What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-24 compared with 2024-07-25 · 243 added, 242 removed, 698 unchanged (41% of the section changed)

18 unchanged sentences

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

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

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

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

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

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

• Differences in state laws and developing case law

• Litigation trends, including varying legal theories advanced by policyholders

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

• The inherent unpredictability of litigation

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

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

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

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

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

• Significant rise in losses from surety or director and officer policies written for financial institutions or other insured entities or in losses from policies written by Cincinnati Re or Cincinnati Global

18 unchanged sentences

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

• Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:

6 unchanged sentences

• Increase our other expenses

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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

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The ultimate changes and eventual effects, if any, of these initiatives are uncertain.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

CORPORATE FINANCIAL HIGHLIGHTS

Net Income and Comprehensive Income Data

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

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

2024 2023 % Change 2024 2023 % Change

1 unchanged sentence

Investment income, net of expenses (pretax) 258 225 15 745 655 14

Investment gains and losses, net (pretax) 137 434 (68) 749 540 39

Investment gains and losses, net (pretax) 758 (456) nm 1,507 84 nm

Total revenues 3,320 1,811 83 8,799 6,657 32

Net income 312 534 (42) 1,067 759 41

Comprehensive income 284 435 (35) 1,032 747 38

Net income per share—diluted 1.98 3.38 (41) 6.77 4.80 41

Net income (loss) 820 (99) nm 1,887 660 186

Comprehensive income 1,140 (300) nm 2,172 447 386

Net income (loss) per share—diluted 5.20 (0.63) nm 11.97 4.17 187

Cash dividends declared per share 0.81 0.75 8 2.43 2.25 8

Diluted weighted average shares outstanding 157.7 156.9 1 157.7 158.2 0

Total revenues decreased $61 million for the second quarter of 2024, compared with the second quarter of 2023, primarily due to a decrease in net investment gains that offset higher earned premiums and investment income.

For the first six months of 2024, compared with the same period of 2023, total revenues increased $633 million, including higher earned premiums, investment income and net investment gains.

Total revenues increased $1.509 billion for the third quarter of 2024, compared with the third quarter of 2023, including higher earned premiums, investment income and net investment gains.

For the first nine months of 2024, compared with the same period of 2023, total revenues increased $2.142 billion, including higher earned premiums, investment income and net investment gains.

Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

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The change in fair value of securities is also generally independent of the insurance underwriting process.

Net income for the second quarter of 2024, compared with the second quarter of 2023, decreased $222 million, including decreases of $235 million in after-tax net investment gains and losses and $9 million in after-tax property casualty underwriting income that offset an increase of $17 million in after-tax investment income.

Catastrophe losses for the second quarter of 2024, mostly weather related, were $7 million higher after taxes and unfavorably affected both net income and property casualty underwriting income.

Life insurance segment results increased by $9 million on a pretax basis.

For the first six months of 2024, net income increased $308 million, compared with the first six months of 2023,

including increases of $164 million in after-tax investment gains and losses, $102 million in after-tax property casualty underwriting income and $45 million in after-tax investment income.

The property casualty underwriting income increase included a favorable $86 million after-tax effect from lower catastrophe losses.

Net income for the third quarter of 2024, compared with the third quarter of 2023, increased $919 million, including increases of $956 million in after-tax net investment gains and losses and $26 million in after-tax investment income, partially offset by a $40 million decrease in after-tax property casualty underwriting income.

Catastrophe losses for the third quarter of 2024, mostly weather related, were $86 million higher after taxes and unfavorably affected both net income and property casualty underwriting income.

Life insurance segment results decreased by $7 million on a pretax basis.

For the first nine months of 2024, net income increased $1.227 billion, compared with the first nine months of 2023,

including increases of $1.120 billion in after-tax investment gains and losses, $62 million in after-tax property casualty underwriting income and $71 million in after-tax investment income.

Catastrophe losses for the first nine months of 2024, mostly weather related, matched the same period in 2023.

Life insurance segment results increased by $4 million on a pretax basis.

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In January 2024, the board of directors increased the regular quarterly dividend to 81 cents per share, setting the stage for our 64 th consecutive year of increasing cash dividends.

During the first six months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023.

During the first nine months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023.

Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases.

The 2024 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Balance Sheet Data and Performance Measures

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

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

Total investments $ 28,104 $ 25,357

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Debt-to-total-capital ratio 5.6 % 6.3 %

Total assets at June 30, 2024, increased 6% compared with year-end 2023, and included a 5% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio.

Shareholders' equity increased 6% and book value per share also increased 6% during the first six months of 2024.

Total assets at September 30, 2024, increased 13% compared with year-end 2023, and included an 11% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio.

Shareholders' equity increased 14% and book value per share increased 15% during the first nine months of 2024.

Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased compared with year-end 2023.

Our value creation ratio is our primary performance metric.

As shown in the tables below, that ratio was 8.2% for the first six months of 2024, better than 7.2% for the same period in 2023, primarily due to higher net income before investment gains.

Book value per share increased $4.73 during the first six months of 2024 and contributed 6.1 percentage points to the value creation ratio, while dividends declared at $1.62 per share contributed 2.1 points.

As shown in the tables below, that ratio was 17.8% for the first nine months of 2024, better than 4.4% for the same period in 2023, primarily due to a higher amount in overall net gains from our investment portfolio.

Book value per share increased $11.26 during the first nine months of 2024 and contributed 14.6 percentage points to the value creation ratio, while dividends declared at $2.43 per share contributed 3.2 points.

Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

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Value creation ratio 9.0 % (2.6) % 17.8 % 4.4 %

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

(Dollars are per share) Three months ended June 30, Six months ended June 30,

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

(Dollars are per share) Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

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We market our insurance products through a select group of independent insurance agencies as discussed in our 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6.

At June 30, 2024, we actively marketed through 2,171 agencies located in 46 states.

At September 30, 2024, we actively marketed through 2,196 agencies located in 46 states.

We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.

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• Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average.

For the first six months of 2024, our consolidated property casualty net written premium year-over-year growth was 13%.

As of March 2024, A.M.

Best projected the industry's full-year 2024 written premium growth at approximately 9%.

For the first nine months of 2024, our consolidated property casualty net written premium year-over-year growth was 14%, comparing favorably with the industry's 10% growth rate reported by A.M.

Best for the first six months of 2024.

For the five-year period 2019 through 2023, our growth rate exceeded that of the industry.

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• Combined ratio – We believe our underwriting philosophy and initiatives can generate an average GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%.

For the first six months of 2024, our GAAP combined ratio was 96.1%, including 9.9 percentage points of current accident year catastrophe losses partially offset by 3.4 percentage points of favorable loss reserve development on prior accident years.

Our statutory combined ratio was 94.6% for the first six months of 2024.

As of March 2024, A.M.

Best projected the industry's full-year 2024 statutory combined ratio at approximately 101%, including approximately 7 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years.

For the first nine months of 2024, our GAAP combined ratio was 96.5%, including 11.2 percentage points of current accident year catastrophe losses partially offset by 3.3 percentage points of favorable loss reserve development on prior accident years.

Our statutory combined ratio was 95.7% for the first nine months of 2024, comparing favorably with the industry's 97.7% reported by A.M.

Best for the first six months of 2024.

The industry's ratio again excludes its mortgage and financial guaranty lines of business.

• Investment contribution – We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor's 500 Index.

For the first six months of 2024, pretax investment income was $487 million, up 13% compared with the same period in 2023.

For the first nine months of 2024, pretax investment income was $745 million, up 14% compared with the same period in 2023.

We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Financial Strength

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Our strong parent-company liquidity and financial strength increase our flexibility to maintain a cash dividend through all periods and to continue to invest in and expand our insurance operations.

At June 30, 2024, we held $5.002 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.643 billion, or 92.8%, was invested in common stocks, and $166 million, or 3.3%, was cash or cash equivalents.

Our debt-to-total-capital ratio was 6.0% at June 30, 2024.

Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.1-to-1 for the 12 months ended June 30, 2024, compared with 1.0-to-1 at year-end 2023.

At September 30, 2024, we held $5.419 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.639 billion, or 85.6%, was invested in common stocks, and $645 million, or 11.9%, was cash or cash equivalents.

Our debt-to-total-capital ratio was 5.6% at September 30, 2024.

Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.0-to-1 for the 12 months ended September 30, 2024, matching year-end 2023.

Financial strength ratings assigned to us by independent rating firms also are important.

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please see each rating agency's website for its most recent report on our ratings.

At July 24, 2024, our insurance subsidiaries continued to be highly rated.

At October 23, 2024, our insurance subsidiaries continued to be highly rated.

Insurer Financial Strength Ratings

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fitchratings.com

A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Stable

A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Positive

Moody's Investors Service

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A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Stable

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

CONSOLIDATED PROPERTY CASUALTY INSURANCE HIGHLIGHTS

1 unchanged sentence

SM (Cincinnati Global).

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

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

2024 2023 % Change 2024 2023 % Change

21 unchanged sentences

Combined ratio before catastrophe losses and prior years reserve development 86.8 % 87.7 % (0.9) 88.6 % 89.4 % (0.8)

Our consolidated property casualty insurance operations generated an underwriting profit of $35 million for the second quarter and $166 million for the first six months of 2024.

The second-quarter 2024 underwriting profit decrease of $12 million, compared with second-quarter 2023, included an unfavorable increase of $9 million in losses from catastrophes, mostly caused by severe weather.

The second-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and lower amounts of favorable reserve development on prior accident years.

The six-month underwriting profit increase of $129 million, compared with the first six months of 2023, included a favorable decrease of $109 million in losses from catastrophes.

The six-month 2023 period also experienced higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and lower amounts of favorable reserve development on prior accident years.

Underwriting results for the second quarter and first six months of 2024 included improved current accident year loss experience, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation.

Our consolidated property casualty insurance operations generated an underwriting profit of $62 million for the third quarter and $228 million for the first nine months of 2024.

The third-quarter 2024 underwriting profit decrease of $50 million, compared with third-quarter 2023, included an unfavorable increase of $109 million in losses from catastrophes, mostly caused by severe weather.

The third-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and higher amounts of favorable reserve development on prior accident years.

The nine-month 2024 underwriting profit increase of $79 million, compared with the first nine months of 2023, included losses from catastrophes that matched.

In addition, the nine-month 2024 period experienced higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and a lower amount of favorable reserve development on prior accident years before catastrophe losses.

Underwriting results for the third quarter and first nine months of 2024 included improved current accident year loss experience before catastrophe losses, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation.

Elevated inflation was a driver of higher losses and loss expenses in both 2024 and 2023 as costs have increased significantly to repair damaged autos or other property that we insure.

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We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

For all property casualty lines of business in aggregate, net loss and loss expense reserves at June 30, 2024, were $578 million, or 7%, higher than at year-end 2023, including an increase of $506 million for the incurred but not reported (IBNR) portion.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

For all property casualty lines of business in aggregate, net loss and loss expense reserves at September 30, 2024, were $963 million, or 11%, higher than at year-end 2023, including an increase of $917 million for the incurred but not reported (IBNR) portion.

We measure and analyze property casualty underwriting results primarily by the combined ratio and its component ratios.

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A combined ratio above 100% indicates that an insurance company's losses and expenses exceeded premiums.

Our consolidated property casualty combined ratio for the second quarter of 2024 increased by 0.9 percentage points, compared with the same period of 2023, including a decrease of 0.8 points from catastrophe losses and loss expenses.

For the first six months of 2024, compared with the 2023 six-month period, our combined ratio improved by 3.1 percentage points, including a decrease of 3.8 points from catastrophe losses and loss expenses.

Our consolidated property casualty combined ratio for the third quarter of 2024 increased by 3.0 percentage points, compared with the same period of 2023, including an increase of 3.9 points from catastrophe losses and loss expenses.

For the first nine months of 2024, compared with the 2023 nine-month period, our combined ratio improved by 1.0 percentage points, including a decrease of 1.2 points from catastrophe losses and loss expenses.

Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.

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The combined ratio can also be affected by updated estimates of loss and loss expense reserves established for claims that occurred in prior periods, referred to as prior accident years.

Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 3.4 percentage points in the first six months of 2024, compared with 4.3 percentage points in the same period of 2023.

Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 3.3 percentage points in the first nine months of 2024, compared with 3.8 percentage points in the same period of 2023.

Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.

The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first six months of 2024.

That 59.5% ratio was 1.3 percentage points lower, compared with the 60.8% accident year 2023 ratio measured as of June 30, 2023, including a decrease of 1.5 points in the ratio for large losses of $2 million or more per claim, discussed below.

The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first nine months of 2024.

That 58.6% ratio was 1.1 percentage points lower, compared with the 59.7% accident year 2023 ratio measured as of September 30, 2023, including a decrease of 1.2 points in the ratio for large losses of $2 million or more per claim, discussed below.

The ratio improvement of 1.1 percentage points included an increase of 1.1 points for the IBNR portion and a decrease of 2.2 points for the case incurred portion.

The underwriting expense ratio increased for the second quarter and first six months of 2024, compared with the same periods a year ago.

The increases were largely due to increases in profit-sharing commissions for agencies and employee-related expenses.

The underwriting expense ratio decreased for the third quarter and increased for the first nine months of 2024, compared with the same periods a year ago.

The third-quarter 2024 decrease was largely due to a decrease in profit-sharing commissions for agencies.

The nine-month 2024 increase was largely due to increases in profit-sharing commissions for agencies and employee-related expenses.

The ratios also included ongoing expense management efforts and higher earned premiums.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Consolidated Property Casualty Insurance Premiums

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

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

2024 2023 % Change 2024 2023 % Change

3 unchanged sentences

Net written premiums 2,293 1,957 17 7,000 6,126 14

Unearned premium change (384) (287) (34) (640) (465) (38)

Unearned premium change (76) — nm (716) (465) (54)

Earned premiums $ 2,217 $ 1,957 13 $ 6,284 $ 5,661 11

1 unchanged sentence

Price change trends that heavily influence renewal written premium increases or decreases, along with other premium growth drivers for 2024, are discussed in more detail by segment below in Financial Results.

Consolidated property casualty net written premiums for the second quarter and six months ended June 30, 2024, grew $309 million and $538 million compared with the same periods of 2023.

Consolidated property casualty net written premiums for the third quarter and nine months ended September 30, 2024, grew $336 million and $874 million compared with the same periods of 2023.

Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Consolidated property casualty agency new business written premiums increased by $104 million and $199 million for the second quarter and first six months of 2024, compared with the same periods of 2023.

New agency appointments during 2024 and 2023 produced a $52 million increase in standard lines new business for the first six months of 2024 compared with the same period of 2023.

Consolidated property casualty agency new business written premiums increased by $93 million and $292 million for the third quarter and first nine months of 2024, compared with the same periods of 2023.

New agency appointments during 2024 and 2023 produced a $82 million increase in standard lines new business for the first nine months of 2024 compared with the same period of 2023.

As we appoint new agencies that choose to move accounts to us, we report these accounts as new business.

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We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent.

Net written premiums for Cincinnati Re, included in other written premiums, increased by $30 million in the second quarter and $2 million for the six months ended June 30, 2024, compared with the same periods of 2023, to $207 million and $409 million, respectively.

Net written premiums for Cincinnati Re, included in other written premiums, increased by $4 million in the third quarter and $6 million for the nine months ended September 30, 2024, compared with the same periods of 2023, to $89 million and $498 million, respectively.

Cincinnati Re assumes risks through reinsurance treaties and in some cases cedes part of the risk and related premiums to one or more unaffiliated reinsurance companies through transactions known as retrocessions.

Cincinnati Global is also included in other written premiums.

Net written premiums for Cincinnati Global decreased by $15 million in the second quarter and increased by $3 million for the six months ended June 30, 2024, to $67 million and $149 million, respectively, compared with the same periods of 2023.

Net written premiums for Cincinnati Global increased by $8 million in the third quarter and $11 million for the nine months ended September 30, 2024, to $77 million and $226 million, respectively, compared with the same periods of 2023.

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program.

An increase in ceded premiums reduced net written premiums by $11 million and $16 million for the second quarter and first six months of 2024, compared with the same period of 2023.

An increase in ceded premiums reduced net written premiums by $16 million and $32 million for the third quarter and first nine months of 2024, compared with the same period of 2023.

Catastrophe losses and loss expenses typically have a material effect on property casualty results and can vary significantly from period to period.

Losses from catastrophes contributed 11.2 and 8.6 percentage points to the combined ratio in the second quarter and first six months of 2024, compared with 12.0 and 12.4 percentage points in the same period of 2023.

Losses from catastrophes contributed 13.0 and 10.1 percentage points to the combined ratio in the third quarter and first nine months of 2024, compared with 9.1 and 11.3 percentage points in the same period of 2023.

Effective June 1, 2024, we restructured our reinsurance program for Cincinnati Re only, providing retrocession coverages with various triggers, exclusions and unique features.

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Ceded premiums for the one-year renewal period of coverage from the treaty effective June 1, 2024, are estimated to be approximately $16 million.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

The following table shows consolidated property casualty insurance catastrophe losses and loss expenses incurred, net of reinsurance, as well as the effect of loss development on prior period catastrophe events.

1 unchanged sentence

Consolidated Property Casualty Insurance Catastrophe Losses and Loss Expenses Incurred

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

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

Dates Region lines lines lines Other Total lines lines lines Other Total

8-10 Midwest, Northeast, South $ (2) $ 1 $ — $ — $ (1) $ 16 $ 9 $ — $ — $ 25

12-17 Midwest, South $ (4) $ 4 $ — $ — $ — $ 30 $ 32 $ — $ — $ 62

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May 25-26 Midwest, South 2 1 1 — 4 38 29 2 — 69

13-18 Midwest, Northeast 18 11 — — 29 18 11 — — 29

25 - 28 Midwest, South (Helene) 35 117 — 26 178 35 117 — 26 178

All other 2024 catastrophes 18 49 — 27 94 101 153 3 30 287

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May 2-9 Midwest, South (1) (1) — — (2) 23 7 — — 30

21-27 Midwest, Northeast, South, West 14 4 — — 18 23 17 — — 40

4 Midwest, Northeast, South, West 8 11 — — 19 10 16 — — 26

All other 2023 catastrophes 53 69 (1) 34 155 125 171 3 39 338

1 unchanged sentence

Calendar year incurred total $ 71 $ 73 $ (2) $ 37 $ 179 $ 300 $ 285 $ 2 $ 51 $ 638

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

The following table includes data for losses incurred of $2 million or more per claim, net of reinsurance.

Consolidated Property Casualty Insurance Losses Incurred by Size

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

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

2024 2023 % Change 2024 2023 % Change

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Our analysis continues to indicate no unexpected concentration of large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory.

The second-quarter 2024 property casualty total large losses incurred of $74 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $97 million experienced for the second quarter of 2023.

The ratio for these large losses was 1.7 percentage points lower compared with last year's second quarter.

The second-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the six-month 2024 total large loss ratio, compared with 2023, in addition to a first-quarter 2024 ratio that was 1.0 point lower than the first quarter of 2023.

We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

The third-quarter 2024 property casualty total large losses incurred of $88 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $108 million experienced for the third quarter of 2023.

The ratio for these large losses was 1.5 percentage points lower compared with last year's third quarter.

The third-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the nine-month 2024 total large loss ratio, compared with 2023, in addition to a first-half 2024 ratio that was 1.4 points lower than the first half of 2023.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Losses by size are discussed in further detail in results of operations by property casualty insurance segment.

6 unchanged sentences

• Investments

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

COMMERCIAL LINES INSURANCE RESULTS

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

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

2024 2023 % Change 2024 2023 % Change

6 unchanged sentences

Prior accident years before catastrophe losses (45) (33) (36) (97) (123) 21

Prior accident years catastrophe losses (7) (5) (40) (15) (1) nm

Prior accident years catastrophe losses (5) (1) (400) (20) (2) (900)

Loss and loss expenses 706 680 4 2,171 2,136 2

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Performance highlights for the commercial lines segment include:

• Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the second quarter and first six months of 2024, compared with the same periods a year ago, due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums.

• Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the third quarter and first nine months of 2024, compared with the same periods a year ago, due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums.

The table below analyzes the primary components of premiums.

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We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy.

Agency renewal written premiums increased by 4% for both the second quarter and first six months of 2024, compared with the same periods of 2023, including price increases.

During the second quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-single-digit range.

Agency renewal written premiums increased 8% for the third quarter and 5% for the first nine months of 2024, compared with the same periods of 2023, including price increases.

During the third quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages in the high-single-digit range.

We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing.

1 unchanged sentence

We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Our average overall commercial lines renewal pricing change includes the impact of flat pricing for certain coverages within package policies written for a three-year term that were in force but did not expire during the period being measured.

Therefore, our reported change in average commercial lines renewal pricing reflects a blend of three-year policies that did not expire and other policies that did expire during the measurement period.

For commercial lines policies that did expire and were then renewed during the second quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines of business.

For commercial lines policies that did expire and were then renewed during the third quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines of business.

The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.

Our commercial lines segment's increase in agency renewal written premiums for the first six months of 2024 also included changes in the level of insured exposures.

Our commercial lines segment's increase in agency renewal written premiums for the first nine months of 2024 also included changes in the level of insured exposures.

Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged commercial structures.

1 unchanged sentence

Renewal premiums for certain policies, primarily our commercial casualty and workers' compensation lines of business, include the results of policy audits that adjust initial premium amounts based on differences between estimated and actual sales or payroll related to a specific policy.

Audits completed during the first six months of 2024 contributed $54 million to net written premiums, compared with $73 million for the same period of 2023.

New business written premiums for commercial lines increased $44 million and $92 million during the second quarter and first six months of 2024, compared with the same periods of 2023, as we continued to carefully underwrite each policy in a highly competitive market.

Audits completed during the first nine months of 2024 contributed $81 million to net written premiums, compared with $105 million for the same period of 2023.

New business written premiums for commercial lines increased $39 million and $131 million during the third quarter and first nine months of 2024, compared with the same periods of 2023, as we continued to carefully underwrite each policy in a highly competitive market.

Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability.

1 unchanged sentence

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program.

For our commercial lines insurance segment, an increase in ceded premiums reduced net written premiums by $5 million and $6 million for the second quarter and first six months of 2024, compared with the same periods of 2023.

For our commercial lines insurance segment, an increase in ceded premiums reduced net written premiums by $5 million and $11 million for the third quarter and first nine months of 2024, compared with the same periods of 2023.

Commercial Lines Insurance Premiums

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

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

2024 2023 % Change 2024 2023 % Change

3 unchanged sentences

Net written premiums 1,138 1,029 11 3,547 3,276 8

Unearned premium change (79) (40) (98) (220) (125) (76)

Unearned premium change (1) 33 nm (221) (92) (140)

Earned premiums $ 1,137 $ 1,062 7 $ 3,326 $ 3,184 4

• Combined ratio – The second-quarter 2024 commercial lines combined ratio increased by 2.2 percentage points, compared with the second quarter of 2023, including a decrease of 1.8 points in losses from catastrophes.

The second-quarter combined ratio also decreased 0.3 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.8 points for the IBNR portion and a decrease of 3.1 points for the case incurred portion.

For the first six months of 2024, the combined ratio improved by 0.7 percentage points, compared with the same period a year ago, including a decrease of 2.9 points in losses from catastrophes.

The six-month 2024 combined ratio also included a decrease of 0.6 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.2 points in the IBNR portion and a decrease of 2.8 points for the case incurred portion.

Underwriting results also included a lower level of favorable reserve development on prior accident years, as discussed below.

The current accident year ratios were measured as of June 30 of the respective years and included a decrease of 2.3 percentage points for the first six months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

• Combined ratio – The third-quarter 2024 commercial lines combined ratio improved by 2.2 percentage points, compared with the third quarter of 2023, including a decrease of 1.3 points in losses from catastrophes.

The third-quarter combined ratio increased by 0.2 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.9 points for the IBNR portion and a decrease of 2.7 points for the case incurred portion.

For the first nine months of 2024, the combined ratio improved by 1.3 percentage points, compared with the same period a year ago, including a decrease of 2.5 points in losses from catastrophes.

The nine-month 2024 combined ratio also included a decrease of 0.3 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.4 points in the IBNR portion and a decrease of 2.7 points for the case incurred portion.

Underwriting results also included higher third-quarter 2024 and lower nine-month 2024 levels of favorable reserve development on prior accident years, as discussed below.

The current accident year ratios were measured as of September 30 of the respective years and included a decrease of 1.5 percentage points for the first nine months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends for inflation, historical paid and reported losses, large loss activity and other data or information for the industry or our company.

Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged business property or autos that we insure, in addition to

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

higher losses for liability coverages for some of our lines of business.

Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.

Catastrophe losses and loss expenses accounted for 9.3 and 7.8 percentage points of the combined ratio for the second quarter and first six months of 2024, compared with 11.1 and 10.7 percentage points for the same periods a year ago.

Catastrophe losses and loss expenses accounted for 5.4 and 6.9 percentage points of the combined ratio for the third quarter and first nine months of 2024, compared with 6.7 and 9.4 percentage points for the same periods a year ago.

Through 2023, the 10-year annual average for that catastrophe measure for the commercial lines segment was 5.9 percentage points, and the five-year annual average was 6.5 percentage points.

The net effect of reserve development on prior accident years during the second quarter and first six months of 2024 was favorable for commercial lines overall by $29 million and $67 million, compared with $59 million and $91 million for the same periods in 2023.

For the second quarter of 2024, our commercial casualty line of business included $28 million of unfavorable reserve development on prior accident years.

For the first six months of 2024, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development.

The net favorable reserve development recognized during the first six months of 2024 for our commercial lines insurance segment was mainly for accident years 2023 and 2022 and was primarily due to lower-than-anticipated loss emergence on known claims.

The net effect of reserve development on prior accident years during the third quarter and first nine months of 2024 was favorable for commercial lines overall by $50 million and $117 million, compared with $34 million and $125 million for the same periods in 2023.

For the first nine months of 2024, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development.

The net favorable reserve development recognized during the first nine months of 2024 for our commercial lines insurance segment was mainly for accident years 2023 and 2022 and was primarily due to lower-than-anticipated loss emergence on known claims.

Our commercial casualty line of business included $27 million of unfavorable reserve development on prior accident years for the first nine months of 2024.

Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

The commercial lines underwriting expense ratio increased for the second quarter and first six months of 2024, compared with the same periods a year ago.

The increases were largely due to increases in profit-sharing commissions for agencies and employee-related expenses.

The commercial lines underwriting expense ratio decreased for the third quarter and increased for the first nine months of 2024, compared with the same periods a year ago.

The third-quarter 2024 decrease was largely due to a decrease in profit-sharing commissions for agencies.

The nine-month 2024 increase was primarily due to an increase in profit-sharing commissions for agencies and employee-related expenses.

The ratios also included ongoing expense management efforts and higher earned premiums.

Commercial Lines Insurance Losses Incurred by Size

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

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

2024 2023 % Change 2024 2023 % Change

16 unchanged sentences

Total loss ratio 51.0 % 53.4 % (2.4) 55.1 % 55.9 % (0.8)

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses.

Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory.

The second-quarter 2024 commercial lines total large losses incurred of $64 million, net of reinsurance, was lower than the quarterly average of $74 million during full-year 2023 and the $75 million of total large losses incurred for the second quarter of 2023.

The decrease in commercial lines large losses for the first six months of 2024 was primarily due to our commercial property line of business.

The second-quarter 2024 ratio for commercial lines total large losses was 1.3 percentage points lower than last year's second-quarter ratio.

We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

The third-quarter 2024 commercial lines total large losses incurred of $67 million, net of reinsurance, was lower than the quarterly average of $74 million during full-year 2023 and the $76 million of total large losses incurred for the third quarter of 2023.

The decrease in commercial lines large losses for the first nine months of 2024 was primarily due to our commercial property line of business.

The third-quarter 2024 ratio for commercial lines total large losses was 1.2 percentage points lower than last year's third-quarter ratio.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

PERSONAL LINES INSURANCE RESULTS

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

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

2024 2023 % Change 2024 2023 % Change

5 unchanged sentences

Current accident year catastrophe losses 186 79 135 396 327 21

Prior accident years before catastrophe losses 12 (4) nm — (10) 100

Prior accident years before catastrophe losses 5 (2) nm 5 (12) nm

Prior accident years catastrophe losses (5) (6) 17 (32) (42) 24

1 unchanged sentence

Underwriting expenses 196 159 23 554 441 26

Underwriting loss $ (42) $ (36) (17) $ (5) $ (93) 95

Underwriting profit (loss) $ (69) $ 1 nm $ (74) $ (92) 20

Ratios as a percent of earned premiums:

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Performance highlights for the personal lines segment include:

• Premiums – Personal lines earned premiums and net written premiums continued to grow during the second quarter and first six months of 2024, including increased agency new business and renewal written premiums that included higher average pricing.

Cincinnati Private Client SM net written premiums included in the personal lines insurance segment results totaled approximately $472 million and $802 million for the second quarter and first six months of 2024, compared with $349 million and $582 million for the same periods of 2023.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $51 million in the second quarter and $85 million in the first six months of 2024, compared with $32 million in the second quarter and $51 million in the first six months of 2023.

• Premiums – Personal lines earned premiums and net written premiums continued to grow during the third quarter and first nine months of 2024, including increased agency new business and renewal written premiums that included higher average pricing.

Cincinnati Private Client SM net written premiums included in the personal lines insurance segment results totaled approximately $479 million and $1.281 billion for the third quarter and first nine months of 2024, compared with $356 million and $938 million for the same periods of 2023.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $46 million in the third quarter and $131 million in the first nine months of 2024, compared with $34 million in the third quarter and $85 million in the first nine months of 2023.

The table below analyzes the primary components of premiums.

Agency renewal written premiums increased 26% for both the second quarter and first six months of 2024, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as higher policy retention rates and changes in policy deductibles or mix of business.

Agency renewal written premiums increased 28% and 27% for the third quarter and first nine months of 2024, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as changes in policy deductibles or mix of business.

Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials used to repair damaged homes.

We estimate that premium rates for our personal auto line of business increased at average percentages in the low-double-digit range during the first six months of 2024.

For our homeowner line of business, we estimate that premium rates for the first six months of 2024 increased at average percentages in the high-single-digit range.

We estimate that premium rates for our personal auto line of business increased at average percentages in the low-double-digit range during the first nine months of 2024.

For our homeowner line of business, we estimate that premium rates for the first nine months of 2024 increased at average percentages in the high-single-digit range.

For both our personal auto and homeowner lines of business, some individual policies experienced lower or higher rate changes based on each risk's specific characteristics and enhanced pricing precision enabled by predictive models.

Personal lines new business written premiums increased $57 million or 54% for the second quarter of 2024, compared with the same period of 2023, including approximately $25 million from Cincinnati Private Client policies and $32 million from middle-market policies.

For the first six months of 2024, compared with the same period of 2023, personal lines new business written premiums increased $100 million or 54%, including approximately $40 million from Cincinnati Private Client policies and $60 million from middle-market policies.

Personal lines new business written premiums increased $43 million or 35% for the third quarter of 2024, compared with the same period of 2023, including approximately $18 million from Cincinnati Private Client policies and $25 million from middle-market policies.

For the first nine months of 2024, compared with the same period of 2023, personal lines new business written premiums increased $143 million or 47%, including approximately $58 million from Cincinnati Private Client policies and $85 million from middle-market policies.

We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools.

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program.

For our personal lines insurance segment, an increase in 2024 ceded premiums reduced net written premiums by approximately $8 million and $10 million for the second quarter and first six months of 2024, compared with the same period of 2023.

For our personal lines insurance segment, an increase in 2024 ceded premiums reduced net written premiums by approximately $10 million and $20 million for the third quarter and first nine months of 2024, compared with the same periods of 2023.

Personal Lines Insurance Premiums

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

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

2024 2023 % Change 2024 2023 % Change

5 unchanged sentences

Earned premiums $ 678 $ 527 29 $ 1,897 $ 1,484 28

• Combined ratio – Our personal lines combined ratio for the second quarter of 2024 improved by 0.7 percentage points, compared with second-quarter 2023, despite an increase of 1.2 points in losses from catastrophes.

The second-quarter 2024 combined ratio also included a decrease of 4.0 percentage points from current accident year loss and loss expenses before catastrophe losses, including a decrease of 0.9 points for the IBNR portion and a decrease of 3.1 points for the case incurred portion.

For the first six months of 2024, the combined ratio improved by 9.4 percentage points, compared with the same period a year ago, including a decrease of 7.1 points in losses from catastrophes.

The six-month 2024 combined ratio also included a decrease of 3.2 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 0.6 points in the IBNR portion and a decrease of 3.8 points for the case incurred portion.

Those current accident year ratios were measured as of June 30 of the respective years and included a decrease of 1.1 percentage points for the first six months of 2024, in the ratio for large losses of $2 million or more per claim, discussed below.

• Combined ratio – Our personal lines combined ratio for the third quarter of 2024 increased by 10.4 percentage points, compared with third-quarter 2023, primarily due to an increase of 12.7 points in losses from catastrophes.

The third-quarter 2024 combined ratio also included a decrease of 2.3 percentage points from current accident year loss and loss expenses before catastrophe losses, including an increase of 5.0 points for the IBNR portion and a decrease of 7.3 points for the case incurred portion.

For the first nine months of 2024, the combined ratio improved by 2.3 percentage points, compared with the same period a year ago, including no change in the net ratio for losses from catastrophes.

The nine-month 2024 combined ratio also included a decrease of 2.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.1 points in the IBNR portion and a decrease of 5.0 points for the case incurred portion.

Those current accident year ratios were measured as of September 30 of the respective years and included a decrease of 1.6 percentage points for the first nine months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends in inflation, historical paid and reported losses, large loss activity and other data or information for the industry or our company.

1 unchanged sentence

Due to increased uncertainty

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.

Catastrophe losses and loss expenses accounted for 20.9 and 15.0 percentage points of the combined ratio for the second quarter and first six months of 2024, compared with 19.7 and 22.1 points for the same periods a year ago.

Catastrophe losses and loss expenses accounted for 26.6 and 19.2 percentage points of the combined ratio for the third quarter and first nine months of 2024, compared with 13.9 and 19.2 points for the same periods a year ago.

The 10-year annual average catastrophe loss ratio for the personal lines segment through 2023 was 11.4 percentage points, and the five-year annual average was 13.2 percentage points.

2 unchanged sentences

In addition, greater geographic diversification is expected to reduce the volatility of homeowner loss ratios attributable to weather-related catastrophe losses over time.

The net effect of reserve development on prior accident years during the second quarter of 2024 was unfavorable by $6 million but favorable by $27 million for the first six months of 2024 for personal lines overall, compared with $15 million and $46 million of favorable development for the same periods of 2023.

Our homeowner line of business was the primary contributor to the personal lines net favorable reserve development for the first six months of 2024.

The net effect of reserve development on prior accident years during the third quarter of 2024 was unfavorable by less than $1 million but favorable by $27 million for the first nine months of 2024 for personal lines overall, compared with $8 million and $54 million of favorable development for the same periods of 2023.

Our homeowner line of business was the primary contributor to the personal lines net favorable reserve development for the first nine months of 2024.

The net favorable reserve development was primarily due to lower-than-anticipated loss emergence on known claims.

The personal lines underwriting expense ratio decreased for the second quarter and first six months of 2024, compared with the same periods a year ago.

The personal lines underwriting expense ratio decreased for the third quarter and first nine months of 2024, compared with the same periods a year ago.

The decreases were primarily due to premium growth outpacing growth in various expenses.

The ratios also included ongoing expense management efforts and higher earned premiums.

The ratios also included ongoing expense management efforts.

Personal Lines Insurance Losses Incurred by Size

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

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

2024 2023 % Change 2024 2023 % Change

18 unchanged sentences

In the second quarter of 2024, the personal lines total large loss ratio, net of reinsurance, was 3.3 percentage points lower than last year's second quarter.

The decrease in personal lines total large losses incurred for the first six months of 2024 occurred primarily for our homeowner line

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

The second-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the six-month 2024 total large loss ratio, compared with 2023, offsetting a first-quarter 2024 ratio that was 0.3 points higher than the first quarter of 2023.

We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

In the third quarter of 2024, the personal lines total large loss ratio, net of reinsurance, was 3.3 percentage points lower than last year's third quarter.

The decrease in personal lines total large losses incurred for the first nine months of 2024 occurred primarily for our homeowner line of business.

The third-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

nine-month 2024 total large loss ratio, compared with 2023, in addition to a first-half 2024 ratio that was 1.6 points lower than the first half of 2023.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

EXCESS AND SURPLUS LINES INSURANCE RESULTS

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

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

2024 2023 % Change 2024 2023 % Change

4 unchanged sentences

Current accident year before catastrophe losses 100 88 14 288 268 7

Current accident year catastrophe losses 3 2 50 4 4 0

Current accident year catastrophe losses 2 (1) nm 6 3 100

Prior accident years before catastrophe losses 5 1 400 5 (13) nm

16 unchanged sentences

Performance highlights for the excess and surplus lines segment include:

• Premiums – Excess and surplus lines earned premiums and net written premiums continued to grow during the second quarter and first six months of 2024, compared with the same periods a year ago, including increases in both agency renewal and new business written premiums.

Renewal written premiums rose 19% for the second quarter and 13% for the six months ended June 30, 2024, compared with the same periods of 2023, largely due to higher renewal pricing.

• Premiums – Excess and surplus lines earned premiums and net written premiums continued to grow during the third quarter and first nine months of 2024, compared with the same periods a year ago, including increases in both agency renewal and new business written premiums.

Renewal written premiums rose 22% for the third quarter and 16% for the nine months ended September 30, 2024, compared with the same periods of 2023, largely due to higher renewal pricing.

For both 2024 periods, excess and surplus lines policy renewals experienced estimated average price increases at percentages in the high-single-digit range.

We measure average changes in excess and surplus lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for respective policies.

New business written premiums produced by agencies increased by 6% for the second quarter and 8% for the first six months of 2024 compared with the same periods of 2023, as we continued to carefully underwrite each policy in a highly competitive market.

New business written premiums produced by agencies increased by 26% for the third quarter and 14% for the first nine months of 2024 compared with the same periods of 2023, as we continued to carefully underwrite each policy in a highly competitive market.

Some of what we report as new business came from accounts that were not new to our agents.

We believe our agents' seasoned accounts tend to be priced more accurately than business that may be less familiar to them.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Excess and Surplus Lines Insurance Premiums

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

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

2024 2023 % Change 2024 2023 % Change

5 unchanged sentences

Earned premiums $ 157 $ 135 16 $ 447 $ 394 13

• Combined ratio – The excess and surplus lines combined ratio increased by 3.2 percentage points for the second quarter and 2.6 points for the first six months of 2024, compared with the same periods of 2023.

The increases were primarily due to unfavorable reserve development on prior accident year loss and loss expenses for the three and six months ended June 30, 2024, compared with favorable reserve development for the same periods of 2023.

The second-quarter 2024 ratio for current accident year loss and loss expenses before catastrophe losses was 5.7 percentage points lower, compared with the 69.7% accident year 2023 ratio measured as of June 30, 2023, including a decrease of 13.6 points for the IBNR portion and an increase of 7.9 points for the case incurred portion.

The six-month 2024 ratio for current accident year loss and loss expenses before catastrophe losses was 4.7 percentage points lower, compared with the 69.5% accident year 2023 ratio measured as of June 30, 2023, including a decrease of 9.4 points for the IBNR portion and an increase of 4.7 points for the case incurred portion.

Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was unfavorable by 2.1% for the second quarter and less than 0.1% for the first six months of 2024, compared with favorable 4.7% and 5.5% for the same periods of 2023.

• Combined ratio – The excess and surplus lines combined ratio increased by 4.8 percentage points for the third quarter and 3.4 points for the first nine months of 2024, compared with the same periods of 2023.

The increases were largely due to unfavorable reserve development on prior accident year loss and loss expenses for the three and nine months ended September 30, 2024, compared with a smaller amount of unfavorable reserve development for third-quarter 2023 and favorable reserve development for the first nine months of 2023.

Higher catastrophe losses for both 2024 periods also contributed to the combined ratio increases.

The 64.2% third-quarter 2024 ratio for current accident year loss and loss expenses before catastrophe losses was 0.6 percentage points lower, compared with the 64.8% accident year 2023 ratio measured as of September 30, 2023, including an increase of 2.7 points for the IBNR portion and a decrease of 3.3 points for the case incurred portion.

The 64.6% nine-month 2024 ratio for current accident year loss and loss expenses before catastrophe losses was 3.3 percentage points lower, compared with the 67.9% accident year 2023 ratio measured as of September 30, 2023, including a decrease of 5.3 points for the IBNR portion and an increase of 2.0 points for the case incurred portion.

Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was unfavorable by 2.7% for the third quarter and 1.0% for the first nine months of 2024, compared with unfavorable 0.7% for third-quarter 2023 and favorable 3.5% for the first nine months of 2023.

The excess and surplus lines underwriting expense ratio increased for the second quarter and first six months of 2024, compared with the same periods a year ago.

The excess and surplus lines underwriting expense ratio increased for the third quarter and first nine months of 2024, compared with the same periods a year ago.

The increases were largely due to increases in profit-sharing commissions for agencies and employee-related expenses.

The ratio for both periods also benefited from ongoing expense management efforts and premium growth.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Excess and Surplus Lines Insurance Losses Incurred by Size

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

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

2024 2023 % Change 2024 2023 % Change

1 unchanged sentence

Current accident year losses $2 million - $5 million 2 — nm 4 — nm

Large loss prior accident year reserve development — (1) 100 — (1) 100

Large loss prior accident year reserve development — — nm — (1) 100

Total large losses incurred 2 — nm 4 (1) nm

1 unchanged sentence

Other losses excluding catastrophe losses 55 45 22 143 118 21

Catastrophe losses 3 2 50 4 3 33

Catastrophe losses 2 (1) nm 6 2 200

Total losses incurred $ 71 $ 60 18 $ 212 $ 182 16

10 unchanged sentences

In the second quarter of 2024, the excess and surplus lines total ratio for large losses, net of reinsurance, was 1.7 percentage points higher than last year's second quarter.

The second-quarter 2024 amount of total large losses incurred contributed unfavorably to the increase in the six-month 2024 total large loss ratio, compared with 2023, in addition to a first-quarter 2024 ratio that was 0.3 points higher than the first quarter of 2023.

We believe results for the three- and six month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

In the third quarter of 2024, the excess and surplus lines total ratio for large losses, net of reinsurance, was 1.3 percentage points higher than last year's third quarter.

The third-quarter 2024 amount of total large losses incurred contributed unfavorably to the increase in the nine-month 2024 total large loss ratio, compared with 2023, in addition to a first-half 2024 ratio that was 1.0 points higher than the first half of 2023.

We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

LIFE INSURANCE RESULTS

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

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

2024 2023 % Change 2024 2023 % Change

8 unchanged sentences

Performance highlights for the life insurance segment include:

• Revenues – Revenues increased for the six months ended June 30, 2024, compared with the same period a year ago, driven by higher earned premiums from term life insurance, our largest life insurance product line.

Net in-force life insurance policy face amounts increased 1% to $83.219 billion at June 30, 2024, from $82.361 billion at year-end 2023.

Fixed annuity deposits received for the three and six months ended June 30, 2024, were $10 million and $19 million, compared with $15 million and $25 million for the same periods of 2023.

• Revenues – Revenues increased for the nine months ended September 30, 2024, compared with the same period a year ago, driven by higher earned premiums from term life insurance, our largest life insurance product line.

Net in-force life insurance policy face amounts increased 2% to $83.664 billion at September 30, 2024, from $82.361 billion at year-end 2023.

Fixed annuity deposits received for the three and nine months ended September 30, 2024, were $10 million and $29 million, compared with $13 million and $38 million for the same periods of 2023.

Fixed annuity deposits have a minimal impact to earned premiums because deposits received are initially recorded as liabilities.

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Life Insurance Premiums

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

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

2024 2023 % Change 2024 2023 % Change

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We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in our life insurance segment results.

A profit of $32 million for our life insurance segment in the first six months of 2024, compared with a profit of $21 million for the same period of 2023, was primarily due to more favorable impacts from the unlocking of interest rate and other actuarial assumptions.

A profit of $42 million for our life insurance segment in the first nine months of 2024, compared with a profit of $38 million for the same period of 2023, was primarily due to more favorable mortality experience.

Life insurance segment benefits and expenses consist principally of contract holders' (policyholders') benefits incurred related to traditional life and interest-sensitive products and operating expenses incurred, net of deferred acquisition costs.

Total benefits decreased in the first six months of 2024 primarily due to more favorable impacts from the unlocking of interest rate and other actuarial assumptions.

Life policy and investment contract reserves decreased primarily due to an increase in market value discount rates.

Mortality results improved compared with the same period of 2023.

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Total benefits decreased in the first nine months of 2024 primarily due to more favorable mortality experience.

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

We recognize that assets under management, capital appreciation and investment income are integral to evaluating the success of the life insurance segment because of the long duration of life products.

On a basis that includes investment income and investment gains or losses from life-insurance-related invested assets, the life insurance subsidiary reported net income of $24 million and $43 million for the three and six months ended June 30, 2024, compared with $21 million and $40 million for the three and six months ended June 30, 2023.

The life insurance subsidiary portfolio had net after-tax investment losses of $5 million and $7 million for the three and six months ended June 30, 2024, compared with $2 million and $1 million for the three and six months ended June 30, 2023.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

On a basis that includes investment income and investment gains or losses from life-insurance-related invested assets, the life insurance subsidiary reported net income of $20 million and $63 million for the three and nine months ended September 30, 2024, compared with $25 million and $65 million for the three and nine months ended September 30, 2023.

The life insurance subsidiary portfolio had net after-tax investment losses of less than $1 million and $7 million for the three and nine months ended September 30, 2024, compared with less than $1 million of net after-tax gains and $1 million of net after-tax investment losses for the three and nine months ended September 30, 2023.

INVESTMENTS RESULTS

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Investment Income

Pretax investment income grew 10% for the second quarter and 13% for the first six months of 2024, compared with the same periods of 2023.

Interest income increased by $26 million and $55 million for the three and six months ended June 30, 2024, as net purchases of fixed-maturity securities in recent quarters and higher bond yields are working to generally offset effects of the low interest rate environment of the past several years.

Dividend income decreased by $1 million in the second quarter and increased by $5 million for the first six months of 2024.

In addition to dividend rates generally increasing more slowly in recent quarters, the second-quarter 2024 dividend decrease reflected two unusual items that totaled approximately $2 million.

One was an equity holding with a June ex-dividend date in 2023 that was July 1 in 2024.

The other was a holding that reduced its dividend rate by 53% after a spin-off transaction.

Minor asset allocation adjustments in our equity portfolio in recent quarters have helped offset other factors that unfavorably affected dividend income.

Pretax investment income grew 15% for the third quarter and 14% for the first nine months of 2024, compared with the same periods of 2023.

Interest income increased by $33 million and $88 million for the three and nine months ended September 30, 2024, as net purchases of fixed-maturity securities in recent quarters and higher bond yields are working to generally offset effects of the low interest rate environment of the past several years.

Net purchases of fixed-maturity securities totaled $672 million for the third quarter and $1.443 billion for the first nine months of 2024.

Sales of selected equity securities, discussed below, contributed to the relatively larger amount of third-quarter 2024 net purchases as proceeds from those sales were reinvested in fixed-maturity securities.

Bond purchases in the third quarter helped increase the yield of the overall investment portfolio as we target what we believe to be optimal risk-adjusted after-tax yields.

Dividend income decreased by $1 million in the third quarter and increased by $4 million for the first nine months of 2024.

In addition to dividend rates generally increasing more slowly in recent quarters, net sales of equity securities totaled $959 million for the third quarter and $1.050 billion for the first nine months of 2024.

Most of the equity security sales involved trimming or exiting positions for selected common stocks.

Minor asset allocation adjustments in our equity portfolio in recent quarters partially offset other factors that unfavorably affected dividend income.

Our investment approach remains the same as we focus on balancing near-term income generation with long-term book value growth potential.

Investments Results

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

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

2024 2023 % Change 2024 2023 % Change

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Investment interest credited to contract holders (32) (31) (3) (94) (91) (3)

Investment gains and losses, net 137 434 (68) 749 540 39

Investments profit, pretax $ 348 $ 624 (44) $ 1,174 $ 910 29

Investment gains and losses, net 758 (456) nm 1,507 84 nm

Investments profit (loss), pretax $ 984 $ (262) nm $ 2,158 $ 648 233

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

We continue to consider the low interest rate environment that prevailed in recent years as well as the potential for a continuation of both elevated inflation and higher bond yields as we position our portfolio.

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(Dollars in millions) % Yield Principal redemptions

At June 30, 2024

At September 30, 2024

Fixed-maturity pretax yield profile:

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Average yield and total expected maturities from the remainder of 2024 through 2026 4.90 $ 3,070

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

The table below shows the average pretax yield-to-amortized cost for fixed-maturity securities acquired during the periods indicated.

The average yield for total fixed-maturity securities acquired during the first six months of 2024 was higher than the 4.60% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2023.

Our fixed-maturity portfolio's average yield of 4.64% for the first six months of 2024, from the investment income table below, was also higher than the 4.60% yield for the year-end 2023 fixed-maturities portfolio.

Three months ended June 30, Six months ended June 30,

The average yield for total fixed-maturity securities acquired during the first nine months of 2024 was higher than the 4.60% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2023.

Our fixed-maturity portfolio's average yield of 4.63% for the first nine months of 2024, from the investment income table below, was also higher than the 4.60% yield for the year-end 2023 fixed-maturities portfolio.

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

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We discuss risks related to our investment income and our fixed-maturity and equity investment portfolios in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

The table below provides details about investment income.

Average yields in this table are based on the average invested asset and cash amounts indicated in the table, using fixed-maturity securities valued at amortized cost and all other securities at fair value.

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

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

2024 2023 % Change 2024 2023 % Change

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Effective tax rate 18.1 17.6 18.0 17.4

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Total Investment Gains and Losses

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Accounting requirements for the allowance for credit losses for the fixed-maturity portfolio are disclosed in our 2023 Annual Report on Form 10-K, Item 8, Note 1, Summary of Significant Accounting Policies, Page 128.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

The table below summarizes total investment gains and losses, before taxes.

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

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

2024 2023 2024 2023

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Total $ 1,255 $ (825) $ 1,874 $ (276)

Of the 4,916 fixed-maturity securities in the portfolio, 16 securities were trading below 70% of amortized cost at June 30, 2024.

Of the 4,988 fixed-maturity securities in the portfolio, five securities were trading below 70% of amortized cost at September 30, 2024.

Our asset impairment committee regularly monitors the portfolio, including a quarterly review of the entire portfolio for potential credit losses.

We believe that if liquidity in the markets were to significantly deteriorate or economic conditions were to significantly weaken, we could experience declines in portfolio values and possibly increases in the allowance for credit losses or write-downs to fair value.

In the the first six months of 2024, the allowance for credit losses increased $25 million and no fixed-maturity securities were written down to fair value due to an intention to be sold.

Fixed-maturity securities written down to fair value due to an intention to be sold were $4 million for the first six months of 2023, in addition to $3 million in changes in the allowance for credit losses.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

We report as Other the noninvestment operations of the parent company and a noninsurance subsidiary, CFC Investment Company.

We also report as Other the underwriting results of Cincinnati Re and Cincinnati Global, including earned premiums, loss and loss expenses and underwriting expenses in the table below.

Total revenues for the first six months of 2024 for our Other operations increased, compared with the same period of 2023, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with increases of $1 million and $2 million, respectively.

Cincinnati Re had $273 million of earned premiums for the first six months of 2024 and generated an underwriting profit of $70 million.

Cincinnati Global had $96 million of earned premiums for the first six months of 2024 and generated an underwriting profit of $32 million.

Total expenses for Other decreased for the first six months of 2024, primarily due to lower loss and loss expenses from Cincinnati Re and Cincinnati Global.

Total revenues for the first nine months of 2024 for our Other operations increased, compared with the same period of 2023, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with increases of $5 million and $10 million, respectively.

Cincinnati Re had $411 million of earned premiums for the first nine months of 2024 and generated an underwriting profit of $76 million.

Cincinnati Global had $203 million of earned premiums for the first nine months of 2024 and generated an underwriting profit of $68 million.

Total expenses for Other decreased for the first nine months of 2024, primarily due to lower loss and loss expenses from Cincinnati Re and Cincinnati Global.

Other income in the table below represents profit before income taxes.

For all periods shown, total other income was driven by underwriting profit from Cincinnati Re and Cincinnati Global.

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

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

2024 2023 % Change 2024 2023 % Change

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Total other income $ 26 $ 30 (13) $ 95 $ 71 34

We had $74 million and $272 million of income tax expense for the three and six months ended June 30, 2024, compared with $132 million and $175 million for the same periods of 2023.

The effective tax rate for the three and six months ended June 30, 2024, was 19.2% and 20.3% compared with 19.8% and 18.7% for the same periods last year.

We had $220 million and $492 million of income tax expense for the three and nine months ended September 30, 2024, compared with $49 million of income tax benefit and $126 million of income tax expense for the same periods of 2023.

The effective tax rate for the three and nine months ended September 30, 2024, was 21.2% and 20.7% compared with 33.1% and 16.0% for the same periods last year.

The change in our effective tax rate between periods was primarily due to large changes in our net investment gains and losses included in income for the periods and changes in underwriting income and investment income.

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Details about our effective tax rate are in this quarterly report Item 1, Note 9, Income Taxes.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2024, shareholders' equity was $12.777 billion, compared with $12.098 billion at December 31, 2023.

Total debt was $815 million at June 30, 2024, unchanged from December 31, 2023.

At June 30, 2024, cash and cash equivalents totaled $771 million, compared with $907 million at December 31, 2023.

At September 30, 2024, shareholders' equity was $13.804 billion, compared with $12.098 billion at December 31, 2023.

Total debt was $815 million at September 30, 2024, unchanged from December 31, 2023.

At September 30, 2024, cash and cash equivalents totaled $1.752 billion, compared with $907 million at December 31, 2023.

During the third quarter of 2024, net sales of equity securities were $959 million, primarily from trimming or exiting positions for selected common stocks.

Proceeds from the sales of those equity securities were used to purchase fixed maturities during the third quarter of 2024, with plans to purchase additional fixed maturities in the fourth quarter of 2024, thereby reducing our cash balance at September 30, 2024.

In addition to our historically positive operating cash flow to meet the needs of operations, we have the ability to slow investing activities or sell a portion of our high-quality, liquid investment portfolio if such need arises.

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Subsidiary Dividends

Our lead insurance subsidiary declared dividends of $290 million to the parent company in the first half of 2024, compared with $284 million for the same period of 2023.

Our lead insurance subsidiary declared dividends of $290 million to the parent company in the first nine months of 2024, compared with $426 million for the same period of 2023.

For full-year 2023, our lead insurance subsidiary paid dividends totaling $526 million to the parent company.

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The table below shows a summary of the operating cash flow for property casualty insurance (direct method):

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

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

2024 2023 % Change 2024 2023 % Change

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Cash flow from operations $ 836 $ 602 39 $ 1,900 $ 1,296 47

Collected premiums for property casualty insurance rose $469 million during the first six months of 2024, compared with the same period in 2023.

Loss and loss expenses paid for the 2024 period decreased $23 million.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Collected premiums for property casualty insurance rose $787 million during the first nine months of 2024, compared with the same period in 2023.

Loss and loss expenses paid for the 2024 period increased $ 33 million.

Commissions and other underwriting expenses paid increased $236 million.

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Capital Resources

At June 30, 2024, our debt-to-total-capital ratio was 6.0%, considerably below our 35% covenant threshold, with $790 million in long-term debt and $25 million in borrowing on our revolving short-term line of credit.

At June 30, 2024, $275 million was available for future cash management needs as part of the general provisions of the line of credit agreement, with another $300 million available as part of an accordion feature.

Based on our capital requirements at June 30, 2024, we do not anticipate a material increase in debt levels exceeding the available line of credit amount during the year.

At September 30, 2024, our debt-to-total-capital ratio was 5.6%, considerably below our 35% covenant threshold, with $790 million in long-term debt and $25 million in borrowing on our revolving short-term line of credit.

At September 30, 2024, $275 million was available for future cash management needs as part of the general provisions of the line of credit agreement, with another $300 million available as part of an accordion feature.

Based on our capital requirements at September 30, 2024, we do not anticipate a material increase in debt levels exceeding the available line of credit amount during the year.

As a result, we expect changes in our debt-to-total-capital ratio to continue to be largely a function of the contribution of unrealized investment gains or losses to shareholders' equity.

We have an unsecured letter of credit agreement that provides a portion of the capital needed to support Cincinnati Global's obligations at Lloyd's.

The amount of this unsecured letter of credit agreement was $94 million at June 30, 2024, with no amounts drawn.

On September 12, 2024, we terminated our unsecured letter of credit agreement, which provided a portion of the capital needed to support Cincinnati Global's obligations at Lloyd's.

The amount of the unsecured letter of credit agreement was $94 million, with no amount drawn.

We replaced the letter of credit agreement with common equities, bringing total common equities held in Lloyd's trust accounts to $219 million.

We provide details of our three long-term notes in this quarterly report Item 1, Note 3, Fair Value Measurements.

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Four independent ratings firms award insurer financial strength ratings to our property casualty insurance companies and three firms rate our life insurance company.

Those firms made no changes to our parent company debt ratings during the first half of 2024.

Those firms made no changes to our parent company debt ratings during the first nine months of 2024.

On October 16, 2024, Fitch Ratings revised our Rating Outlook to Positive from Stable for all ratings.

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

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In addition to our contractual obligations, we have other property casualty operational commitments:

• Commissions – Commissions paid were $934 million in the first half of 2024.

• Commissions – Commissions paid were $1.310 billion in the first nine months of 2024.

Commission payments generally track with written premiums, except for annual profit-sharing commissions typically paid during the first quarter of the year.

• Other underwriting expenses – Many of our underwriting expenses are not contractual obligations, but reflect the ongoing expenses of our business.

Noncommission underwriting expenses paid were $489 million in the first half of 2024.

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

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Noncommission underwriting expenses paid were $698 million in the first nine months of 2024.

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

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Investing Activities

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In January 2024, the board of directors declared regular quarterly cash dividends of 81 cents per share for an indicated annual rate of $3.24 per share.

During the first six months of 2024, we used $241 million to pay cash dividends to shareholders.

During the first nine months of 2024, we used $365 million to pay cash dividends to shareholders.

PROPERTY CASUALTY INSURANCE LOSS AND LOSS EXPENSE RESERVES

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Reserving practices are discussed in our 2023 Annual Report on Form 10-K, Item 7, Property Casualty Loss and Loss Expense Obligations and Reserves, Page 98.

Total gross reserves at June 30, 2024, increased $519 million compared with December 31, 2023.

Case loss reserves increased by $33 million, IBNR loss reserves increased by $445 million and loss expense reserves increased by $41 million.

The total gross increase was primarily due to our commercial casualty, commercial property and homeowner lines of business and also our excess and surplus lines insurance segment.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Total gross reserves at September 30, 2024, increased $891 million compared with December 31, 2023.

Case loss reserves decreased by $9 million, IBNR loss reserves increased by $794 million and loss expense reserves increased by $106 million.

The total gross increase was primarily due to our commercial casualty and homeowner lines of business and also our excess and surplus lines insurance segment.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

Property Casualty Gross Reserves

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Case reserves IBNR reserves Percent of total

At June 30, 2024

At September 30, 2024

Commercial lines insurance:

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LIFE POLICY AND INVESTMENT CONTRACT RESERVES

Gross life policy and investment contract reserves were $2.966 billion at June 30, 2024, compared with $3.068 billion at year-end 2023, primarily due to an increase in market value discount rates.

Gross life policy and investment contract reserves were $3.069 billion at September 30, 2024, compared with $3.068 billion at year-end 2023.

Details about these reserves are in this quarterly report Item 1, Note 5, Life Policy and Investment Contract Reserves.

We discussed our life insurance reserving practices in our 2023 Annual Report on Form 10-K, Item 7, Life Insurance Policyholder Obligations and Reserves, Page 104, and updated that disclosure in this quarterly report Item 1, Note 1, Accounting Policies.

Cincinnati Financial Corporation Second-Quarter 2024 10-Q

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

OTHER MATTERS

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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 2. Management’s Discussion and Analysis