What changed in this filing

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Item 1. Financial Statements

2024-04-25 compared with 2023-10-26 · 153 added, 356 removed, 645 unchanged (44% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(Dollars in millions, except per share data) September 30, December 31,

(Dollars in millions, except per share data) March 31, December 31,

Fixed maturities, at fair value (amortized cost:

5 unchanged sentences

2023—$ 4,282 )

11,557 10,989

Other invested assets 608 577

28 unchanged sentences

Retained earnings 13,712 13,084

Accumulated other comprehensive income ( 827 ) ( 614 )

Accumulated other comprehensive loss ( 442 ) ( 435 )

Treasury stock at cost (2024— 41.8 million shares and 2023— 41.3 million shares)

3 unchanged sentences

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

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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,

2023 2022 2023 2022

(Dollars in millions, except per share data) Three months ended March 31,

Earned premiums $ 2,071 $ 1,918

10 unchanged sentences

Total benefits and expenses 1,982 1,973

Income (Loss) Before Income Taxes ( 148 ) ( 577 ) 786 ( 1,981 )

Provision (Benefit) for Income Taxes

Income Before Income Taxes 953 268

Provision for Income Taxes

Current 61 16

Deferred 137 27

Total provision (benefit) for income taxes ( 49 ) ( 161 ) 126 ( 481 )

Net Income (Loss) $ ( 99 ) $ ( 416 ) $ 660 $ ( 1,500 )

Total provision for income taxes 198 43

Net Income $ 755 $ 225

Per Common Share

Net income (loss)—basic $ ( 0.63 ) $ ( 2.63 ) $ 4.20 $ ( 9.42 )

Net income (loss)—diluted ( 0.63 ) ( 2.63 ) 4.17 ( 9.42 )

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.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Net Income (Loss) $ ( 99 ) $ ( 416 ) $ 660 $ ( 1,500 )

(Dollars in millions) Three months ended March 31,

Net Income $ 755 $ 225

Other Comprehensive Income (Loss)

Change in unrealized gains and losses on investments, net of benefit of $( 79 ), $( 109 ), $( 76 ) and $( 393 ), respectively

( 290 ) ( 405 ) ( 284 ) ( 1,477 )

Change in unrealized gains and losses on investments, net of tax (benefit) of $( 11 ) and $ 35 , respectively

Amortization of pension actuarial loss and prior service cost, net of tax (benefit) of $ 0 and $( 1 ), respectively

Change in life policy reserves, reinsurance recoverable and other, net of tax of $ 22 , $ 25 , $ 19 and $ 104 , respectively

Other comprehensive loss ( 201 ) ( 310 ) ( 213 ) ( 1,084 )

Comprehensive Income (Loss) $ ( 300 ) $ ( 726 ) $ 447 $ ( 2,584 )

Change in life policy reserves, reinsurance recoverable and other, net of tax (benefit) of $ 10 and $( 9 ), respectively

Other comprehensive income (loss) ( 7 ) 87

Comprehensive Income $ 748 $ 312

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

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Beginning of period $ 397 $ 397

5 unchanged sentences

Share-based compensation 14 12

Other 2 2 4 5

End of period 1,446 1,398

1 unchanged sentence

Beginning of period 13,084 11,711

Cumulative effect of change in accounting for long-duration insurance contracts (Note 1) — — — 10

Adjusted beginning of period 12,235 11,331 11,711 12,635

Net income (loss) ( 99 ) ( 416 ) 660 ( 1,500 )

Net income 755 225

Dividends declared ( 127 ) ( 118 )

End of period 13,712 11,818

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Loss

Beginning of period ( 435 ) ( 614 )

Cumulative effect of change in accounting for long-duration insurance contracts (Note 1) — — — ( 352 )

Adjusted beginning of period ( 626 ) ( 478 ) ( 614 ) 296

Other comprehensive loss ( 201 ) ( 310 ) ( 213 ) ( 1,084 )

Other comprehensive income (loss) ( 7 ) 87

End of period ( 442 ) ( 527 )

4 unchanged sentences

Shares acquired - share-based compensation plans ( 7 ) ( 3 )

Other 1 — 2 1

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

5 unchanged sentences

Shares acquired - share repurchase authorization ( 0.7 ) ( 0.2 )

Other 0.1 — 0.1 —

Shares acquired - share-based compensation plans ( 0.1 ) —

End of period 156.5 157.2

1 unchanged sentence

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

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Nine months ended September 30,

(Dollars in millions) Three months ended March 31,

Cash Flows From Operating Activities

Net income (loss) $ 660 $ ( 1,500 )

Net income $ 755 $ 225

Adjustments to reconcile net income to net cash provided by operating activities:

24 unchanged sentences

Shares acquired - share repurchase authorization ( 75 ) ( 25 )

Changes in note payable

( 25 ) ( 10 )

Proceeds from stock options exercised 3 5

14 unchanged sentences

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

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6 unchanged sentences

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, 2023, condensed consolidated financial statements are unaudited.

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.

1 unchanged sentence

The results of operations for interim periods do not necessarily indicate results to be expected for the full year.

Adopted 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 requires changes to the measurement and disclosure of long-duration insurance contracts.

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.

Related to the company's term and whole life products included in life policy and investment contract reserves, the new guidance requires that cash flow assumptions be reviewed at least annually to determine any necessary updates.

Additionally, the discount rate assumption is required to be updated quarterly based on upper-medium grade fixed-income instrument yields (market value discount rates).

The life policy and investment contract reserves balance is adjusted through insurance losses and contract holders' benefits for cash flow assumption updates and through accumulated other comprehensive income (AOCI) for discount rate updates.

These ASUs also amend the previous guidance related to life deferred policy acquisition costs by requiring amortization of those costs on a constant level basis for a group of contracts that approximates straight-line and the removal of shadow deferred policy acquisition costs for universal life and deferred annuity products.

These ASUs also require entities to provide additional disclosures including disaggregated rollforwards of the life policy and investment contract reserves, separate account liabilities and life deferred policy acquisition costs.

We adopted these ASUs on a modified retrospective basis on January 1, 2023, resulting in an after-tax increase to shareholders' equity of $ 31 million.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

The following table illustrates the effect of adopting ASU 2018-12 in the condensed consolidated balance sheets:

(Dollars in millions) September 30, 2023 December 31, 2022

As originally reported As adjusted Difference

Reinsurance recoverable $ 699 $ 640 $ 665 $ 25

Prepaid reinsurance premiums 69 79 51 ( 28 )

Deferred policy acquisition costs 1,101 1,014 1,013 ( 1 )

Total assets 30,915 29,736 29,732 ( 4 )

Life policy and investment contract reserves 2,920 3,059 3,015 ( 44 )

Deferred income tax 997 1,045 1,054 9

Total liabilities 20,291 19,205 19,170 ( 35 )

Retained earnings 12,018 11,702 11,711 9

Accumulated other comprehensive income ( 827 ) ( 636 ) ( 614 ) 22

Total shareholders' equity 10,624 10,531 10,562 31

Total liabilities and shareholders' equity 30,915 29,736 29,732 ( 4 )

The following table illustrates the effect of adopting ASU 2018-12 in the condensed consolidated statements of income and condensed consolidated statements of comprehensive income:

(Dollars in millions, except per share data) Three months ended September 30,

As originally reported As adjusted Difference

Earned premiums $ 2,033 $ 1,882 $ 1,884 $ 2

Insurance losses and contract holders' benefits 1,332 1,418 1,418 —

Underwriting, acquisition and insurance expenses 609 551 551 —

Deferred income tax expense ( 106 ) ( 180 ) ( 180 ) —

Net Income (Loss) ( 99 ) ( 418 ) ( 416 ) 2

Change in life policy reserves, reinsurance recoverable and other, net of tax 89 — 95 95

Other comprehensive income (loss) ( 201 ) ( 405 ) ( 310 ) 95

Comprehensive Income (Loss) ( 300 ) ( 823 ) ( 726 ) 97

Net income (loss) per share:

Basic $ ( 0.63 ) $ ( 2.64 ) $ ( 2.63 ) $ 0.01

Diluted ( 0.63 ) ( 2.64 ) ( 2.63 ) 0.01

(Dollars in millions, except per share data) Nine months ended September 30,

As originally reported As adjusted Difference

Earned premiums $ 5,894 $ 5,345 $ 5,350 $ 5

Insurance losses and contract holders' benefits 4,070 3,766 3,772 6

Underwriting, acquisition and insurance expenses 1,744 1,604 1,604 —

Deferred income tax expense 2 ( 571 ) ( 571 ) —

Net Income (Loss) 660 ( 1,499 ) ( 1,500 ) ( 1 )

Change in life policy reserves, reinsurance recoverable and other, net of tax 76 1 393 392

Other comprehensive income (loss) ( 213 ) ( 1,476 ) ( 1,084 ) 392

Comprehensive Income (Loss) 447 ( 2,975 ) ( 2,584 ) 391

Net income (loss) per share:

Basic $ 4.20 $ ( 9.41 ) $ ( 9.42 ) $ ( 0.01 )

Diluted 4.17 ( 9.41 ) ( 9.42 ) ( 0.01 )

The adoption of ASU 2018-12 did not have a material impact on the company's condensed consolidated cash flows.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 2 – Investments

2 unchanged sentences

cost Gross unrealized Fair value

At September 30, 2023 gains losses

At March 31, 2024 gains losses

Fixed-maturity securities:

2 unchanged sentences

Government-sponsored enterprises 1,424 1 4 1,421

Asset-backed 200 — 11 189

United States government 182 — 4 178

Commercial mortgage-backed 214 — 18 196

Foreign government 29 — — 29

5 unchanged sentences

Government-sponsored enterprises 1,227 3 6 1,224

Asset-backed 203 — 16 187

United States government 203 — 3 200

Commercial mortgage-backed 250 — 16 234

Foreign government 25 — — 25

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

Th e net unrealized investment losses in our fixed-maturity portfolio at September 30, 2023, are primarily due to an increase in U.S.

Treasury yields, partially offset by a tightening of corporate credit spreads .

Our commercial mortgage-backed securities had an average rating of Aa3/AA- and Aa2/AA- at September 30, 2023, and December 31, 2022, respectively.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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, 2023 Fair

At March 31, 2024 Fair

value Unrealized

5 unchanged sentences

Government-sponsored enterprises 396 1 168 3 564 4

Asset-backed 30 — 133 11 163 11

United States government 74 — 105 4 179 4

Commercial mortgage-backed 1 — 194 18 195 18

Foreign government 17 — 5 — 22 —

5 unchanged sentences

Government-sponsored enterprises 652 3 113 3 765 6

Asset-backed 5 — 172 16 177 16

United States government 32 — 129 3 161 3

Commercial mortgage-backed 215 13 14 3 229 16

Foreign government 3 — 6 — 9 —

3 unchanged sentences

value % of fair

At September 30, 2023

At March 31, 2024

Maturity dates:

5 unchanged sentences

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 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Investment income:

1 unchanged sentence

Dividends 72 66

Other 5 3 18 6

Total 248 213

9 unchanged sentences

Gross realized losses ( 1 ) ( 1 )

Write-down of impaired securities with intent to sell — — ( 4 ) —

Change in allowance for credit losses, net ( 9 ) —

Subtotal ( 10 ) —

Other 7 15 ( 13 ) 37

Total $ 612 $ 106

The fair value of our equity portfolio was $ 10.031 billion and $ 9.841 billion at September 30, 2023, and December 31, 2022, respectively.

(Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $ 764 million and $ 597 million, which was 7.9 % and 6.3 % of our publicly traded common equities portfolio and 3.3 % and 2.7 % of the total investment portfolio at September 30, 2023, and December 31, 2022, respectively.

The allowance for credit losses was $ 3 million and $ 1 million at September 30, 2023, and December 31, 2022, respectively.

Changes decreased the allowance $ 1 million for the three months ended September 30, 2023, and increased the allowance $ 2 million for the nine months ended September 30, 2023.

Changes were less than $ 1 million for both the three and nine months ended September 30, 2022.

There were 4,490 fixed-maturity securities with a total unrealized loss of $ 1.236 billion, which were in an unrealized loss position at September 30, 2023.

Of that total, 202 fixed-maturity securities had fair values below 70 % of amortized cost.

There were 3,272 fixed-maturity securities with a total unrealized loss of $ 908 million, which were in an unrealized loss position at December 31, 2022.

Of that total, 49 fixed-maturity securities had fair values below 70 % of amortized cost.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 3 – Fair Value Measurements

5 unchanged sentences

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, 2023, and December 31, 2022.

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 September 30, 2023

At March 31, 2024

Fixed maturities, available for sale:

2 unchanged sentences

Government-sponsored enterprises — 1,421 — 1,421

Asset-backed — 189 — 189

United States government 178 — — 178

Commercial mortgage-backed — 196 — 196

Foreign government — 29 — 29

11 unchanged sentences

Government-sponsored enterprises — 1,224 — 1,224

Asset-backed — 187 — 187

United States government 200 — — 200

Commercial mortgage-backed — 234 — 234

Foreign government — 25 — 25

6 unchanged sentences

Total $ 10,908 $ 14,793 $ — $ 25,701

We also held Level 1 cash and cash equivalents of $ 899 million and $ 1.264 billion at September 30, 2023, and December 31, 2022, respectively.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Fair Value Disclosures for Assets and Liabilities Not Carried at Fair Value

2 unchanged sentences

(Dollars in millions) Book value Principal amount

issue September 30, December 31, September 30, December 31,

issue March 31, December 31, March 31, December 31,

2024 2023 2024 2023

5 unchanged sentences

(Dollars in millions) Level 1 Level 2 Level 3 Total

At September 30, 2023

At March 31, 2024

Note payable $ — $ 25 $ — $ 25

11 unchanged sentences

(Dollars in millions) Level 1 Level 2 Level 3 Total

At September 30, 2023

At March 31, 2024

Life policy loans $ — $ — $ 40 $ 40

7 unchanged sentences

Total $ — $ 141 $ 603 $ 744

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Outstanding principal and interest for these life policy loans totaled $ 31 million at both September 30, 2023, and December 31, 2022.

Recorded reserves for the deferred annuities were $ 680 million and $ 734 million at September 30, 2023, and December 31, 2022, respectively.

Recorded reserves for the structured settlements were $ 124 million and $ 129 million at September 30, 2023, and December 31, 2022, respectively.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Gross loss and loss expense reserves, beginning of period $ 8,975 $ 8,336

17 unchanged sentences

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 $ 72 million and $ 68 million at September 30, 2023, and 2022, respectively, for certain life and health loss and loss expense reserves.

We experienced $ 53 million of favorable development on prior accident years, including $ 34 million of favorable development in commercial lines, $ 8 million of favorable development in personal lines and no net development in excess and surplus lines for the three months ended September 30, 2023.

Within commercial lines, we recognized favorable reserve development of $ 20 million for the workers' compensation line and $ 11 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

We experienced $ 213 million of favorable development on prior accident years, including $ 125 million of favorable development in commercial lines, $ 54 million of favorable development in personal lines and $ 14 million of favorable development in excess and surplus lines for the nine months ended September 30, 2023.

Within commercial lines, we recognized favorable reserve development of $ 46 million for the workers' compensation line and $ 36 million for both the commercial property and commercial casualty lines 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 $ 44 million for the homeowner line and $ 12 million for the personal auto line.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

We experienced $ 43 million of favorable development on prior accident years, including $ 4 million of favorable development in commercial lines, $ 8 million of favorable development in personal lines and $ 7 million of favorable development in excess and surplus lines for the three months ended September 30, 2022.

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.

This was partially offset by unfavorable reserve development of $ 23 million for the commercial casualty line and $ 16 million for the commercial auto line.

We experienced $ 143 million of favorable development on prior accident years, including $ 51 million of favorable development in commercial lines, $ 56 million of favorable development in personal lines and $ 13 million of favorable development in excess and surplus lines for the nine months ended September 30, 2022.

Within commercial lines, we recognized favorable reserve development of $ 43 million for the workers' compensation line and $ 36 million for the commercial property 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 $ 25 million for the commercial casualty line and $ 15 million for the commercial auto line.

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.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 5 – Life Policy and Investment Contract Reserves

In the first quarter of 2023, we adopted ASU 2018-12 which resulted in changes to the life policy and investment contract reserves and the expansion of required disclosures.

The below disclosures represent application of the updated guidance.

See Note 1, Accounting Policies, for further discussion.

We establish the reserves for traditional life policies including term, whole life and other products based on certain cash flow assumptions including expected expenses, mortality, morbidity, lapse rates and timing of claim presentation.

These assumptions are established based on our current expectations and are reviewed annually to determine any necessary updates.

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 assumptions for expected mortality, morbidity and lapse rates.

These reserves also include a discount rate assumption that is based on market value discount rates and is updated quarterly.

Certain assumptions, including the mortality, lapse and long-term interest rate reversion targets, were updated in the second quarter of 2023 as part of our annual assumption unlocking.

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 pro vide 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 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.

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.

1 unchanged sentence

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) September 30,

(Dollars in millions) March 31,

2024 December 31,

10 unchanged sentences

Total life policy and investment contract reserves $ 3,013 $ 3,068

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

The table below shows the ASU 2018-12 adoption impacts to the life policy and investment contract reserves as of January 1, 2021 (transition date), pretax:

(Dollars in millions) Term Whole life Deferred annuity Universal life Other Total

At January 1, 2021

Balance, pre-adoption at December 31, 2020 $ 901 $ 363 $ 761 $ 567 $ 323 $ 2,915

Removal of shadow adjustments — — — — 13 13

Net premiums in excess of gross premiums 14 1 — — — 15

Remeasurement at market value discount rates 372 245 — — — 617

Balance, post-adoption at January 1, 2021 $ 1,287 $ 609 $ 761 $ 567 $ 336 $ 3,560

The table below shows the ASU 2018-12 adoption impacts to the life reinsurance recoverable asset as of January 1, 2021, pretax:

(Dollars in millions) Term Whole life Deferred annuity Universal life Other Total

At January 1, 2021

Balance, pre-adoption at December 31, 2020 $ 113 $ 26 $ — $ — $ 78 $ 217

Remeasurement at market value discount rates 29 18 — — — 47

Other adjustments 20 1 — 2 — 23

Balance, post-adoption at January 1, 2021 $ 162 $ 45 $ — $ 2 $ 78 $ 287

Other above includes structured settlements, other life policy reserves and other investment contract reserves.

The removal of shadow adjustments above represents an increase to the life policy and investment contract reserve balance as it is no longer required under ASU 2018-12 for liabilities amortized in accordance with deferred acquisition costs.

Shadow adjustments were historically included to present the carrying amount of the liability as if unrealized holding gains and losses had been realized.

The net premiums in excess of gross premiums adjustment represents an increase to the liability as the remeasured net premiums, calculated as the present value of future benefits and related expenses using updated cash flow assumptions as of the transition date less the carrying amount of the liability prior to transition, exceeded the present value of future gross premiums.

For purposes of calculating the updated present value of future benefits and related expenses above, the discount rate assumption that was used prior to adoption of ASU 2018-12 was retained.

The remeasurement at market value discount rates adjustment represents the increase to the liability as a result of updating the discount rate assumption for our term and whole life products from the rates used prior to adoption of ASU 2018-12 to market value discount rates that existed at the transition date.

As the discount rate assumption decreased significantly from the date the contracts were initially made, this adjustment represents the largest impact on the liability as a result of the initial adoption of ASU 2018-12.

The life reinsurance recoverable asset is included in the remeasurement as the assumptions used in estimating the life reinsurance recoverable are consistent with those used in estimating the related liabilities.

Other adjustments includes a reclassification from prepaid reinsurance premiums to reinsurance recoverable.

The shadow removal and remeasurement at market value discount rates adjustments were recorded as an increase to the life policy and investment contract reserves liability and a decrease to opening AOCI as of the transition date.

The net premiums in excess of gross premiums adjustment was recorded as an increase to the life policy and investment contract reserves liability and a decrease to the opening balance of retained earnings as of the transition date.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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 September 30,

Term Whole life Term Whole life

Present value of expected net premiums:

Balance, beginning of period $ 1,664 $ 212 $ 1,723 $ 210

Beginning balance at original discount rate 1,712 219 1,704 209

Effect of changes in cash flow assumptions — ( 1 ) ( 13 ) ( 2 )

Effect of actual variances from expected experience ( 3 ) 2 ( 3 ) —

Adjusted beginning of period balance 1,709 220 1,688 207

Issuances 33 7 50 11

Interest accrual 18 3 17 2

Net premiums collected ( 45 ) ( 7 ) ( 44 ) ( 6 )

Ending balance at original discount rate 1,715 223 1,711 214

Effect of changes in discount rate assumptions ( 133 ) ( 17 ) ( 94 ) ( 13 )

Balance, end of period 1,582 206 1,617 201

Present value of expected future policy benefits:

Balance, beginning of period 2,662 633 2,702 646

Beginning balance at original discount rate 2,737 615 2,663 590

Effect of changes in cash flow assumptions — — ( 12 ) ( 2 )

Effect of actual variances from expected experience ( 6 ) 2 ( 2 ) —

Adjusted beginning of period balance 2,731 617 2,649 588

Issuances 33 7 49 11

Interest accrual 30 8 29 7

Benefits paid ( 39 ) ( 9 ) ( 48 ) ( 7 )

Ending balance at original discount rate 2,755 623 2,679 599

Effect of changes in discount rate assumptions ( 234 ) ( 37 ) ( 159 ) ( 5 )

Balance, end of period 2,521 586 2,520 594

Net liability for future policy benefits:

Present value of expected future policy benefits less expected net premiums 939 380 903 393

Impact of flooring at cohort level 17 1 22 2

Net life policy reserves 956 381 925 395

Less reinsurance recoverable at original discount rate ( 99 ) ( 25 ) ( 98 ) ( 25 )

Less effect of discount rate assumption changes on reinsurance recoverable ( 7 ) ( 3 ) ( 9 ) ( 4 )

Net life policy reserves, after reinsurance recoverable $ 850 $ 353 $ 818 $ 366

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

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

(Dollars in millions) Nine months ended September 30,

(Dollars in millions) Three months ended March 31,

Term Whole life Term Whole life

31 unchanged sentences

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 change s of $ 5 million and $ 13 million at September 30, 2023 and 2022, respectively.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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 September 30,

(Dollars in millions) At March 31,

Undiscounted Discounted Undiscounted Discounted

4 unchanged sentences

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Gross premiums

6 unchanged sentences

Total $ 19 $ 18

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums w as immaterial for the three and nine months ended September 30, 2023, and 2022.

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums w as 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 September 30,

Interest accretion rate 5.26 % 5.32 %

3 unchanged sentences

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

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Deferred annuity Universal life Deferred annuity Universal life Deferred annuity Universal life Deferred annuity Universal life

(Dollars in millions) Three months ended March 31,

Deferred annuity Universal life Deferred annuity Universal life

Balance, beginning of period $ 656 $ 457 $ 734 $ 457

11 unchanged sentences

(Dollars in millions) At guaranteed minimum 1 to 50 basis points above 51-150 basis points above Greater than 150 basis points Total

At September 30, 2023

At March 31, 2024

Deferred annuity

7 unchanged sentences

Total $ 329 $ 65 $ 58 $ 4 $ 456

At September 30, 2022

At March 31, 2023

Deferred annuity

7 unchanged sentences

Total $ 400 $ 47 $ 9 $ 2 $ 458

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Balance, beginning of period $ 128 $ 121

14 unchanged sentences

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

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Balance, beginning of period $ 925 $ 892

Interest credited before policy charges 10 10

Change in unrealized gains and losses impacting separate accounts liabilities — 20 — ( 85 )

Benefit payments — ( 2 )

2 unchanged sentences

Cash surrender value $ 925 $ 896

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 6 – Deferred Policy Acquisition Costs

2 unchanged sentences

For property casualty, we evaluate the costs for recoverability.

The adoption of ASU 2018-12 on January 1, 2023 resulted in a simplified amortization of life deferred acquisition costs and the removal of shadow deferred acquisition costs.

See Note 1, Accounting Policies, for further discussion.

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Property casualty:

12 unchanged sentences

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

The removal of shadow deferred policy acquisition costs as a result of the adoption of ASU 2018-12 resulted in a $ 33 million increase, across all products, from $ 263 million pre-adoption at December 31, 2020, to $ 296 million post-adoption at January 1, 2021.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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

(Dollars in millions)

Three months ended September 30, 2023 Term Whole life Deferred annuity Universal life Total

Balance, beginning of period $ 233 $ 45 $ 8 $ 52 $ 338

Capitalized deferred policy acquisition costs 8 2 — — 10

Amortized deferred policy acquisition costs ( 7 ) — — — ( 7 )

Balance, end of period $ 234 $ 47 $ 8 $ 52 $ 341

Three months ended September 30, 2022

Balance, beginning of period $ 222 $ 40 $ 7 $ 54 $ 323

Capitalized deferred policy acquisition costs 9 2 — — $ 11

Amortized deferred policy acquisition costs ( 5 ) ( 1 ) — ( 1 ) $ ( 7 )

Balance, end of period $ 226 $ 41 $ 7 $ 53 $ 327

(Dollars in millions)

Nine months ended September 30, 2023 Term Whole life Deferred annuity Universal life Total

Three months ended March 31, 2024 Term Whole life Deferred annuity Universal life Total

Balance, beginning of period $ 236 $ 48 $ 8 $ 52 $ 344

2 unchanged sentences

Balance, end of period $ 238 $ 49 $ 8 $ 52 $ 347

Nine months ended September 30, 2022

Three months ended March 31, 2023

Balance, beginning of period $ 228 $ 43 $ 7 $ 53 $ 331

2 unchanged sentences

Balance, end of period $ 231 $ 44 $ 7 $ 52 $ 334

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 7 – Accumulated Other Comprehensive Income

The adoption of ASU 2018-12 on January 1, 2023 resulted in restatement of certain amounts below.

See Note 1, Accounting Policies, for further discussion.

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 September 30,

Before tax Income tax Net Before tax Income tax Net

AOCI, beginning of period $ ( 838 ) $ ( 179 ) $ ( 659 ) $ ( 564 ) $ ( 119 ) $ ( 445 )

OCI before investment gains and losses, net, recognized in net income ( 369 ) ( 79 ) ( 290 ) ( 514 ) ( 109 ) ( 405 )

Investment gains and losses, net, recognized in net income — — — — — —

OCI ( 369 ) ( 79 ) ( 290 ) ( 514 ) ( 109 ) ( 405 )

AOCI, end of period $ ( 1,207 ) $ ( 258 ) $ ( 949 ) $ ( 1,078 ) $ ( 228 ) $ ( 850 )

Pension obligations:

AOCI, beginning of period $ 29 $ 7 $ 22 $ 27 $ 7 $ 20

OCI excluding amortization recognized in net income — — — — — —

Amortization recognized in net income — — — — — —

OCI — — — — — —

AOCI, end of period $ 29 $ 7 $ 22 $ 27 $ 7 $ 20

Life policy reserves, reinsurance recoverable and other:

AOCI, beginning of period $ 13 $ 2 $ 11 $ ( 67 ) $ ( 14 ) $ ( 53 )

OCI before investment gains and losses, net, recognized in net income 111 22 89 120 25 95

Investment gains and losses, net, recognized in net income — — — — — —

OCI 111 22 89 120 25 95

AOCI, end of period $ 124 $ 24 $ 100 $ 53 $ 11 $ 42

Summary of AOCI:

AOCI, beginning of period $ ( 796 ) $ ( 170 ) $ ( 626 ) $ ( 604 ) $ ( 126 ) $ ( 478 )

Investments OCI ( 369 ) ( 79 ) ( 290 ) ( 514 ) ( 109 ) ( 405 )

Pension obligations OCI — — — — — —

Life policy reserves, reinsurance recoverable and other OCI 111 22 89 120 25 95

Total OCI ( 258 ) ( 57 ) ( 201 ) ( 394 ) ( 84 ) ( 310 )

AOCI, end of period $ ( 1,054 ) $ ( 227 ) $ ( 827 ) $ ( 998 ) $ ( 210 ) $ ( 788 )

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

(Dollars in millions) Nine months ended September 30,

(Dollars in millions) Three months ended March 31,

Before tax Income tax Net Before tax Income tax Net

12 unchanged sentences

AOCI, beginning of period $ ( 13 ) $ ( 3 ) $ ( 10 ) $ 29 $ 5 $ 24

Cumulative effect of change in accounting for long duration insurance contracts — — — ( 445 ) ( 93 ) ( 352 )

Adjusted AOCI, beginning of period 29 5 24 ( 444 ) ( 93 ) ( 351 )

OCI before investment gains and losses, net, recognized in net income 47 10 37 ( 45 ) ( 9 ) ( 36 )

4 unchanged sentences

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

Cumulative effect of change in accounting for long duration insurance contracts — — — ( 445 ) ( 93 ) ( 352 )

Adjusted AOCI, beginning of period ( 782 ) ( 168 ) ( 614 ) 375 79 296

Investments OCI ( 55 ) ( 11 ) ( 44 ) 163 35 128

5 unchanged sentences

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.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 8 – Reinsurance

3 unchanged sentences

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,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Direct written premiums $ 2,125 $ 1,859

12 unchanged sentences

Primary components of our life reinsurance program include individual mortality coverage, aggregate catastrophe and accidental death coverage in excess of certain deductibles.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Direct earned premiums $ 99 $ 96

5 unchanged sentences

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 and $ 13 million at September 30, 2023, and December 31, 2022, respectively.

The allowances for credit losses on other premiums receivable and reinsurance recoverable assets were immaterial at September 30, 2023, and December 31, 2022.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Tax at statutory rate:

3 unchanged sentences

Dividend received exclusion ( 5 ) ( 0.5 ) ( 5 ) ( 1.9 )

Release of unrecognized tax benefit — — ( 34 ) 5.9 — — ( 34 ) 1.7

Other 8 0.8 ( 3 ) ( 1.2 )

Provision (benefit) for income taxes $ ( 49 ) 33.1 % $ ( 161 ) 27.9 % $ 126 16.0 % $ ( 481 ) 24.3 %

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

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 will be realized.

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 at September 30, 2023, and December 31, 2022.

As more fully discussed below, we do carry a valuation allowance on the deferred tax assets related to Cincinnati Global Underwriting Ltd.

SM (Cincinnati Global).

Unrecognized Tax Benefits

During the third quarter of 2022, we received favorable guidance from the Internal Revenue Service (IRS) supporting our tax position related to our unrecognized tax benefit set up in 2018.

As a result of this guidance, we released our $ 34 million gross unrecognized tax benefit liability at September 30, 2022.

The $ 34 million release was recognized as an additional income tax benefit and shown separately in our effective income tax rate reconciliation.

domestic operations or Cincinnati Global at both March 31, 2024, and December 31, 2023.

Cincinnati Global

As a result of operations for the three and nine months ended September 30, 2023, Cincinnati Global decreased its net deferred tax assets by $ 10 million and $ 20 million, respectively, with an offsettin g decrease of $ 10 million and $ 20 million, respectively, to the valuation allowance.

Cincinnati Global had a net deferred tax asset of $ 11 million and an offsetting valuation allowance of $ 11 million at September 30, 2023.

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, we continue to believe it is appropriate to carry a valuation allowance at September 30, 2023.

Cincinnati Global had operating loss carryforwards in the United States of $ 6 million and $ 5 million and in the United Kingdom of $ 99 million and $ 109 million at September 30, 2023, and December 31, 2022, respectively.

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.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

NOTE 10 – Net Income (Loss) Per Common Share

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 10 – Net Income Per Common Share

Basic earnings per share are computed based on the weighted average number of common shares outstanding.

1 unchanged sentence

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,

2023 2022 2023 2022

Net income (loss)—basic and diluted

$ ( 99 ) $ ( 416 ) $ 660 $ ( 1,500 )

(In millions, except per share data) Three months ended March 31,

Net income—basic and diluted

Basic weighted-average common shares outstanding 156.8 157.2

3 unchanged sentences

Diluted weighted-average shares 157.9 158.5

Earnings (loss) per share:

Earnings per share:

Basic $ 4.82 $ 1.43

1 unchanged sentence

Number of anti-dilutive share-based awards 1.3 1.0

The above table shows the number of anti-dilutive share-based awards for the three and nine months ended September 30, 2023 and 2022.

In accordance with Accounting Standards Codification 260, Earnings per Share , the assumed exercise of share-based awards was excluded from the computation of diluted loss per share for the three months ended September 30, 2023 and for the three and nine months ended September 30, 2022, because their exercise would have anti-dilutive effects.

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Service cost $ 1 $ 1

8 unchanged sentences

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 $ 6 million to our 401(k) and Top Hat savings plans during both the third quarter of 2023 and 2022 and contributions of $ 20 million for both the first nine months of 2023 and 2022.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

We m ade no con tributions to our qualified pension plan during the first nine months of 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 m ade no con tributions to our qualified pension plan during the first three months of 2024.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

NOTE 12 – Commitments and Contingent Liabilities

10 unchanged sentences

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.

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.

11 unchanged sentences

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.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

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.

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

The company accounts for such probable and estimable losses, if any, through the establishment of legal expense reserves.

4 unchanged sentences

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 CODM regularly reviews our reporting segments to make decisions about allocating resources and assessing performance.

Our reporting segments are:

7 unchanged sentences

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.

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Segment information is summarized in the following table:

(Dollars in millions) Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

(Dollars in millions) Three months ended March 31,

Commercial lines insurance

24 unchanged sentences

Premiums 183 194

Other 3 2 8 7

Total other revenues 186 197

7 unchanged sentences

Investments 826 286

Other 30 ( 84 ) 71 ( 66 )

Total income (loss) before income taxes $ ( 148 ) $ ( 577 ) $ 786 $ ( 1,981 )

Total income before income taxes $ 953 $ 268

Identifiable assets:

September 30,

2024 December 31,

4 unchanged sentences

Total $ 33,727 $ 32,769

Cincinnati Financial Corporation Third-Quarter 2023 10-Q

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements