CINCINNATI FINANCIAL CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion highlights significant factors influencing the condensed consolidated results of operations and financial position of Cincinnati Financial Corporation. It should be read in conjunction with the consolidated financial statements and related notes included in our 2023 Annual Report on Form 10-K. Unless otherwise noted, the industry data is prepared by A.M. Best Co., a leading insurance industry statistical, analytical and financial strength rating organization. Information from A.M. Best is presented on a statutory basis for insurance company regulation in the United States of America. When we provide our results on a comparable statutory basis, we label it as such; all other company data is presented in accordance with accounting principles generally accepted in the United States of America (GAAP). We present per share data on a diluted basis unless otherwise noted, adjusting those amounts for all stock splits and dividends. Dollar amounts are rounded to millions; calculations of percent changes are based on dollar amounts rounded to the nearest million. Certain percentage changes are identified as not meaningful (nm). SAFE HARBOR STATEMENT This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2023 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 30. Factors that could cause or contribute to such differences include, but are not limited to: • Effects of any future pandemic, or the resurgence of the COVID-19 pandemic, that could affect results for reasons such as: • Securities market disruption or volatility and related effects such as decreased economic activity and continued supply chain disruptions that affect our investment portfolio and book value • An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses • An unusually high level of insurance losses, including risk of court decisions extending business interruption insurance in commercial property coverage forms to cover claims for pure economic loss related to such pandemic • Decreased premium revenue and cash flow from disruption to our distribution channel of independent agents, consumer self-isolation, travel limitations, business restrictions and decreased economic activity • Inability of our workforce, agencies or vendors to perform necessary business functions • Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns (whether as a result of global climate change or otherwise), environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes • Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance, due to inflationary trends or other causes • Inadequate estimates or assumptions, or reliance on third-party data used for critical accounting estimates • Declines in overall stock market values negatively affecting our equity portfolio and book value • Interest rate fluctuations or other factors that could significantly affect: • Our ability to generate growth in investment income • Values of our fixed-maturity investments, including accounts in which we hold bank-owned life insurance contract assets • Our traditional life policy reserves • Domestic and global events, such as Russia’s invasion of Ukraine, war in the Middle East and disruptions in the banking and financial services industry, resulting in insurance losses, capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to: • Significant or prolonged decline in the fair value of a particular security or group of securities and impairment of the asset(s) • Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 33 Table of Contents • Significant rise in losses from surety or director and officer policies written for financial institutions or other insured entities or in losses from policies written by Cincinnati Re or Cincinnati Global • Our inability to manage Cincinnati Global or other subsidiaries to produce related business opportunities and growth prospects for our ongoing operations • Recession, prolonged elevated inflation or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies • Ineffective information technology systems or discontinuing to develop and implement improvements in technology may impact our success and profitability • Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our or our agents’ ability to conduct business; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability under federal and state laws • Difficulties with our operations and technology that may negatively impact our ability to conduct business, including cloud-based data information storage, data security, cyberattacks, remote working capabilities, and/or outsourcing relationships and third-party operations and data security • Disruption of the insurance market caused by technology innovations such as driverless cars that could decrease consumer demand for insurance products • Delays, inadequate data developed internally or from third parties, or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness • Intense competition, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and profitability • Changing consumer insurance-buying habits and consolidation of independent insurance agencies could alter our competitive advantages • Inability to obtain adequate ceded reinsurance on acceptable terms, amount of reinsurance coverage purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers • Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability • Inability of our subsidiaries to pay dividends consistent with current or past levels • Events or conditions that could weaken or harm our relationships with our independent agencies and hamper opportunities to add new agencies, resulting in limitations on our opportunities for growth, such as: • Downgrades of our financial strength ratings • Concerns that doing business with us is too difficult • Perceptions that our level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace • Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace • Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that: • Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates • Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations • Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business • Add assessments for guaranty funds, other insurance‑related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes • Increase our provision for federal income taxes due to changes in tax law • Increase our other expenses Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 34 Table of Contents • Limit our ability to set fair, adequate and reasonable rates • Place us at a disadvantage in the marketplace • Restrict our ability to execute our business model, including the way we compensate agents • Adverse outcomes from litigation or administrative proceedings, including effects of social inflation and third-party litigation funding on the size of litigation awards • Events or actions, including unauthorized intentional circumvention of controls, that reduce our future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002 • Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others • Our inability, or the inability of our independent agents, to attract and retain personnel in a competitive labor market, impacting the customer experience and altering our competitive advantages • Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location or work effectively in a remote environment Further, our insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. We also are subject to public and regulatory initiatives that can affect the market value for our common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 35 Table of Contents CORPORATE FINANCIAL HIGHLIGHTS Net Income and Comprehensive Income Data (Dollars in millions, except per share data) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Earned premiums $ 2,297 $ 2,033 13 $ 6,524 $ 5,894 11 Investment income, net of expenses (pretax) 258 225 15 745 655 14 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 (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 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. Investment gains and losses are recognized on the sales of investments, on certain changes in fair values of securities even though we continue to hold the securities or as otherwise required by GAAP. We have substantial discretion in the timing of investment sales, and that timing generally is independent of the insurance underwriting process. The change in fair value of securities is also generally independent of the insurance underwriting process. Net income for the 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. Performance by segment is discussed below in Financial Results. As discussed in our 2023 Annual Report on Form 10-K, Item 7, Executive Summary, Page 48, there are several reasons why our performance during 2024 may ultimately be below our long-term targets. The board of directors is committed to rewarding shareholders directly through cash dividends and through share repurchase authorizations. Through 2023, the company had increased the annual cash dividend rate for 63 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2024, the board of directors increased the regular quarterly dividend to 81 cents per share, setting the stage for our 64 th consecutive year of increasing cash dividends. 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 Third-Quarter 2024 10-Q Page 36 Table of Contents Balance Sheet Data and Performance Measures (Dollars in millions, except share data) At September 30, At December 31, 2024 2023 Total investments $ 28,104 $ 25,357 Total assets 37,009 32,769 Short-term debt 25 25 Long-term debt 790 790 Shareholders' equity 13,804 12,098 Book value per share 88.32 77.06 Debt-to-total-capital ratio 5.6 % 6.3 % 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 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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Value creation ratio major contributors: Net income before investment gains 1.7 % 2.4 % 5.8 % 5.6 % Change in fixed-maturity securities, realized and unrealized gains 2.5 (2.6) 1.6 (2.7) Change in equity securities, investment gains 5.2 (3.3) 10.4 0.8 Other (0.4) 0.9 0.0 0.7 Value creation ratio 9.0 % (2.6) % 17.8 % 4.4 % Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 37 Table of Contents (Dollars are per share) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Value creation ratio: End of period book value* $ 88.32 $ 67.72 $ 88.32 $ 67.72 Less beginning of period book value 81.79 70.33 77.06 67.01 Change in book value 6.53 (2.61) 11.26 0.71 Dividend declared to shareholders 0.81 0.75 2.43 2.25 Total value creation $ 7.34 $ (1.86) $ 13.69 $ 2.96 Value creation ratio from change in book value** 8.0 % (3.7) % 14.6 % 1.1 % Value creation ratio from dividends declared to shareholders*** 1.0 1.1 3.2 3.3 Value creation ratio 9.0 % (2.6) % 17.8 % 4.4 % * Book value per share is calculated by dividing end of period total shareholders' equity by end of period shares outstanding ** Change in book value divided by the beginning of period book value *** Dividend declared to shareholders divided by beginning of period book value DRIVERS OF LONG-TERM VALUE CREATION Operating through The Cincinnati Insurance Company, Cincinnati Financial Corporation is one of the 25 largest property casualty insurers in the nation, based on 2023 net written premiums for approximately 2,000 U.S. stock and mutual insurer groups. We market our insurance products through a select group of independent insurance agencies as discussed in our 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At 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. To measure our long-term progress in creating shareholder value, our value creation ratio is our primary financial performance target. As discussed in our 2023 Annual Report on Form 10-K, Item 7, Executive Summary, Page 48, management believes this measure is a meaningful indicator of our long-term progress in creating shareholder value and has three primary performance drivers: • Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average. For the first 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. The industry's growth rate excludes its mortgage and financial guaranty lines of business. • Combined ratio – We believe our underwriting philosophy and initiatives can generate an average GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%. 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 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 Third-Quarter 2024 10-Q Page 38 Table of Contents Financial Strength An important part of our long-term strategy is financial strength, which is described in our 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Financial Strength, Page 8. One aspect of our financial strength is prudent use of reinsurance ceded to help manage financial performance variability due to catastrophe loss experience. A description of how we use reinsurance ceded is included in our 2023 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, 2024 Reinsurance Ceded Programs, Page 105. Another aspect of our financial strength is our investment portfolio, which remains well-diversified as discussed in this quarterly report in Item 3, Quantitative and Qualitative Disclosures About Market Risk. Our strong parent-company liquidity and financial strength increase our flexibility to maintain a cash dividend through all periods and to continue to invest in and expand our insurance operations. At 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. In addition to rating our parent company's senior debt, four firms award insurer financial strength ratings to one or more of our insurance subsidiary companies based on their quantitative and qualitative analyses. These ratings primarily assess an insurer's ability to meet financial obligations to policyholders and do not necessarily address all of the matters that may be important to investors. Ratings are under continuous review and subject to change or withdrawal at any time by the rating agency. Each rating should be evaluated independently of any other rating; please see each rating agency's website for its most recent report on our ratings. At October 23, 2024, our insurance subsidiaries continued to be highly rated. Insurer Financial Strength Ratings Rating agency Standard market property casualty insurance subsidiaries Life insurance subsidiary Excess and surplus lines insurance subsidiary Outlook Rating tier Rating tier Rating tier A.M. Best Co. ambest.com A+ Superior 2 of 16 A+ Superior 2 of 16 A+ Superior 2 of 16 Stable Fitch Ratings fitchratings.com A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Positive Moody's Investors Service moodys.com A1 Good 5 of 21 - - - - - - Stable S&P Global Ratings spratings.com A+ Strong 5 of 21 A+ Strong 5 of 21 - - - Stable Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 39 Table of Contents CONSOLIDATED PROPERTY CASUALTY INSURANCE HIGHLIGHTS Consolidated property casualty insurance results include premiums and expenses for our standard market insurance segments (commercial lines and personal lines), our excess and surplus lines segment, Cincinnati Re ® and our London-based global specialty underwriter Cincinnati Global Underwriting Ltd. SM (Cincinnati Global). (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Earned premiums $ 2,217 $ 1,957 13 $ 6,284 $ 5,661 11 Fee revenues 3 3 0 9 8 13 Total revenues 2,220 1,960 13 6,293 5,669 11 Loss and loss expenses from: Current accident year before catastrophe losses 1,264 1,130 12 3,683 3,380 9 Current accident year catastrophe losses 306 184 66 709 673 5 Prior accident years before catastrophe losses (53) (48) (10) (140) (178) 21 Prior accident years catastrophe losses (18) (5) (260) (71) (35) (103) Loss and loss expenses 1,499 1,261 19 4,181 3,840 9 Underwriting expenses 659 587 12 1,884 1,680 12 Underwriting profit $ 62 $ 112 (45) $ 228 $ 149 53 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year before catastrophe losses 57.0 % 57.7 % (0.7) 58.6 % 59.7 % (1.1) Current accident year catastrophe losses 13.8 9.4 4.4 11.2 11.9 (0.7) Prior accident years before catastrophe losses (2.4) (2.4) 0.0 (2.2) (3.2) 1.0 Prior accident years catastrophe losses (0.8) (0.3) (0.5) (1.1) (0.6) (0.5) Loss and loss expenses 67.6 64.4 3.2 66.5 67.8 (1.3) Underwriting expenses 29.8 30.0 (0.2) 30.0 29.7 0.3 Combined ratio 97.4 % 94.4 % 3.0 96.5 % 97.5 % (1.0) Combined ratio 97.4 % 94.4 % 3.0 96.5 % 97.5 % (1.0) Contribution from catastrophe losses and prior years reserve development 10.6 6.7 3.9 7.9 8.1 (0.2) 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 $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. We also experienced higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear. The higher loss experience is discussed in Financial Results by property casualty insurance segment. We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 40 Table of Contents 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. The GAAP-basis combined ratio is the percentage of incurred losses plus all expenses per each earned premium dollar – the lower the ratio, the better the performance. An underwriting profit results when the combined ratio is below 100%. A combined ratio above 100% indicates that an insurance company's losses and expenses exceeded premiums. Our consolidated property casualty combined ratio for the 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. The combined ratio can be affected significantly by natural catastrophe losses and other large losses as discussed in detail below. The combined ratio can also be affected by updated estimates of loss and loss expense reserves established for claims that occurred in prior periods, referred to as prior accident years. Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 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 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 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 Page 41 Table of Contents Consolidated Property Casualty Insurance Premiums (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Agency renewal written premiums $ 1,795 $ 1,549 16 $ 5,321 $ 4,727 13 Agency new business written premiums 406 313 30 1,159 867 34 Other written premiums 92 95 (3) 520 532 (2) Net written premiums 2,293 1,957 17 7,000 6,126 14 Unearned premium change (76) — nm (716) (465) (54) Earned premiums $ 2,217 $ 1,957 13 $ 6,284 $ 5,661 11 The trends in net written premiums and earned premiums summarized in the table above include the effects of price increases. Price change trends that heavily influence renewal written premium increases or decreases, along with other premium growth drivers for 2024, are discussed in more detail by segment below in Financial Results. Consolidated property casualty net written premiums for the 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. 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. While this business is new to us, in many cases it is not new to the agent. We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent. 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 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 $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 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. That program included property catastrophe excess of loss coverage with a total available aggregate limit of $60 million in excess of $80 million per occurrence. Coverage for Cincinnati Re only with a total available aggregate limit of $20 million in excess of $80 million per occurrence expired during the second quarter of 2024. That expiration also included the shared coverage for Cincinnati Re and the direct business applying to catastrophe losses in excess of $600 million. 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 Third-Quarter 2024 10-Q Page 42 Table of Contents The following table shows consolidated property casualty insurance catastrophe losses and loss expenses incurred, net of reinsurance, as well as the effect of loss development on prior period catastrophe events. We individually list declared catastrophe events for which our incurred losses reached or exceeded $25 million. Consolidated Property Casualty Insurance Catastrophe Losses and Loss Expenses Incurred (Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30, Comm. Pers. E&S Comm. Pers. E&S Dates Region lines lines lines Other Total lines lines lines Other Total 2024 Mar. 12-17 Midwest, South $ (4) $ 4 $ — $ — $ — $ 30 $ 32 $ — $ — $ 62 Mar. 31 - Apr. 4 Midwest, Northeast, South (4) 2 — — (2) 10 24 — — 34 May 6-10 Midwest, South — 2 1 — 3 19 30 1 — 50 May 25-26 Midwest, South 2 1 1 — 4 38 29 2 — 69 Jul. 13-18 Midwest, Northeast 18 11 — — 29 18 11 — — 29 Sep. 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 Development on 2023 and prior catastrophes (5) (5) — (8) (18) (20) (32) — (19) (71) Calendar year incurred total $ 60 $ 181 $ 2 $ 45 $ 288 $ 231 $ 364 $ 6 $ 37 $ 638 2023 Mar. 1-4 Midwest, Northeast, South $ (1) $ (3) $ — $ — $ (4) $ 27 $ 27 $ — $ 2 $ 56 Mar. 23-28 Midwest, Northeast, South (2) (3) — — (5) 20 24 — — 44 Mar. 30 - Apr. 1 Midwest, Northeast, South (1) — — — (1) 62 33 — — 95 Apr. 3-7 Midwest, Northeast, South 2 2 — — 4 12 32 — — 44 May 2-9 Midwest, South (1) (1) — — (2) 23 7 — — 30 Jun. 21-27 Midwest, Northeast, South, West 14 4 — — 18 23 17 — — 40 Jun. 28 - Jul. 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 Development on 2022 and prior catastrophes (1) (6) (1) 3 (5) (2) (42) (1) 10 (35) Calendar year incurred total $ 71 $ 73 $ (2) $ 37 $ 179 $ 300 $ 285 $ 2 $ 51 $ 638 Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 43 Table of Contents 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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Current accident year losses greater than $5 million $ 18 $ 24 (25) $ 49 $ 103 (52) Current accident year losses $2 million - $5 million 51 52 (2) 101 102 (1) Large loss prior accident year reserve development 19 32 (41) 56 60 (7) Total large losses incurred 88 108 (19) 206 265 (22) Losses incurred but not reported 185 150 23 601 474 27 Other losses excluding catastrophe losses 711 639 11 2,129 1,906 12 Catastrophe losses 282 170 66 621 614 1 Total losses incurred $ 1,266 $ 1,067 19 $ 3,557 $ 3,259 9 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year losses greater than $5 million 0.9 % 1.2 % (0.3) 0.8 % 1.8 % (1.0) Current accident year losses $2 million - $5 million 2.3 2.7 (0.4) 1.6 1.8 (0.2) Large loss prior accident year reserve development 0.8 1.6 (0.8) 0.9 1.1 (0.2) Total large loss ratio 4.0 5.5 (1.5) 3.3 4.7 (1.4) Losses incurred but not reported 8.4 7.6 0.8 9.6 8.4 1.2 Other losses excluding catastrophe losses 32.0 32.7 (0.7) 33.8 33.7 0.1 Catastrophe losses 12.7 8.7 4.0 9.9 10.8 (0.9) Total loss ratio 57.1 % 54.5 % 2.6 56.6 % 57.6 % (1.0) We believe the inherent variability of aggregate loss experience for our portfolio of larger policies is greater than that of our portfolio of smaller policies, and we continue to monitor the variability in addition to general inflationary trends in loss costs. Our analysis continues to indicate no unexpected concentration of large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The 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. FINANCIAL RESULTS Consolidated results reflect the operating results of each of our five segments along with the parent company, Cincinnati Re, Cincinnati Global and other activities reported as "Other." The five segments are: • Commercial lines insurance • Personal lines insurance • Excess and surplus lines insurance • Life insurance • Investments Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 44 Table of Contents COMMERCIAL LINES INSURANCE RESULTS (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Earned premiums $ 1,137 $ 1,062 7 $ 3,326 $ 3,184 4 Fee revenues 1 1 0 3 3 0 Total revenues 1,138 1,063 7 3,329 3,187 4 Loss and loss expenses from: Current accident year before catastrophe losses 691 642 8 2,037 1,959 4 Current accident year catastrophe losses 65 72 (10) 251 302 (17) Prior accident years before catastrophe losses (45) (33) (36) (97) (123) 21 Prior accident years catastrophe losses (5) (1) (400) (20) (2) (900) Loss and loss expenses 706 680 4 2,171 2,136 2 Underwriting expenses 351 331 6 1,028 968 6 Underwriting profit $ 81 $ 52 56 $ 130 $ 83 57 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year before catastrophe losses 60.7 % 60.5 % 0.2 61.3 % 61.6 % (0.3) Current accident year catastrophe losses 5.8 6.8 (1.0) 7.5 9.5 (2.0) Prior accident years before catastrophe losses (4.0) (3.2) (0.8) (2.9) (3.9) 1.0 Prior accident years catastrophe losses (0.4) (0.1) (0.3) (0.6) (0.1) (0.5) Loss and loss expenses 62.1 64.0 (1.9) 65.3 67.1 (1.8) Underwriting expenses 30.9 31.2 (0.3) 30.9 30.4 0.5 Combined ratio 93.0 % 95.2 % (2.2) 96.2 % 97.5 % (1.3) Combined ratio 93.0 % 95.2 % (2.2) 96.2 % 97.5 % (1.3) Contribution from catastrophe losses and prior years reserve development 1.4 3.5 (2.1) 4.0 5.5 (1.5) Combined ratio before catastrophe losses and prior years reserve development 91.6 % 91.7 % (0.1) 92.2 % 92.0 % 0.2 Overview Performance highlights for the commercial lines segment include: • 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. We continue to use predictive analytics tools to improve pricing precision and segmentation while leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy. Agency renewal written premiums increased 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. Conversely, we have been seeking stricter renewal terms and conditions on policies we believe have relatively weaker pricing, thus retaining fewer of those policies. We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 45 Table of Contents 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 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 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. We use building valuation software to automate much of that underwriting process and may also manually adjust premiums to reflect property costs. Renewal premiums for certain policies, primarily our commercial casualty and workers' compensation lines of business, include the results of policy audits that adjust initial premium amounts based on differences between estimated and actual sales or payroll related to a specific policy. Audits completed during the first 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. That variability is often driven by larger policies with annual premiums greater than $100,000. Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. For our commercial lines insurance segment, an increase in ceded premiums reduced net written premiums by $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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Agency renewal written premiums $ 987 $ 914 8 $ 3,086 $ 2,940 5 Agency new business written premiums 187 148 26 562 431 30 Other written premiums (36) (33) (9) (101) (95) (6) Net written premiums 1,138 1,029 11 3,547 3,276 8 Unearned premium change (1) 33 nm (221) (92) (140) Earned premiums $ 1,137 $ 1,062 7 $ 3,326 $ 3,184 4 • 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 Third-Quarter 2024 10-Q Page 46 Table of Contents 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 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 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 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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Current accident year losses greater than $5 million $ 11 $ 18 (39) $ 42 $ 76 (45) Current accident year losses $2 million - $5 million 36 28 29 58 68 (15) Large loss prior accident year reserve development 20 30 (33) 54 52 4 Total large losses incurred 67 76 (12) 154 196 (21) Losses incurred but not reported 117 88 33 365 242 51 Other losses excluding catastrophe losses 337 336 0 1,089 1,055 3 Catastrophe losses 58 67 (13) 223 288 (23) Total losses incurred $ 579 $ 567 2 $ 1,831 $ 1,781 3 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year losses greater than $5 million 1.0 % 1.7 % (0.7) 1.3 % 2.4 % (1.1) Current accident year losses $2 million - $5 million 3.2 2.6 0.6 1.7 2.1 (0.4) Large loss prior accident year reserve development 1.7 2.8 (1.1) 1.6 1.6 0.0 Total large loss ratio 5.9 7.1 (1.2) 4.6 6.1 (1.5) Losses incurred but not reported 10.3 8.3 2.0 11.0 7.6 3.4 Other losses excluding catastrophe losses 29.7 31.7 (2.0) 32.8 33.2 (0.4) Catastrophe losses 5.1 6.3 (1.2) 6.7 9.0 (2.3) Total loss ratio 51.0 % 53.4 % (2.4) 55.1 % 55.9 % (0.8) Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 47 Table of Contents 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 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. 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 1.7 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. PERSONAL LINES INSURANCE RESULTS (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Earned premiums $ 678 $ 527 29 $ 1,897 $ 1,484 28 Fee revenues 2 1 100 4 3 33 Total revenues 680 528 29 1,901 1,487 28 Loss and loss expenses from: Current accident year before catastrophe losses 367 297 24 1,052 865 22 Current accident year catastrophe losses 186 79 135 396 327 21 Prior accident years before catastrophe losses 5 (2) nm 5 (12) nm Prior accident years catastrophe losses (5) (6) 17 (32) (42) 24 Loss and loss expenses 553 368 50 1,421 1,138 25 Underwriting expenses 196 159 23 554 441 26 Underwriting profit (loss) $ (69) $ 1 nm $ (74) $ (92) 20 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year before catastrophe losses 54.0 % 56.3 % (2.3) 55.4 % 58.3 % (2.9) Current accident year catastrophe losses 27.4 15.1 12.3 20.9 22.0 (1.1) Prior accident years before catastrophe losses 0.9 (0.4) 1.3 0.3 (0.8) 1.1 Prior accident years catastrophe losses (0.8) (1.2) 0.4 (1.7) (2.8) 1.1 Loss and loss expenses 81.5 69.8 11.7 74.9 76.7 (1.8) Underwriting expenses 28.8 30.1 (1.3) 29.2 29.7 (0.5) Combined ratio 110.3 % 99.9 % 10.4 104.1 % 106.4 % (2.3) Combined ratio 110.3 % 99.9 % 10.4 104.1 % 106.4 % (2.3) Contribution from catastrophe losses and prior years reserve development 27.5 13.5 14.0 19.5 18.4 1.1 Combined ratio before catastrophe losses and prior years reserve development 82.8 % 86.4 % (3.6) 84.6 % 88.0 % (3.4) Overview Performance highlights for the personal lines segment include: • 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 Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 48 Table of Contents 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 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 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 $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 $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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Agency renewal written premiums $ 695 $ 542 28 $ 1,870 $ 1,471 27 Agency new business written premiums 165 122 35 450 307 47 Other written premiums (28) (18) (56) (74) (55) (35) Net written premiums 832 646 29 2,246 1,723 30 Unearned premium change (154) (119) (29) (349) (239) (46) Earned premiums $ 678 $ 527 29 $ 1,897 $ 1,484 28 • 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. Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged autos or homes that we insure. Due to increased uncertainty Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 49 Table of Contents 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 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. In addition to the average rate increases discussed above, we continue to refine our pricing to better match premiums to the risk of loss on individual policies. Improved pricing precision and broad-based rate increases are expected to help position the combined ratio at a profitable level over the long term. In addition, greater geographic diversification is expected to reduce the volatility of homeowner loss ratios attributable to weather-related catastrophe losses over time. The net effect of reserve development on prior accident years during the 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. Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53. The personal lines underwriting expense ratio 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. Personal Lines Insurance Losses Incurred by Size (Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Current accident year losses greater than $5 million $ 7 $ 6 17 $ 7 $ 27 (74) Current accident year losses $2 million - $5 million 13 24 (46) 39 34 15 Large loss prior accident year reserve development (1) 2 nm 2 9 (78) Total large losses incurred 19 32 (41) 48 70 (31) Losses incurred but not reported 33 7 371 86 60 43 Other losses excluding catastrophe losses 256 210 22 743 591 26 Catastrophe losses 178 71 151 357 277 29 Total losses incurred $ 486 $ 320 52 $ 1,234 $ 998 24 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year losses greater than $5 million 1.1 % 1.1 % 0.0 0.4 % 1.8 % (1.4) Current accident year losses $2 million - $5 million 2.0 4.7 (2.7) 2.1 2.3 (0.2) Large loss prior accident year reserve development (0.2) 0.4 (0.6) 0.1 0.6 (0.5) Total large loss ratio 2.9 6.2 (3.3) 2.6 4.7 (2.1) Losses incurred but not reported 5.0 1.2 3.8 4.6 4.0 0.6 Other losses excluding catastrophe losses 37.6 39.9 (2.3) 39.0 39.9 (0.9) Catastrophe losses 26.2 13.4 12.8 18.8 18.7 0.1 Total loss ratio 71.7 % 60.7 % 11.0 65.0 % 67.3 % (2.3) We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. In the 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 Page 50 Table of Contents 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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Earned premiums $ 157 $ 135 16 $ 447 $ 394 13 Fee revenues — 1 (100) 2 2 0 Total revenues 157 136 15 449 396 13 Loss and loss expenses from: Current accident year before catastrophe losses 100 88 14 288 268 7 Current accident year catastrophe losses 2 (1) nm 6 3 100 Prior accident years before catastrophe losses 5 1 400 5 (13) nm Prior accident years catastrophe losses — (1) 100 — (1) 100 Loss and loss expenses 107 87 23 299 257 16 Underwriting expenses 42 35 20 122 101 21 Underwriting profit $ 8 $ 14 (43) $ 28 $ 38 (26) Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year before catastrophe losses 64.2 % 64.8 % (0.6) 64.6 % 67.9 % (3.3) Current accident year catastrophe losses 1.7 (0.6) 2.3 1.4 0.8 0.6 Prior accident years before catastrophe losses 2.9 0.9 2.0 1.0 (3.3) 4.3 Prior accident years catastrophe losses (0.2) (0.2) 0.0 0.0 (0.2) 0.2 Loss and loss expenses 68.6 64.9 3.7 67.0 65.2 1.8 Underwriting expenses 26.7 25.6 1.1 27.3 25.7 1.6 Combined ratio 95.3 % 90.5 % 4.8 94.3 % 90.9 % 3.4 Combined ratio 95.3 % 90.5 % 4.8 94.3 % 90.9 % 3.4 Contribution from catastrophe losses and prior years reserve development 4.4 0.1 4.3 2.4 (2.7) 5.1 Combined ratio before catastrophe losses and prior years reserve development 90.9 % 90.4 % 0.5 91.9 % 93.6 % (1.7) Overview Performance highlights for the excess and surplus lines segment include: • Premiums – Excess and surplus lines earned premiums and net written premiums continued to grow during the 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 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 Third-Quarter 2024 10-Q Page 51 Table of Contents Excess and Surplus Lines Insurance Premiums (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Agency renewal written premiums $ 113 $ 93 22 $ 365 $ 316 16 Agency new business written premiums 54 43 26 147 129 14 Other written premiums (10) (8) (25) (29) (25) (16) Net written premiums 157 128 23 483 420 15 Unearned premium change — 7 (100) (36) (26) (38) Earned premiums $ 157 $ 135 16 $ 447 $ 394 13 • 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. Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53. The excess and surplus lines underwriting expense ratio increased for the 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 Third-Quarter 2024 10-Q Page 52 Table of Contents Excess and Surplus Lines Insurance Losses Incurred by Size (Dollars in millions, net of reinsurance) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Current accident year losses greater than $5 million $ — $ — nm $ — $ — nm Current accident year losses $2 million - $5 million 2 — nm 4 — nm Large loss prior accident year reserve development — — nm — (1) 100 Total large losses incurred 2 — nm 4 (1) nm Losses incurred but not reported 12 16 (25) 59 63 (6) Other losses excluding catastrophe losses 55 45 22 143 118 21 Catastrophe losses 2 (1) nm 6 2 200 Total losses incurred $ 71 $ 60 18 $ 212 $ 182 16 Ratios as a percent of earned premiums: Pt. Change Pt. Change Current accident year losses greater than $5 million — % — % 0.0 — % — % 0.0 Current accident year losses $2 million - $5 million 1.3 — 1.3 0.9 — 0.9 Large loss prior accident year reserve development — — 0.0 — (0.2) 0.2 Total large loss ratio 1.3 — 1.3 0.9 (0.2) 1.1 Losses incurred but not reported 7.1 11.9 (4.8) 13.2 15.9 (2.7) Other losses excluding catastrophe losses 35.4 33.2 2.2 32.1 29.9 2.2 Catastrophe losses 1.5 (0.9) 2.4 1.3 0.5 0.8 Total loss ratio 45.3 % 44.2 % 1.1 47.5 % 46.1 % 1.4 We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. 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 Page 53 Table of Contents LIFE INSURANCE RESULTS (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Earned premiums $ 80 $ 76 5 $ 240 $ 233 3 Fee revenues 1 3 (67) 4 8 (50) Total revenues 81 79 3 244 241 1 Contract holders' benefits incurred 79 71 11 226 230 (2) Investment interest credited to contract holders (32) (31) (3) (94) (91) (3) Underwriting expenses incurred 24 22 9 70 64 9 Total benefits and expenses 71 62 15 202 203 0 Life insurance segment profit $ 10 $ 17 (41) $ 42 $ 38 11 Overview Performance highlights for the life insurance segment include: • 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. Profit is earned over time by way of interest rate spreads. We do not write variable or equity-indexed annuities. Life Insurance Premiums (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Term life insurance $ 58 $ 56 4 $ 174 $ 170 2 Whole life insurance 13 12 8 39 37 5 Universal life and other 9 8 13 27 26 4 Net earned premiums $ 80 $ 76 5 $ 240 $ 233 3 • Profitability – Our life insurance segment typically reports a smaller profit compared with the life insurance subsidiary because profits from investment income spreads are included in our investments segment results. We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in our life insurance segment results. A profit of $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 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. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 54 Table of Contents 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 Overview The investments segment contributes investment income and investment gains and losses to results of operations. Investments traditionally are our primary source of pretax and after-tax profits. Investment Income Pretax investment income grew 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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Total investment income, net of expenses $ 258 $ 225 15 $ 745 $ 655 14 Investment interest credited to contract holders (32) (31) (3) (94) (91) (3) 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 Page 55 Table of Contents We continue to consider the low interest rate environment that prevailed in recent years as well as the potential for a continuation of both elevated inflation and higher bond yields as we position our portfolio. As bonds in our generally laddered portfolio mature or are called over the near term, we will reinvest with a balanced approach, keeping in mind our long-term strategy and pursuing attractive risk-adjusted after-tax yields. The table below shows the average pretax yield-to-amortized cost associated with expected principal redemptions for our fixed-maturity portfolio. The expected principal redemptions are based on par amounts and include dated maturities, calls and prefunded municipal bonds that we expect will be called during each respective time period. (Dollars in millions) % Yield Principal redemptions At September 30, 2024 Fixed-maturity pretax yield profile: Expected to mature during the remainder of 2024 5.02 % $ 494 Expected to mature during 2025 4.71 1,388 Expected to mature during 2026 5.06 1,188 Average yield and total expected maturities from the remainder of 2024 through 2026 4.90 $ 3,070 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 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 Average pretax yield-to-amortized cost on new fixed-maturities: Acquired taxable fixed-maturities 5.63 % 6.60 % 5.81 % 6.41 % Acquired tax-exempt fixed-maturities 4.09 4.34 4.12 4.24 Average total fixed-maturities acquired 5.53 6.40 5.68 6.15 While our bond portfolio more than covers our insurance reserve liabilities, we believe our diversified common stock portfolio of mainly blue chip, dividend-paying companies represents one of our best investment opportunities for the long term. We discussed our portfolio strategies in our 2023 Annual Report on Form 10-K, Item 1, Investments Segment, Page 21, and Item 7, Investments Outlook, Page 91. We discuss risks related to our investment income and our fixed-maturity and equity investment portfolios in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 56 Table of Contents 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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Investment income: Interest $ 187 $ 154 21 $ 529 $ 441 20 Dividends 68 69 (1) 209 205 2 Other 7 5 40 18 18 0 Less investment expenses 4 3 33 11 9 22 Investment income, pretax 258 225 15 745 655 14 Less income taxes 44 37 19 125 106 18 Total investment income, after-tax $ 214 $ 188 14 $ 620 $ 549 13 Investment returns: Average invested assets plus cash and cash equivalents $ 29,107 $ 25,490 $ 28,447 $ 25,025 Average yield pretax 3.55 % 3.53 % 3.49 % 3.49 % Average yield after-tax 2.94 2.95 2.91 2.93 Effective tax rate 16.9 16.3 16.8 16.2 Fixed-maturity returns: Average amortized cost $ 15,592 $ 13,879 $ 15,218 $ 13,515 Average yield pretax 4.80 % 4.44 % 4.63 % 4.35 % Average yield after-tax 3.93 3.66 3.80 3.59 Effective tax rate 18.1 17.6 18.0 17.4 Total Investment Gains and Losses Investment gains and losses are recognized on the sale of investments, for certain changes in fair values of securities even though we continue to hold the securities or as otherwise required by GAAP. The change in fair value for equity securities still held is included in investment gains and losses and also in net income. The change in unrealized gains or losses for fixed-maturity securities is included as a component of other comprehensive income (OCI). Accounting requirements for the allowance for credit losses for the fixed-maturity portfolio are disclosed in our 2023 Annual Report on Form 10-K, Item 8, Note 1, Summary of Significant Accounting Policies, Page 128. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 57 Table of Contents The table below summarizes total investment gains and losses, before taxes. (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Investment gains and losses: Equity securities: Investment gains and losses on securities sold, net $ 24 $ (5) $ 146 $ 2 Unrealized gains and losses on securities still held, net 817 (458) 1,446 99 Subtotal 841 (463) 1,592 101 Fixed maturities: Gross realized gains 1 1 5 2 Gross realized losses (87) (1) (94) (2) Change in allowance for credit losses, net — 1 (25) (2) Write-down of impaired securities with intent to sell — — — (4) Subtotal (86) 1 (114) (6) Other 3 6 29 (11) Total investment gains and losses reported in net income 758 (456) 1,507 84 Change in unrealized investment gains and losses: Fixed maturities 497 (369) 367 (360) Total $ 1,255 $ (825) $ 1,874 $ (276) 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. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 58 Table of Contents OTHER We report as Other the noninvestment operations of the parent company and a noninsurance subsidiary, CFC Investment Company. We also report as Other the underwriting results of Cincinnati Re and Cincinnati Global, including earned premiums, loss and loss expenses and underwriting expenses in the table below. Total revenues for the first 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 September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Interest and fees on loans and leases $ 3 $ 2 50 $ 7 $ 5 40 Earned premiums 245 233 5 614 599 3 Other revenues — 1 (100) 3 3 0 Total revenues 248 236 5 624 607 3 Interest expense 13 13 0 40 40 0 Loss and loss expenses 133 126 6 290 309 (6) Underwriting expenses 70 62 13 180 170 6 Operating expenses 6 5 20 19 17 12 Total expenses 222 206 8 529 536 (1) Total other income $ 26 $ 30 (13) $ 95 $ 71 34 TAXES 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. Historically, we have pursued a strategy of investing some portion of cash flow in tax-advantaged fixed-maturity and equity securities to minimize our overall tax liability and maximize after-tax earnings. See Tax-Exempt Fixed Maturities in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk for further discussion on municipal bond purchases in our fixed-maturity investment portfolio. For tax years after 2017, for our property casualty insurance subsidiaries, approximately 75% of interest from tax-advantaged, fixed-maturity investments and approximately 40% of dividends from qualified equities are exempt from federal tax after applying proration. For our noninsurance companies, the dividend received deduction exempts 50% of dividends from qualified equities. Our life insurance company does not own tax-advantaged, fixed-maturity investments or equities subject to the dividend received deduction. Details about our effective tax rate are in this quarterly report Item 1, Note 9, Income Taxes. Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 59 Table of Contents LIQUIDITY AND CAPITAL RESOURCES 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. We also have additional capacity to borrow on our revolving short-term line of credit, as described further below. SOURCES OF LIQUIDITY Subsidiary Dividends Our lead insurance subsidiary declared dividends of $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. State of Ohio regulatory requirements restrict the dividends our insurance subsidiary can pay. For full-year 2024, total dividends that our insurance subsidiary can pay to our parent company without regulatory approval are approximately $729 million. Investing Activities Investment income is a source of liquidity for both the parent company and its insurance subsidiaries. We continue to focus on portfolio strategies to balance near-term income generation and long-term book value growth. Parent company obligations can be funded with income on investments held at the parent-company level or through sales of securities in that portfolio, although our investment philosophy seeks to compound cash flows over the long term. These sources of capital can help minimize subsidiary dividends to the parent company, protecting insurance subsidiary capital. For a discussion of our historic investment strategy, portfolio allocation and quality, see our 2023 Annual Report on Form 10-K, Item 1, Investments Segment, Page 21. Insurance Underwriting Our property casualty and life insurance underwriting operations provide liquidity because we generally receive premiums before paying losses under the policies purchased with those premiums. After satisfying our cash requirements, we use excess cash flows for investment, increasing future investment income. Historically, cash receipts from property casualty and life insurance premiums, along with investment income, have been more than sufficient to pay claims, operating expenses and dividends to the parent company. The table below shows a summary of the operating cash flow for property casualty insurance (direct method): (Dollars in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 % Change 2024 2023 % Change Premiums collected $ 2,343 $ 2,025 16 $ 6,593 $ 5,806 14 Loss and loss expenses paid (1,114) (1,058) (5) (3,218) (3,185) (1) Commissions and other underwriting expenses paid (585) (516) (13) (2,008) (1,772) (13) Cash flow from underwriting 644 451 43 1,367 849 61 Investment income received 192 151 27 533 447 19 Cash flow from operations $ 836 $ 602 39 $ 1,900 $ 1,296 47 Cincinnati Financial Corporation Third-Quarter 2024 10-Q Page 60 Table of Contents 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. Capital Resources 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. 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. None of the notes are encumbered by rating triggers. Four independent ratings firms award insurer financial strength ratings to our property casualty insurance companies and three firms rate our life insurance company. Those firms made no changes to our parent company debt ratings during the first 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. Off-Balance Sheet Arrangements We do not use any special-purpose financing vehicles or have any undisclosed off-balance sheet arrangements (as that term is defined in applicable SEC rules) that are reasonably likely to have a current or future material effect on the company's financial condition, results of operation, liquidity, capital expenditures or capital resources. Similarly, the company holds no fair-value contracts for which a lack of marketplace quotations would necessitate the use of fair-value techniques. USES OF LIQUIDITY Our parent company and insurance subsidiary have contractual obligations and other commitments. In addition, one of our primary uses of cash is to enhance shareholder return. Contractual Obligations We estimated our future contractual obligations as of December 31, 2023, in our 2023 Annual Report on Form 10-K, Item 7, Contractual Obligations, Page 97. There have been no material changes to our estimates of future contractual obligations since our 2023 Annual Report on Form 10-K. Other Commitments In addition to our contractual obligations, we have other property casualty operational commitments: • Commissions – Commissions paid were $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 $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 Page 61 Table of Contents Investing Activities After fulfilling operating requirements, we invest cash flows from underwriting, investment and other corporate activities in fixed-maturity and equity securities on an ongoing basis to help achieve our portfolio objectives. We discuss our investment strategy and certain portfolio attributes in this quarterly report Item 3, Quantitative and Qualitative Disclosures About Market Risk. Uses of Capital Uses of cash to enhance shareholder return include dividends to shareholders and shares acquired under our repurchase program. In January 2024, the board of directors declared regular quarterly cash dividends of 81 cents per share for an indicated annual rate of $3.24 per share. During the first nine months of 2024, we used $365 million to pay cash dividends to shareholders. PROPERTY CASUALTY INSURANCE LOSS AND LOSS EXPENSE RESERVES For the business lines in the commercial and personal lines insurance segments, and in total for the excess and surplus lines insurance segment and other property casualty insurance operations, the following table details gross reserves among case, IBNR (incurred but not reported) and loss expense reserves, net of salvage and subrogation reserves. Reserving practices are discussed in our 2023 Annual Report on Form 10-K, Item 7, Property Casualty Loss and Loss Expense Obligations and Reserves, Page 98. Total gross reserves at 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 Page 62 Table of Contents Property Casualty Gross Reserves (Dollars in millions) Loss reserves Loss expense reserves Total gross reserves Case reserves IBNR reserves Percent of total At September 30, 2024 Commercial lines insurance: Commercial casualty $ 1,124 $ 1,424 $ 808 $ 3,356 34.0 % Commercial property 297 228 85 610 6.2 Commercial auto 427 350 153 930 9.4 Workers' compensation 403 563 86 1,052 10.7 Other commercial 153 38 129 320 3.2 Subtotal 2,404 2,603 1,261 6,268 63.5 Personal lines insurance: Personal auto 249 116 88 453 4.6 Homeowner 234 270 80 584 5.9 Other personal 90 148 8 246 2.5 Subtotal 573 534 176 1,283 13.0 Excess and surplus lines 386 397 273 1,056 10.7 Cincinnati Re 171 839 6 1,016 10.3 Cincinnati Global 119 120 4 243 2.5 Total $ 3,653 $ 4,493 $ 1,720 $ 9,866 100.0 % At December 31, 2023 Commercial lines insurance: Commercial casualty $ 1,111 $ 1,205 $ 792 $ 3,108 34.6 % Commercial property 362 116 81 559 6.3 Commercial auto 418 303 142 863 9.6 Workers' compensation 431 540 89 1,060 11.8 Other commercial 143 26 128 297 3.3 Subtotal 2,465 2,190 1,232 5,887 65.6 Personal lines insurance: Personal auto 222 74 73 369 4.1 Homeowner 215 122 58 395 4.4 Other personal 101 119 6 226 2.5 Subtotal 538 315 137 990 11.0 Excess and surplus lines 360 336 236 932 10.4 Cincinnati Re 158 747 6 911 10.2 Cincinnati Global 141 111 3 255 2.8 Total $ 3,662 $ 3,699 $ 1,614 $ 8,975 100.0 % LIFE POLICY AND INVESTMENT CONTRACT RESERVES Gross life policy and investment contract reserves were $3.069 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 Third-Quarter 2024 10-Q Page 63 Table of Contents OTHER MATTERS SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are discussed in our 2023 Annual Report on Form 10-K, Item 8, Note 1, Summary of Significant Accounting Policies, Page 128, and updated in this quarterly report Item 1, Note 1, Accounting Policies. In conjunction with those discussions, in the Management's Discussion and Analysis in the 2023 Annual Report on Form 10-K, management reviewed the estimates and assumptions used to develop reported amounts related to the most significant policies. Management discussed the development and selection of those accounting estimates with the audit committee of the board of directors.