CINCINNATI FINANCIAL CORP 10-Q

Item 1. Financial Statements (unaudited) Cincinnati Financial Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Dollars in millions, except per share data) September 30, December 31, 2021 2020 Assets Investments Fixed maturities, at fair value (amortized cost: 2021—$ 12,034 ; 2020—$ 11,312 ) $ 12,908 $ 12,338 Equity securities, at fair value (cost: 2021—$ 4,096 ; 2020—$ 3,927 ) 9,887 8,856 Other invested assets 418 348 Total investments 23,213 21,542 Cash and cash equivalents 1,085 900 Investment income receivable 142 136 Finance receivable 98 95 Premiums receivable 2,106 1,879 Reinsurance recoverable 548 517 Prepaid reinsurance premiums 87 65 Deferred policy acquisition costs 915 805 Land, building and equipment, net, for company use (accumulated depreciation: 2021—$ 299 ; 2020—$ 285 ) 209 213 Other assets 548 438 Separate accounts 956 952 Total assets $ 29,907 $ 27,542 Liabilities Insurance reserves Loss and loss expense reserves $ 7,292 $ 6,746 Life policy and investment contract reserves 2,999 2,915 Unearned premiums 3,342 2,960 Other liabilities 1,120 982 Deferred income tax 1,453 1,299 Note payable 59 54 Long-term debt and lease obligations 845 845 Separate accounts 956 952 Total liabilities 18,066 16,753 Commitments and contingent liabilities (Note 12) Shareholders' Equity Common stock, par value—$ 2 per share; (authorized: 2021 and 2020— 500 million shares; issued: 2021 and 2020— 198.3 million shares) 397 397 Paid-in capital 1,344 1,328 Retained earnings 11,257 10,085 Accumulated other comprehensive income 663 769 Treasury stock at cost (2021— 37.2 million shares and 2020— 37.4 million shares) ( 1,820 ) ( 1,790 ) Total shareholders' equity 11,841 10,789 Total liabilities and shareholders' equity $ 29,907 $ 27,542 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 3 Cincinnati Financial Corporation and Subsidiaries Condensed Consolidated Statements of Income (Dollars in millions, except per share data) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues Earned premiums $ 1,669 $ 1,522 $ 4,806 $ 4,460 Investment income, net of expenses 179 167 528 498 Investment gains and losses, net ( 70 ) 533 954 ( 132 ) Fee revenues 4 2 11 8 Other revenues 3 3 8 8 Total revenues 1,785 2,227 6,307 4,842 Benefits and Expenses Insurance losses and contract holders' benefits 1,072 1,143 2,990 3,232 Underwriting, acquisition and insurance expenses 511 452 1,440 1,372 Interest expense 13 13 39 40 Other operating expenses 5 5 14 15 Total benefits and expenses 1,601 1,613 4,483 4,659 Income Before Income Taxes 184 614 1,824 183 Provision (Benefit) for Income Taxes Current 55 55 166 81 Deferred ( 24 ) 75 182 ( 65 ) Total provision for income taxes 31 130 348 16 Net Income $ 153 $ 484 $ 1,476 $ 167 Per Common Share Net income—basic $ 0.95 $ 3.01 $ 9.16 $ 1.03 Net income—diluted 0.94 2.99 9.07 1.03 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 4 Cincinnati Financial Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Net Income $ 153 $ 484 $ 1,476 $ 167 Other Comprehensive Income (Loss) Change in unrealized gains and losses on investments, net of tax of $( 19 ), $ 23 , $( 33 ) and $ 62 , respectively ( 69 ) 89 ( 119 ) 232 Amortization of pension actuarial loss and prior service cost, net of tax of $ 1 , $ 0 , $ 2 and $ 0 , respectively 1 — 5 2 Change in life deferred acquisition costs, life policy reserves and other, net of tax of $ 0 , $ 0 , $ 2 and $ 1 , respectively — — 8 4 Other comprehensive income (loss) ( 68 ) 89 ( 106 ) 238 Comprehensive Income $ 85 $ 573 $ 1,370 $ 405 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 5 Cincinnati Financial Corporation and Subsidiaries Condensed Consolidated Statements of Shareholders' Equity (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Common Stock Beginning of period $ 397 $ 397 $ 397 $ 397 Share-based awards — — — — End of period 397 397 397 397 Paid-In Capital Beginning of period 1,334 1,309 1,328 1,306 Share-based awards 1 — ( 13 ) ( 16 ) Share-based compensation 8 8 25 24 Other 1 1 4 4 End of period 1,344 1,318 1,344 1,318 Retained Earnings Beginning of period 11,205 8,745 10,085 9,257 Cumulative effect of change in accounting for credit losses as of January 1, 2020 — — — ( 2 ) Adjusted beginning of year 11,205 8,745 10,085 9,255 Net income 153 484 1,476 167 Dividends declared ( 101 ) ( 97 ) ( 304 ) ( 290 ) End of period 11,257 9,132 11,257 9,132 Accumulated Other Comprehensive Income Beginning of period 731 597 769 448 Other comprehensive income (loss) ( 68 ) 89 ( 106 ) 238 End of period 663 686 663 686 Treasury Stock Beginning of period ( 1,809 ) ( 1,790 ) ( 1,790 ) ( 1,544 ) Share-based awards 1 — 16 12 Shares acquired - share repurchase authorization ( 12 ) — ( 40 ) ( 256 ) Shares acquired - share-based compensation plans — — ( 7 ) ( 3 ) Other — 2 1 3 End of period ( 1,820 ) ( 1,788 ) ( 1,820 ) ( 1,788 ) Total Shareholders' Equity $ 11,841 $ 9,745 $ 11,841 $ 9,745 (In millions, except per common share) Common Stock - Shares Outstanding Beginning of period 161.1 160.8 160.9 162.9 Share-based awards 0.1 — 0.6 0.4 Shares acquired - share repurchase authorization ( 0.1 ) — ( 0.4 ) ( 2.5 ) End of period 161.1 160.8 161.1 160.8 Dividends declared per common share $ 0.63 $ 0.60 $ 1.89 $ 1.80 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 6 Cincinnati Financial Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Dollars in millions) Nine months ended September 30, 2021 2020 Cash Flows From Operating Activities Net income $ 1,476 $ 167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 69 62 Investment gains and losses, net ( 933 ) 137 Share-based compensation 25 24 Interest credited to contract holders 33 33 Deferred income tax expense 182 ( 65 ) Changes in: Investment income receivable ( 6 ) 2 Premiums and reinsurance receivable ( 280 ) ( 93 ) Deferred policy acquisition costs ( 84 ) ( 46 ) Other assets ( 12 ) ( 25 ) Loss and loss expense reserves 546 600 Life policy and investment contract reserves 76 94 Unearned premiums 382 236 Other liabilities 95 ( 34 ) Current income tax receivable/payable ( 51 ) 27 Net cash provided by operating activities 1,518 1,119 Cash Flows From Investing Activities Sale of fixed maturities 88 100 Call or maturity of fixed maturities 1,049 756 Sale of equity securities 123 471 Purchase of fixed maturities ( 1,831 ) ( 1,092 ) Purchase of equity securities ( 276 ) ( 640 ) Investment in finance receivables ( 30 ) ( 33 ) Collection of finance receivables 28 26 Investment in building and equipment ( 12 ) ( 16 ) Change in other invested assets, net ( 30 ) 16 Net cash used in investing activities ( 891 ) ( 412 ) Cash Flows From Financing Activities Payment of cash dividends to shareholders ( 295 ) ( 280 ) Shares acquired - share repurchase authorization ( 40 ) ( 256 ) Changes in note payable 5 84 Proceeds from stock options exercised 10 5 Contract holders' funds deposited 64 64 Contract holders' funds withdrawn ( 104 ) ( 123 ) Other ( 82 ) ( 54 ) Net cash used in financing activities ( 442 ) ( 560 ) Net change in cash and cash equivalents 185 147 Cash and cash equivalents at beginning of year 900 767 Cash and cash equivalents at end of period $ 1,085 $ 914 Supplemental Disclosures of Cash Flow Information: Interest paid $ 26 $ 27 Income taxes paid 205 42 Noncash Activities Equipment acquired under finance lease obligations $ 9 $ 13 Share-based compensation 22 3 Other assets and other liabilities 137 63 Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 — Accounting Policies The condensed consolidated financial statements include the accounts of Cincinnati Financial Corporation and its consolidated subsidiaries, each of which is wholly owned. These statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP). 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 September 30, 2021, 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 2020 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. Beginning in mid-March 2020, the coronavirus (SARS-CoV-2 or COVID-19) pandemic outbreak, and unprecedented actions taken to contain the virus, caused an economic downturn on a global scale as well as market disruption and volatility. The company continues to monitor the impact of the pandemic as it unfolds. The company cannot predict the impact the pandemic will have on its future consolidated financial position, results of operations and cash flows, however the impact could be material. Pending Accounting Updates ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. ASU 2018-12 is intended to improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows. The ASU will simplify and improve the accounting for certain market-based options or guarantees associated with deposit or account balance contracts and simplify amortization of deferred acquisition costs while improving and expanding required disclosures. In November 2020, the FASB issued an ASU that delayed the effective date of ASU 2018-12 to interim and annual reporting periods beginning after December 15, 2022. These ASUs have not yet been adopted. Management is currently evaluating the impact on our company's consolidated financial position, results of operations and cash flows. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 8 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 September 30, 2021 gains losses Fixed maturity securities: Corporate $ 6,962 $ 542 $ 8 $ 7,496 States, municipalities and political subdivisions 4,646 328 4 4,970 Commercial mortgage-backed 266 13 — 279 United States government 127 3 — 130 Foreign government 26 — — 26 Government-sponsored enterprises 7 — — 7 Total $ 12,034 $ 886 $ 12 $ 12,908 At December 31, 2020 Fixed maturity securities: Corporate $ 6,281 $ 621 $ 7 $ 6,895 States, municipalities and political subdivisions 4,604 395 2 4,997 Commercial mortgage-backed 271 15 1 285 United States government 115 5 — 120 Foreign government 29 — — 29 Government-sponsored enterprises 12 — — 12 Total $ 11,312 $ 1,036 $ 10 $ 12,338 The net unrealized investment gains in our fixed-maturity portfolio at September 30, 2021, are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa1/AA at September 30, 2021 and December 31, 2020. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 9 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 September 30, 2021 Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses Fixed maturity securities: Corporate $ 647 $ 8 $ 17 $ — $ 664 $ 8 States, municipalities and political subdivisions 154 3 5 1 159 4 Commercial mortgage-backed 7 — 11 — 18 — United States government 6 — — — 6 — Foreign government — — — — — — Government-sponsored enterprises 4 — — — 4 — Total $ 818 $ 11 $ 33 $ 1 $ 851 $ 12 At December 31, 2020 Fixed maturity securities: Corporate $ 330 $ 5 $ 46 $ 2 $ 376 $ 7 States, municipalities and political subdivisions 31 2 2 — 33 2 Commercial mortgage-backed 23 1 6 — 29 1 United States government 12 — — — 12 — Foreign government 10 — — — 10 — Total $ 406 $ 8 $ 54 $ 2 $ 460 $ 10 Contractual maturity dates for fixed-maturities securities were: (Dollars in millions) Amortized cost Fair value % of fair value At September 30, 2021 Maturity dates: Due in one year or less $ 572 $ 580 4.5 % Due after one year through five years 3,722 3,961 30.7 Due after five years through ten years 3,445 3,751 29.1 Due after ten years 4,295 4,616 35.7 Total $ 12,034 $ 12,908 100.0 % Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 10 The following table provides investment income and investment gains and losses, net: (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Investment income: Interest $ 121 $ 113 $ 356 $ 339 Dividends 61 55 179 161 Other 1 2 4 7 Total 183 170 539 507 Less investment expenses 4 3 11 9 Total $ 179 $ 167 $ 528 $ 498 Investment gains and losses, net: Equity securities: Investment gains and losses on securities sold, net $ ( 1 ) $ 55 $ 6 $ 75 Unrealized gains and losses on securities still held, net ( 104 ) 475 869 ( 130 ) Subtotal ( 105 ) 530 875 ( 55 ) Fixed maturities: Gross realized gains 10 4 24 9 Gross realized losses ( 1 ) — ( 3 ) ( 3 ) Write-down of impaired securities ( 1 ) ( 1 ) ( 1 ) ( 78 ) Subtotal 8 3 20 ( 72 ) Other 27 — 59 ( 5 ) Total $ ( 70 ) $ 533 $ 954 $ ( 132 ) The fair value of our equity portfolio was $ 9.887 billion and $ 8.856 billion at September 30, 2021 and December 31, 2020, respectively. At September 30, 2021 and December 31, 2020, Apple Inc. (Nasdaq:AAPL) , an equity holding, was our largest single investment holding with a fair value of $ 687 million and $ 644 million, which was 7.3 % and 7.5 % of our publicly traded common equities portfolio, respectively, and 3.0 % of the total investment portfolio for both periods. At September 30, 2021 and December 31, 2020, there were no fixed-maturity securities with an allowance for credit losses. During the three and nine months ended September 30, 2021, there were five fixed-maturity securities from the municipal sector that were written down to fair value due to an intention to be sold. During the three months ended September 30, 2020, there were two fixed-maturity securities from the municipal sector that were written down to fair value due to an intention to be sold and during the nine months ended September 30, 2020, there were 14 fixed-maturity securities from the energy, real estate, consumer goods, municipal and technology & electronics sectors that were written down to fair value due to an intention to be sold. At September 30, 2021, 244 fixed-maturity securities with a total unrealized loss of $ 12 million were in an unrealized loss position. Of that total, one fixed-maturity security had a fair value below 70 % of amortized cost. At December 31, 2020, 128 fixed-maturity securities with a total unrealized loss of $ 10 million were in an unrealized loss position. Of that total, no fixed-maturity securities had fair values below 70 % of amortized cost. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 11 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, 2020, and ultimately management determines fair value. See our 2020 Annual Report on Form 10-K, Item 8, Note 3, Fair Value Measurements, Page 143, 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 September 30, 2021 and December 31, 2020. We do not have any liabilities carried at fair value. (Dollars in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total At September 30, 2021 Fixed maturities, available for sale: Corporate $ — $ 7,496 $ — $ 7,496 States, municipalities and political subdivisions — 4,970 — 4,970 Commercial mortgage-backed — 279 — 279 United States government 130 — — 130 Foreign government — 26 — 26 Government-sponsored enterprises — 7 — 7 Subtotal 130 12,778 — 12,908 Common equities 9,465 — — 9,465 Nonredeemable preferred equities — 422 — 422 Separate accounts taxable fixed maturities — 923 — 923 Top Hat savings plan mutual funds and common equity (included in Other assets) 62 — — 62 Total $ 9,657 $ 14,123 $ — $ 23,780 At December 31, 2020 Fixed maturities, available for sale: Corporate $ — $ 6,895 $ — $ 6,895 States, municipalities and political subdivisions — 4,997 — 4,997 Commercial mortgage-backed — 285 — 285 United States government 120 — — 120 Foreign government — 29 — 29 Government-sponsored enterprises — 12 — 12 Subtotal 120 12,218 — 12,338 Common equities 8,541 — — 8,541 Nonredeemable preferred equities — 315 — 315 Separate accounts taxable fixed maturities — 903 — 903 Top Hat savings plan mutual funds and common equity (included in Other assets) 51 — — 51 Total $ 8,712 $ 13,436 $ — $ 22,148 Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 12 We also held Level 1 cash and cash equivalents of $ 1.085 billion and $ 900 million at September 30, 2021 and December 31, 2020, respectively. 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 September 30, December 31, September 30, December 31, 2021 2020 2021 2020 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 371 370 374 374 Total $ 789 $ 788 $ 793 $ 793 The following table shows fair values of our note payable and long-term debt: (Dollars in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total At September 30, 2021 Note payable $ — $ 59 $ — $ 59 6.900 % senior debentures, due 2028 — 35 — 35 6.920 % senior debentures, due 2028 — 508 — 508 6.125 % senior notes, due 2034 — 510 — 510 Total $ — $ 1,112 $ — $ 1,112 At December 31, 2020 Note payable $ — $ 54 $ — $ 54 6.900 % senior debentures, due 2028 — 35 — 35 6.920 % senior debentures, due 2028 — 515 — 515 6.125 % senior notes, due 2034 — 522 — 522 Total $ — $ 1,126 $ — $ 1,126 Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 13 The following table shows the fair value of our life policy loans included in other invested assets and the fair values of our deferred annuities and structured settlements included in life policy and investment contract reserves: (Dollars in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total At September 30, 2021 Life policy loans $ — $ — $ 43 $ 43 Deferred annuities — — 800 800 Structured settlements — 205 — 205 Total $ — $ 205 $ 800 $ 1,005 At December 31, 2020 Life policy loans $ — $ — $ 49 $ 49 Deferred annuities — — 836 836 Structured settlements — 227 — 227 Total $ — $ 227 $ 836 $ 1,063 Outstanding principal and interest for these life policy loans totaled $ 30 million and $ 33 million at September 30, 2021 and December 31, 2020, respectively. Recorded reserves for the deferred annuities were $ 767 million and $ 761 million at September 30, 2021 and December 31, 2020, respectively. Recorded reserves for the structured settlements were $ 139 million and $ 145 million at September 30, 2021 and December 31, 2020, respectively. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 14 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 September 30, Nine months ended September 30, 2021 2020 2021 2020 Gross loss and loss expense reserves, beginning of period $ 6,955 $ 6,409 $ 6,677 $ 6,088 Less reinsurance recoverable 274 294 277 342 Net loss and loss expense reserves, beginning of period 6,681 6,115 6,400 5,746 Net incurred loss and loss expenses related to: Current accident year 1,090 1,082 3,072 3,099 Prior accident years ( 102 ) ( 11 ) ( 331 ) ( 91 ) Total incurred 988 1,071 2,741 3,008 Net paid loss and loss expenses related to: Current accident year 416 443 893 998 Prior accident years 349 336 1,344 1,349 Total paid 765 779 2,237 2,347 Net loss and loss expense reserves, end of period 6,904 6,407 6,904 6,407 Plus reinsurance recoverable 322 285 322 285 Gross loss and loss expense reserves, end of period $ 7,226 $ 6,692 $ 7,226 $ 6,692 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 $ 66 million at September 30, 2021 and $ 55 million at September 30, 2020, for certain life and health loss and loss expense reserves. For the three months ended September 30, 2021, we experienced $ 102 million of favorable development on prior accident years, including $ 107 million of favorable development in commercial lines, $ 3 million of favorable development in personal lines and $ 3 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $ 52 million for the commercial casualty line and $ 34 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. For the nine months ended September 30, 2021, we experienced $ 331 million of favorable development on prior accident years, including $ 276 million of favorable development in commercial lines, $ 35 million of favorable development in personal lines and $ 6 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $ 85 million for the commercial casualty line, $ 68 million for the commercial property line, $ 59 million for the workers' compensation line and $ 44 million for the commercial auto line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $ 24 million in personal auto. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 15 For the three months ended September 30, 2020, we experienced $ 11 million of favorable development on prior accident years, including $ 8 million of favorable development in commercial lines, less than $ 1 million of unfavorable development in personal lines and $ 1 million of favorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $ 10 million for the commercial casualty line and $ 6 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $ 10 million for the commercial auto line. For the nine months ended September 30, 2020, we experienced $ 91 million of favorable development on prior accident years, including $ 59 million of favorable development in commercial lines, $ 28 million of favorable development in personal lines and $ 8 million of unfavorable development in excess and surplus lines. Within commercial lines, we recognized favorable reserve development of $ 36 million for the commercial casualty line and $ 32 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $ 14 million for the commercial auto line. Within personal lines, we recognized favorable reserve development of $ 19 million in personal auto and $ 10 million for the homeowner line of business. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 16 NOTE 5 – Life Policy and Investment Contract Reserves We establish the reserves for traditional life insurance policies based on expected expenses, mortality, morbidity, withdrawal rates, timing of claim presentation and investment yields, including a provision for uncertainty. Once these assumptions are established, they generally are maintained throughout the lives of the contracts. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our assumptions for expected mortality, morbidity and withdrawal rates as well as for expected expenses. We base our assumptions for expected investment income on our own experience adjusted for current and future economic conditions. We establish reserves for the company's deferred annuity, universal life and structured settlement policies equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance, based on expected no-lapse guarantee benefits and expected policy assessments. This table summarizes our life policy and investment contract reserves: (Dollars in millions) September 30, 2021 December 31, 2020 Life policy reserves: Ordinary/traditional life $ 1,358 $ 1,301 Other 52 52 Subtotal 1,410 1,353 Investment contract reserves: Deferred annuities 767 761 Universal life 674 647 Structured settlements 139 145 Other 9 9 Subtotal 1,589 1,562 Total life policy and investment contract reserves $ 2,999 $ 2,915 Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 17 NOTE 6 – Deferred Policy Acquisition Costs Expenses directly related to successfully acquired insurance policies – primarily commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience, and we evaluate the costs for recoverability. The table below shows the deferred policy acquisition costs and asset reconciliation. (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Property casualty: Deferred policy acquisition costs asset, beginning of period $ 630 $ 567 $ 542 $ 512 Capitalized deferred policy acquisition costs 287 258 924 830 Amortized deferred policy acquisition costs ( 300 ) ( 274 ) ( 849 ) ( 791 ) Deferred policy acquisition costs asset, end of period $ 617 $ 551 $ 617 $ 551 Life: Deferred policy acquisition costs asset, beginning of period $ 294 $ 267 $ 263 $ 262 Capitalized deferred policy acquisition costs 15 14 44 43 Amortized deferred policy acquisition costs ( 12 ) ( 12 ) ( 35 ) ( 36 ) Shadow deferred policy acquisition costs 1 ( 3 ) 26 ( 3 ) Deferred policy acquisition costs asset, end of period $ 298 $ 266 $ 298 $ 266 Consolidated: Deferred policy acquisition costs asset, beginning of period $ 924 $ 834 $ 805 $ 774 Capitalized deferred policy acquisition costs 302 272 968 873 Amortized deferred policy acquisition costs ( 312 ) ( 286 ) ( 884 ) ( 827 ) Shadow deferred policy acquisition costs 1 ( 3 ) 26 ( 3 ) Deferred policy acquisition costs asset, end of period $ 915 $ 817 $ 915 $ 817 No premium deficiencies were recorded in the condensed consolidated statements of income, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 18 NOTE 7 – Accumulated Other Comprehensive Income Accumulated other comprehensive income (AOCI) includes changes in unrealized gains and losses on investments, changes in pension obligations and changes in life deferred acquisition costs, life policy reserves and other as follows: (Dollars in millions) Three months ended September 30, 2021 2020 Before tax Income tax Net Before tax Income tax Net Investments: AOCI, beginning of period $ 962 $ 201 $ 761 $ 772 $ 162 $ 610 OCI before investment gains and losses, net, recognized in net income ( 80 ) ( 18 ) ( 62 ) 115 23 92 Investment gains and losses, net, recognized in net income ( 8 ) ( 1 ) ( 7 ) ( 3 ) — ( 3 ) OCI ( 88 ) ( 19 ) ( 69 ) 112 23 89 AOCI, end of period $ 874 $ 182 $ 692 $ 884 $ 185 $ 699 Pension obligations: AOCI, beginning of period $ ( 36 ) $ ( 6 ) $ ( 30 ) $ ( 7 ) $ — $ ( 7 ) OCI excluding amortization recognized in net income — — — — — — Amortization recognized in net income 2 1 1 — — — OCI 2 1 1 — — — AOCI, end of period $ ( 34 ) $ ( 5 ) $ ( 29 ) $ ( 7 ) $ — $ ( 7 ) Life deferred acquisition costs, life policy reserves and other: AOCI, beginning of period $ — $ — $ — $ ( 8 ) $ ( 2 ) $ ( 6 ) OCI before investment gains and losses, net, recognized in net income — — — — — — Investment gains and losses, net, recognized in net income — — — — — — OCI — — — — — — AOCI, end of period $ — $ — $ — $ ( 8 ) $ ( 2 ) $ ( 6 ) Summary of AOCI: AOCI, beginning of period $ 926 $ 195 $ 731 $ 757 $ 160 $ 597 Investments OCI ( 88 ) ( 19 ) ( 69 ) 112 23 89 Pension obligations OCI 2 1 1 — — — Life deferred acquisition costs, life policy reserves and other OCI — — — — — — Total OCI ( 86 ) ( 18 ) ( 68 ) 112 23 89 AOCI, end of period $ 840 $ 177 $ 663 $ 869 $ 183 $ 686 Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 19 (Dollars in millions) Nine months ended September 30, 2021 2020 Before tax Income tax Net Before tax Income tax Net Investments: AOCI, beginning of period $ 1,026 $ 215 $ 811 $ 590 $ 123 $ 467 OCI before investment gains and losses, net, recognized in net income ( 132 ) ( 29 ) ( 103 ) 222 46 176 Investment gains and losses, net, recognized in net income ( 20 ) ( 4 ) ( 16 ) 72 16 56 OCI ( 152 ) ( 33 ) ( 119 ) 294 62 232 AOCI, end of period $ 874 $ 182 $ 692 $ 884 $ 185 $ 699 Pension obligations: AOCI, beginning of period $ ( 41 ) $ ( 7 ) $ ( 34 ) $ ( 9 ) $ — $ ( 9 ) OCI excluding amortization recognized in net income 2 1 1 — — — Amortization recognized in net income 5 1 4 2 — 2 OCI 7 2 5 2 — 2 AOCI, end of period $ ( 34 ) $ ( 5 ) $ ( 29 ) $ ( 7 ) $ — $ ( 7 ) Life deferred acquisition costs, life policy reserves and other: AOCI, beginning of period $ ( 10 ) $ ( 2 ) $ ( 8 ) $ ( 13 ) $ ( 3 ) $ ( 10 ) OCI before investment gains and losses, net, recognized in net income 10 2 8 5 1 4 Investment gains and losses, net, recognized in net income — — — — — — OCI 10 2 8 5 1 4 AOCI, end of period $ — $ — $ — $ ( 8 ) $ ( 2 ) $ ( 6 ) Summary of AOCI: AOCI, beginning of period $ 975 $ 206 $ 769 $ 568 $ 120 $ 448 Investments OCI ( 152 ) ( 33 ) ( 119 ) 294 62 232 Pension obligations OCI 7 2 5 2 — 2 Life deferred acquisition costs, life policy reserves and other OCI 10 2 8 5 1 4 Total OCI ( 135 ) ( 29 ) ( 106 ) 301 63 238 AOCI, end of period $ 840 $ 177 $ 663 $ 869 $ 183 $ 686 Investment gains and losses, net, and life deferred acquisition costs, life policy reserves 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 on 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. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 20 NOTE 8 – Reinsurance Primary components of our property casualty reinsurance assumed operations include involuntary and voluntary assumed risks as well as contracts from Cincinnati Re ® , our reinsurance assumed operations. 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 September 30, Nine months ended September 30, 2021 2020 2021 2020 Direct written premiums $ 1,527 $ 1,386 $ 4,721 $ 4,383 Assumed written premiums 66 55 432 267 Ceded written premiums ( 55 ) ( 48 ) ( 208 ) ( 180 ) Net written premiums $ 1,538 $ 1,393 $ 4,945 $ 4,470 Direct earned premiums $ 1,553 $ 1,439 $ 4,447 $ 4,198 Assumed earned premiums 117 78 327 207 Ceded earned premiums ( 74 ) ( 67 ) ( 189 ) ( 163 ) Earned premiums $ 1,596 $ 1,450 $ 4,585 $ 4,242 Direct incurred loss and loss expenses $ 876 $ 1,039 $ 2,525 $ 2,915 Assumed incurred loss and loss expenses 165 54 297 133 Ceded incurred loss and loss expenses ( 53 ) ( 22 ) ( 81 ) ( 40 ) Incurred loss and loss expenses $ 988 $ 1,071 $ 2,741 $ 3,008 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. The table below summarizes our consolidated life insurance earned premiums and contract holders' benefits incurred: (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Direct earned premiums $ 93 $ 90 $ 278 $ 273 Ceded earned premiums ( 20 ) ( 18 ) ( 57 ) ( 55 ) Earned premiums $ 73 $ 72 $ 221 $ 218 Direct contract holders' benefits incurred 103 85 310 270 Ceded contract holders' benefits incurred ( 19 ) ( 13 ) ( 61 ) ( 46 ) Contract holders' benefits incurred $ 84 $ 72 $ 249 $ 224 The ceded benefits incurred can vary depending on the type of life insurance policy held and the year the policy was issued. At September 30, 2021, and December 31, 2020, the allowance for uncollectible property casualty premiums was $ 15 million and $ 19 million, respectively. At September 30, 2021, and December 31, 2020, the allowances for credit losses on other premiums receivable and recoverable assets were immaterial. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 21 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 September 30, Nine months ended September 30, 2021 2020 2021 2020 Tax at statutory rate: $ 39 21.0 % $ 129 21.0 % $ 383 21.0 % $ 38 21.0 % Increase (decrease) resulting from: Tax-exempt income from municipal bonds ( 5 ) ( 2.7 ) ( 5 ) ( 0.8 ) ( 15 ) ( 0.8 ) ( 15 ) ( 8.2 ) Dividend received exclusion ( 5 ) ( 2.7 ) ( 5 ) ( 0.8 ) ( 14 ) ( 0.8 ) ( 13 ) ( 7.1 ) Other 2 1.2 11 1.8 ( 6 ) ( 0.3 ) 6 3.0 Provision for income taxes $ 31 16.8 % $ 130 21.2 % $ 348 19.1 % $ 16 8.7 % 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 will be realized. As a result, we have no valuation allowance for our U.S. domestic operations at September 30, 2021, and December 31, 2020. As more fully discussed below, we do carry a valuation allowance on the deferred tax assets related to Cincinnati Global. Unrecognized Tax Benefits At September 30, 2021, and December 31, 2020, we had a gross unrecognized tax benefit of $ 34 million. There were no changes to this amount during the first nine months of 2021. It is reasonably possible that within the next 12 months, our unrecognized tax benefit could change when the IRS completes its examination of the tax year ended December 31, 2018. Cincinnati Global As a result of operations for the three months ended September 30, 2021, Cincinnati Global increased net deferred assets $ 4 million with an offsetting increase of $ 4 million to the valuation allowance. There was no change in the net deferred assets or valuation allowance for the nine months ended September 30, 2021. At September 30, 2021, Cincinnati Global had a net deferred tax asset of $ 56 million and an offsetting valuation allowance of $ 56 million. Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. After considering all positive and negative evidence related to the Cincinnati Global operations, we continue to believe it is appropriate to carry a valuation allowance at September 30, 2021. At September 30, 2021, and December 31, 2020, Cincinnati Global had operating loss carryforwards in the United States of $ 26 million for both periods and in the United Kingdom of $ 128 million and $ 108 million, respectively. These Cincinnati Global losses can only be utilized within the Cincinnati Global group in both the United States and in the United Kingdom and cannot offset the income of our domestic operations in the United States. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 22 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 September 30, Nine months ended September 30, 2021 2020 2021 2020 Numerator: Net income—basic and diluted $ 153 $ 484 $ 1,476 $ 167 Denominator: Basic weighted-average common shares outstanding 161.1 160.9 161.1 161.3 Effect of share-based awards: Stock options 1.2 0.5 1.1 0.7 Nonvested shares 0.6 0.6 0.6 0.5 Diluted weighted-average shares 162.9 162.0 162.8 162.5 Earnings per share: Basic $ 0.95 $ 3.01 $ 9.16 $ 1.03 Diluted $ 0.94 $ 2.99 $ 9.07 $ 1.03 Number of anti-dilutive share-based awards 0.4 1.4 0.9 1.4 The sources of dilution of our common shares are certain equity-based awards. See our 2020 Annual Report on Form 10-K, Item 8, Note 17, Share-Based Associate Compensation Plans, Page 176, for information about share-based awards. The above table shows the number of anti-dilutive share-based awards for the three and nine months ended September 30, 2021 and 2020. These share-based awards were not included in the computation of net income per common share (diluted) because their exercise would have anti-dilutive effects. NOTE 11 – Employee Retirement Benefits The following summarizes the components of net periodic benefit cost for our qualified and supplemental pension plans: (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Service cost $ 2 $ 2 $ 7 $ 7 Non-service costs (benefit): Interest cost 2 3 7 9 Expected return on plan assets ( 5 ) ( 5 ) ( 16 ) ( 16 ) Amortization of actuarial loss and prior service cost 2 — 5 2 Other — — 2 — Total non-service benefit ( 1 ) ( 2 ) ( 2 ) ( 5 ) Net periodic benefit cost $ 1 $ — $ 5 $ 2 See our 2020 Annual Report on Form 10-K, Item 8, Note 13, Employee Retirement Benefits, Page 169, for information on our retirement benefits. Service costs and non-service costs (benefit) are 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 2021 and 2020. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 23 We made matching contributions totaling $ 7 million and $ 6 million to our 401(k) and Top Hat savings plans during the third quarter of 2021 and 2020 and contributions of $ 18 million during both the first nine months of 2021 and 2020, respectively. We m ade no con tributions to our qualified pension plan during the first nine months of 2021. NOTE 12 – Commitments and Contingent Liabilities In the ordinary course of conducting business, the company and its subsidiaries are named as defendants in various legal proceedings. Most of these proceedings are claims litigation involving the company’s insurance subsidiaries in which the company is either defending or providing indemnity for third-party claims brought against insureds or litigating first-party coverage claims. The company accounts for such activity through the establishment of unpaid loss and loss expense reserves. We believe that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, 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 economic 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 intends to continue to vigorously defend them. Although the policy terms vary, in general, the company denied the claims at issue in these lawsuits because the policyholder identified no direct physical loss or damage to property at the insured premises, and/or 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. 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 number of lawsuits that will be filed, 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, and the state laws that govern policy interpretation will guide judicial rulings on dispositive motions. These lawsuits are at various stages of litigation; many complaints continue to be amended; several have been dismissed voluntarily and may be refiled; others have been dismissed in favor of the company by trial courts; and a handful of cases are advancing toward trials. Many decisions on motion filings have been appealed. While these appeals are at various stages of the briefing and argument process, several of the cases are now fully briefed and are ripe for decision. The first two appellate cases in the nation to consider these issues were recently decided by the Federal Courts of Appeals for the Eighth and Eleventh Circuits in favor of the company, applying Iowa law and Georgia law, respectively. The Federal Courts of Appeals for the Sixth and Ninth Circuits also recently decided cases on these issues in favor of other insurers, applying Ohio law and California law, respectively. The company’s cases pending in trial courts in Ohio are stayed pending a decision by the Ohio Supreme Court on a question certified to it by the federal district court in the Northern District of Ohio in the case of Neuro-Communication Services, Inc. v. The Cincinnati Insurance Company, et al., Case No. 4:20-cv-1275 (N.D. Ohio filed June 10, 2020). The Ohio Supreme Court has agreed to answer the following question: “Does the general presence in the community, or on surfaces at a premises, of the novel coronavirus known as SARS-CoV-2, constitute direct physical loss or damage to property; or does the presence of a person infected with COVID-19 constitute direct physical loss or damage to property at that premises?" Because most of our pending cases remain in the early stages of motion practice or appeals from trial court rulings on dispositive motions, little discovery has occurred. In addition, business income calculations depend upon a wide range of factors that are particular to the circumstances of each individual policyholder and, here, the vast majority of plaintiffs have not submitted proofs of loss or otherwise quantified or factually supported any allegedly covered loss. Moreover, the company’s experience shows that demands stated in lawsuits often bear little relation to a reasonable estimate of potential loss. Accordingly, management cannot now reasonably estimate the possible loss Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 24 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 a national class. 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 loss has been incurred and we can reasonably estimate its potential 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, if any, 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 chief operating decision maker 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 2020 Annual Report on Form 10-K, Item 8, Note 18, Segment Information, Page 179, for a description of revenue, income or loss before income taxes and identifiable assets for each of the five segments. Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 25 Segment information is summarized in the following table: (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues: Commercial lines insurance Commercial casualty $ 323 $ 290 $ 938 $ 868 Commercial property 264 252 776 755 Commercial auto 200 189 591 563 Workers' compensation 66 64 201 207 Other commercial 77 70 221 205 Commercial lines insurance premiums 930 865 2,727 2,598 Fee revenues 1 1 3 3 Total commercial lines insurance 931 866 2,730 2,601 Personal lines insurance Personal auto 153 154 457 462 Homeowner 184 165 536 487 Other personal 51 48 153 141 Personal lines insurance premiums 388 367 1,146 1,090 Fee revenues 1 1 3 3 Total personal lines insurance 389 368 1,149 1,093 Excess and surplus lines insurance 105 82 289 238 Fee revenues 1 — 2 1 Total excess and surplus lines insurance 106 82 291 239 Life insurance premiums 73 72 221 218 Fee revenues 1 — 3 1 Total life insurance 74 72 224 219 Investments Investment income, net of expenses 179 167 528 498 Investment gains and losses, net ( 70 ) 533 954 ( 132 ) Total investment revenue 109 700 1,482 366 Other Premiums 173 136 423 316 Other 3 3 8 8 Total other revenues 176 139 431 324 Total revenues $ 1,785 $ 2,227 $ 6,307 $ 4,842 Income (loss) before income taxes: Insurance underwriting results Commercial lines insurance $ 182 $ ( 20 ) $ 457 $ ( 32 ) Personal lines insurance ( 10 ) ( 2 ) 16 ( 24 ) Excess and surplus lines insurance 7 11 25 19 Life insurance ( 5 ) 6 ( 9 ) 9 Investments 83 674 1,403 289 Other ( 73 ) ( 55 ) ( 68 ) ( 78 ) Total income before income taxes $ 184 $ 614 $ 1,824 $ 183 Identifiable assets: September 30, 2021 December 31, 2020 Property casualty insurance $ 4,400 $ 3,838 Life insurance 1,631 1,661 Investments 22,940 21,332 Other 936 711 Total $ 29,907 $ 27,542 Cincinnati Financial Corporation Third-Quarter 2021 10-Q Page 26