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 2024 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 2024 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 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 climate change or otherwise), environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes and our ability to manage catastrophe risk due to inaccurate catastrophe models or incomplete data • 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: Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 29 Table of Contents • 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 the wars in Ukraine and in the Middle East, recent tariff and trade policy announcements, 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 • 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 business opportunities, growth prospects, and expenses 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 • 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, artificial intelligence 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 • Mergers, acquisitions and other consolidations of agencies that result in a concentration of a significant amount of premium in one agency or agency group and/or 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 Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 30 Table of Contents • 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 • 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 • 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 First-Quarter 2025 10-Q Page 31 Table of Contents CORPORATE FINANCIAL HIGHLIGHTS Net Income and Comprehensive Income Data (Dollars in millions, except per share data) Three months ended March 31, 2025 2024 % Change Earned premiums $ 2,344 $ 2,071 13 Investment income, net of expenses (pretax) 280 245 14 Investment gains and losses, net (pretax) (67) 612 nm Total revenues 2,566 2,935 (13) Net income (loss) (90) 755 nm Comprehensive income (loss) (52) 748 nm Net income (loss) per share—diluted (0.57) 4.78 nm Cash dividends declared per share 0.87 0.81 7 Diluted weighted average shares outstanding 156.4 157.9 (1) Total revenues decreased $369 million for the first quarter of 2025, compared with the first quarter of 2024, as a reduction in net investment gains offset higher earned premiums and investment income. 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. The net loss for the first quarter of 2025, compared with first-quarter 2024 net income, was a change of $845 million, including decreases of $536 million in after-tax net investment gains and losses and $339 million in after-tax property casualty underwriting profit, partially offset by a $28 million increase in after-tax investment income. Catastrophe losses for the first quarter of 2025, primarily from January 2025 wildfires in southern California, were $356 million higher after taxes and unfavorably affected both net income and property casualty underwriting profit. Life insurance segment results decreased by $1 million on a pretax basis. Performance by segment is discussed below in Financial Results. As discussed in our 2024 Annual Report on Form 10-K, Item 7, Executive Summary, Page 46, there are several reasons why our performance during 2025 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 2024, the company had increased the annual cash dividend rate for 64 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2025, the board of directors increased the regular quarterly dividend to 87 cents per share, setting the stage for our 65 th consecutive year of increasing cash dividends. During the first three months of 2025, cash dividends declared by the company increased 7% compared with the same period of 2024. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2025 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 First-Quarter 2025 10-Q Page 32 Table of Contents Balance Sheet Data and Performance Measures (Dollars in millions, except share data) At March 31, At December 31, 2025 2024 Total investments $ 28,481 $ 28,378 Total assets 37,276 36,501 Short-term debt 25 25 Long-term debt 790 790 Shareholders' equity 13,718 13,935 Book value per share 87.78 89.11 Debt-to-total-capital ratio 5.6 % 5.5 % Total assets at March 31, 2025, increased 2% compared with year-end 2024, and included an increase of less than 1% in total investments that reflected net purchases that were partially offset by lower fair values for many securities in our equity portfolio. Shareholders' equity decreased 2% and book value per share decreased 1% during the first three months of 2025. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) increased slightly compared with year-end 2024. Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was negative 0.5% for the first three months of 2025, compared with positive 5.9% for the same period in 2024. The decrease was primarily due to a reduction in overall net gains from our investment portfolio and an underwriting loss from our insurance operations. Book value per share decreased $1.33 during the first three months of 2025 and contributed negative 1.5 percentage points to the value creation ratio, while dividends declared at $0.87 per share contributed positive 1.0 point. Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below. Three months ended March 31, 2025 2024 Value creation ratio major contributors: Net income before investment gains (0.3) % 2.3 % Change in fixed-maturity securities, realized and unrealized gains 0.4 (0.4) Change in equity securities, investment gains (0.4) 3.9 Other (0.2) 0.1 Value creation ratio (0.5) % 5.9 % Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 33 Table of Contents (Dollars are per share) Three months ended March 31, 2025 2024 Value creation ratio: End of period book value* $ 87.78 $ 80.83 Less beginning of period book value 89.11 77.06 Change in book value (1.33) 3.77 Dividend declared to shareholders 0.87 0.81 Total value creation $ (0.46) $ 4.58 Value creation ratio from change in book value** (1.5) % 4.9 % Value creation ratio from dividends declared to shareholders*** 1.0 1.0 Value creation ratio (0.5) % 5.9 % * 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 2024 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 2024 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At March 31, 2025, we actively marketed through 2,199 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 2024 Annual Report on Form 10-K, Item 7, Executive Summary, Page 46, 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 three months of 2025, our consolidated property casualty net written premium year-over-year growth was 11%. As of February 2025, A.M. Best projected the industry's full-year 2025 written premium growth at approximately 7%. For the five-year period 2020 through 2024, 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 three months of 2025, our GAAP combined ratio was 113.3%, including 26.8 percentage points of current accident year catastrophe losses partially offset by 4.0 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 112.3% for the first three months of 2025. As of February 2025, A.M. Best projected the industry's full-year 2025 statutory combined ratio at approximately 99%, including approximately 9 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years. 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 three months of 2025, pretax investment income was $280 million, up 14% compared with the same period in 2024. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 34 Table of Contents Financial Strength An important part of our long-term strategy is financial strength, which is described in our 2024 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 2024 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, 2025 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 March 31, 2025, we held $5.028 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.479 billion, or 89.1%, was invested in common stocks, and $241 million, or 4.8%, was cash or cash equivalents. Our debt-to-total-capital ratio was 5.6% at March 31, 2025. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.1-to-1 for the 12 months ended March 31, 2025, compared with 1.0-to-1 at year-end 2024. 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 April 25, 2025, 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 First-Quarter 2025 10-Q Page 35 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 March 31, 2025 2024 % Change Earned premiums $ 2,264 $ 1,992 14 Fee revenues 4 3 33 Total revenues 2,268 1,995 14 Loss and loss expenses from: Current accident year before catastrophe losses 1,370 1,221 12 Current accident year catastrophe losses 608 149 308 Prior accident years before catastrophe losses (50) (68) 26 Prior accident years catastrophe losses (41) (32) (28) Loss and loss expenses 1,887 1,270 49 Underwriting expenses 679 594 14 Underwriting profit (loss) $ (298) $ 131 nm Ratios as a percent of earned premiums: Pt. Change Current accident year before catastrophe losses 60.5 % 61.3 % (0.8) Current accident year catastrophe losses 26.8 7.5 19.3 Prior accident years before catastrophe losses (2.2) (3.4) 1.2 Prior accident years catastrophe losses (1.8) (1.6) (0.2) Loss and loss expenses 83.3 63.8 19.5 Underwriting expenses 30.0 29.8 0.2 Combined ratio 113.3 % 93.6 % 19.7 Combined ratio 113.3 % 93.6 % 19.7 Contribution from catastrophe losses and prior years reserve development 22.8 2.5 20.3 Combined ratio before catastrophe losses and prior years reserve development 90.5 % 91.1 % (0.6) Our consolidated property casualty insurance operations generated an underwriting loss of $298 million for the first quarter of 2025. Compared with an underwriting profit of $131 million for the first quarter of 2024, the first-quarter 2025 decrease of $429 million included an unfavorable increase of $450 million in losses from catastrophes, mostly caused by January 2025 wildfires in southern California, and a slightly lower amount of total favorable reserve development on prior accident years. The change in underwriting profitability for the first quarter of 2025 also included a favorable effect from higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums. Underwriting results for the first quarter of 2025 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 recent years 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. For all property casualty lines of business in aggregate, net loss and loss expense reserves at March 31, 2025, were $488 million, or 5%, higher than at year-end 2024, including an increase of $454 million for the incurred but not reported (IBNR) portion. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 36 Table of Contents 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 first quarter of 2025 increased by 19.7 percentage points, compared with the same period of 2024, including an increase of 19.1 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 4.0 percentage points in the first three months of 2025, compared with 5.0 percentage points in the same period of 2024. 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 three months of 2025. That 60.5% ratio was 0.8 percentage points lower, compared with the 61.3% accident year 2024 ratio measured as of March 31, 2024, including an increase of 1.0 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio improvement of 0.8 percentage points included a decrease of 0.2 points for the IBNR portion and a decrease of 0.6 points for the case incurred portion. It also included an unfavorable 1.4 points for the net effect of $52 million for reinsurance treaty reinstatement premiums related to the January 2025 wildfires in southern California. The underwriting expense ratio increased for the first three months of 2025, compared with the same period a year ago. The increase included an unfavorable 0.7 points for the effect of reinstatement premiums. The ratio for both periods also included ongoing expense management efforts and higher earned premiums. Consolidated Property Casualty Insurance Premiums (Dollars in millions) Three months ended March 31, 2025 2024 % Change Agency renewal written premiums $ 1,912 $ 1,683 14 Agency new business written premiums 383 346 11 Other written premiums 200 219 (9) Net written premiums 2,495 2,248 11 Unearned premium change (231) (256) 10 Earned premiums $ 2,264 $ 1,992 14 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 2025, are discussed in more detail by segment below in Financial Results. Consolidated property casualty net written premiums for the three months ended March 31, 2025, grew $247 million compared with the same period of 2024. 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 $37 million for the first three months of 2025, compared with the same period of 2024. New agency appointments during 2025 and 2024 produced a $24 million increase in standard lines new business for the first three months of 2025 compared with the same period of 2024. 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 Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 37 Table of Contents 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 $53 million to $255 million for the three months ended March 31, 2025, compared with the same period of 2024. 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. The increase included a $12 million net favorable effect from estimated premiums to reinstate treaties affected by the California wildfires. Cincinnati Global is also included in other written premiums. Net written premiums for Cincinnati Global decreased by $7 million to $75 million for the three months ended March 31, 2025, compared with the same period of 2024. 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 $65 million for the first three months of 2025, compared with the same period of 2024. Other written premiums for the first quarter of 2025 included a net unfavorable amount of $52 million for reinsurance treaty reinstatement premiums related to the California wildfires, including a favorable $12 million for Cincinnati Re and an unfavorable $64 million for our personal lines insurance segment. 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 25.0 percentage points to the combined ratio in the first three months of 2025, compared with 5.9 percentage points in the same period of 2024. Net losses from catastrophes for the first quarter of 2025 included recoveries from reinsurers that participate in our primary property catastrophe reinsurance treaty. The recovery related to the California wildfires based on loss estimates at the end of the quarter was $429 million. During the first quarter of 2025, we reinstated the applicable layers of our primary property catastrophe reinsurance treaty to provide coverage for catastrophic events. As a result of the reinstatement, the treaty provides the same coverage that was effective on January 1, 2025. The reinsurance program for Cincinnati Re only effective June 1, 2024, provides retrocession coverages with various triggers, exclusions and unique features. The program includes property catastrophe excess of loss coverage in excess of $80 million per occurrence. During 2024, the program had a total available limit of $60 million per occurrence and there was no recovery from reinsurers pertaining to these treaties. During the first three months of 2025, recoveries of $38 million were estimated related to the California wildfires. As of March 31, 2025, the remaining coverage provides a total available limit of $41 million per occurrence in excess of $80 million. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 38 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 March 31, Comm. Pers. E&S Dates Region lines lines lines Other Total 2025 Jan. 7-28 West $ — $ 325 $ — $ 124 $ 449 Mar. 14-17 Midwest, Northeast, South 42 75 1 — 118 All other 2025 catastrophes 14 23 1 3 41 Development on 2024 and prior catastrophes (14) (13) (1) (13) (41) Calendar year incurred total $ 42 $ 410 $ 1 $ 114 $ 567 2024 Jan. 8-10 Midwest, Northeast, South $ 18 $ 9 $ — $ — $ 27 Mar. 12-17 Midwest, South 32 22 — — 54 All other 2024 catastrophes 25 42 1 — 68 Development on 2023 and prior catastrophes (8) (21) (1) (2) (32) Calendar year incurred total $ 67 $ 52 $ — $ (2) $ 117 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 March 31, 2025 2024 % Change Current accident year losses greater than $5 million $ 26 $ — nm Current accident year losses $2 million - $5 million 20 22 (9) Large loss prior accident year reserve development 56 22 155 Total large losses incurred 102 44 132 Losses incurred but not reported 279 251 11 Other losses excluding catastrophe losses 688 677 2 Catastrophe losses 558 111 403 Total losses incurred $ 1,627 $ 1,083 50 Ratios as a percent of earned premiums: Pt. Change Current accident year losses greater than $5 million 1.2 % — % 1.2 Current accident year losses $2 million - $5 million 0.9 1.1 (0.2) Large loss prior accident year reserve development 2.4 1.1 1.3 Total large loss ratio 4.5 2.2 2.3 Losses incurred but not reported 12.3 12.6 (0.3) Other losses excluding catastrophe losses 30.4 34.0 (3.6) Catastrophe losses 24.6 5.6 19.0 Total loss ratio 71.8 % 54.4 % 17.4 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 Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 39 Table of Contents 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 first-quarter 2025 property casualty total large losses incurred of $102 million, net of reinsurance, was higher than the $70 million quarterly average during full-year 2024 and the $44 million experienced for the first quarter of 2024. The ratio for these large losses was 2.3 percentage points higher compared with last year's first quarter. We believe results for the three-month period 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 First-Quarter 2025 10-Q Page 40 Table of Contents COMMERCIAL LINES INSURANCE RESULTS (Dollars in millions) Three months ended March 31, 2025 2024 % Change Earned premiums $ 1,179 $ 1,082 9 Fee revenues 2 1 100 Total revenues 1,181 1,083 9 Loss and loss expenses from: Current accident year before catastrophe losses 722 682 6 Current accident year catastrophe losses 56 75 (25) Prior accident years before catastrophe losses (29) (30) 3 Prior accident years catastrophe losses (14) (8) (75) Loss and loss expenses 735 719 2 Underwriting expenses 349 325 7 Underwriting profit $ 97 $ 39 149 Ratios as a percent of earned premiums: Pt. Change Current accident year before catastrophe losses 61.1 % 63.0 % (1.9) Current accident year catastrophe losses 4.8 7.0 (2.2) Prior accident years before catastrophe losses (2.4) (2.8) 0.4 Prior accident years catastrophe losses (1.2) (0.8) (0.4) Loss and loss expenses 62.3 66.4 (4.1) Underwriting expenses 29.6 30.1 (0.5) Combined ratio 91.9 % 96.5 % (4.6) Combined ratio 91.9 % 96.5 % (4.6) Contribution from catastrophe losses and prior years reserve development 1.2 3.4 (2.2) Combined ratio before catastrophe losses and prior years reserve development 90.7 % 93.1 % (2.4) Overview Performance highlights for the commercial lines segment include: • Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the first three months of 2025, compared with the same period a year ago, primarily 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 7% for the first three months of 2025, compared with the same period of 2024, including price increases. During the first quarter of 2025, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of 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. 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 Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 41 Table of Contents 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 first quarter of 2025, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty and commercial property lines of business and in the mid-single-digit range for our commercial auto line 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 three months of 2025 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 three months of 2025 contributed $23 million to net written premiums, compared with $29 million for the same period of 2024. New business written premiums for commercial lines increased $21 million during the first three months of 2025, compared with the same period of 2024, 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, a decrease in ceded premiums increased net written premiums by approximately $4 million for the first three months of 2025, compared with the same period of 2024. Commercial Lines Insurance Premiums (Dollars in millions) Three months ended March 31, 2025 2024 % Change Agency renewal written premiums $ 1,152 $ 1,076 7 Agency new business written premiums 203 182 12 Other written premiums (30) (35) 14 Net written premiums 1,325 1,223 8 Unearned premium change (146) (141) (4) Earned premiums $ 1,179 $ 1,082 9 • Combined ratio – The first-quarter 2025 commercial lines combined ratio improved by 4.6 percentage points, compared with the first quarter of 2024, including a decrease of 2.6 points in losses from catastrophes. The first-quarter combined ratio decreased by 1.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 0.7 points for the IBNR portion and a decrease of 2.6 points for the case incurred portion. Underwriting results also included favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of March 31 of the respective years and included an increase of 0.8 percentage points for the first three months of 2025 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 properties or autos that we insure, in addition to 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 3.6 percentage points of the combined ratio for the first three months of 2025, compared with 6.2 percentage points for the same period a year ago. Through 2024, the 10-year annual average for that catastrophe measure for the commercial lines segment was 6.0 percentage points, and the five-year annual average was 6.6 percentage points. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 42 Table of Contents The net effect of reserve development on prior accident years during the first three months of 2025 was favorable for commercial lines overall by $43 million, compared with $38 million for the same period in 2024. For the first three months of 2025, 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 three months of 2025 for our commercial lines insurance segment was mainly for accident years 2024 and 2023 and was primarily due to lower-than-anticipated loss emergence on known claims. Our commercial casualty line of business included $1 million of favorable reserve development on prior accident years for the first three months of 2025. Reserve estimates are inherently uncertain as described in our 2024 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 51. The commercial lines underwriting expense ratio decreased for the first three months of 2025, compared with the same period a year ago. The decrease was primarily due to premium growth outpacing growth in various expenses. The ratio for both periods 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 March 31, 2025 2024 % Change Current accident year losses greater than $5 million $ 7 $ — nm Current accident year losses $2 million - $5 million 15 11 36 Large loss prior accident year reserve development 44 12 267 Total large losses incurred 66 23 187 Losses incurred but not reported 163 156 4 Other losses excluding catastrophe losses 318 368 (14) Catastrophe losses 40 64 (38) Total losses incurred $ 587 $ 611 (4) Ratios as a percent of earned premiums: Pt. Change Current accident year losses greater than $5 million 0.6 % — % 0.6 Current accident year losses $2 million - $5 million 1.2 1.0 0.2 Large loss prior accident year reserve development 3.8 1.1 2.7 Total large loss ratio 5.6 2.1 3.5 Losses incurred but not reported 13.9 14.4 (0.5) Other losses excluding catastrophe losses 26.8 34.0 (7.2) Catastrophe losses 3.4 6.0 (2.6) Total loss ratio 49.7 % 56.5 % (6.8) 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 first-quarter 2025 commercial lines total large losses incurred of $66 million, net of reinsurance, was higher than the quarterly average of $49 million during full-year 2024 and the $23 million of total large losses incurred for the first quarter of 2024. The increase in commercial lines large losses for the first three months of 2025 was primarily due to our commercial property line of business. The first-quarter 2025 ratio for commercial lines total large losses was 3.5 percentage points higher than last year's first-quarter ratio. We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 43 Table of Contents PERSONAL LINES INSURANCE RESULTS (Dollars in millions) Three months ended March 31, 2025 2024 % Change Earned premiums $ 698 $ 588 19 Fee revenues 1 1 0 Total revenues 699 589 19 Loss and loss expenses from: Current accident year before catastrophe losses 442 339 30 Current accident year catastrophe losses 423 73 479 Prior accident years before catastrophe losses (6) (12) 50 Prior accident years catastrophe losses (13) (21) 38 Loss and loss expenses 846 379 123 Underwriting expenses 210 173 21 Underwriting profit (loss) $ (357) $ 37 nm Ratios as a percent of earned premiums: Pt. Change Current accident year before catastrophe losses 63.3 % 57.7 % 5.6 Current accident year catastrophe losses 60.6 12.4 48.2 Prior accident years before catastrophe losses (0.8) (2.0) 1.2 Prior accident years catastrophe losses (1.9) (3.6) 1.7 Loss and loss expenses 121.2 64.5 56.7 Underwriting expenses 30.1 29.4 0.7 Combined ratio 151.3 % 93.9 % 57.4 Combined ratio 151.3 % 93.9 % 57.4 Contribution from catastrophe losses and prior years reserve development 57.9 6.8 51.1 Combined ratio before catastrophe losses and prior years reserve development 93.4 % 87.1 % 6.3 Overview Performance highlights for the personal lines segment include: • Premiums – Personal lines earned premiums and net written premiums continued to grow during the first three months of 2025, 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 $363 million for the first three months of 2025, compared with $330 million for the same period of 2024. Cincinnati Private Client direct written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $39 million in the first three months of 2025, compared with $37 million in the same period of 2024. The table below analyzes the primary components of premiums. Agency renewal written premiums increased 28% for the first three months of 2025, 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 three months of 2025. For our homeowner line of business, we estimate that premium rates for the first three months of 2025 also increased at average percentages in the low-double-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 $5 million or 4% for the first three months of 2025, compared with the same period of 2024, including an increase of approximately $8 million from Cincinnati Private Client policies and a decrease of $3 million from middle-market policies. We believe we maintained Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 44 Table of Contents 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 2025 ceded premiums reduced net written premiums by approximately $67 million for the first three months of 2025, compared with the same period of 2024. Ceded premiums for the first quarter of 2025 included a net amount of $64 million for reinsurance reinstatement premiums related to the January 2025 wildfires in southern California. Personal Lines Insurance Premiums (Dollars in millions) Three months ended March 31, 2025 2024 % Change Agency renewal written premiums $ 634 $ 494 28 Agency new business written premiums 127 122 4 Other written premiums (89) (21) (324) Net written premiums 672 595 13 Unearned premium change 26 (7) nm Earned premiums $ 698 $ 588 19 • Combined ratio – Our personal lines combined ratio for the first quarter of 2025 increased by 57.4 percentage points, compared with first-quarter 2024, primarily due to an increase of 49.9 points in losses from catastrophes. The first-quarter 2025 combined ratio increase also included an increase of 5.6 percentage points from current accident year loss and loss expenses before catastrophe losses, including an increase of 4.7 points for the IBNR portion and an increase of 0.9 points for the case incurred portion. The first-quarter 2025 current accident year ratio before catastrophe losses included an unfavorable 5.3 points for the effect of reinstatement premiums. The total current accident year ratios before catastrophe losses were measured as of March 31 of the respective years and included an increase of 1.7 percentage points for the first three months of 2025 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 autos or homes that we insure. 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 58.7 percentage points of the combined ratio for the first three months of 2025, compared with 8.8 points for the same period a year ago. The 10-year annual average catastrophe loss ratio for the personal lines segment through 2024 was 12.1 percentage points, and the five-year annual average was 13.9 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 first quarter of 2025 was favorable for personal lines overall by $19 million, compared with $33 million for the same period of 2024. Our homeowner line of business was the main contributor to the personal lines net favorable reserve development for the first three months of 2025. 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 2024 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 51. The personal lines underwriting expense ratio increased for the first three months of 2025, compared with the same period a year ago. The increase included an unfavorable 2.5 points for the effect of reinstatement premiums. The ratio for both periods also included ongoing expense management efforts. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 45 Table of Contents . Personal Lines Insurance Losses Incurred by Size (Dollars in millions, net of reinsurance) Three months ended March 31, 2025 2024 % Change Current accident year losses greater than $5 million $ 19 $ — nm Current accident year losses $2 million - $5 million 5 11 (55) Large loss prior accident year reserve development 12 10 20 Total large losses incurred 36 21 71 Losses incurred but not reported 74 22 236 Other losses excluding catastrophe losses 254 231 10 Catastrophe losses 405 50 710 Total losses incurred $ 769 $ 324 137 Ratios as a percent of earned premiums: Pt. Change Current accident year losses greater than $5 million 2.8 % — % 2.8 Current accident year losses $2 million - $5 million 0.7 1.8 (1.1) Large loss prior accident year reserve development 1.8 1.8 0.0 Total large loss ratio 5.3 3.6 1.7 Losses incurred but not reported 10.5 3.8 6.7 Other losses excluding catastrophe losses 36.4 39.4 (3.0) Catastrophe losses 57.9 8.4 49.5 Total loss ratio 110.1 % 55.2 % 54.9 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 first quarter of 2025, the personal lines total large loss ratio, net of reinsurance, was 1.7 percentage points higher than last year's first quarter. The increase in personal lines total large losses incurred for the first three months of 2025 occurred primarily for inland marine coverages in our other personal line of business. We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 46 Table of Contents EXCESS AND SURPLUS LINES INSURANCE RESULTS (Dollars in millions) Three months ended March 31, 2025 2024 % Change Earned premiums $ 162 $ 139 17 Fee revenues 1 1 0 Total revenues 163 140 16 Loss and loss expenses from: Current accident year before catastrophe losses 106 92 15 Current accident year catastrophe losses 2 1 100 Prior accident years before catastrophe losses (8) (2) (300) Prior accident years catastrophe losses (1) (1) 0 Loss and loss expenses 99 90 10 Underwriting expenses 44 38 16 Underwriting profit $ 20 $ 12 67 Ratios as a percent of earned premiums: Pt. Change Current accident year before catastrophe losses 65.6 % 65.7 % (0.1) Current accident year catastrophe losses 0.8 0.9 (0.1) Prior accident years before catastrophe losses (5.0) (1.7) (3.3) Prior accident years catastrophe losses (0.5) (0.4) (0.1) Loss and loss expenses 60.9 64.5 (3.6) Underwriting expenses 27.4 27.4 0.0 Combined ratio 88.3 % 91.9 % (3.6) Combined ratio 88.3 % 91.9 % (3.6) Contribution from catastrophe losses and prior years reserve development (4.7) (1.2) (3.5) Combined ratio before catastrophe losses and prior years reserve development 93.0 % 93.1 % (0.1) 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 first three months of 2025, compared with the same period a year ago, including increases in both agency renewal and new business written premiums. Renewal written premiums rose 12% for the three months ended March 31, 2025, compared with the same period of 2024, largely due to higher renewal pricing. For the first three months of 2025, 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 first three months of 2025 compared with the same period of 2024, 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 First-Quarter 2025 10-Q Page 47 Table of Contents Excess and Surplus Lines Insurance Premiums (Dollars in millions) Three months ended March 31, 2025 2024 % Change Agency renewal written premiums $ 126 $ 113 12 Agency new business written premiums 53 42 26 Other written premiums (11) (9) (22) Net written premiums 168 146 15 Unearned premium change (6) (7) 14 Earned premiums $ 162 $ 139 17 • Combined ratio – The excess and surplus lines combined ratio improved by 3.6 percentage points for the first three months of 2025, compared with the same period of 2024. The improvement was primarily due to a higher level of favorable reserve development on prior accident year loss and loss expenses for the three months ended March 31, 2025, compared with the first three months of 2024. The 65.6% first-quarter 2025 ratio for current accident year loss and loss expenses before catastrophe losses was 0.1 percentage point lower, compared with the 65.7% accident year 2024 ratio measured as of March 31, 2024, including an increase of 2.8 points for the IBNR portion and a decrease of 2.9 points for the case incurred portion. Excess and surplus lines net reserve development on prior accident years, as a ratio to earned premiums, was favorable by 5.5% for the first three months of 2025, compared with 2.1% for the same period of 2024. Reserve estimates are inherently uncertain as described in our 2024 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 51. The excess and surplus lines underwriting expense ratio for the first three months of 2025 matched the same period a year ago. The ratio for both periods benefited from ongoing expense management efforts and premium growth. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 48 Table of Contents Excess and Surplus Lines Insurance Losses Incurred by Size (Dollars in millions, net of reinsurance) Three months ended March 31, 2025 2024 % Change Current accident year losses greater than $5 million $ — $ — nm Current accident year losses $2 million - $5 million — — nm Large loss prior accident year reserve development — — nm Total large losses incurred — — nm Losses incurred but not reported 46 30 53 Other losses excluding catastrophe losses 24 37 (35) Catastrophe losses — 1 (100) Total losses incurred $ 70 $ 68 3 Ratios as a percent of earned premiums: Pt. Change Current accident year losses greater than $5 million — % — % 0.0 Current accident year losses $2 million - $5 million — — 0.0 Large loss prior accident year reserve development — — 0.0 Total large loss ratio — — 0.0 Losses incurred but not reported 28.1 21.6 6.5 Other losses excluding catastrophe losses 14.8 26.8 (12.0) Catastrophe losses 0.2 0.5 (0.3) Total loss ratio 43.1 % 48.9 % (5.8) 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. In the first quarter of both 2025 and 2024, our excess and surplus lines insurance segment had no large losses of $2 million or more per claim. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 49 Table of Contents LIFE INSURANCE RESULTS (Dollars in millions) Three months ended March 31, 2025 2024 % Change Earned premiums $ 80 $ 79 1 Fee revenues 1 1 0 Total revenues 81 80 1 Contract holders' benefits incurred 81 79 3 Investment interest credited to contract holders (32) (31) (3) Underwriting expenses incurred 23 22 5 Total benefits and expenses 72 70 3 Life insurance segment profit $ 9 $ 10 (10) Overview Performance highlights for the life insurance segment include: • Revenues – Revenues increased for the three months ended March 31, 2025, compared with the same period a year ago. Net in-force life insurance policy face amounts increased 1% to $84.712 billion at March 31, 2025, from $84.245 billion at year-end 2024. Fixed annuity deposits received for the three months ended March 31, 2025, were $4 million, compared with $9 million for the same period of 2024. Fixed annuity deposits have a minimal impact on 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 March 31, 2025 2024 % Change Term life insurance $ 57 $ 57 0 Whole life insurance 13 13 0 Universal life and other 10 9 11 Net earned premiums $ 80 $ 79 1 • 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 $9 million for our life insurance segment in the first three months of 2025, compared with a profit of $10 million for the same period of 2024, was primarily due to less favorable impacts from the unlocking of interest rate actuarial assumptions. 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 increased in the first three months of 2025 primarily due to less favorable impacts from the unlocking of interest rate actuarial assumptions. Underwriting expenses for the first three months of 2025 increased compared with the same period a year ago, largely due to higher general insurance expense levels compared to the same period of 2024. We recognize that assets under management, capital appreciation and investment income are integral to evaluating the success of the life insurance segment because of the long duration of life products. On a basis that includes investment income and investment gains or losses from life-insurance-related Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 50 Table of Contents invested assets, the life insurance subsidiary reported net income of $21 million for the three months ended March 31, 2025, compared with $19 million for the three months ended March 31, 2024. The life insurance subsidiary portfolio had net after-tax investment losses of $1 million for the three months ended March 31, 2025, compared with $2 million for the three months ended March 31, 2024. 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 14% for the first three months of 2025, compared with the same period of 2024. Interest income increased by $41 million for the first quarter, as net purchases of fixed-maturity securities in recent quarters and higher bond yields are working to generally offset effects of the low interest rate environment of the past several years. Dividend income decreased by $5 million for the three months ended March 31, 2025. The decrease was primarily due to the unfavorable effect on dividend income from net sales of equity securities during the second half of 2024. That effect was partially offset by dividend rates that have generally been increasing, although more slowly in recent quarters. Minor asset allocation adjustments in our equity portfolio in recent quarters partially offset other factors that unfavorably affected dividend income. Investments Results (Dollars in millions) Three months ended March 31, 2025 2024 % Change Total investment income, net of expenses $ 280 $ 245 14 Investment interest credited to contract holders (32) (31) (3) Investment gains and losses, net (67) 612 nm Investments profit, pretax $ 181 $ 826 (78) 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 March 31, 2025 Fixed-maturity pretax yield profile: Expected to mature during the remainder of 2025 4.35 % $ 970 Expected to mature during 2026 4.47 1,195 Expected to mature during 2027 4.87 967 Average yield and total expected maturities from the remainder of 2025 through 2027 4.56 $ 3,132 Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 51 Table of Contents 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 three months of 2025 was higher than the 5.06% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2024. Our fixed-maturity portfolio's average yield of 4.92% for the first three months of 2025, from the investment income table below, was lower than the 5.06% yield for the year-end 2024 fixed-maturities portfolio. Three months ended March 31, 2025 2024 Average pretax yield-to-amortized cost on new fixed-maturities: Acquired taxable fixed-maturities 5.91 % 5.94 % Acquired tax-exempt fixed-maturities 4.40 4.10 Average total fixed-maturities acquired 5.80 5.79 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 2024 Annual Report on Form 10-K, Item 1, Investments Segment, Page 21, and Item 7, Investments Outlook, Page 89. 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. 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 March 31, 2025 2024 % Change Investment income: Interest $ 210 $ 169 24 Dividends 67 72 (7) Other 7 7 0 Less investment expenses 4 3 33 Investment income, pretax 280 245 14 Less income taxes 48 41 17 Total investment income, after-tax $ 232 $ 204 14 Investment returns: Average invested assets plus cash and cash equivalents $ 29,946 $ 27,164 Average yield pretax 3.74 % 3.61 % Average yield after-tax 3.10 3.00 Effective tax rate 17.2 16.7 Fixed-maturity returns: Average amortized cost $ 17,071 $ 14,535 Average yield pretax 4.92 % 4.65 % Average yield after-tax 4.02 3.82 Effective tax rate 18.3 17.9 Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 52 Table of Contents 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 2024 Annual Report on Form 10-K, Item 8, Note 1, Summary of Significant Accounting Policies, Page 128. The table below summarizes total investment gains and losses, before taxes. (Dollars in millions) Three months ended March 31, 2025 2024 Investment gains and losses: Equity securities: Investment gains and losses on securities sold, net $ (1) $ (11) Unrealized gains and losses on securities still held, net (71) 613 Subtotal (72) 602 Fixed maturities: Gross realized losses — (1) Change in allowance for credit losses, net (2) (9) Subtotal (2) (10) Other 7 20 Total investment gains and losses reported in net income (67) 612 Change in unrealized investment gains and losses: Fixed maturities 67 (55) Total unrealized investment gains and losses reported in OCI 67 (55) Total $ — $ 557 Of the 5,140 fixed-maturity and short-term securities in the portfolio, 34 securities were trading below 70% of amortized cost at March 31, 2025. 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 First-Quarter 2025 10-Q Page 53 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 three months of 2025 for our Other operations increased, compared with the same period of 2024, primarily due to earned premiums from Cincinnati Re and Cincinnati Global, with increases of $26 million and $16 million, respectively. Cincinnati Re had $161 million of earned premiums for the first three months of 2025 and generated an underwriting loss of $61 million due to $104 million of net catastrophe losses from January 2025 wildfires in southern California. Cincinnati Global had $64 million of earned premiums for the first three months of 2025 and generated an underwriting profit of $3 million. Total expenses for Other increased for the first three months of 2025, primarily due to higher loss and loss expenses from Cincinnati Re and Cincinnati Global. Other income in the table below represents profit before income taxes. For the first three months of 2025, total other loss resulted from an underwriting loss from Cincinnati Re and interest expense from debt of the parent company. For the first three months of 2024, total other income was driven by underwriting profit from Cincinnati Re and Cincinnati Global. (Dollars in millions) Three months ended March 31, 2025 2024 % Change Interest and fees on loans and leases $ 3 $ 2 50 Earned premiums 225 183 23 Other revenues 1 1 0 Total revenues 229 186 23 Interest expense 13 13 0 Loss and loss expenses 207 82 152 Underwriting expenses 76 58 31 Operating expenses 11 4 175 Total expenses 307 157 96 Total other income (loss) $ (78) $ 29 nm TAXES We had $38 million of income tax benefit for the three months ended March 31, 2025, compared with $198 million of income tax expense for the same period of 2024. The effective tax rate for the three months ended March 31, 2025, was 29.7% compared with 20.8% for the same period 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 First-Quarter 2025 10-Q Page 54 Table of Contents LIQUIDITY AND CAPITAL RESOURCES At March 31, 2025, shareholders' equity was $13.718 billion, compared with $13.935 billion at December 31, 2024. Total debt was $815 million at March 31, 2025, unchanged from December 31, 2024. At March 31, 2025, cash and cash equivalents totaled $1.010 billion, compared with $983 million at December 31, 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 did not declare dividends to the parent company in the first three months of 2025, compared with $145 million for the same period of 2024. For full-year 2024, our lead insurance subsidiary paid dividends totaling $290 million to the parent company. State of Ohio regulatory requirements restrict the dividends our insurance subsidiary can pay. For full-year 2025, total dividends that our insurance subsidiary can pay to our parent company without regulatory approval are approximately $1.245 billion. 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 2024 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 March 31, 2025 2024 % Change Premiums collected $ 2,277 $ 2,044 11 Loss and loss expenses paid (1,399) (1,037) (35) Commissions and other underwriting expenses paid (924) (808) (14) Cash flow from underwriting (46) 199 nm Investment income received 206 165 25 Cash flow from operations $ 160 $ 364 (56) Collected premiums for property casualty insurance rose $233 million during the first three months of 2025, compared with the same period in 2024. Loss and loss expenses paid for the 2025 period increased $362 million. Commissions and other underwriting expenses paid increased $116 million. We discuss our future obligations for claims payments and for underwriting expenses in our 2024 Annual Report on Form 10-K, Item 7, Obligations, Page 95. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 55 Table of Contents Capital Resources At March 31, 2025, 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 March 31, 2025, $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 March 31, 2025, 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. During 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. We replaced the letter of credit agreement with common equities, bringing total common equities held in Lloyd's trust accounts to $215 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 three months of 2025. Our debt ratings are discussed in our 2024 Annual Report on Form 10-K, Item 7, Liquidity and Capital Resources, Long-Term Debt, Page 94. 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, 2024, in our 2024 Annual Report on Form 10-K, Item 7, Contractual Obligations, Page 95. There have been no material changes to our estimates of future contractual obligations since our 2024 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 $635 million in the first three months of 2025. 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 $289 million in the first three months of 2025. There were no contributions to our qualified pension plan during the first three months of 2025. 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 2025, the board of directors declared regular quarterly cash dividends of 87 cents Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 56 Table of Contents per share for an indicated annual rate of $3.48 per share. During the first three months of 2025, we used $125 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 2024 Annual Report on Form 10-K, Item 7, Property Casualty Loss and Loss Expense Obligations and Reserves, Page 96. Total gross reserves at March 31, 2025, increased $770 million compared with December 31, 2024. Case loss reserves increased by $129 million, IBNR loss reserves increased by $577 million and loss expense reserves increased by $64 million. The total gross increase was primarily due to our homeowner and commercial casualty and lines of business and also Cincinnati Re. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 57 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 March 31, 2025 Commercial lines insurance: Commercial casualty $ 1,138 $ 1,577 $ 838 $ 3,553 33.2 % Commercial property 217 266 93 576 5.4 Commercial auto 418 391 166 975 9.1 Workers' compensation 382 572 98 1,052 9.8 Other commercial 159 56 144 359 3.4 Subtotal 2,314 2,862 1,339 6,515 60.9 Personal lines insurance: Personal auto 264 127 105 496 4.6 Homeowner 370 341 95 806 7.5 Other personal 114 190 9 313 2.9 Subtotal 748 658 209 1,615 15.0 Excess and surplus lines 382 471 300 1,153 10.8 Cincinnati Re 218 964 8 1,190 11.1 Cincinnati Global 121 109 4 234 2.2 Total $ 3,783 $ 5,064 $ 1,860 $ 10,707 100.0 % At December 31, 2024 Commercial lines insurance: Commercial casualty $ 1,121 $ 1,498 $ 824 $ 3,443 34.7 % Commercial property 251 199 90 540 5.4 Commercial auto 423 355 159 937 9.4 Workers' compensation 389 564 89 1,042 10.5 Other commercial 159 45 137 341 3.4 Subtotal 2,343 2,661 1,299 6,303 63.4 Personal lines insurance: Personal auto 260 106 100 466 4.7 Homeowner 244 134 88 466 4.7 Other personal 102 166 9 277 2.8 Subtotal 606 406 197 1,209 12.2 Excess and surplus lines 395 425 289 1,109 11.2 Cincinnati Re 191 880 8 1,079 10.8 Cincinnati Global 119 115 3 237 2.4 Total $ 3,654 $ 4,487 $ 1,796 $ 9,937 100.0 % LIFE POLICY AND INVESTMENT CONTRACT RESERVES Gross life policy and investment contract reserves were $2.968 billion at March 31, 2025, compared with $2.960 billion at year-end 2024. 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 2024 Annual Report on Form 10-K, Item 7, Life Insurance Policyholder Obligations and Reserves, Page 102, and updated that disclosure in this quarterly report Item 1, Note 1, Accounting Policies. Cincinnati Financial Corporation First-Quarter 2025 10-Q Page 58 Table of Contents OTHER MATTERS SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are discussed in our 2024 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 2024 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.