 2024.
INVESTMENTS RESULTS
Overview
The investments segment contributes investment income and investment gains and losses to results of operations. Investments traditionally are our primary source of pretax and after-tax profits.
Investment Income
Pretax investment income grew 18% for the second quarter and 16% for the first six months of 2025, compared with the same periods of 2024. Interest income increased by $41 million and $82 million for the three and six months ended June 30, 204, as net purchases of fixed-maturity securities in recent quarters and higher bond yields are working to generally offset effects of the low interest rate environment for several years prior to 2022. Dividend income increased by $1 million for the second quarter and decreased by $4 million for the first six months of 2025. The decrease for the first six months of 2025 was primarily due to the unfavorable effect on dividend income from net sales of equity securities during the second half of 2024. That effect was partially offset by net purchases of equity securities during the first six months of 2025 and dividend rates that have generally been increasing, although more slowly in recent quarters.
Investments Results
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Total investment income, net of expenses $ 285 $ 242 18 $ 565 $ 487 16
Investment interest credited to contract holders (31) (31) 0 (63) (62) (2)
Investment gains and losses, net 473 137 245 406 749 (46)
Investments profit, pretax $ 727 $ 348 109 $ 908 $ 1,174 (23)
We continue to consider the low interest rate environment that prevailed for several years prior to 2022 as well as the potential for a continuation of both elevated inflation and higher bond yields as we position our portfolio. As bonds in our generally laddered portfolio mature or are called over the near term, we will reinvest with a balanced approach, keeping in mind our long-term strategy and pursuing attractive risk-adjusted after-tax yields. The table below shows the average pretax yield-to-amortized cost associated with expected principal redemptions for our fixed-maturity portfolio. The expected principal redemptions are based on par amounts and include dated maturities, calls and prefunded municipal bonds that we expect will be called during each respective time period.
(Dollars in millions) % Yield Principal redemptions
At June 30, 2025
Fixed-maturity pretax yield profile:
Expected to mature during the remainder of 2025 4.95 % $ 556
Expected to mature during 2026 4.87 1,108
Expected to mature during 2027 5.12 980
Average yield and total expected maturities from the remainder of 2025 through 2027 4.98 $ 2,644
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 56
The table below shows the average pretax yield-to-amortized cost for fixed-maturity securities acquired during the periods indicated. The average yield for total fixed-maturity securities acquired during the first six months of 2025 was higher than the 5.06% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2024. Our fixed-maturity portfolio's average yield of 4.89% for the first six months of 2025, from the investment income table below, was lower than the 5.06% yield for the year-end 2024 fixed-maturities portfolio.
Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
Average pretax yield-to-amortized cost on new fixed-maturities:
Acquired taxable fixed-maturities 5.94 % 6.25 % 5.93 % 6.09 %
Acquired tax-exempt fixed-maturities 4.77 4.22 4.66 4.16
Average total fixed-maturities acquired 5.82 6.06 5.82 5.92
While our bond portfolio more than covers our insurance reserve liabilities, we believe our diversified common stock portfolio of mainly blue chip, dividend-paying companies represents one of our best investment opportunities for the long term. We discussed our portfolio strategies in our 2024 Annual Report on Form 10-K, Item 1, Investments Segment, Page 21, and Item 7, Investments Outlook, Page 89. We discuss risks related to our investment income and our fixed-maturity and equity investment portfolios in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk.
The table below provides details about investment income. Average yields in this table are based on the average invested asset and cash amounts indicated in the table, using fixed-maturity securities valued at amortized cost and all other securities at fair value.
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Investment income:
Interest $ 214 $ 173 24 $ 424 $ 342 24
Dividends 70 69 1 137 141 (3)
Other 5 4 25 12 11 9
Less investment expenses 4 4 0 8 7 14
Investment income, pretax 285 242 18 565 487 16
Less income taxes
49 40 23 97 81 20
Total investment income, after-tax $ 236 $ 202 17 $ 468 $ 406 15
Investment returns:
Average invested assets plus cash and cash
equivalents 		$ 30,500 $ 27,824 $ 30,468 $ 27,495
Average yield pretax 3.74 % 3.48 % 3.71 % 3.54 %
Average yield after-tax 3.10 2.90 3.07 2.95
Effective tax rate 17.2 16.7 17.2 16.7
Fixed-maturity returns:
Average amortized cost $ 17,372 $ 14,909 $ 17,334 $ 14,735
Average yield pretax 4.93 % 4.64 % 4.89 % 4.64 %
Average yield after-tax 4.02 3.81 4.00 3.81
Effective tax rate 18.4 17.9 18.3 17.9
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 57
Total Investment Gains and Losses
Investment gains and losses are recognized on the sale of investments, for certain changes in fair values of securities even though we continue to hold the securities or as otherwise required by GAAP. The change in fair value for equity securities still held is included in investment gains and losses and also in net income. The change in unrealized gains or losses for fixed-maturity securities is included as a component of other comprehensive income (OCI). Accounting requirements for the allowance for credit losses for the fixed-maturity portfolio are disclosed in our 2024 Annual Report on Form 10-K, Item 8, Note 1, Summary of Significant Accounting Policies, Page 128.
The table below summarizes total investment gains and losses, before taxes.
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
Investment gains and losses:
Equity securities:
Investment gains and losses on securities sold, net $ (1) $ 7 $ (3) $ 4
Unrealized gains and losses on securities still held, net 481 142 411 747
Subtotal 480 149 408 751
Fixed maturities:
Gross realized gains 1 4 1 4
Gross realized losses - (6) - (7)
Change in allowance for credit losses, net (13) (16) (15) (25)
Subtotal (12) (18) (14) (28)
Other 5 6 12 26
Total investment gains and losses reported in net income 473 137 406 749
Change in unrealized investment gains and losses:
Fixed maturities 28 (75) 95 (130)
Total $ 501 $ 62 $ 501 $ 619
Of the 5,278 fixed-maturity and short-term securities in the portfolio, 48 securities were trading below 70% of amortized cost at June 30, 2025. Our asset impairment committee regularly monitors the portfolio, including a quarterly review of the entire portfolio for potential credit losses. We believe that if liquidity in the markets were to significantly deteriorate or economic conditions were to significantly weaken, we could experience declines in portfolio values and possibly increases in the allowance for credit losses or write-downs to fair value.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 58
OTHER
We report as Other the noninvestment operations of the parent company and a noninsurance subsidiary, CFC Investment Company. We also report as Other the underwriting results of Cincinnati Re and Cincinnati Global, including earned premiums, loss and loss expenses and underwriting expenses in the table below.
Total revenues for the first six months of 2025 for our Other operations increased, compared with the same period of 2024, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with increases of $30 million and $33 million, respectively. Cincinnati Re had $303 million of earned premiums for the first six months of 2025 and generated an underwriting loss of $36 million due to $104 million of net catastrophe losses from the January 2025 wildfires in southern California. Cincinnati Global had $129 million of earned premiums for the first six months of 2025 and generated an underwriting profit of $17 million. Total expenses for Other increased for the first six months of 2025, primarily due to higher loss and loss expenses from Cincinnati Re and Cincinnati Global.
Other income (loss) in the table below represents profit before income taxes. For the first six months of 2025, total other loss resulted from an underwriting loss from Cincinnati Re and interest expense from debt of the parent company. For the first six months of 2024, total other income was driven by underwriting profit from Cincinnati Re and Cincinnati Global.
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Interest and fees on loans and leases $ 2 $ 2 0 $ 5 $ 4 25
Earned premiums 207 186 11 432 369 17
Other revenues 3 2 50 4 3 33
Total revenues 212 190 12 441 376 17
Interest expense 14 14 0 27 27 0
Loss and loss expenses 112 75 49 319 157 103
Underwriting expenses 56 52 8 132 110 20
Operating expenses 10 9 11 21 13 62
Total expenses 192 150 28 499 307 63
Total other income (loss) $ 20 $ 40 (50) $ (58) $ 69 nm
TAXES
We had $170 million and $132 million of income tax expense for the three and six months ended June 30, 2025, compared with $74 million and $272 million of income tax expense for the same periods of 2024. The effective tax rate for the three and six months ended June 30, 2025, was 19.9% and 18.2% compared with 19.2% and 20.3% for the same periods last year. The change in our effective tax rate between periods was primarily due to large changes in our net investment gains and losses included in income for the periods and changes in underwriting income and investment income.
Historically, we have pursued a strategy of investing some portion of cash flow in tax-advantaged, fixed-maturity and equity securities to minimize our overall tax liability and maximize after-tax earnings. See Tax-Exempt Fixed Maturities in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk for further discussion on municipal bond purchases in our fixed-maturity investment portfolio. For tax years after 2017, for our property casualty insurance subsidiaries, approximately 75% of interest from tax-advantaged, fixed-maturity investments and approximately 40% of dividends from qualified equities are exempt from federal tax after applying proration. For our noninsurance companies, the dividend received deduction exempts 50% of dividends from qualified equities. Our life insurance company does not own tax-advantaged, fixed-maturity investments or equities subject to the dividend received deduction. Details about our effective tax rate are in this quarterly report Item 1, Note 9, Income Taxes.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 59
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2025, shareholders' equity was $14.301 billion, compared with $13.935 billion at December 31, 2024. Total debt was $815 million at June 30, 2025, unchanged from December 31, 2024. At June 30, 2025, cash and cash equivalents totaled $995 million, compared with $983 million at December 31, 2024.
In addition to our historically positive operating cash flow to meet the needs of operations, we have the ability to slow investing activities or sell a portion of our high-quality, liquid investment portfolio if such need arises. We also have additional capacity to borrow on our revolving short-term line of credit, as described further below.
SOURCES OF LIQUIDITY
Subsidiary Dividends
Our lead insurance subsidiary declared dividends of $175 million to the parent company in the first half of 2025, compared with $290 million for the same period of 2024. For full-year 2024, our lead insurance subsidiary paid dividends totaling $290 million to the parent company. State of Ohio regulatory requirements restrict the dividends our insurance subsidiary can pay. For full-year 2025, total dividends that our insurance subsidiary can pay to our parent company without regulatory approval are approximately $1.245 billion.
Investing Activities
Investment income is a source of liquidity for both the parent company and its insurance subsidiaries. We continue to focus on portfolio strategies to balance near-term income generation and long-term book value growth.
Parent company obligations can be funded with income on investments held at the parent-company level or through sales of securities in that portfolio, although our investment philosophy seeks to compound cash flows over the long term. These sources of capital can help minimize subsidiary dividends to the parent company, protecting insurance subsidiary capital.
For a discussion of our historic investment strategy, portfolio allocation and quality, see our 2024 Annual Report on Form 10-K, Item 1, Investments Segment, Page 21.
Insurance Underwriting
Our property casualty and life insurance underwriting operations provide liquidity because we generally receive premiums before paying losses under the policies purchased with those premiums. After satisfying our cash requirements, we use excess cash flows for investment, increasing future investment income.
Historically, cash receipts from property casualty and life insurance premiums, along with investment income, have been more than sufficient to pay claims, operating expenses and dividends to the parent company.
The table below shows a summary of the operating cash flow for property casualty insurance (direct method):
(Dollars in millions) Three months ended June 30, Six months ended June 30,
2025 2024 % Change 2025 2024 % Change
Premiums collected $ 2,466 $ 2,206 12 $ 4,743 $ 4,250 12
Loss and loss expenses paid (1,246) (1,067) (17) (2,645) (2,104) (26)
Commissions and other underwriting expenses paid (668) (615) (9) (1,592) (1,423) (12)
Cash flow from underwriting 552 524 5 506 723 (30)
Investment income received 207 176 18 413 341 21
Cash flow from operations $ 759 $ 700 8 $ 919 $ 1,064 (14)
Collected premiums for property casualty insurance rose $493 million during the first six months of 2025, compared with the same period in 2024. Loss and loss expenses paid for the 2025 period increased $541 million. Commissions and other underwriting expenses paid increased $169 million.
We discuss our future obligations for claims payments and for underwriting expenses in our 2024 Annual Report on Form 10-K, Item 7, Obligations, Page 95.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 60
Capital Resources
At June 30, 2025, our debt-to-total-capital ratio was 5.4%, considerably below our 35% covenant threshold, with $790 million in long-term debt and$25 million in borrowing on our revolving short-term line of credit. At June 30, 2025, $275 million was available for future cash management needs as part of the general provisions of the line of credit agreement, with another $300 million available as part of an accordion feature. Based on our capital requirements at June 30, 2025, we do not anticipate a material increase in debt levels exceeding the available line of credit amount during the year. As a result, we expect changes in our debt-to-total-capital ratio to continue to be largely a function of the contribution of unrealized investment gains or losses to shareholders' equity. During 2024, we terminated our unsecured letter of credit agreement, which provided a portion of the capital needed to support Cincinnati Global's obligations at Lloyd's. We replaced the letter of credit agreement with common equities, bringing total common equities held in Lloyd's trust accounts to $223 million.
We provide details of our three long-term notes in this quarterly report Item 1, Note 3, Fair Value Measurements. None of the notes are encumbered by rating triggers.
Four independent ratings firms award insurer financial strength ratings to our property casualty insurance companies and three firms rate our life insurance company. Those firms made no changes to our parent company debt ratings during the first half of 2025. Our debt ratings are discussed in our 2024 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, Long-Term Debt, Page 94.
Off-Balance Sheet Arrangements
We do not use any special-purpose financing vehicles or have any undisclosed off-balance sheet arrangements (as that term is defined in applicable SEC rules) that are reasonably likely to have a current or future material effect on the company's financial condition, results of operation, liquidity, capital expenditures or capital resources. Similarly, the company holds no fair-value contracts for which a lack of marketplace quotations would necessitate the use of fair-value techniques.
USES OF LIQUIDITY
Our parent company and insurance subsidiary have contractual obligations and other commitments. In addition, one of our primary uses of cash is to enhance shareholder return.
Contractual Obligations
We estimated our future contractual obligations as of December 31, 2024, in our 2024 Annual Report on Form 10-K, Item 7, Contractual Obligations, Page 95. There have been no material changes to our estimates of future contractual obligations since our 2024 Annual Report on Form 10-K.
Other Commitments
In addition to our contractual obligations, we have other property casualty operational commitments:
•Commissions - Commissions paid were $1.063 billion in the first half of 2025. Commission payments generally track with written premiums, except for annual profit-sharing commissions typically paid during the first quarter of the year.
•Other underwriting expenses - Many of our underwriting expenses are not contractual obligations, but reflect the ongoing expenses of our business. Noncommission underwriting expenses paid were $529 million in the first half of 2025.
There were no contributions to our qualified pension plan during the first half of 2025.
Investing Activities
After fulfilling operating requirements, we invest cash flows from underwriting, investment and other corporate activities in fixed-maturity and equity securities on an ongoing basis to help achieve our portfolio objectives. We discuss our investment strategy and certain portfolio attributes in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk.
Uses of Capital
Uses of cash to enhance shareholder return include dividends to shareholders and shares acquired under our repurchase program. In January and May 2025, the board of directors declared regular quarterly cash dividends of
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 61
87 cents per share for an indicated annual rate of $3.48 per share. During the first six months of 2025, we used $258 million to pay cash dividends to shareholders.
PROPERTY CASUALTY INSURANCE LOSS AND LOSS EXPENSE RESERVES
For the business lines in the commercial and personal lines insurance segments, and in total for the excess and surplus lines insurance segment and other property casualty insurance operations, the following table details gross reserves among case, IBNR (incurred but not reported) and loss expense reserves, net of salvage and subrogation reserves. Reserving practices are discussed in our 2024 Annual Report on Form 10-K, Item 7, Property Casualty Loss and Loss Expense Obligations and Reserves, Page 96.
Total gross reserves at June 30, 2025, increased $1.064 billion compared with December 31, 2024. Case loss reserves increased by $191 million, IBNR loss reserves increased by $734 million and loss expense reserves increased by $139 million. The total gross increase was primarily due to our homeowner and commercial casualty lines of business and Cincinnati Re.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 62
Property Casualty Gross Reserves
(Dollars in millions) Loss reserves Loss expense reserves Total gross reserves
Case reserves IBNR reserves Percent of total
At June 30, 2025
Commercial lines insurance:
Commercial casualty $ 1,157 $ 1,628 $ 856 $ 3,641 33.1 %
Commercial property 224 268 97 589 5.3
Commercial auto 424 419 170 1,013 9.2
Workers' compensation 374 581 100 1,055 9.6
Other commercial 160 61 160 381 3.5
Subtotal 2,339 2,957 1,383 6,679 60.7
Personal lines insurance:
Personal auto 269 147 112 528 4.8
Homeowner 384 321 102 807 7.3
Other personal 116 205 10 331 3.0
Subtotal 769 673 224 1,666 15.1
Excess and surplus lines 383 504 318 1,205 11.0
Cincinnati Re 236 978 7 1,221 11.1
Cincinnati Global 118 109 3 230 2.1
Total $ 3,845 $ 5,221 $ 1,935 $ 11,001 100.0 %
At December 31, 2024
Commercial lines insurance:
Commercial casualty $ 1,121 $ 1,498 $ 824 $ 3,443 34.7 %
Commercial property 251 199 90 540 5.4
Commercial auto 423 355 159 937 9.4
Workers' compensation 389 564 89 1,042 10.5
Other commercial 159 45 137 341 3.4
Subtotal 2,343 2,661 1,299 6,303 63.4
Personal lines insurance:
Personal auto 260 106 100 466 4.7
Homeowner 244 134 88 466 4.7
Other personal 102 166 9 277 2.8
Subtotal 606 406 197 1,209 12.2
Excess and surplus lines 395 425 289 1,109 11.2
Cincinnati Re 191 880 8 1,079 10.8
Cincinnati Global 119 115 3 237 2.4
Total $ 3,654 $ 4,487 $ 1,796 $ 9,937 100.0 %
LIFE POLICY AND INVESTMENT CONTRACT RESERVES
Gross life policy and investment contract reserves were $2.959 billion at June 30, 2025, compared with $2.960 billion at year-end 2024. Details about these reserves are in this quarterly report Item 1, Note 5, Life Policy and Investment Contract Reserves. We discussed our life insurance reserving practices in our 2024 Annual Report on Form 10-K, Item 7, Life Insurance Policyholder Obligations and Reserves, Page 102.
Cincinnati Financial Corporation Second-Quarter 2025 10-Q
Page 63
OTHER MATTERS
SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are discussed in our 2024 Annual Report on Form 10-K, Item 8, Note 1, Summary of Significant Accounting Policies, Page 128, and updated in this quarterly report Item 1, Note 1, Accounting Policies.
In conjunction with those discussions, in the Management's Discussion and Analysis in the 2024 Annual Report on Form 10-K, management reviewed the estimates and assumptions used to develop reported amounts related to the most significant policies. Management discussed the development and selection of those accounting estimates with the audit committee of the board of directors.
Cincinnati Financial Corporation published this content on July 28, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on July 28, 2025 at 20:20 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]