CINCINNATI FINANCIAL CORP [CINF] Filings

10-Q 1 cinf-20240331.htm 10-Q cinf-20240331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2024.

☐ 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, former address and former fiscal year, 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.

☑Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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).

☑Yes ☐ 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.

☑ 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 ☑ No

As of April 19, 2024, there were 156,558,411 shares of common stock outstanding.

Table of Contents

CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTER ENDED March 31, 2024

TABLE OF CONTENTS


Part I – Financial Information			3

Item 1. Financial Statements (unaudited)			3

Condensed Consolidated Balance Sheets			3

Condensed Consolidated Statements of Income			4

Condensed Consolidated Statements of Comprehensive Income			5

Condensed Consolidated Statements of Shareholders’ Equity			6

Condensed Consolidated Statements of Cash Flows			7

Notes to Condensed Consolidated Financial Statements (unaudited)			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			30

Safe Harbor Statement			30

Corporate Financial Highlights			33

Financial Results			40

Liquidity and Capital Resources			55

Other Matters			59

Item 3. Quantitative and Qualitative Disclosures about Market Risk			59

Item 4. Controls and Procedures			66

Part II – Other Information			67

Item 1. Legal Proceedings			67

Item 1A. Risk Factors			67

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			68

Item 5. Other Information			69

Item 6. Exhibits			70

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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,
	2024		2023
Assets
Investments
Fixed maturities, at fair value (amortized cost: 2024—$14,709; 2023—$14,361)	$	14,084	$	13,791
Equity securities, at fair value (cost: 2024—$4,313; 2023—$4,282)	11,557		10,989

Other invested assets	608		577
Total investments	26,249		25,357
Cash and cash equivalents	619		907

Investment income receivable	202		192
Finance receivable	106		108
Premiums receivable	2,805		2,592
Reinsurance recoverable	617		651
Prepaid reinsurance premiums	77		55
Deferred policy acquisition costs	1,143		1,093
Land, building and equipment, net, for company use (accumulated depreciation: 2024—$331; 2023—$337)	211		208
Other assets	771		681
Separate accounts	927		925
Total assets	$	33,727	$	32,769

Liabilities
Insurance reserves
Loss and loss expense reserves	$	9,246	$	9,050
Life policy and investment contract reserves	3,013		3,068
Unearned premiums	4,398		4,119
Other liabilities	1,156		1,311
Deferred income tax	1,460		1,324
Note payable	25		25
Long-term debt and lease obligations	848		849
Separate accounts	927		925
Total liabilities	21,073		20,671

Commitments and contingent liabilities (Note 12)

Shareholders' Equity
Common stock, par value—$2 per share; (authorized: 2024 and 2023—500 million shares; issued: 2024 and 2023—198.3 million shares)	397		397
Paid-in capital	1,446		1,437
Retained earnings	13,712		13,084
Accumulated other comprehensive loss	(442)		(435)
Treasury stock at cost (2024—41.8 million shares and 2023—41.3 million shares)	(2,459)		(2,385)
Total shareholders' equity	12,654		12,098
Total liabilities and shareholders' equity	$	33,727	$	32,769

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

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Income


(Dollars in millions, except per share data)	Three months ended March 31,
		2024		2023
Revenues
Earned premiums		$	2,071	$	1,918
Investment income, net of expenses		245		210
Investment gains and losses, net		612		106
Fee revenues		4		4
Other revenues		3		3
Total revenues		2,935		2,241
Benefits and Expenses
Insurance losses and contract holders' benefits		1,349		1,398
Underwriting, acquisition and insurance expenses		616		556
Interest expense		13		14
Other operating expenses		4		5
Total benefits and expenses		1,982		1,973
Income Before Income Taxes		953		268
Provision for Income Taxes
Current		61		16
Deferred		137		27
Total provision for income taxes		198		43
Net Income		$	755	$	225
Per Common Share
Net income — basic		$	4.82	$	1.43
Net income — diluted		4.78		1.42

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

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income


(Dollars in millions)	Three months ended March 31,
		2024		2023
Net Income		$	755	$	225
Other Comprehensive Income (Loss)
Change in unrealized gains and losses on investments, net of tax (benefit) of $(11) and $35, respectively		(44)		128
Amortization of pension actuarial loss and prior service cost, net of tax (benefit) of $0 and $(1), respectively		—		(5)
Change in life policy reserves, reinsurance recoverable and other, net of tax (benefit) of $10 and $(9), respectively		37		(36)
Other comprehensive income (loss)		(7)		87
Comprehensive Income		$	748	$	312

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

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity


(Dollars in millions)	Three months ended March 31,
		2024		2023
Common Stock
Beginning of period		$	397	$	397
Share-based awards		—		—
End of period		397		397

Paid-In Capital
Beginning of period		1,437		1,392
Share-based awards		(6)		(6)
Share-based compensation		14		12
Other		1		—
End of period		1,446		1,398

Retained Earnings
Beginning of period		13,084		11,711


Net income		755		225
Dividends declared		(127)		(118)
End of period		13,712		11,818

Accumulated Other Comprehensive Loss
Beginning of period		(435)		(614)


Other comprehensive income (loss)		(7)		87
End of period		(442)		(527)

Treasury Stock
Beginning of period		(2,385)		(2,324)
Share-based awards		8		7
Shares acquired - share repurchase authorization		(75)		(25)
Shares acquired - share-based compensation plans		(7)		(3)

End of period		(2,459)		(2,345)

Total Shareholders' Equity		$	12,654	$	10,741

(In millions, except per common share)
Common Stock - Shares Outstanding
Beginning of period		157.0		157.1
Share-based awards		0.3		0.3
Shares acquired - share repurchase authorization		(0.7)		(0.2)
Shares acquired - share-based compensation plans		(0.1)		—

End of period		156.5		157.2

Dividends declared per common share		$	0.81	$	0.75

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

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows


(Dollars in millions)	Three months ended March 31,
	2024		2023
Cash Flows From Operating Activities
Net income	$	755	$	225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other	34		40
Investment gains and losses, net	(608)		(93)

Interest credited to contract holders	11		10
Deferred income tax expense	137		27
Changes in:

Premiums and reinsurance receivable	(203)		(229)
Deferred policy acquisition costs	(50)		(36)
Other assets	(8)		(24)
Loss and loss expense reserves	196		293
Life policy and investment contract reserves	26		25
Unearned premiums	279		201
Other liabilities	(161)		(121)
Current income tax receivable/payable	(55)		(68)
Net cash provided by operating activities	353		250
Cash Flows From Investing Activities
Sale, call or maturity of fixed maturities	464		303

Sale of equity securities	266		4
Purchase of fixed maturities	(838)		(606)
Purchase of equity securities	(226)		(22)


Changes in finance receivables	2		(3)

Investment in building and equipment	(7)		(4)
Change in other invested assets, net	(16)		(34)
Net cash used in investing activities	(355)		(362)
Cash Flows From Financing Activities
Payment of cash dividends to shareholders	(116)		(106)
Shares acquired - share repurchase authorization	(75)		(25)

Proceeds from stock options exercised	3		5
Contract holders' funds deposited	19		20
Contract holders' funds withdrawn	(60)		(58)
Other	(57)		(33)
Net cash used in financing activities	(286)		(197)
Net change in cash and cash equivalents	(288)		(309)
Cash and cash equivalents at beginning of year	907		1,264
Cash and cash equivalents at end of period	$	619	$	955
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	—	$	1
Income taxes paid	106		76
Noncash Activities

Equipment acquired under finance lease obligations	$	4	$	1
Share-based compensation	17		11
Other assets and other liabilities	97		96

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

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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). 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, 2024, 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 2023 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.

Pending Accounting Updates

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 enhances reportable segment disclosures by requiring entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure of profit or loss. This ASU also requires disclosure of the title and position of the CODM as well as a description of how the reported measure of profit or loss is used to assess segment performance and allocate resources. The effective date of ASU 2023-07 is for annual reporting periods beginning after December 15, 2023, and interim reporting periods within annual periods beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented. The ASU has not yet been adopted and will not have a material impact on our company’s consolidated financial position, results of operations or cash flows, but the ASU will require additional disclosures in our annual and interim financial statements.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures by requiring entities to disclose specific categories within their rate reconciliation as well as additional items within those categories above a prescribed threshold. This ASU also requires disclosure of the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes as well as additional items within those categories above a prescribed threshold. The effective date of ASU 2023-09 is for annual reporting periods beginning after December 15, 2024, and should be applied prospectively with retrospective application permitted. The ASU has not yet been adopted and will not have a material impact on our company’s consolidated financial position, results of operations or cash flows, but the ASU will require additional disclosures in our annual financial statements.

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NOTE 2 – Investments

The following table provides amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity securities:


(Dollars in millions)	Amortized cost		Gross unrealized				Fair value
At March 31, 2024			gains		losses
Fixed-maturity securities:
Corporate	$	8,002	$	60	$	463	$	7,599
States, municipalities and political subdivisions	4,872		28		232		4,668
Government-sponsored enterprises	1,424		1		4		1,421
Asset-backed	200		—		11		189
United States government	182		—		4		178
Foreign government	29		—		—		29

Total	$	14,709	$	89	$	714	$	14,084






At December 31, 2023
Fixed-maturity securities:
Corporate	$	7,836	$	70	$	454	$	7,452
States, municipalities and political subdivisions	4,867		44		208		4,703
Government-sponsored enterprises	1,227		3		6		1,224
Asset-backed	203		—		16		187
United States government	203		—		3		200
Foreign government	25		—		—		25






Total	$	14,361	$	117	$	687	$	13,791

The increase in net unrealized investment losses in our fixed-maturity portfolio at March 31, 2024, is primarily due to an increase in U.S. Treasury yields that were partially offset by a tightening of corporate credit spreads. Our asset-backed securities had an average rating of Aa3/AA- at both March 31, 2024, and December 31, 2023.

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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, 2024	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	642	$	13	$	5,488	$	450	$	6,130	$	463
States, municipalities and political subdivisions	1,099		9		1,900		223		2,999		232
Government-sponsored enterprises	396		1		168		3		564		4
Asset-backed	30		—		133		11		163		11
United States government	74		—		105		4		179		4
Foreign government	17		—		5		—		22		—
Total	$	2,258	$	23	$	7,799	$	691	$	10,057	$	714





At December 31, 2023
Fixed-maturity securities:
Corporate	$	379	$	13	$	5,560	$	441	$	5,939	$	454
States, municipalities and political subdivisions	313		2		1,932		206		2,245		208
Government-sponsored enterprises	652		3		113		3		765		6
Asset-backed	5		—		172		16		177		16
United States government	32		—		129		3		161		3
Foreign government	3		—		6		—		9		—





Total	$	1,384	$	18	$	7,912	$	669	$	9,296	$	687

Contractual maturity dates for fixed-maturities securities were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At March 31, 2024
Maturity dates:
Due in one year or less	$	971	$	963	6.8	%
Due after one year through five years	4,413		4,300		30.5
Due after five years through ten years	3,553		3,427		24.3
Due after ten years	5,772		5,394		38.4
Total	$	14,709	$	14,084	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.

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The following table provides investment income and investment gains and losses, net:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Investment income:
Interest		$	169	$	140
Dividends		72		66
Other		7		7
Total		248		213
Less investment expenses		3		3
Total		$	245	$	210

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net		$	(11)	$	(1)
Unrealized gains and losses on securities still held, net		613		106
Subtotal		602		105
Fixed-maturity securities:
Gross realized gains		—		1
Gross realized losses		(1)		(1)
Change in allowance for credit losses, net		(9)		—

Subtotal		(10)		—

Other		20		1

Total		$	612	$	106

The fair value of our equity portfolio was $11.557 billion and $10.989 billion at March 31, 2024, and December 31, 2023, respectively. Microsoft Corporation (Nasdaq:MSFT), an equity holding, was our largest single investment holding with a fair value of $942 million and $842 million, which was 8.4% and 7.9% of our publicly traded common equities portfolio and 3.7% and 3.4% of the total investment portfolio at March 31, 2024, and December 31, 2023, respectively.

The allowance for credit losses on fixed-maturity securities was $27 million and $18 million at March 31, 2024, and December 31, 2023, respectively.

There were 3,329 and 2,840 fixed-maturity securities in a total unrealized loss position of $714 million and $687 million at March 31, 2024, and December 31, 2023, respectively. Of those totals, 12 and 20 fixed-maturity securities had fair values below 70% of amortized cost at March 31, 2024, and December 31, 2023, respectively.

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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, 2023, and ultimately management determines fair value. See our 2023 Annual Report on Form 10-K, Item 8, Note 3, Fair Value Measurements, Page 139, 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, 2024, and December 31, 2023. We do not have any liabilities carried at fair value.


(Dollars in millions)	Level 1		Level 2		Level 3		Total
At March 31, 2024
Fixed maturities, available for sale:
Corporate	$	—	$	7,599	$	—	$	7,599
States, municipalities and political subdivisions	—		4,668		—		4,668
Government-sponsored enterprises	—		1,421		—		1,421
Asset-backed	—		189		—		189
United States government	178		—		—		178
Foreign government	—		29		—		29


Subtotal	178		13,906		—		14,084
Common equities	11,203		—		—		11,203
Nonredeemable preferred equities	—		354		—		354

Separate accounts taxable fixed maturities	—		866		—		866
Top Hat savings plan mutual funds and common equity (included in Other assets)	78		—		—		78
Total	$	11,459	$	15,126	$	—	$	26,585

At December 31, 2023
Fixed maturities, available for sale:
Corporate	$	—	$	7,452	$	—	$	7,452
States, municipalities and political subdivisions	—		4,703		—		4,703
Government-sponsored enterprises	—		1,224		—		1,224
Asset-backed	—		187		—		187
United States government	200		—		—		200
Foreign government	—		25		—		25

Subtotal	200		13,591		—		13,791
Common equities	10,641		—		—		10,641
Nonredeemable preferred equities	—		348		—		348
Separate accounts taxable fixed maturities	—		854		—		854
Top Hat savings plan mutual funds and common equity (included in Other assets)	67		—		—		67
Total	$	10,908	$	14,793	$	—	$	25,701

We also held Level 1 cash and cash equivalents of $619 million and $907 million at March 31, 2024, and December 31, 2023, respectively.

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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.

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,
			2024		2023		2024		2023
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	372		372		374		374
Total			$	790	$	790	$	793	$	793

The following table shows fair values of our note payable and long-term debt:


(Dollars in millions)	Level 1		Level 2		Level 3		Total
At March 31, 2024
Note payable	$	—	$	25	$	—	$	25
6.900% senior debentures, due 2028	—		29		—		29
6.920% senior debentures, due 2028	—		416		—		416
6.125% senior notes, due 2034	—		399		—		399
Total	$	—	$	869	$	—	$	869

At December 31, 2023
Note payable	$	—	$	25	$	—	$	25
6.900% senior debentures, due 2028	—		29		—		29
6.920% senior debentures, due 2028	—		420		—		420
6.125% senior notes, due 2034	—		394		—		394
Total	$	—	$	868	$	—	$	868

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)	Level 1		Level 2		Level 3		Total
At March 31, 2024
Life policy loans	$	—	$	—	$	40	$	40

Deferred annuities	—		—		577		577
Structured settlements	—		137		—		137
Total	$	—	$	137	$	577	$	714

At December 31, 2023
Life policy loans	$	—	$	—	$	39	$	39

Deferred annuities	—		—		603		603
Structured settlements	—		141		—		141
Total	$	—	$	141	$	603	$	744

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Outstanding principal and interest for these life policy loans totaled $34 million and $33 million at March 31, 2024, and December 31, 2023, respectively.

Recorded reserves for the deferred annuities were $631 million and $656 million at March 31, 2024, and December 31, 2023, respectively. Recorded reserves for the structured settlements were $122 million and $123 million at March 31, 2024, and December 31, 2023, respectively.

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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,
		2024		2023
Gross loss and loss expense reserves, beginning of period		$	8,975	$	8,336
Less reinsurance recoverable		362		405
Net loss and loss expense reserves, beginning of period		8,613		7,931





Net incurred loss and loss expenses related to:
Current accident year		1,370		1,376
Prior accident years		(100)		(59)
Total incurred		1,270		1,317
Net paid loss and loss expenses related to:
Current accident year		205		187
Prior accident years		832		859
Total paid		1,037		1,046
Net loss and loss expense reserves, end of period		8,846		8,202
Plus reinsurance recoverable		332		424
Gross loss and loss expense reserves, end of period		$	9,178	$	8,626

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 $68 million and $67 million at March 31, 2024, and 2023, respectively, for certain life and health loss and loss expense reserves.

We experienced $100 million of favorable development on prior accident years, including $38 million of favorable development in commercial lines, $33 million of favorable development in personal lines and $3 million of favorable development in excess and surplus lines for the three months ended March 31, 2024. Within commercial lines, we recognized favorable reserve development of $22 million for the commercial property line and $12 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $25 million for the homeowner line and $5 million for the personal auto line.

We experienced $59 million of favorable development on prior accident years, including $32 million of favorable development in commercial lines, $31 million of favorable development in personal lines and $9 million of favorable development in excess and surplus lines for the three months ended March 31, 2023. Within commercial lines, we recognized favorable reserve development of $16 million for the commercial property line and $15 million for

the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $27 million for the homeowner line.

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NOTE 5 – Life Policy and Investment Contract Reserves

We establish the reserves for traditional life policies including term, whole life and other products based on the present value of future benefits and claim expenses less the present value of future net premiums. Net premium is the portion of gross premium required to provide for all benefits and claim expenses. We estimate future benefits and claim expenses and net premium using certain cash flow assumptions including mortality, morbidity and lapse rates as well as a discount rate assumption. The cash flow assumptions are established based on our current expectations and are reviewed annually to determine any necessary updates. These assumptions are also updated on an interim basis if evidence suggests that they should be revised. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our cash flow assumptions. The discount rate assumption is based on upper-medium grade fixed-income instrument yields (market value discount rates) and is updated quarterly. Changes in the inputs, judgments and assumptions during the period and the related measurement impact on the liability are reflected in the below tables.

We establish reserves for our universal life, deferred annuity and other investment contracts 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.

The following table summarizes our life policy and investment contract reserves and provides a reconciliation of the balances described in the below tables to those in the condensed consolidated balance sheets:


(Dollars in millions)	March 31, 2024		December 31, 2023
Life policy reserves:
Term	$	1,054	$	1,066
Whole life	418		434
Other	99		97
Subtotal	1,571		1,597
Investment contract reserves:
Deferred annuities	631		656
Universal life	585		585
Structured settlements	122		123
Other	104		107
Subtotal	1,442		1,471
Total life policy and investment contract reserves	$	3,013	$	3,068

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The balances and changes in the term and whole life policy reserves included in life policy and investment contract reserves is as follows:


(Dollars in millions)	Three months ended March 31,
	2024				2023
	Term		Whole life		Term		Whole life
Present value of expected net premiums:
Balance, beginning of period	$	1,700	$	223	$	1,643	$	208
Beginning balance at original discount rate	1,712		225		1,708		217
Effect of changes in cash flow assumptions	—		—		—		—
Effect of actual variances from expected experience	(9)		—		(3)		1
Adjusted beginning of period balance	1,703		225		1,705		218
Issuances	35		5		38		7
Interest accrual	18		2		18		2
Net premiums collected	(46)		(7)		(46)		(7)
Ending balance at original discount rate	1,710		225		1,715		220
Effect of changes in discount rate assumptions	(50)		(6)		(16)		(3)
Balance, end of period	1,660		219		1,699		217

Present value of expected future policy benefits:
Balance, beginning of period	2,751		657		2,584		614
Beginning balance at original discount rate	2,765		628		2,692		607
Effect of changes in cash flow assumptions	—		—		—		—
Effect of actual variances from expected experience	(14)		—		(2)		1
Adjusted beginning of period balance	2,751		628		2,690		608
Issuances	35		5		38		6
Interest accrual	31		8		30		8
Benefits paid	(37)		(8)		(46)		(8)
Ending balance at original discount rate	2,780		633		2,712		614
Effect of changes in discount rate assumptions	(82)		4		(21)		30
Balance, end of period	2,698		637		2,691		644

Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums	1,038		418		992		427
Impact of flooring at cohort level	16		—		19		—
Net life policy reserves	1,054		418		1,011		427
Less reinsurance recoverable at original discount rate	(100)		(24)		(96)		(25)
Less effect of discount rate assumption changes on reinsurance recoverable	(8)		(4)		(10)		(6)
Net life policy reserves, after reinsurance recoverable	$	946	$	390	$	905	$	396

Weighted-average duration of the net life policy reserves in years	11		16		12		16

The total impact of flooring at cohort level in the above tables includes the effect of discount rate assumption changes of $2 million and $5 million at March 31, 2024 and 2023, respectively.

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The following table shows the amount of undiscounted and discounted expected future benefit payments and expected gross premiums for our term and whole life policies:


(Dollars in millions)	At March 31,
	2024				2023
	Undiscounted		Discounted		Undiscounted		Discounted
Term
Expected future benefit payments	$	4,816	$	2,698	$	4,696	$	2,691
Expected future gross premiums	4,386		2,601		4,470		2,674
Whole life
Expected future benefit payments	$	1,660	$	637	$	1,586	$	644
Expected future gross premiums	663		402		618		384

The following table shows the amount of revenue and interest recognized in the condensed consolidated statements of income related to our term and whole life policies:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Gross premiums
Term		$	74	$	73
Whole life		13		12

Total		$	87	$	85
Interest accretion
Term		$	13	$	12
Whole life		6		6

Total		$	19	$	18

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums was immaterial for the three months ended March 31, 2024, and 2023.

The following table shows the weighted-average interest rate for our term and whole life products:


	At March 31,
	2024		2023
Term
Interest accretion rate	5.26	%	5.32	%
Current discount rate	5.09		4.81
Whole life
Interest accretion rate	5.90	%	5.94	%
Current discount rate	5.40		5.06

The discount rate assumption was developed by calculating forward rates from market yield curves of upper-medium grade fixed-income instruments.

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The following table shows the balances and changes in policyholders' account balances included in investment contract reserves:


(Dollars in millions)	Three months ended March 31,
		2024	2023
			Deferred annuity			Universal life			Deferred annuity			Universal life
Balance, beginning of period			$	656		$	457		$	734		$	457
Premiums received			9			10			10			11
Policy charges			—			(10)			—			(10)
Surrenders and withdrawals			(37)			(4)			(36)			(3)
Benefit payments			(3)			(2)			(3)			(2)
Interest credited			6			5			6			5

Balance, end of period			$	631		$	456		$	711		$	458

Weighted average crediting rate			3.55		%	4.33		%	3.36		%	4.26		%
Net amount at risk			$	—		$	3,908		$	—		$	4,064
Cash surrender value			625			425			706			424

The net amount at risk above represents the guaranteed benefit amount in excess of the current account balances.

The following table shows the balance of account values by range of guaranteed minimum crediting rates, in basis points, and the related range of the difference between rates being credited to policyholders and the respective guaranteed minimums for our deferred annuity and universal life contracts:


(Dollars in millions)	At guaranteed minimum		1 to 50 basis points above		51-150 basis points above		Greater than 150 basis points		Total
At March 31, 2024
Deferred annuity
1.00-3.00%	$	4	$	337	$	15	$	226	582
3.01-4.00%	49		—		—		—		49

Total	$	53	$	337	$	15	$	226	$	631
Universal life
1.00-3.00%	$	—	$	60	$	58	$	4	$	122
3.01-4.00%	49		5		—		—		54
Greater than 4.00%	280		—		—		—		280
Total	$	329	$	65	$	58	$	4	$	456

At March 31, 2023
Deferred annuity
1.00-3.00%	$	9	$	423	$	17	$	212	$	661
3.01-4.00%	50		—		—		—		50

Total	$	59	$	423	$	17	$	212	$	711
Universal life
1.00-3.00%	$	60	$	47	$	9	$	2	$	118
3.01-4.00%	53		—		—		—		53
Greater than 4.00%	287		—		—		—		287
Total	$	400	$	47	$	9	$	2	$	458

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The following table shows the balances and changes in the other additional liability related to the no-lapse guarantees contained within our universal life contracts:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Balance, beginning of period		$	128	$	121

Balance, beginning of period before shadow reserve adjustments		129		123
Effect of changes in cash flow assumptions		—		—
Effect of actual variances from expected experience		—		(1)
Adjusted beginning of period balance		129		122
Interest accrual		1		1
Excess death benefits		(2)		—
Attributed assessments		3		3

Effect of changes in interest rate assumptions		(1)		1
Balance, end of period before shadow reserve adjustments		130		127
Shadow reserve adjustments		(1)		(2)
Balance, end of period		129		125
Less reinsurance recoverable, end of period		6		6

Net other additional liability, after reinsurance recoverable		$	135	$	131

Weighted-average duration of the other additional liability in years		31		34

The following table shows balances and changes in separate accounts balances during the period:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Balance, beginning of period		$	925	$	892
Interest credited before policy charges		10		10

Benefit payments		—		(2)




Other		(8)		(1)
Balance, end of period		$	927	$	899

Cash surrender value		$	925	$	896

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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. For property casualty, we evaluate the costs for recoverability. 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.

The table below shows the deferred policy acquisition costs and asset reconciliation.


(Dollars in millions)	Three months ended March 31,
		2024		2023
Property casualty:
Deferred policy acquisition costs asset, beginning of period		$	749	$	682
Capitalized deferred policy acquisition costs		407		372
Amortized deferred policy acquisition costs		(360)		(340)
Deferred policy acquisition costs asset, end of period		$	796	$	714

Life:
Deferred policy acquisition costs asset, beginning of period		$	344	$	331
Capitalized deferred policy acquisition costs		10		11
Amortized deferred policy acquisition costs		(7)		(8)

Deferred policy acquisition costs asset, end of period		$	347	$	334

Consolidated:
Deferred policy acquisition costs asset, beginning of period		$	1,093	$	1,013
Capitalized deferred policy acquisition costs		417		383
Amortized deferred policy acquisition costs		(367)		(348)

Deferred policy acquisition costs asset, end of period		$	1,143	$	1,048

The table below shows the life deferred policy acquisition costs asset by product:


(Dollars in millions)
Three months ended March 31, 2024	Term		Whole life		Deferred annuity		Universal life		Total
Balance, beginning of period	$	236	$	48	$	8	$	52	$	344
Capitalized deferred policy acquisition costs	8		2		—		—		10
Amortized deferred policy acquisition costs	(6)		(1)		—		—		(7)
Balance, end of period	$	238	$	49	$	8	$	52	$	347

Three months ended March 31, 2023
Balance, beginning of period	$	228	$	43	$	7	$	53	$	331
Capitalized deferred policy acquisition costs	9		2		—		—		$	11
Amortized deferred policy acquisition costs	(6)		(1)		—		(1)		$	(8)
Balance, end of period	$	231	$	44	$	7	$	52	$	334

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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 policy reserves, reinsurance recoverable and other as follows:


(Dollars in millions)	Three months ended March 31,
	2024						2023
	Before tax		Income tax		Net		Before tax		Income tax		Net
Investments:
AOCI, beginning of period	$	(570)	$	(123)	$	(447)	$	(847)	$	(182)	$	(665)


OCI before investment gains and losses, net, recognized in net income	(65)		(13)		(52)		163		35		128
Investment gains and losses, net, recognized in net income	10		2		8		—		—		—
OCI	(55)		(11)		(44)		163		35		128
AOCI, end of period	$	(625)	$	(134)	$	(491)	$	(684)	$	(147)	$	(537)

Pension obligations:
AOCI, beginning of period	$	30	$	8	$	22	$	36	$	9	$	27
OCI excluding amortization recognized in net income	—		—		—		(5)		(1)		(4)
Amortization recognized in net income	—		—		—		(1)		—		(1)
OCI	—		—		—		(6)		(1)		(5)
AOCI, end of period	$	30	$	8	$	22	$	30	$	8	$	22

Life policy reserves, reinsurance recoverable and other:
AOCI, beginning of period	$	(13)	$	(3)	$	(10)	$	29	$	5	$	24


OCI before investment gains and losses, net, recognized in net income	47		10		37		(45)		(9)		(36)
Investment gains and losses, net, recognized in net income	—		—		—		—		—		—
OCI	47		10		37		(45)		(9)		(36)
AOCI, end of period	$	34	$	7	$	27	$	(16)	$	(4)	$	(12)

Summary of AOCI:
AOCI, beginning of period	$	(553)	$	(118)	$	(435)	$	(782)	$	(168)	$	(614)


Investments OCI	(55)		(11)		(44)		163		35		128
Pension obligations OCI	—		—		—		(6)		(1)		(5)
Life policy reserves, reinsurance recoverable and other OCI	47		10		37		(45)		(9)		(36)
Total OCI	(8)		(1)		(7)		112		25		87
AOCI, end of period	$	(561)	$	(119)	$	(442)	$	(670)	$	(143)	$	(527)

Investment gains and losses, net, and other investment gains and losses, net, are recorded in the investment gains and losses, net, line item in the condensed consolidated statements of income. Amortization of pension obligations is recorded in the insurance losses and contract holders' benefits and underwriting, acquisition and insurance expenses line items in the condensed consolidated statements of income.

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NOTE 8 – Reinsurance

Primary components of our property casualty reinsurance assumed operations include involuntary and voluntary assumed as well as contracts from our reinsurance assumed operations, known as Cincinnati Re. Primary components of our ceded reinsurance include a property per risk treaty, property excess treaty, casualty per occurrence treaty, casualty excess treaty, property catastrophe treaty and retrocessions on our reinsurance assumed operations. Management’s decisions about the appropriate level of risk retention are affected by various factors, including changes in our underwriting practices, capacity to retain risks and reinsurance market conditions.

The table below summarizes our consolidated property casualty insurance net written premiums, earned premiums and incurred loss and loss expenses:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Direct written premiums		$	2,125	$	1,859
Assumed written premiums		239		244
Ceded written premiums		(116)		(84)
Net written premiums		$	2,248	$	2,019

Direct earned premiums		$	1,934	$	1,760
Assumed earned premiums		152		159
Ceded earned premiums		(94)		(78)
Earned premiums		$	1,992	$	1,841

Direct incurred loss and loss expenses		$	1,193	$	1,299
Assumed incurred loss and loss expenses		76		76
Ceded incurred loss and loss expenses		1		(58)
Incurred loss and loss expenses		$	1,270	$	1,317

Our life insurance company purchases reinsurance for protection of a portion of the risks that are written. Primary components of our life reinsurance program include individual mortality coverage, aggregate catastrophe and accidental death coverage in excess of certain deductibles.

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The table below summarizes our consolidated life insurance earned premiums and contract holders' benefits incurred:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Direct earned premiums		$	99	$	96

Ceded earned premiums		(20)		(19)
Earned premiums		$	79	$	77

Direct contract holders' benefits incurred		94		97

Ceded contract holders' benefits incurred		(15)		(16)
Contract holders' benefits incurred		$	79	$	81

The ceded benefits incurred can vary depending on the type of life insurance policy held and the year the policy was issued.

The allowance for uncollectible property casualty premiums was $16 million at both March 31, 2024, and December 31, 2023. The allowances for credit losses on other premiums receivable and reinsurance recoverable assets were immaterial at March 31, 2024, and December 31, 2023.

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NOTE 9 – Income Taxes

The differences between the 21% statutory federal income tax rate and our effective income tax rate were as follows:


(Dollars in millions)	Three months ended March 31,
		2024	2023
Tax at statutory rate:			$	200	21.0	%	$	56	21.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds			(5)		(0.5)		(5)		(1.9)
Dividend received exclusion			(5)		(0.5)		(5)		(1.9)

Other			8		0.8		(3)		(1.2)
Provision for income taxes			$	198	20.8	%	$	43	16.0	%

The provision for federal income taxes is based upon filing a consolidated income tax return for the company and its domestic subsidiaries.

We continue to believe that after considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, it is more likely than not that all of the deferred tax assets on our U.S. domestic operations and those related to Cincinnati Global Underwriting Ltd.SM (Cincinnati Global) will be realized. As a result, we have no valuation allowance for our U.S. domestic operations or Cincinnati Global at both March 31, 2024, and December 31, 2023.

Cincinnati Global

Cincinnati Global had no operating loss carryforwards in the United States and $91 million and $100 million in the United Kingdom at March 31, 2024, and December 31, 2023, respectively. These Cincinnati Global losses can only be utilized within the Cincinnati Global group.

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NOTE 10 – Net Income Per Common Share

Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are computed based on the weighted average number of common and dilutive potential common shares outstanding using the treasury stock method. The table shows calculations for basic and diluted earnings per share:


(In millions, except per share data)	Three months ended March 31,
		2024		2023
Numerator:
Net income—basic and diluted		$	755	$	225
Denominator:
Basic weighted-average common shares outstanding		156.8		157.2
Effect of share-based awards:
Stock options		0.7		0.8
Nonvested shares		0.4		0.5
Diluted weighted-average shares		157.9		158.5
Earnings per share:
Basic		$	4.82	$	1.43
Diluted		$	4.78	$	1.42
Number of anti-dilutive share-based awards		1.3		1.0

The source of dilution of our common shares are certain equity-based awards. See our 2023 Annual Report on Form 10-K, Item 8, Note 17, Share-Based Associate Compensation Plans, Page 177, for information about share-based awards. The above table shows the number of anti-dilutive share-based awards for the three months ended March 31, 2024 and 2023.

NOTE 11 – Employee Retirement Benefits

The following summarizes the components of net periodic benefit for our qualified and supplemental pension plans:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Service cost		$	1	$	1
Non-service (benefit) costs:
Interest cost		3		3
Expected return on plan assets		(5)		(5)
Amortization of actuarial loss and prior service cost		—		(1)
Other		—		(5)
Total non-service benefit		(2)		(8)
Net periodic benefit		$	(1)	$	(7)

See our 2023 Annual Report on Form 10-K, Item 8, Note 13, Employee Retirement Benefits, Page 170, for information on our retirement benefits. The net periodic benefit is allocated in the same proportion primarily to the underwriting, acquisition and insurance expenses line item with the remainder allocated to the insurance losses and contract holders' benefits line item on the condensed consolidated statements of income for both 2024 and 2023.

We made matching contributions totaling $9 million and $8 million to our 401(k) and Top Hat savings plans during the first quarter of 2024 and 2023, respectively.

We made no contributions to our qualified pension plan during the first three months of 2024.

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NOTE 12 – Commitments and Contingent Liabilities

The company, through its insurance subsidiaries, is involved in claims litigation arising in the ordinary course of conducting its business, both as a liability insurer defending or providing indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The company accounts for such activity through the establishment of unpaid loss and loss expense reserves. Subject to the uncertainties discussed in Note 4, Property Casualty Loss and Loss Expenses, and in the discussion in the balance of this Note, we believe that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses, costs of defense, and reinsurance recoveries, is immaterial to our consolidated financial position, results of operations and cash flows.

Beginning in April 2020, like many companies in the property casualty insurance industry, the company’s property casualty subsidiaries were named as defendants in lawsuits seeking insurance coverage under commercial property insurance policies issued by the company for alleged losses resulting from the shutdown or suspension of their businesses due to the COVID-19 pandemic. Although the allegations vary, the plaintiffs generally seek a declaration of insurance coverage, damages for breach of contract in unspecified amounts for claim denials, interest and attorney fees. Some of the lawsuits also allege that the insurance claims were denied in bad faith or otherwise in violation of state laws and seek extra-contractual or punitive damages.

The company denies the allegations in these lawsuits and continues to vigorously defend them. The company maintains that it has no coverage obligations with respect to these lawsuits for business income allegedly lost by the plaintiffs due to the COVID-19 pandemic based on the terms of the applicable insurance policies. Although the policy terms vary, in general, the claims at issue in these lawsuits were denied because the policyholder identified no direct physical loss or damage to property at the insured premises, and the governmental orders that led to the complete or partial shutdown of the business were not due to the existence of any direct physical loss or damage to property in the immediate vicinity of the insured premises and did not prohibit access to the insured premises, as required by the terms of the insurance policies. Depending on the individual policy, additional policy terms and conditions may also prohibit coverage, such as exclusions for pollutants, ordinance or law, loss of use, and acts or decisions. The company’s standard commercial property insurance policies generally did not contain a specific virus exclusion.

In addition to the inherent difficulty in predicting litigation outcomes, the COVID-19 pandemic business income coverage lawsuits present a number of uncertainties and contingencies that are not yet known, including how many policyholders will ultimately file claims, the extent to which any class may be certified, and the size and scope of any such classes. The legal theories advanced by plaintiffs vary by case as do the state laws that govern the policy interpretation. Most of these lawsuits have been dismissed, both by courts and by plaintiffs, but some have been appealed and a few others remain pending in trial courts. Appellate decisions issued to date generally have been favorable for the insurance industry, and the company has received numerous favorable rulings on appeal with no adverse appellate rulings to date. Some cases remain to be decided and in some jurisdictions, cases have been stayed pending appellate decisions in their state or federal circuit. Accordingly, little discovery has occurred on pending cases. In addition, business income calculations depend upon a wide range of factors that are particular to the circumstances of each individual policyholder and, here, virtually none of the plaintiffs have submitted proofs of loss or otherwise quantified or factually supported any allegedly covered loss. Moreover, the company’s experience shows that demands for damages often bear little relation to a reasonable estimate of potential loss. Accordingly, management cannot now reasonably estimate the possible loss or range of loss, if any. Nonetheless, given the number of claims and potential claims, the indeterminate amounts sought, and the inherent unpredictability of litigation, it is possible that adverse outcomes, if any, in the aggregate could have a material adverse effect on the company’s consolidated financial position, results of operations and cash flows.

The company and its subsidiaries also are occasionally involved in other legal and regulatory proceedings, some of which assert claims for substantial amounts. These actions include, among others, putative class actions seeking certification of state or national classes. Such proceedings have alleged, for example, improper depreciation of labor costs in repair estimates. The company’s insurance subsidiaries also are occasionally parties to individual actions in which extra-contractual damages, punitive damages or penalties are sought, such as claims alleging bad faith handling of insurance claims or writing unauthorized coverage or claims alleging discrimination by former or current associates.

On a quarterly basis, we review these outstanding matters. Under current accounting guidance, we establish accruals when it is probable that a covered loss has been incurred and we can reasonably estimate its potential

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exposure. The company accounts for such probable and estimable losses, if any, through the establishment of legal expense reserves. Based on our quarterly review, we believe that our accruals for probable and estimable losses are reasonable and that the amounts accrued do not have a material effect on our consolidated financial position, results of operations and cash flows. However, if any one or more of these matters results in a judgment against us or settlement for an amount that is significantly greater than the amount accrued, the resulting liability could have a material effect on the company’s consolidated financial position, results of operations and cash flows. Based on our most recent review, our estimate for any other matters for which the risk of loss is not probable, but more than remote, is immaterial.

NOTE 13 – Segment Information

We operate primarily in two industries, property casualty insurance and life insurance. Our CODM regularly reviews our reporting segments to make decisions about allocating resources and assessing performance. Our reporting segments are:

•Commercial lines insurance

•Personal lines insurance

•Excess and surplus lines insurance

•Life insurance

•Investments

We report as Other the noninvestment operations of the parent company and its noninsurer subsidiary, CFC Investment Company. We also report as Other the underwriting results of Cincinnati Re and Cincinnati Global. See our 2023 Annual Report on Form 10-K, Item 8, Note 18, Segment Information, Page 180, for a description of revenue, income or loss before income taxes and identifiable assets for each of the five segments.

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Segment information is summarized in the following table:


(Dollars in millions)	Three months ended March 31,
		2024		2023
Revenues:
Commercial lines insurance
Commercial casualty		$	365	$	377
Commercial property		336		299
Commercial auto		220		213
Workers' compensation		61		74
Other commercial		100		93
Commercial lines insurance premiums		1,082		1,056
Fee revenues		1		1
Total commercial lines insurance		1,083		1,057

Personal lines insurance
Personal auto		208		166
Homeowner		303		232
Other personal		77		66
Personal lines insurance premiums		588		464
Fee revenues		1		1
Total personal lines insurance		589		465

Excess and surplus lines insurance		139		127
Fee revenues		1		—
Total excess and surplus lines insurance		140		127

Life insurance premiums		79		77
Fee revenues		1		2
Total life insurance		80		79

Investments
Investment income, net of expenses		245		210
Investment gains and losses, net		612		106
Total investment revenue		857		316

Other
Premiums		183		194

Other		3		3
Total other revenues		186		197
Total revenues		$	2,935	$	2,241

Income (loss) before income taxes:
Insurance underwriting results
Commercial lines insurance		$	39	$	(2)
Personal lines insurance		37		(57)
Excess and surplus lines insurance		12		13
Life insurance		10		8
Investments		826		286
Other		29		20
Total income before income taxes		$	953	$	268


Identifiable assets:	March 31, 2024		December 31, 2023
Property casualty insurance	$	5,298	$	5,294
Life insurance	1,564		1,562
Investments	25,878		24,999
Other	987		914
Total	$	33,727	$	32,769

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Item 2. 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 2023 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

This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2023 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 30.

Factors that could cause or contribute to such differences include, but are not limited to:

•Ongoing developments concerning business interruption insurance claims and litigation related to the COVID-19 pandemic that affect our estimates of losses and loss adjustment expenses or our ability to reasonably estimate such losses, such as:

•The continuing duration of the pandemic and governmental actions to limit the spread of the virus that may produce additional economic losses

•The number of policyholders that will ultimately submit claims or file lawsuits

•The lack of submitted proofs of loss for allegedly covered claims

•Judicial rulings in similar litigation involving other companies in the insurance industry

•Differences in state laws and developing case law

•Litigation trends, including varying legal theories advanced by policyholders

•Whether and to what degree any class of policyholders may be certified

•The inherent unpredictability of litigation

•Effects of any future pandemic, or the resurgence of the COVID-19 pandemic, that could affect results for reasons such as:

•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

•An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses

•An unusually high level of insurance losses, including risk of court decisions extending business interruption insurance in commercial property coverage forms to cover claims for pure economic loss related to such pandemic

•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

•Inability of our workforce, agencies or vendors to perform necessary business functions

•Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns (whether as a result of global climate change or otherwise), environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes

•Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance, due to inflationary trends or other causes

•Inadequate estimates or assumptions, or reliance on third-party data used for critical accounting estimates

•Declines in overall stock market values negatively affecting our equity portfolio and book value

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•Interest rate fluctuations or other factors that could significantly affect:

•Our ability to generate growth in investment income

•Values of our fixed-maturity investments, including accounts in which we hold bank-owned life insurance contract assets

•Our traditional life policy reserves

•Domestic and global events, such as Russia’s invasion of Ukraine, war in the Middle East 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:

•Significant or prolonged decline in the fair value of a particular security or group of securities and impairment of the asset(s)

•Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of 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

•Our inability to manage Cincinnati Global or other subsidiaries to produce related business opportunities and growth prospects for our ongoing operations

•Recession, prolonged elevated inflation or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies

•Ineffective information technology systems or discontinuing to develop and implement improvements in technology may impact our success and profitability

•Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our or our agents’ ability to conduct business; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability under federal and state laws

•Difficulties with our operations and technology that may negatively impact our ability to conduct business, including cloud-based data information storage, data security, cyberattacks, 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 methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness

•Intense competition, and the impact of innovation, technological change 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

•Changing consumer insurance-buying habits and consolidation of independent insurance agencies could alter our competitive advantages

•Inability to obtain adequate ceded reinsurance on acceptable terms, amount of reinsurance coverage purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers

•Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability

•Inability of our subsidiaries to pay dividends consistent with current or past levels

•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, such as:

•Downgrades of our financial strength ratings

•Concerns that doing business with us is too difficult

•Perceptions that our level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace

•Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace

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•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

•Add 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 law

•Increase our other expenses

•Limit our ability to set fair, adequate and reasonable rates

•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 or administrative proceedings, including effects of social inflation and third-party litigation funding on the size of litigation awards

•Events or actions, including unauthorized intentional circumvention of controls, that reduce our future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002

•Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes 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 in a competitive labor market, impacting the customer experience and altering our competitive advantages

•Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location or work effectively in a remote environment

Further, our insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. We also are subject to public and regulatory initiatives that can affect the market value for our common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.

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CORPORATE FINANCIAL HIGHLIGHTS

Net Income and Comprehensive Income Data


(Dollars in millions, except per share data)	Three months ended March 31,
		2024		2023		% Change
Earned premiums		$	2,071	$	1,918	8
Investment income, net of expenses (pretax)		245		210		17
Investment gains and losses, net (pretax)		612		106		477
Total revenues		2,935		2,241		31
Net income		755		225		236
Comprehensive income		748		312		140
Net income per share—diluted		4.78		1.42		237
Cash dividends declared per share		0.81		0.75		8
Diluted weighted average shares outstanding		157.9		158.5		0

Total revenues increased $694 million for the first quarter of 2024, compared with the first quarter of 2023, primarily due to an increase in net investment gains in addition to higher earned premiums and investment income. 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 first quarter of 2024, compared with first-quarter 2023, increased $530 million, including increases of $399 million in after-tax net investment gains and losses, $111 million in after-tax property casualty underwriting income and $28 million in after-tax investment income. Catastrophe losses for the first quarter of 2024, mostly weather related, were $93 million lower after taxes and favorably affected both net income and property casualty underwriting income. Life insurance segment results increased by $2 million on a pretax basis.

Performance by segment is discussed below in Financial Results. As discussed in our 2023 Annual Report on Form 10-K, Item 7, Executive Summary, Page 48, there are several reasons why our performance during 2024 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 2023, the company had increased the annual cash dividend rate for 63 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2024, the board of directors increased the regular quarterly dividend to 81 cents per share, setting the stage for our 64th consecutive year of increasing cash dividends. During the first three months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2024 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.

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Balance Sheet Data and Performance Measures


(Dollars in millions, except share data)	At March 31,			At December 31,
	2024			2023
Total investments	$	26,249		$	25,357
Total assets	33,727			32,769
Short-term debt	25			25
Long-term debt	790			790
Shareholders' equity	12,654			12,098
Book value per share	80.83			77.06
Debt-to-total-capital ratio	6.1		%	6.3		%

Total assets at March 31, 2024, increased 3% compared with year-end 2023, and included a 4% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio. Shareholders' equity increased 5% and book value per share also increased 5% during the first three months of 2024. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased compared with year-end 2023.

Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was 5.9% for the first three months of 2024, better than the same period in 2023, including higher net income before investment gains and a higher amount in overall net gains from our investment portfolio. Book value per share increased $3.77 during the first three months of 2024 and contributed 4.9 percentage points to the value creation ratio, while dividends declared at $0.81 per share contributed 1.0 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 March 31,
		2024		2023
Value creation ratio major contributors:
Net income before investment gains		2.3	%	1.3	%
Change in fixed-maturity securities, realized and unrealized gains		(0.4)		1.2
Change in equity securities, investment gains		3.9		0.7
Other		0.1		(0.1)
Value creation ratio		5.9	%	3.1	%

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(Dollars are per share)	Three months ended March 31,
		2024			2023
Value creation ratio:
End of period book value*		$	80.83		$	68.33
Less beginning of period book value		77.06			67.01
Change in book value		3.77			1.32
Dividend declared to shareholders		0.81			0.75
Total value creation		$	4.58		$	2.07

Value creation ratio from change in book value**		4.9		%	2.0		%
Value creation ratio from dividends declared to shareholders***		1.0			1.1
Value creation ratio		5.9		%	3.1		%

* 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 2023 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 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At March 31, 2024, we actively marketed through 2,125 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 2023 Annual Report on Form 10-K, Item 7, Executive Summary, Page 48, 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 three months of 2024, our consolidated property casualty net written premium year-over-year growth was 11%. As of March 2024, A.M. Best projected the industry's full-year 2024 written premium growth at approximately 9%. For the five-year period 2019 through 2023, 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 a GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%. For the first three months of 2024, our GAAP combined ratio was 93.6%, including 7.5 percentage points of current accident year catastrophe losses partially offset by 5.0 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 92.3% for the first three months of 2024. As of March 2024, A.M. Best projected the industry's full-year 2024 statutory combined ratio at approximately 101%, including approximately 7 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 three months of 2024, pretax investment income was $245 million, up 17% compared with the same period in 2023. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

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Financial Strength

An important part of our long-term strategy is financial strength, which is described in our 2023 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 2023 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, 2024 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 March 31, 2024, we held $4.906 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.543 billion, or 92.6%, was invested in common stocks, and $163 million, or 3.3%, was cash or cash equivalents. Our debt-to-total-capital ratio was 6.1% at March 31, 2024. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.0-to-1 for the 12 months ended March 31, 2024, matching year-end 2023.

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 April 24, 2024, 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

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

Stable

Moody's Investors Service

moodys.com

Good

5 of 21

Stable

S&P Global Ratings

spratings.com

A+

Strong

5 of 21

A+

Strong

5 of 21

Stable

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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 March 31,
		2024			2023			% Change
Earned premiums		$	1,992		$	1,841		8
Fee revenues		3			2			50
Total revenues		1,995			1,843			8
Loss and loss expenses from:
Current accident year before catastrophe losses		1,221			1,123			9
Current accident year catastrophe losses		149			253			(41)
Prior accident years before catastrophe losses		(68)			(41)			(66)
Prior accident years catastrophe losses		(32)			(18)			(78)
Loss and loss expenses		1,270			1,317			(4)
Underwriting expenses		594			536			11
Underwriting profit (loss)		$	131		$	(10)		nm

Ratios as a percent of earned premiums:								Pt. Change
Current accident year before catastrophe losses		61.3		%	61.0		%	0.3
Current accident year catastrophe losses		7.5			13.8			(6.3)
Prior accident years before catastrophe losses		(3.4)			(2.2)			(1.2)
Prior accident years catastrophe losses		(1.6)			(1.0)			(0.6)
Loss and loss expenses		63.8			71.6			(7.8)
Underwriting expenses		29.8			29.1			0.7
Combined ratio		93.6		%	100.7		%	(7.1)

Combined ratio		93.6		%	100.7		%	(7.1)
Contribution from catastrophe losses and prior years reserve development		2.5			10.6			(8.1)
Combined ratio before catastrophe losses and prior years reserve development		91.1		%	90.1		%	1.0

Our consolidated property casualty insurance operations generated an underwriting profit of $131 million for the first quarter of 2024. Compared with an underwriting loss of $10 million for the first quarter of 2023, the first-quarter 2024 improvement of $141 million included a favorable decrease of $118 million in losses from catastrophes, mostly caused by severe weather. The first-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slightly faster than earned premiums and higher amounts of favorable reserve development on prior accident years.

Underwriting results for the first quarter of 2024 included improved overall insured loss experience before catastrophe effects, 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 both 2024 and 2023 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 March 31, 2024, were $233 million, or 3%, higher than at year-end 2023, including an increase of $272 million for the incurred but not reported (IBNR) portion.

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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 first quarter of 2024 improved by 7.1 percentage points, compared with the same period of 2023, including a decrease of 6.9 points from lower 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 5.0 percentage points in the first three months of 2024, compared with 3.2 percentage points in the same period of 2023. 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 increased in the first three months of 2024. That 61.3% ratio was 0.3 percentage points higher, compared with the 61.0% accident year 2023 ratio measured as of March 31, 2023, including a decrease of 1.6 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio increase of 0.3 percentage points included an increase of 1.8 points for the IBNR portion and a decrease of 1.5 points for the case incurred portion.

The underwriting expense ratio increased for the first three months of 2024, compared with the same period a year ago. The increase was primarily due to an increase in profit-sharing commissions for agencies. The ratio also included ongoing expense management efforts and higher earned premiums.

Consolidated Property Casualty Insurance Premiums


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Agency renewal written premiums		$	1,683	$	1,535	10
Agency new business written premiums		346		251		38


Other written premiums		219		233		(6)
Net written premiums		2,248		2,019		11
Unearned premium change		(256)		(178)		(44)
Earned premiums		$	1,992	$	1,841	8

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 2024, are discussed in more detail by segment below in Financial Results.

Consolidated property casualty net written premiums for the three months ended March 31, 2024, grew $229 million compared with the same period of 2023. 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 increased by $95 million for the first three months of 2024, compared with the same period of 2023. New agency appointments during 2024 and 2023 produced a $24 million increase in standard lines new business for the first three months of 2024 compared with the same period of 2023. 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.

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Net written premiums for Cincinnati Re, included in other written premiums, decreased by $28 million to $202 million for the three months ended March 31, 2024, compared with the same period of 2023. 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 increased for Cincinnati Global by $18 million to $82 million for the three months ended March 31, 2024, compared with the same period of 2023.

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. An increase in ceded premiums reduced net written premiums by $5 million for the first three months of 2024, compared with the same period of 2023.

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 5.9 percentage points to the combined ratio in the first three months of 2024, compared with 12.8 percentage points in the same period of 2023.

The reinsurance program for Cincinnati Re effective June 1, 2023, provides property catastrophe excess of loss coverage and includes $40 million of coverage for various combinations of occurrences for business written in North America on a direct basis. There is a per occurrence limit of $20 million for Cincinnati Re catastrophe losses in excess of $80 million per event. The remaining coverage is for business written by Cincinnati Re and on a direct basis for catastrophe losses in excess of $600 million per event. During 2023 and for the first three months of 2024, there was no recovery from reinsurers pertaining to these treaties.

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 March 31,
					Comm.				Pers.				E&S
Dates	Region				lines				lines				lines				Other				Total
2024
Jan. 8-10	Midwest, Northeast, South				$	18			$	9			$	—			$	—			$	27
Mar. 12-17	Midwest, South				32				22				—				—				54














All other 2024 catastrophes			25				42				1				—				68
Development on 2023 and prior catastrophes			(8)				(21)				(1)				(2)				(32)
Calendar year incurred total			$	67			$	52			$	—			$	(2)			$	117

2023
Mar. 1-4	Midwest, Northeast, South				$	30			$	34			$	1			$	—			$	65
Mar. 23-28	Midwest, Northeast, South				13				27				1				—				41
Mar. 30 - Apr. 1	Midwest, Northeast, South				42				24				—				—				66






All other 2023 catastrophes			21				55				—				5				81
Development on 2022 and prior catastrophes			4				(25)				(1)				4				(18)
Calendar year incurred total			$	110			$	115			$	1			$	9			$	235

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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 March 31,
		2024			2023			% Change
Current accident year losses greater than $5 million		$	—		$	36		(100)
Current accident year losses $2 million - $5 million		22			15			47
Large loss prior accident year reserve development		22			9			144
Total large losses incurred		44			60			(27)
Losses incurred but not reported		251			179			40
Other losses excluding catastrophe losses		677			641			6
Catastrophe losses		111			227			(51)
Total losses incurred		$	1,083		$	1,107		(2)

Ratios as a percent of earned premiums:								Pt. Change
Current accident year losses greater than $5 million		—		%	1.9		%	(1.9)
Current accident year losses $2 million - $5 million		1.1			0.8			0.3
Large loss prior accident year reserve development		1.1			0.5			0.6
Total large loss ratio		2.2			3.2			(1.0)
Losses incurred but not reported		12.6			9.7			2.9
Other losses excluding catastrophe losses		34.0			34.9			(0.9)
Catastrophe losses		5.6			12.3			(6.7)
Total loss ratio		54.4		%	60.1		%	(5.7)

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 first-quarter 2024 property casualty total large losses incurred of $44 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $60 million experienced for the first quarter of 2023. The ratio for these large losses was 1.0 percentage point lower compared with last year's first quarter. 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. 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

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COMMERCIAL LINES INSURANCE RESULTS


(Dollars in millions)	Three months ended March 31,
		2024			2023			% Change
Earned premiums		$	1,082		$	1,056		2
Fee revenues		1			1			0
Total revenues		1,083			1,057			2
Loss and loss expenses from:
Current accident year before catastrophe losses		682			674			1
Current accident year catastrophe losses		75			106			(29)
Prior accident years before catastrophe losses		(30)			(36)			17
Prior accident years catastrophe losses		(8)			4			nm
Loss and loss expenses		719			748			(4)
Underwriting expenses		325			311			5
Underwriting profit (loss)		$	39		$	(2)		nm

Ratios as a percent of earned premiums:								Pt. Change
Current accident year before catastrophe losses		63.0		%	63.9		%	(0.9)
Current accident year catastrophe losses		7.0			10.0			(3.0)
Prior accident years before catastrophe losses		(2.8)			(3.4)			0.6
Prior accident years catastrophe losses		(0.8)			0.4			(1.2)
Loss and loss expenses		66.4			70.9			(4.5)
Underwriting expenses		30.1			29.5			0.6
Combined ratio		96.5		%	100.4		%	(3.9)

Combined ratio		96.5		%	100.4		%	(3.9)
Contribution from catastrophe losses and prior years reserve development		3.4			7.0			(3.6)
Combined ratio before catastrophe losses and prior years reserve development		93.1		%	93.4		%	(0.3)

Overview

Performance highlights for the commercial lines segment include:

•Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the first three months of 2024, compared with the same period a year ago, 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 by 3% for the first three months of 2024, compared with the same period of 2023, including price increases. During the first quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-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.

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

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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 first quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines 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 three months of 2024 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 three months of 2024 contributed $29 million to net written premiums, compared with $35 million for the same period of 2023.

New business written premiums for commercial lines increased $48 million during the first three months of 2024, compared with the same period of 2023, 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, an increase in ceded premiums reduced net written premiums by less than $1 million for the first three months of 2024, compared with the same period of 2023.

Commercial Lines Insurance Premiums


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Agency renewal written premiums		$	1,076	$	1,041	3
Agency new business written premiums		182		134		36
Other written premiums		(35)		(34)		(3)
Net written premiums		1,223		1,141		7
Unearned premium change		(141)		(85)		(66)
Earned premiums		$	1,082	$	1,056	2

•Combined ratio – The first-quarter 2024 commercial lines combined ratio improved by 3.9 percentage points, compared with the first quarter of 2023, including a decrease of 4.2 points in losses from catastrophes. The first-quarter combined ratio also decreased 0.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 1.7 points for the IBNR portion and a decrease of 2.6 points for the case incurred portion. Underwriting results also included a higher level of favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of March 31 of the respective years and included a decrease of 2.9 percentage points for the first three months of 2024 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 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 property 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 6.2 percentage points of the combined ratio for the first three months of 2024, compared with 10.4 percentage points for the same period a year ago. Through 2023, the 10-year annual average for that catastrophe measure for the commercial lines segment was 5.9 percentage points, and the five-year annual average was 6.5 percentage points.

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The net effect of reserve development on prior accident years during the first three months of 2024 was favorable for commercial lines overall by $38 million, compared with $32 million for the same period in 2023. For the first three months of 2024, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development on prior accident years. The net favorable reserve development recognized during the first three months of 2024 for our commercial lines insurance segment was mainly for accident years 2023 and 2022 and was primarily due to lower-than-anticipated loss emergence on known claims. Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

The commercial lines underwriting expense ratio increased for the first three months of 2024, compared with the same period a year ago. The increase was largely due to an increase in profit-sharing commissions for agencies. The ratios also included ongoing expense management efforts and higher earned premiums.

Commercial Lines Insurance Losses Incurred by Size


(Dollars in millions, net of reinsurance)	Three months ended March 31,
		2024			2023			% Change
Current accident year losses greater than $5 million		$	—		$	30		(100)
Current accident year losses $2 million - $5 million		11			12			(8)
Large loss prior accident year reserve development		12			3			300
Total large losses incurred		23			45			(49)
Losses incurred but not reported		156			125			25
Other losses excluding catastrophe losses		368			335			10
Catastrophe losses		64			106			(40)
Total losses incurred		$	611		$	611		0

Ratios as a percent of earned premiums:								Pt. Change
Current accident year losses greater than $5 million		—		%	2.8		%	(2.8)
Current accident year losses $2 million - $5 million		1.0			1.1			(0.1)
Large loss prior accident year reserve development		1.1			0.3			0.8
Total large loss ratio		2.1			4.2			(2.1)
Losses incurred but not reported		14.4			11.8			2.6
Other losses excluding catastrophe losses		34.0			31.9			2.1
Catastrophe losses		6.0			10.0			(4.0)
Total loss ratio		56.5		%	57.9		%	(1.4)

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 first-quarter 2024 commercial lines total large losses incurred of $23 million, net of reinsurance, was lower than the quarterly average of $74 million during full-year 2023 and the $45 million of total large losses incurred for the first quarter of 2023. The decrease in commercial lines large losses for the first three months of 2024 was primarily due to our commercial property line of business. The first-quarter 2024 ratio for commercial lines total large losses was 2.1 percentage points lower than last year's first-quarter ratio. 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.

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PERSONAL LINES INSURANCE RESULTS


(Dollars in millions)	Three months ended March 31,
		2024			2023			% Change
Earned premiums		$	588		$	464		27
Fee revenues		1			1			0
Total revenues		589			465			27
Loss and loss expenses from:
Current accident year before catastrophe losses		339			277			22
Current accident year catastrophe losses		73			140			(48)
Prior accident years before catastrophe losses		(12)			(6)			(100)
Prior accident years catastrophe losses		(21)			(25)			16
Loss and loss expenses		379			386			(2)
Underwriting expenses		173			136			27
Underwriting profit (loss)		$	37		$	(57)		nm

Ratios as a percent of earned premiums:								Pt. Change
Current accident year before catastrophe losses		57.7		%	59.9		%	(2.2)
Current accident year catastrophe losses		12.4			30.1			(17.7)
Prior accident years before catastrophe losses		(2.0)			(1.3)			(0.7)
Prior accident years catastrophe losses		(3.6)			(5.4)			1.8
Loss and loss expenses		64.5			83.3			(18.8)
Underwriting expenses		29.4			29.2			0.2
Combined ratio		93.9		%	112.5		%	(18.6)

Combined ratio		93.9		%	112.5		%	(18.6)
Contribution from catastrophe losses and prior years reserve development		6.8			23.4			(16.6)
Combined ratio before catastrophe losses and prior years reserve development		87.1		%	89.1		%	(2.0)

Overview

Performance highlights for the personal lines segment include:

•Premiums – Personal lines earned premiums and net written premiums continued to grow during the first three months of 2024, including increased agency new business and renewal written premiums that included higher average pricing. Cincinnati Private ClientSM net written premiums included in the personal lines insurance segment results totaled approximately $330 million for the first three months of 2024, compared with $233 million for the same period of 2023. Cincinnati Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $34 million in first three months of 2024 and $19 million for the first three months of 2023. The table below analyzes the primary components of premiums.

Agency renewal written premiums increased 27% for the first three months of 2024, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as higher policy retention rates and 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 low-double-digit range during the first three months of 2024. For our homeowner line of business, we estimate that premium rates for the first three months of 2024 increased at average percentages in the high-single-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 increased $43 million or 54% for the first three months of 2024, compared with the same period of 2023, including approximately $15 million from Cincinnati Private Client

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policies and $28 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 2024 ceded premiums reduced net written premiums by approximately $2 million for the first three months of 2024, compared with the same period of 2023.

Personal Lines Insurance Premiums


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Agency renewal written premiums		$	494	$	388	27
Agency new business written premiums		122		79		54
Other written premiums		(21)		(19)		(11)
Net written premiums		595		448		33
Unearned premium change		(7)		16		nm
Earned premiums		$	588	$	464	27

•Combined ratio – Our personal lines combined ratio for the first quarter of 2024 improved by 18.6 percentage points, compared with first-quarter 2023, including a decrease of 15.9 points in losses from catastrophes. The first-quarter 2024 combined ratio also included a decrease of 2.2 percentage points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.2 points for the IBNR portion and a decrease of 4.4 points for the case incurred portion. Those current accident year ratios were measured as of March 31 of the respective years and included a decrease of 0.1 percentage points for the first three months of 2024, 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 in inflation, historical paid and reported losses, large loss activity and other data or information for the industry 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 8.8 percentage points of the combined ratio for the first three months of 2024, compared with 24.7 points for the same period a year ago. The 10-year annual average catastrophe loss ratio for the personal lines segment through 2023 was 11.4 percentage points, and the five-year annual average was 13.2 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 first three months of 2024 was favorable for personal lines overall by $33 million, compared with $31 million of favorable development for the same period of 2023. Our homeowner line of business was the primary contributor to the personal lines net favorable reserve development for the first three months of 2024. 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 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

The personal lines underwriting expense ratio increased for the first three months of 2024, compared with the same period a year ago. The increase was primarily due to an increase in profit-sharing commissions for agencies. The ratios also included ongoing expense management efforts and higher earned premiums.

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Personal Lines Insurance Losses Incurred by Size


(Dollars in millions, net of reinsurance)	Three months ended March 31,
		2024			2023			% Change
Current accident year losses greater than $5 million		$	—		$	6		(100)
Current accident year losses $2 million - $5 million		11			3			267
Large loss prior accident year reserve development		10			6			67
Total large losses incurred		21			15			40
Losses incurred but not reported		22			27			(19)
Other losses excluding catastrophe losses		231			187			24
Catastrophe losses		50			113			(56)
Total losses incurred		$	324		$	342		(5)

Ratios as a percent of earned premiums:								Pt. Change
Current accident year losses greater than $5 million		—		%	1.3		%	(1.3)
Current accident year losses $2 million - $5 million		1.8			0.6			1.2
Large loss prior accident year reserve development		1.8			1.4			0.4
Total large loss ratio		3.6			3.3			0.3
Losses incurred but not reported		3.8			5.9			(2.1)
Other losses excluding catastrophe losses		39.4			40.2			(0.8)
Catastrophe losses		8.4			24.3			(15.9)
Total loss ratio		55.2		%	73.7		%	(18.5)

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 first quarter of 2024, the personal lines total large loss ratio, net of reinsurance, was 0.3 percentage points higher than last year's first quarter. The increase in personal lines total large losses incurred for the first three months of 2024 occurred primarily for our homeowner line of business. 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.

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EXCESS AND SURPLUS LINES INSURANCE RESULTS


(Dollars in millions)	Three months ended March 31,
		2024			2023			% Change
Earned premiums		$	139		$	127		9
Fee revenues		1			—			nm
Total revenues		140			127			10

Loss and loss expenses from:
Current accident year before catastrophe losses		92			88			5
Current accident year catastrophe losses		1			2			(50)
Prior accident years before catastrophe losses		(2)			(8)			75
Prior accident years catastrophe losses		(1)			(1)			0
Loss and loss expenses		90			81			11
Underwriting expenses		38			33			15
Underwriting profit		$	12		$	13		(8)

Ratios as a percent of earned premiums:								Pt. Change
Current accident year before catastrophe losses		65.7		%	69.2		%	(3.5)
Current accident year catastrophe losses		0.9			1.5			(0.6)
Prior accident years before catastrophe losses		(1.7)			(6.2)			4.5
Prior accident years catastrophe losses		(0.4)			(0.3)			(0.1)
Loss and loss expenses		64.5			64.2			0.3
Underwriting expenses		27.4			25.7			1.7
Combined ratio		91.9		%	89.9		%	2.0

Combined ratio		91.9		%	89.9		%	2.0
Contribution from catastrophe losses and prior years reserve development		(1.2)			(5.0)			3.8
Combined ratio before catastrophe losses and prior years reserve development		93.1		%	94.9		%	(1.8)

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 first quarter of 2024, compared with the same period a year ago, including increases in both agency renewal and new business written premiums. For the first three months of 2024, 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 11% for the first three months of 2024 compared with the same period of 2023, as we continued to carefully underwrite 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.

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Excess and Surplus Lines Insurance Premiums


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Agency renewal written premiums		$	113	$	106	7
Agency new business written premiums		42		38		11
Other written premiums		(9)		(8)		(13)
Net written premiums		146		136		7
Unearned premium change		(7)		(9)		22
Earned premiums		$	139	$	127	9

•Combined ratio – The excess and surplus lines combined ratio increased by 2.0 percentage points for the first quarter of 2024, compared with the same period of 2023, with the change primarily due to lower favorable reserve development on prior accident year loss and loss expenses.

The first-quarter 2024 ratio for current accident year loss and loss expenses before catastrophe losses was 3.5 percentage points lower, compared with the 69.2% accident year 2023 ratio measured as of March 31, 2023.

Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was a favorable 2.1% for the first three months of 2024, compared with favorable 6.5% for the same period of 2023. The $3 million of net favorable reserve development recognized during the first three months of 2024 was mostly for accident year 2023 and was primarily due to lower-than-anticipated loss emergence on known claims. Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

The excess and surplus lines underwriting expense ratio increased for the first three months of 2024, largely due to an increase in profit-sharing commissions for agencies, compared with the same period of 2023. The ratio for both periods also benefited from ongoing expense management efforts and premium growth.

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Excess and Surplus Lines Insurance Losses Incurred by Size


(Dollars in millions, net of reinsurance)	Three months ended March 31,
		2024			2023			% Change
Current accident year losses greater than $5 million		$	—		$	—		nm
Current accident year losses $2 million - $5 million		—			—			nm
Large loss prior accident year reserve development		—			—			nm
Total large losses incurred		—			—			nm
Losses incurred but not reported		30			27			11
Other losses excluding catastrophe losses		37			28			32
Catastrophe losses		1			1			0
Total losses incurred		$	68		$	56		21

Ratios as a percent of earned premiums:								Pt. Change
Current accident year losses greater than $5 million		—		%	—		%	0.0
Current accident year losses $2 million - $5 million		—			—			0.0
Large loss prior accident year reserve development		—			(0.3)			0.3
Total large loss ratio		—			(0.3)			0.3
Losses incurred but not reported		21.6			21.3			0.3
Other losses excluding catastrophe losses		26.8			22.2			4.6
Catastrophe losses		0.5			1.1			(0.6)
Total loss ratio		48.9		%	44.3		%	4.6

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LIFE INSURANCE RESULTS


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Earned premiums		$	79	$	77	3
Fee revenues		1		2		(50)
Total revenues		80		79		1
Contract holders' benefits incurred		79		81		(2)
Investment interest credited to contract holders		(31)		(30)		(3)
Underwriting expenses incurred		22		20		10
Total benefits and expenses		70		71		(1)
Life insurance segment profit		$	10	$	8	25

Overview

Performance highlights for the life insurance segment include:

•Revenues – Revenues increased for the three months ended March 31, 2024, 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 less than 1% to $82.670 billion at March 31, 2024, from $82.361 billion at year-end 2023.

Fixed annuity deposits received for the three months ended March 31, 2024, were $9 million, compared with $10 million for the same period of 2023. Fixed annuity deposits have a minimal impact to 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 March 31,
		2024		2023		% Change
Term life insurance		$	57	$	56	2
Whole life insurance		13		12		8
Universal life and other		9		9		0
Net earned premiums		$	79	$	77	3

•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 $10 million for our life insurance segment in the first three months of 2024, compared with a profit of $8 million for the same period of 2023, was primarily due to more favorable impacts from the unlocking of interest rate 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 decreased in the first three months of 2024 primarily due to more favorable impacts from the unlocking of interest rate actuarial assumptions. Life policy and investment contract reserves decreased due to an increase in market value discount rates. Mortality results improved compared with the same period of 2023.

Underwriting expenses for the first three months of 2024 increased compared with the same period a year ago, largely due to higher general insurance expense levels compared to the same period of 2023.

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.

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On a basis that includes investment income and investment gains or losses from life-insurance-related invested assets, the life insurance subsidiary reported net income of $19 million for the three months ended March 31, 2024, and March 31, 2023. The life insurance subsidiary portfolio had net after-tax investment losses of $2 million for the three months ended March 31, 2024, compared with net after-tax investment gains of $1 million for the three months ended March 31, 2023.

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 17% for the first quarter of 2024, compared with the same period of 2023. Interest income increased by $29 million for the first quarter, 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 of the past several years. Although dividend rates generally are increasing more slowly, minor asset allocation adjustments in our equity portfolio and net purchases of equity securities in recent quarters helped dividend income to grow by $6 million for the three months ended March 31, 2024.

Investments Results


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Total investment income, net of expenses		$	245	$	210	17
Investment interest credited to contract holders		(31)		(30)		(3)
Investment gains and losses, net		612		106		477
Investments profit, pretax		$	826	$	286	189

We continue to consider the low interest rate environment that prevailed in recent years 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 March 31, 2024
Fixed-maturity pretax yield profile:
Expected to mature during the remainder of 2024	4.30	%	$	849
Expected to mature during 2025	4.70		1,381
Expected to mature during 2026	5.03		1,104
Average yield and total expected maturities from the remainder of 2024 through 2026	4.71		$	3,334

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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 three months of 2024 was higher than the 4.60% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2023. Our fixed-maturity portfolio's average yield of 4.65% for the first three months of 2024, from the investment income table below, was also higher than the 4.60% yield for the year-end 2023 fixed-maturities portfolio.


	Three months ended March 31,
		2024		2023
Average pretax yield-to-amortized cost on new fixed-maturities:
Acquired taxable fixed-maturities		5.94	%	6.55	%
Acquired tax-exempt fixed-maturities		4.10		4.20
Average total fixed-maturities acquired		5.79		6.18

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 2023 Annual Report on Form 10-K, Item 1, Investments Segment, Page 21, and Item 7, Investments Outlook, Page 91. 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 March 31,
		2024			2023			% Change
Investment income:
Interest		$	169		$	140		21
Dividends		72			66			9
Other		7			7			0
Less investment expenses		3			3			0
Investment income, pretax		245			210			17
Less income taxes		41			34			21
Total investment income, after-tax		$	204		$	176		16

Investment returns:
Average invested assets plus cash and cash equivalents		$	27,164		$	24,649
Average yield pretax		3.61		%	3.41		%
Average yield after-tax		3.00			2.86
Effective tax rate		16.7			16.1

Fixed-maturity returns:
Average amortized cost		$	14,535		$	13,171
Average yield pretax		4.65		%	4.25		%
Average yield after-tax		3.82			3.52
Effective tax rate		17.9			17.3

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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 are included in investment gains and losses and also in net income. The change in unrealized gains or losses for fixed-maturity securities are 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 2023 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 March 31,
		2024		2023
Investment gains and losses:
Equity securities:
Investment gains and losses on securities sold, net		$	(11)	$	(1)
Unrealized gains and losses on securities still held, net		613		106



Subtotal		602		105
Fixed maturities:
Gross realized gains		—		1
Gross realized losses		(1)		(1)
Change in allowance for credit losses, net		(9)		—

Subtotal		(10)		—
Other		20		1
Total investment gains and losses reported in net income		612		106

Change in unrealized investment gains and losses:

Fixed maturities		(55)		163

Total		$	557	$	269

Of the 4,804 fixed-maturity securities in the portfolio, 12 securities were trading below 70% of amortized cost at March 31, 2024. 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.

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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 three months of 2024 for our Other operations decreased, compared with the same period of 2023, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with a decrease of $15 million and an increase of $4 million, respectively. Cincinnati Re had $135 million of earned premiums for the first three months of 2024 and generated an underwriting profit of $29 million. Cincinnati Global had $48 million of earned premiums for the first three months of 2024 and generated an underwriting profit of $14 million. Total expenses for Other decreased for the first three months of 2024, primarily due to lower loss and loss expenses from Cincinnati Re and Cincinnati Global.

Other income in the table below represents profit before income taxes. For all periods shown, total other income was driven by underwriting profit from Cincinnati Re and Cincinnati Global.


(Dollars in millions)	Three months ended March 31,
		2024		2023		% Change
Interest and fees on loans and leases		$	2	$	2	0
Earned premiums		183		194		(6)
Other revenues		1		1		0
Total revenues		186		197		(6)
Interest expense		13		14		(7)
Loss and loss expenses		82		102		(20)
Underwriting expenses		58		56		4
Operating expenses		4		5		(20)
Total expenses		157		177		(11)
Total other income		$	29	$	20	45

TAXES

We had $198 million of income tax expense for the three months ended March 31, 2024, compared with $43 million for the same period of 2023. The effective tax rate for the three months ended March 31, 2024, was 20.8% compared with 16.0% for the same period 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.

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LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2024, shareholders' equity was $12.654 billion, compared with $12.098 billion at December 31, 2023. Total debt was $815 million at March 31, 2024, unchanged from December 31, 2023. At March 31, 2024, cash and cash equivalents totaled $619 million, compared with $907 million at December 31, 2023.

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 $145 million to the parent company in the first three months of 2024, compared with $142 million for the same period of 2023. For full-year 2023, our lead insurance subsidiary paid dividends totaling $526 million to the parent company. State of Ohio regulatory requirements restrict the dividends our insurance subsidiary can pay. For full-year 2024, total dividends that our insurance subsidiary can pay to our parent company without regulatory approval are approximately $729 million.

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 2023 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 March 31,
		2024		2023		% Change
Premiums collected		$	2,044	$	1,842	11
Loss and loss expenses paid		(1,037)		(1,046)		1
Commissions and other underwriting expenses paid		(808)		(710)		(14)
Cash flow from underwriting		199		86		131
Investment income received		165		147		12
Cash flow from operations		$	364	$	233	56

Collected premiums for property casualty insurance rose $202 million during the first three months of 2024, compared with the same period in 2023. Loss and loss expenses paid for the 2024 period decreased $9 million. Commissions and other underwriting expenses paid increased $98 million.

We discuss our future obligations for claims payments and for underwriting expenses in our 2023 Annual Report on Form 10-K, Item 7, Obligations, Page 97.

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Capital Resources

At March 31, 2024, our debt-to-total-capital ratio was 6.1%, 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 March 31, 2024, $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 March 31, 2024, 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. We have an unsecured letter of credit agreement that provides a portion of the capital needed to support Cincinnati Global's obligations at Lloyd's. The amount of this unsecured letter of credit agreement was $94 million at March 31, 2024, with no amounts drawn.

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 three months of 2024. Our debt ratings are discussed in our 2023 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, Long-Term Debt, Page 96.

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, 2023, in our 2023 Annual Report on Form 10-K, Item 7, Contractual Obligations, Page 97. There have been no material changes to our estimates of future contractual obligations since our 2023 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 $550 million in the first three months of 2024. 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 $258 million in the first three months of 2024.

There were no contributions to our qualified pension plan during the first three months of 2024.

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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 2024, the board of directors declared regular quarterly cash dividends of 81 cents per share for an indicated annual rate of $3.24 per share. During the first three months of 2024, we used $116 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 2023 Annual Report on Form 10-K, Item 7, Property Casualty Loss and Loss Expense Obligations and Reserves, Page 98.

Total gross reserves at March 31, 2024, increased $203 million compared with December 31, 2023. Case loss reserves decreased by $57 million, IBNR loss reserves increased by $250 million and loss expense reserves increased by $10 million. The total gross increase was primarily due to our commercial casualty and homeowner lines of business and also Cincinnati Re and our excess and surplus lines insurance segment.

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Property Casualty Gross Reserves


(Dollars in millions)	Loss reserves				Loss expense reserves		Total gross reserves
	Case reserves		IBNR reserves						Percent of total
At March 31, 2024
Commercial lines insurance:
Commercial casualty	$	1,132	$	1,271	$	795	$	3,198	34.9	%
Commercial property	327		166		79		572		6.2
Commercial auto	410		325		144		879		9.6
Workers' compensation	412		562		89		1,063		11.6
Other commercial	137		31		126		294		3.2
Subtotal	2,418		2,355		1,233		6,006		65.5
Personal lines insurance:
Personal auto	229		80		75		384		4.2
Homeowner	222		133		59		414		4.5
Other personal	102		124		7		233		2.5
Subtotal	553		337		141		1,031		11.2
Excess and surplus lines	350		367		240		957		10.4
Cincinnati Re	152		788		7		947		10.3
Cincinnati Global	132		102		3		237		2.6
Total	$	3,605	$	3,949	$	1,624	$	9,178	100.0	%
At December 31, 2023
Commercial lines insurance:
Commercial casualty	$	1,111	$	1,205	$	792	$	3,108	34.6	%
Commercial property	362		116		81		559		6.3
Commercial auto	418		303		142		863		9.6
Workers' compensation	431		540		89		1,060		11.8
Other commercial	143		26		128		297		3.3
Subtotal	2,465		2,190		1,232		5,887		65.6
Personal lines insurance:
Personal auto	222		74		73		369		4.1
Homeowner	215		122		58		395		4.4
Other personal	101		119		6		226		2.5
Subtotal	538		315		137		990		11.0
Excess and surplus lines	360		336		236		932		10.4
Cincinnati Re	158		747		6		911		10.2
Cincinnati Global	141		111		3		255		2.8
Total	$	3,662	$	3,699	$	1,614	$	8,975	100.0	%

LIFE POLICY AND INVESTMENT CONTRACT RESERVES

Gross life policy and investment contract reserves were $3.013 billion at March 31, 2024, compared with $3.068 billion at year-end 2023, primarily due to an increase in market value discount rates. We discussed our life insurance reserving practices in our 2023 Annual Report on Form 10-K, Item 7, Life Insurance Policyholder Obligations and Reserves, Page 104, and updated that disclosure in this quarterly report Item 1, Note 1, Accounting Policies.

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OTHER MATTERS

SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are discussed in our 2023 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 2023 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our greatest exposure to market risk is through our investment portfolio. Market risk is the potential for a decrease in securities' fair value resulting from broad yet uncontrollable forces such as: inflation, economic growth or recession, interest rates, world political conditions or other widespread unpredictable events. It is comprised of many individual risks that, when combined, create a macroeconomic impact.

Our view of potential risks and our sensitivity to such risks is discussed in our 2023 Annual Report on Form 10-K, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, Page 113.

The fair value of our investment portfolio was $25.641 billion at March 31, 2024, up $861 million from year-end 2023, including a $293 million increase in the fixed-maturity portfolio and a $568 million increase in the equity portfolio.


(Dollars in millions)	At March 31, 2024								At December 31, 2023
	Cost or amortized cost		Percent of total		Fair value		Percent of total		Cost or amortized cost		Percent of total		Fair value		Percent of total
Taxable fixed maturities	$	10,761	56.6	%	$	10,218	39.8	%	$	10,414	55.8	%	$	9,889	40.0	%
Tax-exempt fixed maturities	3,948		20.8		3,866		15.1		3,947		21.2		3,902		15.7
Common equities	3,905		20.5		11,203		43.7		3,869		20.8		10,641		42.9
Nonredeemable preferred equities	408		2.1		354		1.4		413		2.2		348		1.4

Total	$	19,022	100.0	%	$	25,641	100.0	%	$	18,643	100.0	%	$	24,780	100.0	%

At March 31, 2024, substantially all of our consolidated investment portfolio, measured at fair value, is classified as Level 1 or Level 2. See Item 1, Note 3, Fair Value Measurements, for additional discussion of our valuation techniques.

In addition to our investment portfolio, the total investments amount reported in our condensed consolidated balance sheets includes Other invested assets. Other invested assets included $477 million of private equity investments, $79 million of real estate through direct property ownership and development projects in the United States, $34 million of life policy loans and $18 million in Lloyd's deposit at March 31, 2024.

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FIXED-MATURITY SECURITIES INVESTMENTS

By maintaining a well-diversified fixed-maturity portfolio, we attempt to reduce overall risk. We invest new money in the bond market on a regular basis, targeting what we believe to be optimal risk-adjusted, after-tax yields. Risk, in this context, includes interest rate, call, reinvestment rate, credit and liquidity risk. We do not make a concerted effort to alter duration on a portfolio basis in response to anticipated movements in interest rates. By regularly investing in the bond market, we build a broad, diversified portfolio that we believe mitigates the impact of adverse economic factors.

In the first three months of 2024, the increase in fair value of our fixed-maturity portfolio was due to net purchases of securities and tightening of corporate credit spreads, partially offset by an increase in our net unrealized loss position that reflected an increase in U.S. Treasury yields. At March 31, 2024, our fixed-maturity portfolio with an average rating of A2/A was valued at 95.8% of its amortized cost, compared with 96.0% at December 31, 2023.

At March 31, 2024, our investment-grade fixed-maturity securities represented 96.3% of the portfolio based on ratings provided by nationally recognized statistical rating organizations or the Securities Valuation Office of the National Association of Insurance Commissioners.

Attributes of the fixed-maturity portfolio include:


	At March 31, 2024		At December 31, 2023
Weighted average yield-to-amortized cost	4.68	%	4.60	%
Weighted average maturity	8.3	yrs	7.9	yrs
Effective duration	4.3	yrs	4.3	yrs

We discuss maturities of our fixed-maturity portfolio in our 2023 Annual Report on Form 10-K, Item 8, Note 2, Investments, Page 137, and in this quarterly report Item 2, Investments Results.

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TAXABLE FIXED MATURITIES

Our taxable fixed-maturity portfolio, with a fair value of $10.218 billion at March 31, 2024, included:


(Dollars in millions)	At March 31, 2024		At December 31, 2023
Investment-grade corporate	$	7,156	$	7,040
States, municipalities and political subdivisions	802		801
Noninvestment-grade corporate	443		412
Government-sponsored enterprises	1,421		1,224
Asset-backed	189		187
United States government	178		200
Foreign government	29		25


Total	$	10,218	$	9,889

Our strategy is to buy, and typically hold, fixed-maturity investments to maturity, but we monitor credit profiles and fair value movements when determining holding periods for individual securities. With the exception of United States agency issues that include government-sponsored enterprises, no individual issuer's securities accounted for more than 1.1% of the taxable fixed-maturity portfolio at March 31, 2024. Our investment-grade corporate bonds had an average rating of Baa1 by Moody's or BBB by S&P Global Ratings and represented 70.0% of the taxable fixed-maturity portfolio's fair value at March 31, 2024, compared with 71.2% at year-end 2023.

The heaviest concentration in our investment-grade corporate bond portfolio, based on fair value at

March 31, 2024, was the financial sector. It represented 37.7% of our investment-grade corporate bond portfolio, compared with 38.2% at year-end 2023. The energy and utility sectors represented 11.3% and 10.0%, respectively, compared with 11.2% and less than 10% at year-end 2023. No other sector exceeded 10% of our investment-grade corporate bond portfolio.

As discussed in our 2023 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 30, investments in the financial sector include various risks. See risk factors entitled “Financial disruption or a prolonged economic downturn could materially and adversely affect our investment performance” and “Our ability to achieve our performance objectives could be affected by changes in the financial, credit and capital markets or the general economy.”

Our taxable fixed-maturity portfolio at March 31, 2024, included $189 million of asset-backed securities with an average rating of Aa3/AA-.

TAX-EXEMPT FIXED MATURITIES

At March 31, 2024, we had $3.866 billion of tax-exempt fixed-maturity securities with an average rating of Aa2/AA by Moody's and S&P Global Ratings. We traditionally have purchased municipal bonds focusing on general obligation and essential services issues, such as water, waste disposal or others. The portfolio is well diversified among approximately 1,800 municipal bond issuers. No single municipal issuer accounted for more than 0.6% of the tax-exempt fixed-maturity portfolio at March 31, 2024.

INTEREST RATE SENSITIVITY ANALYSIS

Because of our strong surplus, long-term investment horizon and ability to hold most fixed-maturity investments until maturity, we believe the company is adequately positioned if interest rates were to rise. Although the fair values of our existing holdings may suffer, a higher rate environment would provide the opportunity to invest cash flow in higher-yielding securities, while reducing the likelihood of untimely redemptions of currently callable securities. While higher interest rates would be expected to continue to increase the number of fixed-maturity holdings trading below 100% of amortized cost, we believe lower fixed-maturity security values due solely to interest rate changes would not signal a decline in credit quality. We continue to manage the portfolio with an eye toward both meeting current income needs and managing interest rate risk.

Our dynamic financial planning model uses analytical tools to assess market risks. As part of this model, the effective duration of the fixed-maturity portfolio is continually monitored by our investment department to evaluate the theoretical impact of interest rate movements.

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The table below summarizes the effect of hypothetical changes in interest rates on the fair value of the fixed-maturity portfolio:


(Dollars in millions)	Effect from interest rate change in basis points
	-200		-100		—		100		200
At March 31, 2024	$	15,281	$	14,681	$	14,084	$	13,458	$	12,802
At December 31, 2023	$	14,962	$	14,375	$	13,791	$	13,179	$	12,543

The effective duration of the fixed-maturity portfolio as of March 31, 2024, was 4.3 years, matching year-end 2023. The above table is a theoretical presentation showing that an instantaneous, parallel shift in the yield curve of 100 basis points could produce an approximately 4.3% change in the fair value of the fixed-maturity portfolio. Generally speaking, the higher a bond is rated, the more directly correlated movements in its fair value are to changes in the general level of interest rates, exclusive of call features. The fair values of average- to lower-rated corporate bonds are additionally influenced by the expansion or contraction of credit spreads.

In our dynamic financial planning model, the selected interest rate change of 100 to 200 basis points represents our view of a shift in rates that is quite possible over a one-year period. The rates modeled should not be considered a prediction of future events as interest rates may be much more volatile in the future. The analysis is not intended to provide a precise forecast of the effect of changes in rates on our results or financial condition, nor does it take into account any actions that we might take to reduce exposure to such risks.

EQUITY INVESTMENTS

Our equity investments, with a fair value totaling $11.557 billion at March 31, 2024, included $11.203 billion of common stock securities of companies generally with strong indications of paying and growing their dividends. Other criteria we evaluate include increasing sales and earnings, proven management and a favorable outlook. We believe our equity investment style is an appropriate long-term strategy. While our long-term financial position would be affected by prolonged changes in the market valuation of our investments, we believe our strong surplus position and cash flow provide a cushion against short-term fluctuations in valuation. Continued payment of cash dividends by the issuers of our common equity holdings can provide a floor to their valuation.

The table below summarizes the effect of hypothetical changes in market prices on fair value of our equity portfolio.


(Dollars in millions)	Effect from market price change in percent
		-30%		-20%		-10%		—		10%		20%		30%
At March 31, 2024		$	8,090	$	9,246	$	10,401	$	11,557	$	12,713	$	13,868	$	15,024
At December 31, 2023		$	7,692	$	8,791	$	9,890	$	10,989	$	12,088	$	13,187	$	14,286

At March 31, 2024, Microsoft (Nasdaq:MSFT) was our largest single common stock holding with a fair value of $942 million, or 8.4% of our publicly traded common stock portfolio and 3.7% of the total investment portfolio. Forty holdings among nine different sectors each had a fair value greater than $100 million.

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Common Stock Portfolio Industry Sector Distribution


	Percent of common stock portfolio
	At March 31, 2024				At December 31, 2023
	Cincinnati Financial		S&P 500 Industry Weightings		Cincinnati Financial		S&P 500 Industry Weightings
Sector:
Information technology	33.3	%	29.6	%	33.1	%	28.9	%
Financial	13.9		13.1		13.9		13.0
Industrials	12.4		8.8		11.9		8.8
Healthcare	11.4		12.4		11.6		12.6
Consumer staples	7.0		6.0		7.0		6.2
Consumer discretionary	7.0		10.3		7.0		10.8
Materials	4.5		2.4		4.7		2.4
Energy	4.4		3.9		4.1		3.9
Utilities	2.6		2.2		2.7		2.3
Real estate	2.2		2.3		2.6		2.5
Telecomm services	1.3		9.0		1.4		8.6
Total	100.0	%	100.0	%	100.0	%	100.0	%

UNREALIZED INVESTMENT GAINS AND LOSSES

At March 31, 2024, unrealized investment gains before taxes for the fixed-maturity portfolio totaled $89 million and unrealized investment losses amounted to $714 million before taxes.

The $625 million net unrealized loss position in our fixed-maturity portfolio at March 31, 2024, increased in the first three months of 2024, primarily due to an increase in U.S. Treasury yields that were partially offset by tightening of corporate credit spreads. The net loss position for our current fixed-maturity holdings will naturally decline over time as individual securities approach maturity. In addition, changes in interest rates can cause rapid, significant changes in fair values of fixed-maturity securities and the net loss position, as discussed in Quantitative and Qualitative Disclosures About Market Risk.

For federal income tax purposes, taxes on gains from appreciated investments generally are not due until securities are sold. We believe that the appreciated value of equity securities, compared with the cost of securities that is generally used as a tax basis, is a useful measure to help evaluate how fair value can change over time. On this basis, the net unrealized investment gains at March 31, 2024, consisted of a net gain position in our equity portfolio of $7.244 billion. Events or factors such as economic growth or recession can affect the fair value and unrealized investment gains of our equity securities. The five largest holdings in our common stock portfolio were Microsoft, Apple (Nasdaq:AAPL), Broadcom Inc. (Nasdaq:AVGO), JPMorgan Chase & Co (NYSE:JPM) and BlackRock, Inc. (NYSE:BLK), which had a combined fair value of $3.202 billion.

Unrealized Investment Losses

We expect the number of fixed-maturity securities trading below amortized cost to fluctuate as interest rates rise or fall and credit spreads expand or contract due to prevailing economic conditions. Further, amortized costs for some securities are revised through write-downs recognized in prior periods. At March 31, 2024, 3,329 of the 4,804 fixed-maturity securities we owned had fair values below amortized cost, compared with 2,840 of the 4,738 securities we owned at year-end 2023. The 3,329 holdings with fair values below amortized cost at March 31, 2024, represented 71.4% of the fair value of our fixed-maturity investment portfolio and $714 million in unrealized losses.

•2,413 of the 3,329 holdings had fair value between 90% and 100% of amortized cost at March 31, 2024. These primarily consist of securities whose current valuation is largely the result of interest rate factors. The fair value of these 2,413 securities was $8.027 billion, and they accounted for $250 million in unrealized losses.

•904 of the 3,329 fixed-maturity holdings had fair value between 70% and 90% of amortized cost at
March 31, 2024. We believe the 904 fixed-maturity securities will continue to pay interest and ultimately pay

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principal upon maturity. The issuers of these 904 securities have strong cash flow to service their debt and meet their contractual obligation to make principal payments. The fair value of these securities was $2.001 billion, and they accounted for $448 million in unrealized losses.

•12 of the 3,329 fixed-maturity holdings had fair value below 70% of amortized cost at March 31, 2024. We believe these fixed-maturity securities will continue to pay interest and ultimately pay principal upon maturity. The fair value of these securities was $29 million, and they accounted for $16 million in unrealized losses.

The table below reviews fair values and unrealized losses by investment category and by the overall duration of the securities' continuous unrealized loss position.


(Dollars in millions)	Less than 12 months				12 months or more				Total
At March 31, 2024	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	642	$	13	$	5,488	$	450	$	6,130	$	463
States, municipalities and political subdivisions	1,099		9		1,900		223		2,999		232
Government-sponsored enterprises	396		1		168		3		564		4
Asset-backed	30		—		133		11		163		11
United States government	74		—		105		4		179		4
Foreign government	17		—		5		—		22		—
Total	$	2,258	$	23	$	7,799	$	691	$	10,057	$	714





At December 31, 2023
Fixed-maturity securities:
Corporate	$	379	$	13	$	5,560	$	441	$	5,939	$	454
States, municipalities and political subdivisions	313		2		1,932		206		2,245		208
Government-sponsored enterprises	652		3		113		3		765		6
Asset-backed	5		—		172		16		177		16
United States government	32		—		129		3		161		3
Foreign government	3		—		6		—		9		—





Total	$	1,384	$	18	$	7,912	$	669	$	9,296	$	687

At March 31, 2024, applying our invested asset impairment policy, we determined that the total of $714 million, for securities in an unrealized loss position in the table above, was not the result of a credit loss.

During the first three months of 2024, no fixed-maturity securities were written down to fair value, due to an intention to be sold. The allowance for credit losses increased $9 million during the first three months of 2024. During the first three months of 2023, no fixed-maturity securities were written down to fair value, due to an intention to be sold, and changes in allowance for credit losses were less than $1 million.

During the full year of 2023, we wrote down one security and recorded $4 million in impairment charges. At December 31, 2023, 2,840 fixed-maturity securities with a total unrealized loss of $687 million were in an unrealized loss position. Of that total, 20 fixed-maturity securities had fair values below 70% of amortized cost.

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The following table summarizes the investment portfolio by severity of decline:


(Dollars in millions)	Number of issues	Amortized cost		Fair value		Gross unrealized gain (loss)		Gross investment income
At March 31, 2024
Taxable fixed maturities:
Fair valued below 70% of amortized cost	10	$	41	$	27	$	(14)	$	—
Fair valued at 70% to less than 100% of amortized cost	1,907	8,345		7,752		(593)		96
Fair valued at 100% and above of amortized cost	498	2,375		2,439		64		38
Investment income on securities sold in current year	—	—		—		—		2
Total	2,415	10,761		10,218		(543)		136
Tax-exempt fixed maturities:
Fair valued below 70% of amortized cost	2	4		2		(2)		—
Fair valued at 70% to less than 100% of amortized cost	1,410	2,381		2,276		(105)		18
Fair valued at 100% and above of amortized cost	977	1,563		1,588		25		15
Investment income on securities sold in current year	—	—		—		—		—
Total	2,389	3,948		3,866		(82)		33


















Fixed-maturities summary:
Fair valued below 70% of amortized cost	12	45		29		(16)		—
Fair valued at 70% to less than 100% of amortized cost	3,317	10,726		10,028		(698)		114
Fair valued at 100% and above of amortized cost	1,475	3,938		4,027		89		53
Investment income on securities sold in current year	—	—		—		—		2
Total	4,804	$	14,709	$	14,084	$	(625)	$	169

At December 31, 2023
Fixed-maturities summary:
Fair valued below 70% of amortized cost	20	$	67	$	44	$	(23)	$	3
Fair valued at 70% to less than 100% of amortized cost	2,820	9,916		9,252		(664)		409
Fair valued at 100% and above of amortized cost	1,898	4,378		4,495		117		162
Investment income on securities sold in current year	—	—		—		—		26
Total	4,738	$	14,361	$	13,791	$	(570)	$	600

See our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Asset Impairment, Page 58.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures – The company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)).

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The company's management, with the participation of the company's chief executive officer and chief financial officer, has evaluated the effectiveness of the design and operation of the company's disclosure controls and procedures as of March 31, 2024. Based upon that evaluation, the company's chief executive officer and chief financial officer concluded that the design and operation of the company's disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures are effective to ensure:

•that information required to be disclosed in the company's reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and

•that such information is accumulated and communicated to the company's management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting – During the three months ended March 31, 2024, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – Other Information

Item 1. Legal Proceedings

Neither the company nor any of our subsidiaries are involved in any litigation believed to be material other than ordinary, routine litigation incidental to the nature of our business.

Item 1A. Risk Factors

Our risk factors have not changed materially since they were described in our 2023 Annual Report on Form 10-K filed February 26, 2024. Investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any of our shares that were not registered under the Securities Act during the first three months of 2024. Our repurchase program does not have an expiration date. On January 26, 2018, an additional 15 million shares were authorized, which expanded our current repurchase program. We have 6,046,785 shares available for purchase under our programs at March 31, 2024.


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
January 1-31, 2024	—	—		—	6,726,785
February 1-29, 2024	500,000	$	109.07	500,000	6,226,785
March 1-31, 2024	180,000	112.19		180,000	6,046,785






Totals	680,000	109.89		680,000

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Item 5. Other Information

Neither the company nor any of our officers or directors adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement as defined by Item 408(a) and Item 408(d) of Regulation S-K during the last fiscal quarter.

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Item 6. Exhibits


Exhibit No.						Exhibit Description
3.1						Amended and Restated Articles of Incorporation of Cincinnati Financial Corporation (incorporated by reference to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, Exhibit 3.1)
3.2						Amended and Restated Code of Regulations of Cincinnati Financial Corporation, as of May 6, 2023 (incorporated by reference to Exhibit 3.1 filed with the company's Current Report on Form 8-K dated May 9, 2023)
31A						Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002 – Chief Executive Officer
31B						Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002 – Chief Financial Officer
32						Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002
101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


CINCINNATI FINANCIAL CORPORATION
Date: April 25, 2024

/S/ Michael J. Sewell
Michael J. Sewell, CPA
Chief Financial Officer, Executive Vice President and Treasurer
(Principal Accounting Officer)

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