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Item 1. Financial Statements

2024-07-25 compared with 2024-04-25 · 206 added, 96 removed, 702 unchanged (30% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

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

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

Fixed maturities, at fair value (amortized cost:

42 unchanged sentences

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Income

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

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

2024 2023 2024 2023

Earned premiums $ 2,156 $ 1,943 $ 4,227 $ 3,861

20 unchanged sentences

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Net Income $ 312 $ 534 $ 1,067 $ 759

1 unchanged sentence

Change in unrealized gains and losses on investments, net of tax (benefit) of $( 17 ), $( 32 ), $( 28 ) and $ 3 , respectively

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

( 58 ) ( 122 ) ( 102 ) 6

Amortization of pension actuarial loss (gain) and prior service cost, net of tax (benefit) of $ 0 , $( 1 ), $ 0 and $( 2 ), respectively

Change in life policy reserves, reinsurance recoverable and other, net of tax (benefit) of $ 8 , $ 6 , $ 18 and $( 3 ), respectively

Other comprehensive income (loss) ( 7 ) 87

29 23 66 ( 13 )

Other comprehensive loss ( 28 ) ( 99 ) ( 35 ) ( 12 )

Comprehensive Income $ 284 $ 435 $ 1,032 $ 747

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Beginning of period $ 397 $ 397 $ 397 $ 397

5 unchanged sentences

Share-based compensation 12 10 26 22

Other 2 2 3 2

End of period 1,466 1,410 1,466 1,410

6 unchanged sentences

Beginning of period ( 442 ) ( 527 ) ( 435 ) ( 614 )

Other comprehensive income (loss) ( 7 ) 87

Other comprehensive loss ( 28 ) ( 99 ) ( 35 ) ( 12 )

End of period ( 470 ) ( 626 ) ( 470 ) ( 626 )

4 unchanged sentences

Shares acquired - share-based compensation plans ( 12 ) — ( 19 ) ( 3 )

Other — 1 — 1

End of period ( 2,513 ) ( 2,386 ) ( 2,513 ) ( 2,386 )

9 unchanged sentences

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Six months ended June 30,

Cash Flows From Operating Activities

26 unchanged sentences

Shares acquired - share repurchase authorization ( 121 ) ( 66 )

Changes in note payable

Proceeds from stock options exercised 4 6

14 unchanged sentences

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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 March 31, 2024, condensed consolidated financial statements are unaudited.

Our June 30, 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.

18 unchanged sentences

The ASU has not yet been adopted and will not have a material impact on our company’s consolidated financial position, results of operations or cash flows, but the ASU will require additional disclosures in our annual financial statements .

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

NOTE 2 – Investments

2 unchanged sentences

cost Gross unrealized Fair value

At March 31, 2024 gains losses

At June 30, 2024 gains losses

Fixed-maturity securities:

15 unchanged sentences

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

The increase in net unrealized investment losses in our fixed-maturity portfolio at March 31, 2024, is primarily due to an increase in U.S.

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

Our asset-backed securities had an average rating of Aa3/AA- at both March 31, 2024, and December 31, 2023.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

The increase in net unrealized investment losses in our fixed-maturity portfolio at June 30, 2024, is primarily due to an increase in U.S.

Treasury yields.

Our asset-backed securities had an average rating of Aa3/AA- at both June 30, 2024, and December 31, 2023.

Cincinnati Financial Corporation Second-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 March 31, 2024 Fair

At June 30, 2024 Fair

value Unrealized

21 unchanged sentences

value % of fair

At March 31, 2024

At June 30, 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 First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

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

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Investment income:

1 unchanged sentence

Dividends 69 70 141 136

Other 4 6 11 13

Total 246 223 494 436

10 unchanged sentences

Change in allowance for credit losses, net ( 16 ) ( 3 ) ( 25 ) ( 3 )

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

Subtotal ( 18 ) ( 7 ) ( 28 ) ( 7 )

Other 6 ( 18 ) 26 ( 17 )

Total $ 137 $ 434 $ 749 $ 540

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

The fair value of our equity portfolio was $ 11.634 billion and $ 10.989 billion at June 30, 2024, and December 31, 2023, respectively.

Microsoft Corporation (Nasdaq:MSFT), an equity holding, was our largest single investment holding with a fair value of $ 1.001 billion and $ 842 million, which was 8.9 % and 7.9 % of our publicly traded common equities portfolio and 3.8 % and 3.4 % of the total investment portfolio at June 30, 2024, and December 31, 2023, respectively.

The allowance for credit losses on fixed-maturity securities was $ 43 million and $ 18 million at June 30, 2024, and December 31, 2023, respectively.

There were 3,784 and 2,840 fixed-maturity securities in a total unrealized loss position of $ 767 million and $ 687 million at June 30, 2024, and December 31, 2023, respectively.

Of those totals, 16 and 20 fixed-maturity securities had fair values below 70 % of amortized cost at June 30, 2024, and December 31, 2023, respectively.

Cincinnati Financial Corporation Second-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 March 31, 2024, and December 31, 2023.

The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at June 30, 2024, and December 31, 2023.

We do not have any liabilities carried at fair value.

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

At March 31, 2024

At June 30, 2024

Fixed maturities, available for sale:

27 unchanged sentences

Total $ 10,908 $ 14,793 $ — $ 25,701

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

We also held Level 1 cash and cash equivalents of $ 771 million and $ 907 million at June 30, 2024, and December 31, 2023, respectively.

Cincinnati Financial Corporation Second-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 March 31, December 31, March 31, December 31,

issue June 30, December 31, June 30, December 31,

2024 2023 2024 2023

5 unchanged sentences

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

At March 31, 2024

At June 30, 2024

Note payable $ — $ 25 $ — $ 25

11 unchanged sentences

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

At March 31, 2024

At June 30, 2024

Life policy loans $ — $ — $ 40 $ 40

7 unchanged sentences

Total $ — $ 141 $ 603 $ 744

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Outstanding principal and interest for these life policy loans totaled $ 35 million and $ 33 million at June 30, 2024, and December 31, 2023, respectively.

Recorded reserves for the deferred annuities were $ 618 million and $ 656 million at June 30, 2024, and December 31, 2023, respectively.

Recorded reserves for the structured settlements were $ 119 million and $ 123 million at June 30, 2024, and December 31, 2023, respectively.

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Gross loss and loss expense reserves, beginning of period $ 9,178 $ 8,626 $ 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 $ 68 million and $ 67 million at March 31, 2024, and 2023, respectively, for certain life and health loss and loss expense reserves.

We experienced $ 100 million of favorable development on prior accident years, including $ 38 million of favorable development in commercial lines, $ 33 million of favorable development in personal lines and $ 3 million of favorable development in excess and surplus lines for the three months ended March 31, 2024.

Within commercial lines, we recognized favorable reserve development of $ 22 million for the commercial property line and $ 12 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

Within personal lines, we recognized favorable reserve development of $ 25 million for the homeowner line and $ 5 million for the personal auto line.

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

Within commercial lines, we recognized favorable reserve development of $ 16 million for the commercial property line and $ 15 million for

the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

The reserve for loss and loss expenses in the condensed consolidated balance sheets also included $ 61 million and $ 66 million at June 30, 2024, and 2023, respectively, for certain life and health loss and loss expense reserves.

We experienced $ 40 million of favorable development on prior accident years, including $ 29 million of favorable development in commercial lines, $ 6 million of unfavorable development in personal lines and $ 3 million of unfavorable development in excess and surplus lines for the three months ended June 30, 2024.

Within commercial lines, we recognized favorable reserve development of $ 28 million for the workers' compensation line and $ 21 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 $ 28 million for the commercial casualty line.

Within personal lines, we recognized unfavorable reserve development of $ 12 million for the personal auto line.

We experienced $ 140 million of favorable development on prior accident years, including $ 67 million of favorable development in commercial lines, $ 27 million of favorable development in personal lines and no net development in excess and surplus lines for the six months ended June 30, 2024.

Within commercial lines, we recognized favorable reserve development of $ 44 million for the commercial property line, $ 40 million for the workers' compensation line and $ 11 million for the commercial auto line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

This was partially offset by unfavorable reserve development of $ 29 million for the commercial casualty line.

Within personal lines, we recognized favorable reserve development of $ 27 million for the homeowner line.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

We experienced $ 101 million of favorable development on prior accident years, including $ 59 million of favorable development in commercial lines, $ 15 million of favorable development in personal lines and $ 5 million of favorable development in excess and surplus lines for the three months ended June 30, 2023.

Within commercial lines, we recognized favorable reserve development of $ 34 million for the commercial casualty line and $ 11 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

We experienced $ 160 million of favorable development on prior accident years, including $ 91 million of favorable development in commercial lines, $ 46 million of favorable development in personal lines and $ 14 million of favorable development in excess and surplus lines for the six months ended June 30, 2023.

Within commercial lines, we recognized favorable reserve development of $ 36 million for the commercial casualty line, $ 26 million for the workers' compensation line and $ 25 million for the commercial property 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 $ 35 million for the homeowner line and $ 12 million for the personal auto line.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

NOTE 5 – Life Policy and Investment Contract Reserves

6 unchanged sentences

The discount rate assumption is based on upper-medium grade fixed-income instrument yields (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 2024 as part of our annual assumption unlocking.

Changes in the inputs, judgments and assumptions during the period and the related measurement impact on the liability are reflected in the below tables.

3 unchanged sentences

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

(Dollars in millions) March 31,

(Dollars in millions) June 30,

2024 December 31,

10 unchanged sentences

Total life policy and investment contract reserves $ 2,966 $ 3,068

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) Three months ended June 30,

Term Whole life Term Whole life

31 unchanged sentences

Weighted-average duration of the net life policy reserves in years 11 15 12 16

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

(Dollars in millions) Six months ended June 30,

Term Whole life Term Whole life

Present value of expected net premiums:

Balance, beginning of period $ 1,700 $ 223 $ 1,643 $ 208

Beginning balance at original discount rate 1,712 225 1,708 217

Effect of changes in cash flow assumptions ( 12 ) 1 ( 5 ) ( 6 )

Effect of actual variances from expected experience ( 19 ) ( 3 ) ( 12 ) 1

Adjusted beginning of period balance 1,681 223 1,691 212

Issuances 76 11 78 17

Interest accrual 36 5 35 4

Net premiums collected ( 92 ) ( 14 ) ( 92 ) ( 14 )

Ending balance at original discount rate 1,701 225 1,712 219

Effect of changes in discount rate assumptions ( 81 ) ( 10 ) ( 48 ) ( 7 )

Balance, end of period 1,620 215 1,664 212

Present value of expected future policy benefits:

Balance, beginning of period 2,751 657 2,584 614

Beginning balance at original discount rate 2,765 628 2,692 607

Effect of changes in cash flow assumptions ( 29 ) 2 5 ( 10 )

Effect of actual variances from expected experience ( 28 ) ( 4 ) ( 13 ) 1

Adjusted beginning of period balance 2,708 626 2,684 598

Issuances 76 12 78 17

Interest accrual 62 16 60 15

Benefits paid ( 74 ) ( 18 ) ( 85 ) ( 15 )

Ending balance at original discount rate 2,772 636 2,737 615

Effect of changes in discount rate assumptions ( 138 ) ( 17 ) ( 75 ) 18

Balance, end of period 2,634 619 2,662 633

Net liability for future policy benefits:

Present value of expected future policy benefits less expected net premiums 1,014 404 998 421

Impact of flooring at cohort level 21 — 17 —

Net life policy reserves 1,035 404 1,015 421

Less reinsurance recoverable at original discount rate ( 95 ) ( 24 ) ( 100 ) ( 25 )

Less effect of discount rate assumption changes on reinsurance recoverable ( 7 ) ( 4 ) ( 8 ) ( 5 )

Net life policy reserves, after reinsurance recoverable $ 933 $ 376 $ 907 $ 391

Weighted-average duration of the net life policy reserves in years 11 15 12 16

The total impact of flooring at cohort level in the above tables includes the effect of discount rate assumption change s of $ 3 million at both June 30, 2024 and 2023.

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) At June 30,

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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Gross premiums

6 unchanged sentences

Total $ 18 $ 17 $ 37 $ 35

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 .

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums w as immaterial for the six months ended June 30, 2024, and 2023 .

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

4 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 First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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 March 31,

Deferred annuity Universal life Deferred annuity Universal life

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

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

Balance, beginning of period $ 631 $ 456 $ 711 $ 458 $ 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 March 31, 2024

At June 30, 2024

Deferred annuity

7 unchanged sentences

Total $ 328 $ 65 $ 59 $ 4 $ 456

At March 31, 2023

At June 30, 2023

Deferred annuity

7 unchanged sentences

Total $ 397 $ — $ 56 $ 3 $ 456

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Balance, beginning of period $ 129 $ 125 $ 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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Balance, beginning of period $ 927 $ 899 $ 925 $ 892

4 unchanged sentences

Cash surrender value $ 932 $ 906 $ 932 $ 906

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

NOTE 6 – Deferred Policy Acquisition Costs

4 unchanged sentences

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

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Property casualty:

12 unchanged sentences

Deferred policy acquisition costs asset, end of period $ 1,229 $ 1,109 $ 1,229 $ 1,109

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

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

(Dollars in millions)

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

Three months ended June 30, 2024 Term Whole life Deferred annuity Universal life Total

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

2 unchanged sentences

Balance, end of period $ 241 $ 50 $ 8 $ 52 $ 351

Three months ended March 31, 2023

Three months ended June 30, 2023

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

2 unchanged sentences

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

Cincinnati Financial Corporation First-Quarter 2024 10-Q

(Dollars in millions)

Six months ended June 30, 2024 Term Whole life Deferred annuity Universal life Total

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

Capitalized deferred policy acquisition costs 16 4 1 1 22

Amortized deferred policy acquisition costs ( 11 ) ( 2 ) ( 1 ) ( 1 ) ( 15 )

Balance, end of period $ 241 $ 50 $ 8 $ 52 $ 351

Six months ended June 30, 2023

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

Capitalized deferred policy acquisition costs 16 4 1 1 22

Amortized deferred policy acquisition costs ( 11 ) ( 2 ) — ( 2 ) ( 15 )

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

NOTE 7 – Accumulated Other Comprehensive Income

Accumulated other comprehensive income (AOCI) includes changes in unrealized gains and losses on investments, changes in pension obligations and changes in life policy reserves, reinsurance recoverable and other as follows:

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30,

Before tax Income tax Net Before tax Income tax Net

23 unchanged sentences

AOCI, end of period $ ( 598 ) $ ( 128 ) $ ( 470 ) $ ( 796 ) $ ( 170 ) $ ( 626 )

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

(Dollars in millions) Six months ended June 30,

Before tax Income tax Net Before tax Income tax Net

AOCI, beginning of period $ ( 570 ) $ ( 123 ) $ ( 447 ) $ ( 847 ) $ ( 182 ) $ ( 665 )

OCI before investment gains and losses, net, recognized in net income ( 158 ) ( 34 ) ( 124 ) 5 1 4

Investment gains and losses, net, recognized in net income 28 6 22 4 2 2

OCI ( 130 ) ( 28 ) ( 102 ) 9 3 6

AOCI, end of period $ ( 700 ) $ ( 151 ) $ ( 549 ) $ ( 838 ) $ ( 179 ) $ ( 659 )

Pension obligations:

AOCI, beginning of period $ 30 $ 8 $ 22 $ 36 $ 9 $ 27

OCI excluding amortization recognized in net income — — — ( 5 ) ( 1 ) ( 4 )

Amortization recognized in net income 1 — 1 ( 2 ) ( 1 ) ( 1 )

OCI 1 — 1 ( 7 ) ( 2 ) ( 5 )

AOCI, end of period $ 31 $ 8 $ 23 $ 29 $ 7 $ 22

Life policy reserves, reinsurance recoverable and other:

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

OCI before investment gains and losses, net, recognized in net income 84 18 66 ( 16 ) ( 3 ) ( 13 )

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

OCI 84 18 66 ( 16 ) ( 3 ) ( 13 )

AOCI, end of period $ 71 $ 15 $ 56 $ 13 $ 2 $ 11

Summary of AOCI:

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

Investments OCI ( 130 ) ( 28 ) ( 102 ) 9 3 6

Pension obligations OCI 1 — 1 ( 7 ) ( 2 ) ( 5 )

Life policy reserves, reinsurance recoverable and other OCI 84 18 66 ( 16 ) ( 3 ) ( 13 )

Total OCI ( 45 ) ( 10 ) ( 35 ) ( 14 ) ( 2 ) ( 12 )

AOCI, end of period $ ( 598 ) $ ( 128 ) $ ( 470 ) $ ( 796 ) $ ( 170 ) $ ( 626 )

Investment gains and losses, net, and other investment gains and losses, net, are recorded in the investment gains and losses, net, line item in the condensed consolidated statements of income.

Amortization of pension obligations is recorded in the insurance losses and contract holders' benefits and underwriting, acquisition and insurance expenses line items in the condensed consolidated statements of income.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Direct written premiums $ 2,362 $ 2,071 $ 4,487 $ 3,930

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 First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Direct earned premiums $ 101 $ 100 $ 200 $ 196

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 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

The allowance for uncollectible property casualty premiums was $ 18 million and $ 16 million at June 30, 2024, and December 31, 2023, respectively.

The allowances for credit losses on other premiums receivable and reinsurance recoverable assets were immaterial at June 30, 2024, and December 31, 2023.

Cincinnati Financial Corporation Second-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 March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Tax at statutory rate:

10 unchanged sentences

As a result, we have no valuation allowance for our U.S.

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

domestic operations or Cincinnati Global at both June 30, 2024, and December 31, 2023.

Cincinnati Global

Cincinnati Global had no operating loss carryforwards in the United States and $ 91 million and $ 100 million in the United Kingdom at March 31, 2024, and December 31, 2023, respectively.

Cincinnati Global had no operating loss carryforwards in the United States and $ 85 million and $ 100 million in the United Kingdom at June 30, 2024, and December 31, 2023, respectively.

These Cincinnati Global losses can only be utilized within the Cincinnati Global group.

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

NOTE 10 – Net Income Per Common Share

2 unchanged sentences

The table shows calculations for basic and diluted earnings per share:

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

(In millions, except per share data) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Net income—basic and diluted

$ 312 $ 534 $ 1,067 $ 759

Basic weighted-average common shares outstanding 156.3 157.0 156.6 157.1

9 unchanged sentences

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.

The above table shows the number of anti-dilutive share-based awards for the three and six months ended June 30, 2024 and 2023.

NOTE 11 – Employee Retirement Benefits

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

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Service cost $ 2 $ 2 $ 3 $ 3

2 unchanged sentences

Expected return on plan assets ( 6 ) ( 5 ) ( 11 ) ( 10 )

Amortization of actuarial loss and prior service cost — ( 1 )

Amortization of actuarial loss (gain) and prior

service cost 1 ( 1 ) 1 ( 2 )

Other — — — ( 5 )

3 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 $ 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

We made matching contributions totaling $ 7 million and $ 6 million to our 401(k) and Top Hat savings plans during the second quarter of 2024 and 2023, respectively, and contributions of $ 16 million and $ 14 million for the first half of 2024 and 2023, respectively.

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

NOTE 12 – Commitments and Contingent Liabilities

24 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 Second-Quarter 2024 10-Q

On a quarterly basis, we review these outstanding matters.

Under current accounting guidance, we establish accruals when it is probable that a covered loss has been incurred and we can reasonably estimate its potential

Cincinnati Financial Corporation First-Quarter 2024 10-Q

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 exposure.

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

14 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 First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Segment information is summarized in the following table:

(Dollars in millions) Three months ended March 31,

(Dollars in millions) Three months ended June 30, Six months ended June 30,

2024 2023 2024 2023

Commercial lines insurance

24 unchanged sentences

Premiums 186 172 369 366

Other 4 2 7 5

Total other revenues 190 174 376 371

7 unchanged sentences

Investments 348 624 1,174 910

Other 40 21 69 41

Total income before income taxes $ 386 $ 666 $ 1,339 $ 934

6 unchanged sentences

Total $ 34,802 $ 32,769

Cincinnati Financial Corporation First-Quarter 2024 10-Q

Cincinnati Financial Corporation Second-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