Company Quick10K Filing
Quick10K
Cincinnati Financial
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$95.09 163 $15,520
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-25 Officers
8-K 2019-05-13 Regulation FD, Exhibits
8-K 2019-04-27 Shareholder Vote, Regulation FD, Exhibits
8-K 2019-04-24 Earnings, Exhibits
8-K 2019-03-11 Regulation FD, Exhibits
8-K 2019-02-25 Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2019-02-06 Earnings, Off-BS Arrangement, Exhibits
8-K 2019-02-01 Regulation FD, Exhibits
8-K 2018-11-16 Regulation FD, Exhibits
8-K 2018-11-05 Regulation FD, Exhibits
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-10-15 Off-BS Arrangement, Exhibits
8-K 2018-10-12 Earnings, Regulation FD, Exhibits
8-K 2018-10-11 Regulation FD, Exhibits
8-K 2018-09-04 Regulation FD, Exhibits
8-K 2018-08-20 Officers, Regulation FD, Exhibits
8-K 2018-08-10 Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-05-05 Shareholder Vote, Regulation FD, Exhibits
8-K 2018-05-03 Regulation FD, Exhibits
8-K 2018-03-05 Regulation FD, Exhibits
8-K 2018-02-07 Earnings, Exhibits
8-K 2018-01-26 Regulation FD, Exhibits
CP Canadian Pacific Railway 30,720
FCX Freeport-McMoran 16,360
ATH Athene Holding 8,800
BKH Black Hills Power 4,480
MDP Meredith 2,670
LBAI Lakeland Bancorp 838
AMBR Amber Road 272
MEIP MEI Pharma 208
JEM JEM Capital 0
PFHO Pacific Health Care Organization 0
CINF 2019-03-31
Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Note 1 - Accounting Policies
Note 2 - Investments
Note 3 - Fair Value Measurements
Note 4 - Property Casualty Loss and Loss Expenses
Note 5 - Life Policy and Investment Contract Reserves
Note 6 - Deferred Policy Acquisition Costs
Note 7 - Accumulated Other Comprehensive Income
Note 8 - Reinsurance
Note 9 - Income Taxes
Note 10 - Net Income per Common Share
Note 11 - Employee Retirement Benefits
Note 12 - Commitments and Contingent Liabilities
Note 13 - Segment Information
Note 14 - Acquisition
Item 2. Management's Discussion and Analysis of Financial Condition And
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.A cinf-2019331xex31a.htm
EX-31.B cinf-2019331xex31b.htm
EX-32 cinf-2019331xex32.htm

Cincinnati Financial Earnings 2019-03-31

CINF 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cinf-2019331x10q.htm 10-Q Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 (Mark one)
þ        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. 
For the quarterly period ended March 31, 2019.
 ¨       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. 
For the transition period from _____________________ to _____________________.
Commission file number 0-4604
CINCINNATI FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio
 
31-0746871
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification
No.)
 
 
 
6200 S. Gilmore Road, Fairfield, Ohio
 
45014-5141
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code: (513) 870-2000
N/A
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock
CINF
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
þYes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
þYes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
þ Large accelerated filer ¨ Accelerated filer ¨ Nonaccelerated filer ¨ Smaller reporting company
¨ Emerging growth company
¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
¨Yes þ No
As of April 19, 2019, there were 163,229,828 shares of common stock outstanding.




CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019
 
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 2



Part I – Financial Information
Item 1.    Financial Statements (unaudited)
 
Cincinnati Financial Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share data)
 
March 31,
 
December 31,
 
 
2019
 
2018
Assets
 
 

 
 

Investments
 
 

 
 

Fixed maturities, at fair value (amortized cost: 2019—$10,734; 2018—$10,643)
 
$
11,022

 
$
10,689

Equity securities, at fair value (cost: 2019—$3,381; 2018—$3,368)
 
6,571

 
5,920

Other invested assets
 
271

 
123

Total investments
 
17,864

 
16,732

Cash and cash equivalents
 
802

 
784

Investment income receivable
 
128

 
132

Finance receivable
 
72

 
71

Premiums receivable
 
1,785

 
1,644

Reinsurance recoverable
 
527

 
484

Prepaid reinsurance premiums
 
50

 
44

Deferred policy acquisition costs
 
751

 
738

Land, building and equipment, net, for company use (accumulated depreciation:
   2019—$265; 2018—$265)
 
202

 
195

Other assets
 
340

 
308

Separate accounts
 
831

 
803

Total assets
 
$
23,352

 
$
21,935

 
 
 
 
 
Liabilities
 
 

 
 

Insurance reserves
 
 

 
 

Loss and loss expense reserves
 
$
5,944

 
$
5,707

Life policy and investment contract reserves
 
2,784

 
2,779

Unearned premiums
 
2,717

 
2,516

Other liabilities
 
752

 
804

Deferred income tax
 
817

 
627

Note payable
 
32

 
32

Long-term debt and lease obligations
 
845

 
834

Separate accounts
 
831

 
803

Total liabilities
 
14,722

 
14,102

 
 
 
 
 
Commitments and contingent liabilities (Note 12)
 


 


 
 
 
 
 
Shareholders' Equity
 
 

 
 

Common stock, par value—$2 per share; (authorized: 2019 and 2018—500 million
   shares; issued: 2019 and 2018—198.3 million shares)
 
397

 
397

Paid-in capital
 
1,277

 
1,281

Retained earnings
 
8,229

 
7,625

Accumulated other comprehensive income
 
210

 
22

Treasury stock at cost (2019—35.1 million shares and 2018—35.5 million shares)
 
(1,483
)
 
(1,492
)
Total shareholders' equity
 
8,630

 
7,833

Total liabilities and shareholders' equity
 
$
23,352

 
$
21,935

 
 
 
 
 
 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 3



Cincinnati Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars in millions, except per share data)
Three months ended March 31,
 
2019
 
2018
Revenues
 

 
 

Earned premiums
$
1,333

 
$
1,260

Investment income, net of expenses
157

 
150

Investment gains and losses, net
663

 
(191
)
Fee revenues
4

 
4

Other revenues
2

 
1

Total revenues
2,159

 
1,224

Benefits and Expenses
 

 
 

Insurance losses and contract holders' benefits
860

 
854

Underwriting, acquisition and insurance expenses
411

 
403

Interest expense
13

 
13

Other operating expenses
8

 
4

 Total benefits and expenses
1,292

 
1,274

Income (Loss) Before Income Taxes
867

 
(50
)
Provision (Benefit) for Income Taxes
 

 
 

Current
28

 
28

Deferred
144

 
(47
)
Total provision (benefit) for income taxes
172

 
(19
)
Net Income (Loss)
$
695

 
$
(31
)
Per Common Share
 

 
 

Net income (loss)—basic
$
4.27

 
$
(0.19
)
Net income (loss)—diluted
4.22

 
(0.19
)
 
 
 
 
Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 4



Cincinnati Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Dollars in millions)
 
Three months ended March 31,
 
 
2019
 
2018
Net Income (Loss)
 
$
695

 
$
(31
)
Other Comprehensive Income (Loss)
 
 

 
 

Change in unrealized gains on investments, net of tax (benefit) of $50 and ($46),
  respectively
 
192

 
(175
)
Amortization of pension actuarial loss and prior service cost, net of tax of $0 and $0,
  respectively
 

 

Change in life deferred acquisition costs, life policy reserves and other, net of tax (benefit) of $(1) and $1, respectively
 
(4
)
 
5

Other comprehensive income (loss)
 
188

 
(170
)
Comprehensive Income (Loss)
 
$
883

 
$
(201
)
 
 
 
 
 
Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 5



Cincinnati Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
(Dollars in millions)
 
Three months ended March 31,
 
 
2019
 
2018
Common Stock
 
 
 
 
   Beginning of year
 
$
397

 
$
397

   Share-based awards
 

 

   End of period
 
397

 
397

 
 
 
 
 
Paid-In Capital
 
 
 
 
   Beginning of year
 
1,281

 
1,265

   Share-based awards
 
(14
)
 
(17
)
   Share-based compensation
 
9

 
9

   Other
 
1

 
1

   End of period
 
1,277

 
1,258

 
 
 
 
 
Retained Earnings
 
 
 
 
   Beginning of year
 
7,625

 
5,180

Cumulative effect of change in accounting for equity securities as of January 1, 2018
 

 
2,503

Adjusted beginning of year
 
7,625

 
7,683

   Net income (loss)
 
695

 
(31
)
   Dividends declared (per share of $0.56 for 2019 and $0.53 for 2018)
 
(91
)
 
(87
)
   End of period
 
8,229

 
7,565

 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
   Beginning of year
 
22

 
2,788

Cumulative effect of change in accounting for equity securities as of January 1, 2018
 

 
(2,503
)
Adjusted beginning of year
 
22

 
285

   Other comprehensive income (loss)
 
188

 
(170
)
   End of period
 
210

 
115

 
 
 
 
 
Treasury Stock
 
 
 
 
   Beginning of year
 
(1,492
)
 
(1,387
)
   Share-based awards
 
13

 
14

   Shares acquired - share repurchase authorization
 

 
(15
)
   Shares acquired - share-based compensation plans
 
(5
)
 
(2
)
   Other
 
1

 
1

   End of period
 
(1,483
)
 
(1,389
)
 
 
 
 
 
      Total Shareholders' Equity
 
$
8,630

 
$
7,946

 
 
 
 
 
(In millions)
 
 
 
 
Common Stock - Shares Outstanding
 
 
 
 
   Beginning of year
 
162.8

 
163.9

   Share-based awards
 
0.4

 
0.4

   Shares acquired - share repurchase authorization
 

 
(0.2
)
   End of period
 
163.2

 
164.1

 
 
 
 
 
Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 6



Cincinnati Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
 (Dollars in millions)
 
Three months ended March 31,
 
 
2019
 
2018
Cash Flows From Operating Activities
 
 

 
 

Net income (loss)
 
$
695

 
$
(31
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
19

 
18

Investment gains and losses, net
 
(660
)
 
191

Share-based compensation
 
9

 
9

Interest credited to contract holders'
 
11

 
11

Deferred income tax expense
 
144

 
(47
)
Changes in:
 
 

 
 

Investment income receivable
 
4

 
10

Premiums and reinsurance receivable
 
(95
)
 
(26
)
Deferred policy acquisition costs
 
(24
)
 
(10
)
Other assets
 
(25
)
 
(8
)
Loss and loss expense reserves
 
(40
)
 
72

Life policy and investment contract reserves
 
22

 
21

Unearned premiums
 
113

 
55

Other liabilities
 
(93
)
 
(137
)
Current income tax receivable/payable
 
120

 
26

Net cash provided by operating activities
 
200

 
154

Cash Flows From Investing Activities
 
 

 
 

Sale of fixed maturities
 
1

 
5

Call or maturity of fixed maturities
 
269

 
393

Sale of equity securities
 
31

 
104

Purchase of fixed maturities
 
(289
)
 
(438
)
Purchase of equity securities
 
(26
)
 
(110
)
Investment in finance receivables
 
(8
)
 
(6
)
Collection of finance receivables
 
7

 
6

Investment in buildings and equipment
 
(5
)
 
(3
)
Change in other invested assets, net
 
(36
)
 
(5
)
Net cash used in investing activities
 
(56
)
 
(54
)
Cash Flows From Financing Activities
 
 

 
 

Payment of cash dividends to shareholders
 
(85
)
 
(80
)
Shares acquired - share repurchase authorization
 

 
(15
)
Proceeds from stock options exercised
 
3

 
4

Contract holders' funds deposited
 
19

 
21

Contract holders' funds withdrawn
 
(44
)
 
(46
)
Other
 
(19
)
 
(37
)
Net cash used in financing activities
 
(126
)
 
(153
)
Net change in cash and cash equivalents
 
18

 
(53
)
Cash and cash equivalents at beginning of year
 
784

 
657

Cash and cash equivalents at end of period
 
$
802

 
$
604

Supplemental Disclosures of Cash Flow Information:
 
 

 
 

Income taxes received
 
$
94

 
$

Noncash Activities
 
 

 
 

Conversion of securities
 
$

 
$
3

Equipment acquired under capital lease obligations
 
3

 
5

Cashless exercise of stock options
 
5

 
2

Other assets and other liabilities
 
23

 
30

 
 
 
 
 
 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 7



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
NOTE 1 — Accounting Policies
The condensed consolidated financial statements include the accounts of Cincinnati Financial Corporation and its consolidated subsidiaries, each of which is wholly owned. These statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP). Effective February 28, 2019, the company acquired MSP Underwriting Limited (MSP), a London-based global specialty underwriter. Refer to Note 14, Acquisition, for additional information. The interim condensed consolidated financial statements include MSP’s results for the period from February 28, 2019, through March 31, 2019. Foreign exchange rates related to MSP's operations did not have a material impact to our condensed consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.
 
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Our actual results could differ from those estimates. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been condensed or omitted.
 
Our March 31, 2019, condensed consolidated financial statements are unaudited. We believe that we have made all adjustments, consisting only of normal recurring accruals, that are necessary for fair presentation. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our 2018 Annual Report on Form 10-K. The results of operations for interim periods do not necessarily indicate results to be expected for the full year.

Adopted Accounting Updates
ASU 2016-02, Leases (Topic 842)
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The main provision of ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The effective date of ASU 2016-02 is for interim and annual reporting periods beginning after December 15, 2018. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 and ASU 2018-11,Targeted Improvements to Topic 842. ASU 2018-10 makes narrow-scope amendments to certain aspects of the new leasing standard while ASU 2018-11 provides relief from costs of implementing certain aspects of the new leasing standard.

The company adopted this ASU effective January 1, 2019, and it did not have a material impact on our company’s consolidated financial position, cash flows or results of operations. The company has elected the practical expedient package for carrying forward historical lease classifications, not re-evaluating for embedded leases and not reassessing initial direct costs. The company also elected additional practical expedients to not recognize short-term leases on the balance sheet and to only combine lease and nonlease components for certain asset classes. We also elected not to restate prior periods. In support of its insurance operations, the company leases real estate properties which qualify as operating leases and also leases equipment and autos which qualify as finance leases. The lease term for real estate properties is typically five years while the term for equipment and autos is three to six years.

ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities
In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to beginning retained earnings. The effective date of ASU 2017-08 is for interim and annual reporting periods beginning after December 15, 2018. The company adopted this ASU effective January 1, 2019, and it did not have a material impact on our company's consolidated financial position, cash flows or results of operations.




Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 8



ASU 2018-07, Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting
In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718, Compensation - Stock Compensation, which currently only includes share-based payments issued to employees, to include share-based payments issued to nonemployees for the acquisition of goods and services. The effective date of ASU 2018-07 is for interim and annual reporting periods beginning after December 15, 2018. The company adopted this ASU effective January 1, 2019, and it did not have a material impact on our company's consolidated financial position, cash flows or results of operations.

Pending Accounting Updates
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends previous guidance on the impairment of financial instruments by adding an impairment model that allows an entity to recognize expected credit losses as an allowance rather than impairing as they are incurred. The new guidance is intended to reduce complexity of credit impairment models and result in a more timely recognition of expected credit losses. The effective date of ASU 2016-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted. Management is currently evaluating the impact on our company's consolidated financial position, cash flows and results of operations.

ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Instead, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit and income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered. The effective date of ASU 2017-04 is for interim and annual goodwill impairment tests performed in any fiscal years beginning after December 15, 2019. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations.

ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts
In August 2018, the FASB issued ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows. The ASU will simplify and improve the accounting for certain market-based options or guarantees associated with deposit or account balance contracts, simplify amortization of deferred acquisition costs while improving and expanding required disclosures. The effective date of ASU 2018-12 is for interim and annual reporting periods beginning after December 15, 2020. The ASU has not yet been adopted. Management is currently evaluating the impact on our company's consolidated financial position, cash flows and results of operations.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 clarifies the fair value measurement disclosure requirements of ASC 820 by adding, eliminating and modifying disclosures. The effective date of ASU 2018-13 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations.


Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 9



ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 clarifies the guidance in ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The effective date of ASU 2018-14 is for annual reporting periods ending after December 15, 2020. The ASU has not yet been adopted; however, it is not expected to have a material impact on our company's consolidated financial position, cash flows or results of operations.

ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 amends ASC 350 to include implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. The effective date of ASU 2018-15 is for interim and annual reporting periods beginning after December 15, 2019. The ASU has not yet been adopted. Management is currently evaluating the impact on our company's consolidated financial position, cash flows and results of operations.

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 10



NOTE 2 – Investments
The following table provides cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity securities:
(Dollars in millions)
 
Cost or
amortized
cost
 
Gross unrealized
 
Fair value
At March 31, 2019
 
 
gains
 
losses
 
Fixed maturity securities:
 
 

 
 

 
 

 
 

Corporate
 
$
5,753

 
$
160

 
$
25

 
$
5,888

States, municipalities and political subdivisions
 
4,269

 
153

 
3

 
4,419

Government-sponsored enterprises
 
305

 

 
3

 
302

Commercial mortgage-backed
 
292

 
6

 
1

 
297

United States government
 
99

 
1

 

 
100

Foreign government
 
16

 

 

 
16

Total
 
$
10,734

 
$
320

 
$
32

 
$
11,022

At December 31, 2018
 
 

 
 

 
 

 
 

Fixed maturity securities:
 
 

 
 

 
 

 
 

Corporate
 
$
5,712

 
$
85

 
$
87

 
$
5,710

States, municipalities and political subdivisions
 
4,251

 
84

 
31

 
4,304

Government-sponsored enterprises
 
316

 
1

 
7

 
310

Commercial mortgage-backed
 
287

 
3

 
2

 
288

United States government
 
67

 
1

 
1

 
67

Foreign government
 
10

 

 

 
10

Total
 
$
10,643

 
$
174

 
$
128

 
$
10,689

 
 
 
 
 
 
 
 
 
 
The net unrealized investment gains in our fixed-maturity portfolio at March 31, 2019, are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa1/AA at March 31, 2019, and December 31, 2018. At March 31, 2019, Microsoft Corporation (Nasdaq:MSFT) was our largest single equity holding with a fair value of
$296 million, which was 4.6% of our publicly traded common equities portfolio and 1.7% of the total investment portfolio.


Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 11



The table below provides fair values and gross unrealized losses by investment category and by the duration of the securities’ continuous unrealized loss positions:
(Dollars in millions)
 
Less than 12 months
 
12 months or more
 
Total
At March 31, 2019
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
Fixed maturity securities:
 
 

 
 

 
 

 
 

 
 

 
 

Corporate
 
$
343

 
$
5

 
$
685

 
$
20

 
$
1,028

 
$
25

States, municipalities and political subdivisions
 
10

 

 
237

 
3

 
247

 
3

Government-sponsored enterprises
 
7

 

 
204

 
3

 
211

 
3

Commercial mortgage-backed securities
 
2

 

 
45

 
1

 
47

 
1

United States government
 

 

 
23

 

 
23

 

Total
 
$
362

 
$
5

 
$
1,194

 
$
27

 
$
1,556

 
$
32

At December 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

Fixed maturity securities:
 
 

 
 

 
 

 
 

 
 

 
 

Corporate
 
$
2,082

 
$
51

 
$
501

 
$
36

 
$
2,583

 
$
87

States, municipalities and political subdivisions
 
823

 
18

 
340

 
13

 
1,163

 
31

Government-sponsored enterprises
 
49

 
1

 
211

 
6

 
260

 
7

Commercial mortgage-backed
 
77

 

 
64

 
2

 
141

 
2

United States government
 

 

 
33

 
1

 
33

 
1

Total
 
$
3,031

 
$
70

 
$
1,149

 
$
58

 
$
4,180

 
$
128

 
 
 
 
 
 
 
 
 
 
 
 
 

Contractual maturity dates for fixed-maturities investments were:
(Dollars in millions)
 
Amortized
cost
 
Fair
value
 
% of fair
value
At March 31, 2019
 
 
 
Maturity dates:
 
 

 
 

 
 

Due in one year or less
 
$
598

 
$
604

 
5.5
%
Due after one year through five years
 
2,977

 
3,039

 
27.6

Due after five years through ten years
 
3,656

 
3,742

 
33.9

Due after ten years
 
3,503

 
3,637

 
33.0

Total
 
$
10,734

 
$
11,022

 
100.0
%
 
 
 
 
 
 
 

Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.
 

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 12



The following table provides investment income and investment gains and losses, net:
(Dollars in millions)
 
Three months ended March 31,
 
 
2019
 
2018
Investment income:
 
 
 
 
Interest
 
$
111

 
$
110

Dividends
 
46

 
42

Other
 
3

 
1

Total
 
160

 
153

Less investment expenses
 
3

 
3

Total
 
$
157

 
$
150

 
 
 
 
 
Investment gains and losses, net:
 
 

 
 

Equity securities:
 
 

 
 

Investment gains and losses on securities sold, net
 
$
4

 
$
3

Unrealized gains and losses on securities still held, net
 
652

 
(198
)
Subtotal
 
656

 
(195
)
Fixed maturities:
 
 

 
 

Gross realized gains
 
2

 
4

Subtotal
 
2

 
4

 
 
 
 
 
Other
 
5

 

Total
 
$
663

 
$
(191
)
 
 
 
 
 
 
During the three months ended March 31, 2019 and 2018, there were no fixed-maturity securities other-than-temporarily impaired. There were no credit losses on fixed-maturity securities for which a portion of other-than-temporary impairment (OTTI) has been recognized in other comprehensive income for the three months ended March 31, 2019 and 2018.

At March 31, 2019, 358 fixed-maturity securities with a total unrealized loss of $27 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity security had a fair value below 70% of amortized cost. At December 31, 2018, 400 fixed-maturity securities with a total unrealized loss of $58 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity securities had fair values below 70% of amortized cost.
 


Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 13



NOTE 3 – Fair Value Measurements

In accordance with accounting guidance for fair value measurements and disclosures, we categorized our financial instruments, based on the priority of the observable and market-based data for the valuation technique used, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest observable input that has a significant impact on fair value measurement is used. Our valuation techniques have not changed from those used at December 31, 2018, and ultimately management determines fair value. See our 2018 Annual Report on Form 10-K, Item 8, Note 3, Fair Value Measurements, Page 141, for information on characteristics and valuation techniques used in determining fair value.

Fair Value Disclosures for Assets
The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at March 31, 2019, and December 31, 2018. We do not have any liabilities carried at fair value. There were no transfers between Level 1 and Level 2.
(Dollars in millions)
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant other
observable inputs (Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Total
At March 31, 2019
 
 
 
 
Fixed maturities, available for sale:
 
 

 
 

 
 

 
 

Corporate
 
$

 
$
5,887

 
$
1

 
$
5,888

States, municipalities and political subdivisions
 

 
4,415

 
4

 
4,419

Government-sponsored enterprises
 

 
302

 

 
302

Commercial mortgage-backed
 

 
297

 

 
297

United States government
 
100

 

 

 
100

Foreign government
 

 
16

 

 
16

Subtotal
 
100

 
10,917

 
5

 
11,022

Common equities
 
6,381

 

 

 
6,381

Nonredeemable preferred equities
 

 
190

 

 
190

Separate accounts taxable fixed maturities
 

 
820

 

 
820

Top Hat savings plan mutual funds and common
equity (included in Other assets)
 
38

 

 

 
38

Total
 
$
6,519

 
$
11,927

 
$
5

 
$
18,451

 
 
 
 
 
 
 
 
 
At December 31, 2018
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 

 
 

 
 

 
 

Corporate
 
$

 
$
5,709

 
$
1

 
$
5,710

States, municipalities and political subdivisions
 

 
4,300

 
4

 
4,304

Government-sponsored enterprises
 

 
310

 

 
310

Commercial mortgage-backed
 

 
288

 

 
288

United States government
 
67

 

 

 
67

Foreign government
 

 
10

 

 
10

Subtotal
 
67

 
10,617

 
5

 
10,689

Common equities
 
5,742

 

 

 
5,742

Nonredeemable preferred equities
 

 
178

 

 
178

Separate accounts taxable fixed maturities
 

 
791

 

 
791

Top Hat savings plan mutual funds and common
  equity (included in Other assets)
 
34

 

 

 
34

Total
 
$
5,843

 
$
11,586

 
$
5

 
$
17,434

 
 
 
 
 
 
 
 
 

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 14



 
Each financial instrument that was deemed to have significant unobservable inputs when determining valuation is identified in the following tables by security type with a summary of changes in fair value as of March 31, 2019. Total Level 3 assets continue to be less than 1% of financial assets measured at fair value in the condensed consolidated balance sheets. Assets presented in the table below were valued based primarily on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. Transfers out of Level 3 included situations where a broker quote was used without observable inputs or data that could be corroborated by our pricing vendors in the prior period and significant other observable inputs were identified in the current period. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to us.
 
 
 
 
 
 
 
The following table provides the change in Level 3 assets for the three months ended March 31:
(Dollars in millions)
Asset fair value measurements using significant unobservable inputs
 
 
Corporate
fixed
maturities
 
States,
municipalities
and political
subdivisions
fixed maturities
 
Total
Beginning balance, January 1, 2019
 
$
1

 
$
4

 
$
5

Total gains or losses (realized/unrealized):
 
 
 
 

 
 

Included in net income
 

 

 

Included in other comprehensive income
 

 

 

Purchases
 

 

 

Sales
 

 

 

Transfers into Level 3
 

 

 

Transfers out of Level 3
 

 

 

Ending balance, March 31, 2019
 
$
1

 
$
4

 
$
5

 
 
 
 
 
 
 
Beginning balance, January 1, 2018
 
$
1

 
$
5

 
$
6

Total gains or losses (realized/unrealized):
 
 
 
 

 
 
Included in net income (loss)
 

 

 

Included in other comprehensive income (loss)
 

 
(1
)
 
(1
)
Purchases
 

 

 

Sales
 

 

 

Transfers into Level 3
 

 

 

Transfers out of Level 3
 

 

 

Ending balance, March 31, 2018
 
$
1

 
$
4

 
$
5

 
 
 
 
 
 
 

With the exception of the above tables, additional disclosures for the Level 3 category are not material and therefore not provided.

Fair Value Disclosures for Assets and Liabilities Not Carried at Fair Value
 
The disclosures below are presented to provide information about the effects of current market conditions on financial instruments that are not reported at fair value in our condensed consolidated financial statements.
 

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 15



This table summarizes the book value and principal amounts of our long-term debt:
(Dollars in millions)
 
 
 
Book value
 
Principal amount
Interest
rate
 
Year of 
issue
 
 
 
March 31,
 
December 31,
 
March 31,
 
December 31,
 
 
 
 
2019
 
2018
 
2019
 
2018
6.900
%
 
1998
 
Senior debentures, due 2028
 
$
27

 
$
27

 
$
28

 
$
28

6.920
%
 
2005
 
Senior debentures, due 2028
 
391

 
391

 
391

 
391

6.125
%
 
2004
 
Senior notes, due 2034
 
370

 
370

 
374

 
374

 

 
 
 
Total
 
$
788

 
$
788

 
$
793

 
$
793

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table shows fair values of our note payable and long-term debt:
(Dollars in millions)
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant other observable inputs (Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Total
At March 31, 2019
 
 
 
 
Note payable
 
$

 
$
32

 
$

 
$
32

6.900% senior debentures, due 2028
 

 
33

 

 
33

6.920% senior debentures, due 2028
 

 
486

 

 
486

6.125% senior notes, due 2034
 

 
459

 

 
459

Total
 
$

 
$
1,010

 
$

 
$
1,010

 
 
 
 
 
 
 
 
 
At December 31, 2018
 
 
 
 
 
 
 
 
Note payable
 
$

 
$
32

 
$

 
$
32

6.900% senior debentures, due 2028
 

 
32

 

 
32

6.920% senior debentures, due 2028
 

 
471

 

 
471

6.125% senior notes, due 2034
 

 
440

 

 
440

Total
 
$

 
$
975

 
$

 
$
975

 
 
 
 
 
 
 
 
 
 
The following table shows the fair value of our life policy loans included in other invested assets and the fair values of our deferred annuities and structured settlements included in life policy and investment contract reserves:
(Dollars in millions)
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant other
observable inputs (Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Total
At March 31, 2019
 
 
 
 
Life policy loans
 
$

 
$

 
$
41

 
$
41

 
 
 
 
 
 
 
 
 
Deferred annuities
 

 

 
751

 
751

Structured settlements
 

 
195

 

 
195

Total
 
$

 
$
195

 
$
751

 
$
946

 
 
 
 
 
 
 
 
 
At December 31, 2018
 
 
 
 
 
 
 
 
Life policy loans
 
$

 
$

 
$
40

 
$
40

 
 
 
 
 
 
 
 
 
Deferred annuities
 

 

 
742

 
742

Structured settlements
 

 
185

 

 
185

Total
 
$

 
$
185

 
$
742

 
$
927

 
 
 
 
 
 
 
 
 
 
Outstanding principal and interest for these life policy loans totaled $32 million and $33 million at March 31, 2019, and December 31, 2018, respectively.
 

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 16



Recorded reserves for the deferred annuities were $776 million and $787 million at March 31, 2019, and December 31, 2018, respectively. Recorded reserves for the structured settlements were $154 million and $156 million at March 31, 2019, and December 31, 2018, respectively.



Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 17



NOTE 4 – Property Casualty Loss and Loss Expenses
This table summarizes activity for our consolidated property casualty loss and loss expense reserves:
(Dollars in millions)
 
Three months ended March 31,
 
 
2019
 
2018
Gross loss and loss expense reserves, beginning of period
 
$
5,646

 
$
5,219

Less reinsurance recoverable
 
238

 
187

Net loss and loss expense reserves, beginning of period
 
5,408

 
5,032

 
 
 
 
 
  Net loss and loss expense reserves related to acquisition of MSP at February 28, 2019
 
246

 

 
 
 
 
 
Net incurred loss and loss expenses related to:
 
 

 
 

Current accident year
 
857

 
839

Prior accident years
 
(67
)
 
(48
)
Total incurred
 
790

 
791

Net paid loss and loss expenses related to:
 
 

 
 

Current accident year
 
177

 
195

Prior accident years
 
647

 
519

Total paid
 
824

 
714

Net loss and loss expense reserves, end of period
 
5,620

 
5,109

Plus reinsurance recoverable
 
266

 
184

Gross loss and loss expense reserves, end of period
 
$
5,886

 
$
5,293

 
 
 
 
 
 
We use actuarial methods, models and judgment to estimate, as of a financial statement date, the property casualty loss and loss expense reserves required to pay for and settle all outstanding insured claims, including incurred but not reported (IBNR) claims, as of that date. The actuarial estimate is subject to review and adjustment by an inter-departmental committee that includes actuarial, claims, underwriting, loss prevention and accounting management. This committee is familiar with relevant company and industry business, claims and underwriting trends, as well as general economic and legal trends that could affect future loss and loss expense payments. The amount we will actually have to pay for claims can be highly uncertain. This uncertainty, together with the size of our reserves, makes the loss and loss expense reserves our most significant estimate. The reserve for loss and loss expenses in the condensed consolidated balance sheets also included $58 million at March 31, 2019, and
$52 million at March 31, 2018, for certain life and health loss and loss expense reserves.

For the three months ended March 31, 2019, we experienced $67 million of favorable development on prior accident years, including $62 million of favorable development in commercial lines, $3 million of unfavorable development in personal lines and $2 million of favorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $31 million for the commercial casualty line, $15 million for the workers' compensation line and $11 million for the commercial auto line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized unfavorable reserve development of $11 million for the homeowner line of business due primarily to higher-than-anticipated loss development on known claims.

For the three months ended March 31, 2018, we experienced $48 million of favorable development on prior accident years, including $35 million of favorable development in commercial lines, $1 million of favorable development in personal lines, $10 million of favorable development in excess and surplus lines and $2 million of favorable development in our reinsurance assumed operations. This included $7 million from favorable development of catastrophe losses. Within commercial lines, we recognized favorable reserve development of
$21 million for the commercial property line, $13 million for the workers' compensation line, $2 million for the commercial auto line and $4 million for the other commercial lines due to reduced uncertainty of prior accident year loss and loss adjustment expenses for these lines. We recognized unfavorable reserve development of $5 million for the commercial casualty line. The unfavorable reserve development for commercial casualty was primarily due to an increase in case reserves for accident year 2017.

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 18



NOTE 5 – Life Policy and Investment Contract Reserves
We establish the reserves for traditional life insurance policies based on expected expenses, mortality, morbidity, withdrawal rates, timing of claim presentation and investment yields, including a provision for uncertainty. Once these assumptions are established, they generally are maintained throughout the lives of the contracts. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our assumptions for expected mortality, morbidity and withdrawal rates as well as for expected expenses. We base our assumptions for expected investment income on our own experience adjusted for current economic conditions.
 
We establish reserves for the company’s deferred annuity, universal life and structured settlement policies equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance, based on expected no-lapse guarantee benefits and expected policy assessments.

This table summarizes our life policy and investment contract reserves:
(Dollars in millions)
 
March 31,
2019
 
December 31, 2018
Life policy reserves:
 
 
 
 
Ordinary/traditional life
 
$
1,168

 
$
1,149

Other
 
48

 
48

Subtotal
 
1,216

 
1,197

Investment contract reserves:
 
 
 
 
Deferred annuities
 
776

 
787

Universal life
 
632

 
632

Structured settlements
 
154

 
156

Other
 
6

 
7

Subtotal
 
1,568

 
1,582

Total life policy and investment contract reserves
 
$
2,784

 
$
2,779

 
 
 
 
 



Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 19



NOTE 6 – Deferred Policy Acquisition Costs
Expenses directly related to successfully acquired insurance policies – primarily commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience, and we evaluate the costs for recoverability. The table below shows the deferred policy acquisition costs and asset reconciliation.
(Dollars in millions)
 
Three months ended March 31,

 
2019
 
2018
Property casualty:
 
 
 
 
Deferred policy acquisition costs asset, beginning of period
 
$
464

 
$
438

Capitalized deferred policy acquisition costs
 
254

 
232

Amortized deferred policy acquisition costs
 
(233
)
 
(224
)
Deferred policy acquisition costs asset, end of period
 
$
485

 
$
446

 
 
 
 
 
Life:
 
 
 
 
Deferred policy acquisition costs asset, beginning of period
 
$
274

 
$
232

Capitalized deferred policy acquisition costs
 
16

 
13

Amortized deferred policy acquisition costs
 
(13
)
 
(10
)
Shadow deferred policy acquisition costs
 
(11
)
 
10

Deferred policy acquisition costs asset, end of period
 
$
266

 
$
245

 
 
 
 
 
Consolidated:
 
 
 
 
Deferred policy acquisition costs asset, beginning of period
 
$
738

 
$
670

Capitalized deferred policy acquisition costs
 
270

 
245

Amortized deferred policy acquisition costs
 
(246
)
 
(234
)
Shadow deferred policy acquisition costs
 
(11
)
 
10

Deferred policy acquisition costs asset, end of period
 
$
751

 
$
691

 
 
 
 
 

No premium deficiencies were recorded in the condensed consolidated statements of income, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income.
 

Cincinnati Financial Corporation First-Quarter 2019 10-Q
Page 20



NOTE 7 – Accumulated Other Comprehensive Income
Accumulated other comprehensive income (AOCI) includes changes in unrealized gains and losses on investments, changes in pension obligations and changes in life deferred acquisition costs, life policy reserves and other as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
Three months ended March 31,
 
2019
 
 
2018
 
Before tax
 
Income tax
 
Net
 
 
Before tax
 
Income tax
 
Net
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
AOCI, beginning of period
$
46

 
$
9

 
$
37

 
 
$
3,540

 
$
733

 
$
2,807

Cumulative effect of change in accounting for equity securities as of January 1, 2018

 

 

 
 
(3,155
)
 
(652
)
 
(2,503
)
Adjusted AOCI, beginning of period
46

 
9

 
37

 
 
385

 
81

 
304

OCI before investment gains and losses, net, recognized in net income
244

 
51

 
193

 
 
(217
)
 
(45
)
 
(172
)
Investment gains and losses, net, recognized in net income
(2
)
 
(1
)
 
(1
)
 
 
(4
)
 
(1
)
 
(3
)
OCI
242

 
50

 
192

 
 
(221
)
 
(46
)
 
(175
)
AOCI, end of period
$
288

 
$
59

 
$
229

 
 
$
164

 
$
35

 
$
129

 
 
 
 
 
 
 
 
 
 
 
 
 
Pension obligations:
 
 
 
 
 
 
 
 
 
 
 
 
AOCI, beginning of period
$
(16
)
 
$
(2
)
 
$
(14
)
 
 
$
(12
)
 
$
(1
)
 
$
(11
)
OCI excluding amortization recognized in net income

 

 

 
 

 

 

Amortization recognized in net income

 

 

 
 

 

 

OCI