CINCINNATI FINANCIAL CORP (CINF)
SIC breadcrumb: Finance, Insurance, And Real Estate > Insurance Carriers > SIC 6331 Fire, Marine & Casualty Insurance
SEC company page: https://www.sec.gov/edgar/browse/?CIK=20286. Latest filing source: 0000020286-26-000008.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 12,631,000,000 | USD | 2025 | 2026-02-23 |
| Net income | 2,393,000,000 | USD | 2025 | 2026-02-23 |
| Assets | 41,002,000,000 | USD | 2025 | 2026-02-23 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000020286.json. Derived margins are computed from the extracted annual SEC facts.
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 5,449,000,000 | 5,732,000,000 | 5,407,000,000 | 7,924,000,000 | 7,536,000,000 | 9,626,000,000 | 6,563,000,000 | 10,013,000,000 | 11,337,000,000 | 12,631,000,000 |
| Net income | 591,000,000 | 1,045,000,000 | 287,000,000 | 1,997,000,000 | 1,216,000,000 | 2,968,000,000 | -487,000,000 | 1,843,000,000 | 2,292,000,000 | 2,393,000,000 |
| Diluted EPS | 3.55 | 6.29 | 1.75 | 12.10 | 7.49 | 18.24 | -3.06 | 11.66 | 14.53 | 15.17 |
| Assets | 20,386,000,000 | 21,843,000,000 | 21,935,000,000 | 25,408,000,000 | 27,542,000,000 | 31,387,000,000 | 29,732,000,000 | 32,769,000,000 | 36,501,000,000 | 41,002,000,000 |
| Liabilities | 13,326,000,000 | 13,600,000,000 | 14,102,000,000 | 15,544,000,000 | 16,753,000,000 | 18,282,000,000 | 19,170,000,000 | 20,671,000,000 | 22,566,000,000 | 25,091,000,000 |
| Stockholders' equity | 7,060,000,000 | 8,243,000,000 | 7,833,000,000 | 9,864,000,000 | 10,789,000,000 | 12,764,000,000 | 10,562,000,000 | 12,098,000,000 | 13,935,000,000 | 15,911,000,000 |
| Net margin | 10.85% | 18.23% | 5.31% | 25.20% | 16.14% | 30.83% | -7.42% | 18.41% | 20.22% | 18.95% |
Financial Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
Latest 10-K MD&A
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Introduction
The purpose of Management’s Discussion and Analysis is to provide an understanding of Cincinnati Financial Corporation’s consolidated results of operations and financial condition. Our Management’s Discussion and Analysis should be read in conjunction with Item 8, Consolidated Financial Statements and related Notes. We present per share data on a diluted basis unless otherwise noted, adjusting those amounts for all stock splits and stock dividends.
We begin with an executive summary of our results of operations, followed by other highlights and details about critical accounting estimates. In several instances, we refer to estimated industry data so that we can provide information on our performance within the context of the overall insurance industry. Unless otherwise noted, the industry data is prepared by A.M. Best, a leading insurance industry statistical, analytical and financial strength rating organization. Information from A.M. Best is presented on a statutory accounting basis for insurance company regulation in the United States of America. When we provide our results on a comparable statutory accounting 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).
Through The Cincinnati Insurance Company, Cincinnati Financial Corporation is one of the 25 largest property casualty insurers in the nation, based on net written premium volume for the first nine months of 2025, among more than 2,000 U.S. stock and mutual companies operating independently or in groups. We market our insurance products through a select group of independent insurance agencies in 46 states as discussed in Item 1, Our Business and Our Strategy.
The U.S. economy, the insurance industry and our company continue to face many challenges. Our long-term perspective has allowed us to address immediate challenges while also focusing on the major decisions that best position the company for success through all market cycles. We believe that this forward-looking view consistently benefits our shareholders, agents, policyholders and associates.
To measure our progress, we have defined a measure of value creation that we believe captures the contribution of our insurance operations, the success of our investment strategy and the importance we place on paying cash dividends to shareholders. We refer to this measure as our value creation ratio (VCR) and it is made up of two primary components: (1) our rate of growth in book value per share plus (2) the ratio of dividends declared per share to beginning book value per share. This measure, intended to be all-inclusive regarding changes in book value per share, uses originally reported book value per share in cases where book value per share has been adjusted, such as after the adoption of Accounting Standards Updates with a cumulative effect of a change in accounting.
The primary sources of our company’s net income are summarized below. We discuss contributions to net income and VCR by source in Corporate Financial Highlights, followed by more detailed discussion in Financial Results.
•Underwriting profit (loss) – Includes revenues from earned premiums for insurance and reinsurance policies or contracts, reduced by losses and loss expenses from associated insurance coverages. Those revenues are further reduced by underwriting expenses associated with marketing policies or related to administration of our insurance operations. The net result represents an underwriting profit when revenues exceed losses and expenses.
•Investment income – Is generated primarily from investing the premiums collected for insurance policies sold, until funds are needed to pay losses for insurance claims or other expenses. Interest income from bonds or dividend income from stocks are the main categories of our investment income, with additional contribution from compounding effects over time.
•Investment gains and losses – Occur from appreciation or depreciation of invested assets over time. Gains or losses are generally recognized from changes in market values of equity securities without a sale or when invested assets are sold or become impaired.
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Executive Summary
Our value creation ratio, defined above, is our primary performance target. VCR trends are shown in the table below.
One
year
Three-year
% average
Five-year
% average
Value creation ratio:
As of December 31, 2025
18.8
%
19.4
%
13.8
%
As of December 31, 2024
19.8
8.2
13.0
As of December 31, 2023
19.5
10.2
15.2
We are targeting an annual value creation ratio averaging 10% to 13% over the next five-year period. At 18.8% for 2025, our performance was above the high end of that range. We also exceeded the high end of the range for both the three-year and five-year periods that ended in December 2025.
The table below shows the primary contributors of our value creation ratio on a percentage basis. Analysis of the contributors aids understanding of our financial performance. Our financial results are further analyzed in the Corporate Financial Highlights section below.
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Pt. Change
Pt. Change
Value creation ratio major contributors:
Net income before investment gains
9.1
%
9.9
%
9.1
%
(0.8)
0.8
Change in fixed-maturity securities, realized and unrealized gains
2.0
(0.6)
1.9
2.6
(2.5)
Change in equity securities, investment gains
8.2
9.6
8.6
(1.4)
1.0
Other
(0.5)
0.9
(0.1)
(1.4)
1.0
Value creation ratio
18.8
%
19.8
%
19.5
%
(1.0)
0.3
The 2025 value creation ratio decreased by 1.0 percentage points, compared with 2024, and again included a significant contribution from operating results, as shown in the table above. The 2025 ratio decrease included 0.8 percentage points from net income before investment gains and 0.2 percentage points in overall net gains from our investment portfolio and other items. The increase in 2024, compared with 2023, was primarily due to an increase in operating results which was partially offset by a reduction in overall net gains from our investment portfolio.
We believe our value creation ratio is a useful measure. The table below shows calculations for VCR.
(Dollars are per share)
Years ended December 31,
2025
2024
2023
Value creation ratio:
End of period book value*
$
102.35
$
89.11
$
77.06
Less beginning of period book value
89.11
77.06
67.01
Change in book value
13.24
12.05
10.05
Dividend declared to shareholders
3.48
3.24
3.00
Total value creation
$
16.72
$
15.29
$
13.05
Value creation ratio from change in book value**
14.9
%
15.6
%
15.0
%
Value creation ratio from dividends declared to shareholders***
3.9
4.2
4.5
Value creation ratio
18.8
%
19.8
%
19.5
%
* 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 year book value
*** Dividend declared to shareholders divided by beginning of year book value
Cincinnati Financial Corporation - 2025 10-K - Page 46
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When looking at our longer-term objectives, we see three primary performance drivers for our value creation ratio:
•Premium growth – We believe over any five-year period our agency relationships and initiatives can lead to a property casualty written premium growth rate that exceeds the industry average. The compound annual growth rate of our net written premiums was 11.4% over the five-year period 2021 through 2025, exceeding the 8.8% estimated growth rate for the property casualty insurance industry, with 2025 representing industry data reported through the first nine months of 2025. The industry’s growth rate excludes its mortgage and financial guaranty lines of business.
•Combined ratio – We believe our underwriting philosophy and initiatives can drive performance to achieve our underwriting profitability target of a GAAP combined ratio over any five-year period that consistently averages within the range of 92% to 98% in the future. Our GAAP combined ratio averaged 93.9% over the five-year period 2021 through 2025, within the performance target range. Performance as measured by the combined ratio is discussed in Consolidated Property Casualty Insurance Results. Our statutory combined ratio averaged 93.6% over the five-year period 2021 through 2025, compared with an estimated 99.6% for the property casualty industry, with 2025 representing industry data reported through the first nine months of 2025. 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 total return of the S&P 500 Index.
◦Investment income growth, on a pretax basis, had a compound annual growth rate of 11.7% over the five-year period 2021 through 2025.
◦Over the five years ended December 31, 2025, our equity portfolio compound annual total return was 12.4% compared with a compound annual total return of 14.4% for the Index. Our equity portfolio favors larger-capitalization, high-quality, dividend-growing stocks with a slight value orientation. For the year 2025, our equity portfolio total return was 15.7%, compared with 17.9% for the Index.
The board of directors is committed to rewarding shareholders directly through cash dividends and share repurchase authorizations. Through 2025, the company has increased the annual cash dividend rate for 65 consecutive years, a record we believe is matched by only seven other publicly traded U.S. companies. In addition to regular dividends, strong capital and excellent company performance has provided opportunities to further reward shareholders. The board regularly evaluates relevant factors in dividend-related decisions, and the 2025 increase to the regular dividend reflected confidence in our outstanding capital, liquidity and financial flexibility, as well as progress of our initiatives to improve earnings performance while growing insurance premium revenues. We discuss our financial position in more detail in Liquidity and Capital Resources.
Our view of the shareholder value we can create over the next five years relies largely on three assumptions – each highly dependent on the external environment. First, we anticipate our property casualty average insurance prices will increase in proportion to, or in excess of, our loss cost trends. Second, we assume that the economy can maintain a long-term growth track. Third, we assume that valuations of our marketable securities will vary within a typical range over time, based on historical trends. If those assumptions prove to be inaccurate, we may not be able to achieve our performance targets even if we accomplish our strategic objectives.
We discuss in Item 1A, Risk Factors, many potential risks to our business and our ability to achieve our qualitative and quantitative objectives.
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Table of Contents
Corporate Financial Highlights
In addition to the value creation ratio discussion and analysis in the Executive Summary, we further analyze our financial results in the sections below.
Balance Sheet Data
(Dollars in millions, except share data)
At December 31,
At December 31,
2025
2024
Total investments
$
31,783
$
28,378
Total assets
41,002
36,501
Short-term debt
25
25
Long-term debt
790
790
Shareholders' equity
15,911
13,935
Book value per share
102.35
89.11
Debt-to-total-capital ratio
4.9
%
5.5
%
Total investments increased by 12% during 2025 on a fair value basis. Entering 2026, we believe the portfolio continues to be well diversified and is well positioned to withstand short-term fluctuations. We discuss our investment strategy in Item 1, Investments Segment, and results for the segment in Investments Results. Total assets also increased by 12%, compared with year-end 2024. Shareholders’ equity increased by 14% and book value per share increased by 15%, for reasons discussed in the preceding Executive Summary.
The amount of our debt obligations at year-end 2025 matched year-end 2024. Our 4.9% ratio of debt to total capital (debt plus shareholders’ equity) at year-end 2025 decreased by 0.6 percentage points compared with the prior-year ratio.
Income Statement and Per Share Data
(In millions, except per share data)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Earned premiums
$
9,983
$
8,889
$
7,958
12
12
Investment income, net of expenses (pretax)
1,165
1,025
894
14
15
Investment gains and losses, net (pretax)
1,442
1,391
1,127
4
23
Total revenues
12,631
11,337
10,013
11
13
Net income
2,393
2,292
1,843
4
24
Comprehensive income
2,668
2,418
2,022
10
20
Net income per share - diluted
15.17
14.53
11.66
4
25
Cash dividends declared per share
3.48
3.24
3.00
7
8
Diluted weighted average shares outstanding
157.7
157.8
158.1
0
0
Net income rose by $101 million in 2025, compared with 2024, including a $44 million increase in net investment gains on an after-tax basis. The improved 2025 net income also included a $112 million increase in investment income after taxes partially offset by a decrease in property casualty underwriting income of $62 million after taxes, as discussed below. Our investment operation’s performance is discussed further in Investments Results. Net income of $2.292 billion in 2024, representing a $449 million increase compared with net income for 2023, included a $204 million increase in net investment gains after taxes. The improved 2024 net income also included an increase in property casualty underwriting income of $141 million after taxes and a $104 million increase in investment income after taxes.
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Table of Contents
Contribution from Insurance Operations
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Consolidated property casualty data:
Net written premiums
$
10,082
$
9,243
$
8,046
9
15
Earned premiums
9,653
8,568
7,645
13
12
Underwriting profit
501
580
401
(14)
45
Pt. Change
Pt. Change
GAAP combined ratio
94.9
%
93.4
%
94.9
%
1.5
(1.5)
Statutory combined ratio
94.7
92.9
94.6
1.8
(1.7)
Written premium to statutory surplus
1.0
1.0
1.1
0.0
(0.1)
Property casualty net written premiums grew 9% and earned premiums grew 13% in 2025. The growth reflected average renewal price increases, premium growth initiatives and a higher level of insured exposures, including a contribution to net written premium growth of less than 1 percentage point from Cincinnati Re and Cincinnati Global in total. Growth in 2024 net written premiums and earned premiums was driven by factors similar to 2025. Trends and related factors are discussed in Commercial Lines, Personal Lines and Excess and Surplus Lines Insurance Results.
Our property casualty insurance operations generated an underwriting profit for each of the three years ending in 2025. The $79 million decrease in 2025 underwriting profit, compared with 2024, included a $249 million increase in losses from natural catastrophe events and $13 million less benefit from net favorable reserve development on prior accident years before catastrophe losses. The $179 million increase in 2024, compared with 2023, included a $66 million increase in losses from catastrophe events and $27 million less benefit from net favorable reserve development on prior accident years before catastrophe losses.
We measure property casualty underwriting profitability primarily by the combined ratio. Our combined ratio measures the percentage of each earned premium dollar spent on claims plus all expenses related to our property casualty operations, all on a pretax basis. A lower ratio indicates more favorable results and better underlying performance. A ratio below 100% represents an underwriting profit.
Initiatives to improve our combined ratio are discussed in Item 1, Our Business and Our Strategy. In 2025, 2024 and 2023, favorable development on reserves for claims that occurred in prior accident years helped offset other incurred losses and loss expenses. Reserve development is discussed further in Property Casualty Loss and Loss Expense Obligations and Reserves. Losses from weather-related catastrophes are another important item influencing the combined ratio and are discussed along with other factors in Financial Results for our property casualty business and related segments.
Our life insurance segment reported a profit of $65 million in 2025, $57 million in 2024 and $41 million in 2023. We discuss results for the segment in Life Insurance Results. Most of this segment’s investment income is included in our investments segment results. In addition to investment income, investment gains and losses from the life insurance investment portfolio are also included in our investments segment results.
Critical Accounting Estimates
Cincinnati Financial Corporation’s financial statements are prepared using U.S. GAAP. These principles require management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. Actual results could differ materially from those estimates.
The significant accounting policies used in the preparation of the financial statements are discussed in Item 8, Note 1 of the Consolidated Financial Statements. In conjunction with that discussion, material implications of uncertainties associated with the methods, assumptions and estimates underlying the company’s critical accounting policies are discussed below. The audit committee of the board of directors reviews the annual financial statements with management and the independent registered public accounting firm. These discussions cover: the quality of earnings; review of reserves and accruals; reconsideration of the suitability of accounting principles; review of highly
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judgmental areas including critical accounting estimates; audit adjustments; and such other inquiries as may be appropriate.
Property Casualty Insurance Loss and Loss Expense Reserves
We establish loss and loss expense reserves for our property casualty insurance business as balance sheet liabilities. Unpaid loss and loss expenses are the estimated amounts necessary to pay for and settle all outstanding insured claims, including incurred but not reported (IBNR) claims. These reserves account for unpaid loss and loss expenses as of a financial statement date.
For some lines of business that we write, a considerable and uncertain amount of time can elapse between the occurrence, reporting and payment of insured claims. The amount we will actually have to pay for such claims also can be highly uncertain. This uncertainty, together with the size of our reserves, makes the loss and loss expense reserves our most significant estimate. Gross loss and loss expense reserves were $11.450 billion at year-end 2025 compared with $9.937 billion at year-end 2024.
How Reserves Are Established
Our field claims representatives establish case reserves when claims are reported to the company to provide for our unpaid loss and loss expense obligation associated with known claims. Field claims managers supervise and review all claims with case reserves less than $100,000. Additionally, a headquarters supervisor and regional claims manager review claims under $100,000 if litigation or a certain specialty claim is involved. All claims with case reserves of $100,000 or greater are reviewed and approved by experienced headquarters supervisors and regional claims managers. Upper-level headquarters claims managers also review case reserves of $175,000 or more.
Our claims representatives base their case reserve estimates primarily upon case-by-case evaluations that consider:
•type of claim involved
•circumstances surrounding each claim
•policy provisions pertaining to each claim
•potential for subrogation or salvage recoverable
•general insurance reserving practices
Case reserves of all sizes are generally reviewed on a 90-day cycle, or more frequently if new information about a loss becomes available. As part of the review process, we monitor industry trends, cost trends, relevant court cases, legislative activity and other current events in an effort to ascertain new or additional loss exposures.
We also establish IBNR reserves to provide for all unpaid loss and loss expenses not accounted for by case reserves:
•For events designated as natural catastrophes resulting in losses incurred related to premiums written on a direct basis by The Cincinnati Insurance Companies, we calculate IBNR reserves directly as a result of an estimated IBNR claim count and an estimated average claim amount for each event. Once case reserves are established for a catastrophe event, we reduce the IBNR reserves. Our claims department management coordinates the assessment of these events and prepares the related IBNR reserve estimates. Such an assessment involves a comprehensive analysis of the nature of the event, of policyholder exposures within the affected geographic area and of available claims intelligence. Depending on the nature of the event, available claims intelligence could include surveys of field claims representatives within the affected geographic area, feedback from a catastrophe claims team sent into the area, as well as data on claims reported as of the financial statement date.
To determine whether an event is designated as a catastrophe, related to premiums written on a direct basis by The Cincinnati Insurance Companies, we generally use the catastrophe definition provided by Property Claims Service (PCS), a division of Insurance Services Office. PCS defines a catastrophe as an event that causes U.S., Puerto Rico and U.S. Virgin Islands damage of $25 million or more in insured property losses and affects a significant number of policyholders and insureds.
•For events designated as natural catastrophes resulting in losses for Cincinnati Re and Cincinnati Global, we begin with a review of in-force policies, treaties and related limits likely to be affected by each event. For both Cincinnati Re and Cincinnati Global, use of information from third-party catastrophe models, industry estimates,
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and our own proprietary adjustments are used for the estimate of ultimate losses for each catastrophe event. Incurred losses from catastrophe events for both Cincinnati Re and Cincinnati Global can be designated catastrophes by PCS, or deemed as a catastrophe by the international insurance industry or, for Cincinnati Re, as reported by ceding companies. IBNR reserves are calculated as the difference between the estimate of the ultimate loss and loss expenses and the sum of total loss and loss expense payments and total case reserves.
•For asbestos and environmental claims, we calculate IBNR reserves by deriving an actuarially-based estimate of total unpaid loss and loss expenses. We then reduce the estimate by total case reserves. We discuss the reserve analysis that applies to asbestos and environmental reserves in Liquidity and Capital Resources, Asbestos and Environmental Loss and Loss Expense Reserves.
•For loss expenses that pertain primarily to salaries and other costs related to our claims associates, also referred to as adjusting and other expense or AOE, we calculate reserves based on an analysis of the relationship between paid losses and paid AOE. Reserves for AOE are allocated to company, line of business and accident year based on a claim count algorithm. Claim counts reported and used in the reserving process are primarily measured by insurance coverages that are triggered when a loss occurs and a reserve is established. Coverages are defined as unique combinations of certain attributes such as line of business and cause of loss. Claims that are opened and closed without payment are included in the reported claim counts. Claim counts are presented on a direct basis only and do not reflect any assumed or ceded reinsurance.
•For all other claims and events, including reinsurance assumed or ceded, IBNR reserves are calculated as the difference between an actuarial estimate of the ultimate cost of total loss and loss expenses incurred reduced by the sum of total loss and loss expense payments and total case reserves estimated for individual claims. Reserve amounts for those other claims and events are significant, and represent the majority of amounts shown as IBNR reserves and loss expense reserves in the table included in Liquidity and Capital Resources, Property Casualty Loss and Loss Expense Obligations and Reserves. We discuss below the development of actuarially based estimates of the ultimate cost of total loss and loss expenses incurred.
Our actuarial staff applies significant judgment in selecting models and estimating model parameters when preparing reserve analyses. Unpaid loss and loss expenses are inherently uncertain as to timing and amount. Uncertainties relating to model appropriateness, parameter estimates and actual loss and loss expense amounts are referred to as model, parameter and process uncertainty, respectively. Our management and actuarial staff address these uncertainties in the reserving process in a variety of ways.
Our actuarial staff bases its IBNR reserve estimates for these losses primarily on the indications of methods and models that analyze accident year data. Accident year is the year in which an insured claim, loss or loss expense occurred. The specific methods and models that our actuaries have used for the past several years are:
•paid and reported loss development methods
•paid and reported loss Bornhuetter-Ferguson methods
•stochastic reserving models
Our actuarial staff uses diagnostics to evaluate the appropriateness of the models and methods listed above. The appropriateness of these models and methods for estimating IBNR reserves tends to depend on the tail for a line of business. Tail refers to the time interval between a typical claim’s occurrence and its settlement. The loss development and Bornhuetter-Ferguson methods, particularly the reported loss variations, tend to produce more appropriate IBNR reserve estimates for our short-tail lines such as homeowner and commercial property. For our mid-tail and long-tail lines, all models and methods provide useful insights.
Our actuarial staff also devotes significant time and effort to the estimation of model and method parameters. The loss development and Bornhuetter-Ferguson methods require the estimation of numerous loss development factors. The Bornhuetter-Ferguson methods also involve the estimation of numerous expected loss ratios by accident year. Stochastic reserving models can involve the estimation of development trends, calendar year inflation trends and exposure levels. Consequently, our actuarial staff monitors a number of trends and measures to gain key business insights necessary for exercising appropriate judgment when estimating the parameters mentioned, such as:
•company and industry pricing
•company and industry exposure
•company and industry loss frequency and severity
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•past large loss events
•company and industry premium
•company in-force policy count
These trends and measures also support the estimation of expected accident year loss ratios needed for applying the Bornhuetter-Ferguson methods and for assessing the reasonability of all IBNR reserve estimates computed. Our actuarial staff reviews these trends and measures quarterly, updating parameters derived from them as necessary.
Quarterly, our actuarial staff summarizes their reserve analysis by preparing an actuarial best estimate and a range of reasonable IBNR reserves intended to reflect the uncertainty of the estimate. An inter-departmental committee that includes our actuarial management team reviews the results of each quarterly reserve analysis. The committee establishes management’s best estimate of IBNR reserves, which is the amount that is included in each period’s financial statements. In addition to the information provided by actuarial staff, the committee also considers factors such as:
•large loss activity and trends in large losses
•new business activity
•judicial decisions
•general economic trends such as inflation
•trends in litigiousness and legal expenses
•product and underwriting changes
•changes in claims practices
The determination of management’s best estimate, like the preparation of the reserve analysis that supports it, involves considerable judgment. Changes in reserving data or the trends and factors that influence reserving data may signal fundamental shifts or may simply reflect single-period anomalies. Even if a change reflects a fundamental shift, the full extent of the change may not become evident until years later. Moreover, since our methods and models do not explicitly relate many of the factors we consider directly to reserve levels, we typically cannot quantify the precise impact of such factors on the adequacy of reserves prospectively or retrospectively.
Due to the uncertainties described above, our ultimate loss experience could prove better or worse than our carried reserves reflect. To the extent that reserves are inadequate and increased, the amount of the increase is a charge in the period that the deficiency is recognized, raising our loss and loss expense ratio and reducing earnings. To the extent that reserves are redundant and released, the amount of the release is a credit in the period that the redundancy is recognized, reducing our loss and loss expense ratio and increasing earnings.
Key Assumptions – Loss Reserving
Our actuarial staff makes a number of key assumptions when using their methods and models to derive IBNR reserve estimates. Appropriate reliance on these key assumptions essentially entails determinations of the likelihood that statistically significant patterns in historical data may extend into the future. The four most significant of the key assumptions used by our actuarial staff and approved by management are:
•Emergence of loss and defense and cost containment expenses, also referred to as DCCE, on an accident year basis. Historical paid loss, reported loss and paid DCCE data for the business lines we analyze contain patterns that reflect how unpaid losses, unreported losses and unpaid DCCE as of a financial statement date will emerge in the future. Unless our actuarial staff or management identifies reasons or factors that invalidate the extension of historical patterns into the future, these patterns can be used to make projections necessary for estimating IBNR reserves. Our actuaries significantly rely on this assumption in the application of all methods and models mentioned above.
•Calendar year inflation. For long-tail and mid-tail business lines, calendar year inflation trends for future paid losses and paid DCCE do not vary significantly from a stable, long-term average. Our actuaries base reserve estimates derived from stochastic reserving models on this assumption.
•Exposure levels. Historical earned premiums, when adjusted to reflect common levels of product pricing and loss cost inflation, can serve as a proxy for historical exposures. Our actuaries require this assumption to estimate expected loss ratios and expected DCCE ratios used by the Bornhuetter-Ferguson reserving methods. They may
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also use this assumption to establish exposure levels for recent accident years, characterized by “green” or immature data, when working with stochastic reserving models.
•Claims having atypical emergence patterns. Characteristics of certain subsets of claims, such as high frequency, high severity, or mass tort claims, have the potential to distort patterns contained in historical paid loss, reported loss and paid DCCE data. When testing indicates this to be the case for a particular subset of claims, our actuaries segregate these claims from the data and analyze them separately. Subsets of claims that could fall into this category include hurricane claims or claims for other weather events where total losses we incurred were very large, individual large claims and asbestos and environmental claims.
These key assumptions have not changed for several years. Paid losses, reported losses and paid DCCE are subject to random as well as systematic influences. As a result, actual paid losses, reported losses and paid DCCE are virtually certain to differ from projections. Such differences are consistent with what specific models for our business lines predict and with the related patterns in the historical data used to develop these models. As a result, management does not closely monitor statistically insignificant differences between actual and projected data.
Reserve Estimate Variability
Management believes that the standard error of a reserve estimate, a measure of the estimate’s variability, provides the most appropriate measure of the estimate’s sensitivity. The reserves we establish depend on the models we use and the related parameters we estimate in the course of conducting reserve analyses. However, the actual amount required to settle all outstanding insured claims, including IBNR claims, as of a financial statement date depends on stochastic, or random, elements as well as the systematic elements captured by our models and estimated model parameters. For the lines of business we write, process uncertainty – the inherent variability of loss and loss expense payments – typically contributes more to the imprecision of a reserve estimate than parameter uncertainty.
Consequently, a sensitivity measure that ignores process uncertainty would provide an incomplete picture of the reserve estimate’s sensitivity. Since a reserve estimate’s standard error accounts for both process and parameter uncertainty, it reflects the estimate’s full sensitivity to a range of reasonably likely scenarios.
The table below provides standard errors and reserve ranges by major property casualty lines of business and in total for net loss and loss expense reserves as well as the potential effects on our net income, assuming a 21% federal tax rate. Standard errors and reserve ranges for assorted groupings of these lines of business cannot be computed by simply adding the standard errors and reserve ranges of the component lines of business, since such an approach would ignore the effects of product diversification. See Liquidity and Capital Resources, Property Casualty Loss and Loss Expense Obligations and Reserves, Range of Reasonable Reserves, for more details on our total reserve range. While the table reflects our assessment of the most likely range within which each line’s actual unpaid loss and loss expenses may fall, one or more lines’ actual unpaid loss and loss expenses could nonetheless fall outside of the indicated ranges.
(Dollars in millions)
Net loss and loss expense range of reserves
Carried reserves
Low point
High point
Standard error
Net income
effect
At December 31, 2025
Total
$
11,012
$
10,073
$
11,141
$
534
$
422
Commercial casualty
$
3,837
$
3,498
$
4,047
$
274
$
217
Commercial property
495
368
520
76
60
Commercial auto
1,085
1,003
1,116
57
45
Workers' compensation
1,013
855
1,047
96
76
Personal auto
580
533
620
44
35
Homeowners
571
484
580
48
38
Excess and surplus
1,268
1,081
1,384
152
120
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Life Policy and Investment Contract Reserves
We establish the reserves for traditional life policies, including term, whole life and other products based on certain cash flow assumptions including mortality and lapse rates. These assumptions are established based on our current expectations and are reviewed annually to determine any necessary updates. They are also updated on an interim basis if evidence suggests that they should be revised. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our cash flow assumptions. These reserves also include a discount rate assumption that is based on upper-medium grade fixed-income instrument yields (market value discount rates) and is updated quarterly.
The gross reserve balance for term and whole life policy reserves was $1.529 billion, or 51.1%, of total life policy and investment contract reserves at December 31, 2025. The following table summarizes the sensitivity, on a net basis, of our term and whole life policy reserves and reinsurance recoverable amounts to hypothetical changes in key assumptions and the resulting increase/(decrease) to pretax net income and pretax other comprehensive income:
(Dollars in millions)
At December 31, 2025
Pretax Net Income
Pretax Other Comprehensive Income
Assumptions set by actuaries and approved by management:
Mortality
Effect of a 1% increase
$
(7)
$
—
Effect of a 1% decrease
7
—
Lapse rates
Effect of a 10% increase
$
21
$
(4)
Effect of a 10% decrease
(20)
3
Assumptions set by market values:
Market value discount rate
Effect of a 100 basis point increase
$
—
$
160
Effect of a 100 basis point decrease
—
(198)
We establish reserves for our universal life, deferred annuity and other investment contracts, equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Charges include surrender and contract administration charges as well as asset-based fees. The reserve balance for these contracts was $1.225 billion, or 40.9%, of total life policy and investment contract reserves, at December 31, 2025.
Some of our universal life insurance policies contain no-lapse guarantee provisions. For these policies, we establish a reserve, or other additional liability, in addition to the account balance based on expected no-lapse guarantee benefits and expected policy assessments. Key assumptions used to establish this other additional liability reserve are expected investment returns and projected lapse rates. These assumptions, and other relevant inputs, are reviewed annually and on an interim basis in line with the process described above for traditional life policies. The reserve balance was $138 million, or 4.6%, of total life policy and investment contract reserves at December 31, 2025, and is included as a component of universal life reserves in Item 8, Note 5 of the Consolidated Financial Statements.
Asset Impairment
Our investment portfolio is our largest asset. We monitor the fixed-maturity portfolio and all other assets for signs of credit-related or other impairment. We monitor decreases in the fair value of invested assets and the need for an allowance for credit losses for our fixed-maturity portfolio; allowances for expected credit losses on receivable and recoverable assets considering past events, current conditions and reasonable and supportable forecasts; an accumulation of company costs in excess of the amount originally expected to acquire or construct an asset; or other factors such as bankruptcy, deterioration of creditworthiness or failure to pay interest; and changes in legal factors or in the business climate.
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The application of our invested assets impairment policy resulted in no write-downs of impaired securities intended to be sold in 2025 or 2024. Write-downs of impaired securities intended to be sold reduced our income before income taxes by $4 million in 2023. Write-downs represent noncash charges to income and are reported as investment losses. The application of our noninvested assets impairment policy did not have a material effect on our financial condition in 2025 or 2024.
Our internal investment portfolio managers monitor their assigned portfolios. If a fixed-maturity security is valued below amortized cost, the portfolio managers undertake additional reviews. Such declines often occur in conjunction with events taking place in the overall economy and market, combined with events specific to the industry or operations of the issuing organization. Managers review quantitative measurements such as a declining trend in fair value and the extent of the fair value decline, as well as qualitative measures such as pending events, credit ratings and issuer liquidity. We are even more proactive when these declines in valuation are greater than might be anticipated when viewed in the context of overall economic and market conditions. We provide detailed information about fixed-maturity securities fair valued in a continuous loss position at year-end 2025 in Item 7A, Quantitative and Qualitative Disclosures About Market Risk.
An available for sale fixed-maturity security is impaired if the fair value of the security is below amortized cost. The impaired loss is charged to net income when we have the intent to sell the security or it is more likely than not we will be required to sell the security before recovery of the amortized cost. For impaired securities we intend to hold, an allowance for credit related losses is recorded in investment losses when the company determines a credit loss has been incurred based on certain factors such as adverse conditions, credit rating downgrades or failure of the issuer to make scheduled principal or interest payments. A credit loss is determined using a discounted cash flow analysis by comparing the present value of expected cash flows with the amortized cost basis, limited to the difference between fair value and amortized cost. Noncredit losses are recognized in other comprehensive income as a change in unrealized gains and losses on investments. We provide information about valuations of our invested assets in Item 8, Note 2 of the Consolidated Financial Statements.
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Fair Value Measurements
Valuation of Financial Instruments
Fair value is defined as the exit price or the amount that would be (1) received to sell an asset or (2) paid to transfer a liability in an orderly transaction between marketplace participants at the measurement date. When determining an exit price, we must, whenever possible, rely upon observable market data.
We have categorized our financial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level that is significant to the fair value measurement of the instrument. While we consider pricing data from outside services, we ultimately determine whether the data or inputs used by these outside services are observable or unobservable.
Financial assets and liabilities recorded in the Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as described in Item 8, Note 3 of the Consolidated Financial Statements.
Level 1 and Level 2 Valuation Techniques
Substantially all of the $30.965 billion of securities in our investment portfolio at year-end 2025, measured at fair value, are classified as Level 1 or Level 2. Financial assets that fall within Level 1 and Level 2 are priced according to observable data from identical or similar securities that have traded in the marketplace. Also within Level 2 are securities that are valued by outside services or brokers where we have evaluated and verified the pricing methodology and determined that the inputs are observable.
Recent Accounting Pronouncements
Information about recent accounting pronouncements is provided in Item 8, Note 1 of the Consolidated Financial Statements.
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Financial Results
Consolidated financial results primarily reflect the results of our five reporting segments. These segments are defined based on financial information we use to evaluate performance and to determine the allocation of assets.
•Commercial lines insurance
•Personal lines insurance
•Excess and surplus lines insurance
•Life insurance
•Investments
We report as Other the noninvestment operations of the parent company and its noninsurer subsidiary, CFC Investment Company. In addition, Other includes the financial results of our reinsurance assumed operations, known as Cincinnati Re®, and our London-based global specialty underwriter, known as Cincinnati Global Underwriting Ltd.SM (Cincinnati Global).
We measure profit or loss for our commercial lines, personal lines, excess and surplus lines and life insurance segments based upon underwriting results (profit or loss), which represent net earned premium less loss and loss expenses, or contract holders’ benefits incurred, and underwriting expenses on a pretax basis. We also evaluate results for our consolidated property casualty insurance operations. That is the total of our standard market segments (commercial lines and personal lines), our excess and surplus lines insurance segment, Cincinnati Re and Cincinnati Global. For analysis of our consolidated property casualty insurance results, it is important to include the earned premiums, loss and loss expenses and also underwriting expenses reported as Other. Underwriting results and segment pretax operating income are not substitutes for net income determined in accordance with GAAP.
For our consolidated property casualty insurance operations as well as the insurance segments, statutory accounting data and ratios are key performance indicators that we use to assess business trends and to make comparisons to industry results, since GAAP-based industry data generally is not as readily available.
Investments held by the parent company and the investment portfolios for the insurance subsidiaries are managed and reported as the investments segment, separate from our underwriting business. Net investment income and net investment gains and losses for our investment portfolios are discussed in Investments Results.
The calculations of segment data are described in more detail in Item 8, Note 18 of the Consolidated Financial Statements. The following sections provide analysis and discussion of results of operations for each of the five segments.
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Consolidated Property Casualty Insurance Results
Earned and net written premiums for our consolidated property casualty operations grew in 2025, reflecting average renewal price increases, a higher level of insured exposures and strategic initiatives for targeted growth. A key measure of property casualty profitability is underwriting profit or loss. Our 2025 underwriting profit of $501 million was $79 million less than in 2024, including a $249 million unfavorable effect from a higher amount of catastrophe losses, primarily from the January 2025 wildfires in southern California. Prior accident year loss experience before catastrophes during 2025 was $13 million less favorable than in 2024. 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 and our company. Higher losses and loss expenses, especially for liability lines of business, reflect increased uncertainty of estimated ultimate losses. Until longer-term paid loss cost trends or other inflation effects become more clear, we intend to remain prudent in reserving for estimated ultimate losses. We continue working to improve underwriting profitability, such as through higher pricing and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices. Underwriting profit trends are discussed further below.
The table below highlights property casualty results, with analysis and discussion in the sections that follow. That analysis and discussion includes sections by segment.
Overview – Three-Year Highlights
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Earned premiums
$
9,653
$
8,568
$
7,645
13
12
Fee revenues
14
12
11
17
9
Total revenues
9,667
8,580
7,656
13
12
Loss and loss expenses from:
Current accident year before catastrophe losses
5,485
4,848
4,463
13
9
Current accident year catastrophe losses
1,046
824
710
27
16
Prior accident years before catastrophe losses
(128)
(141)
(168)
9
16
Prior accident years catastrophe losses
(68)
(95)
(47)
28
(102)
Loss and loss expenses
6,335
5,436
4,958
17
10
Underwriting expenses
2,831
2,564
2,297
10
12
Underwriting profit
$
501
$
580
$
401
(14)
45
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year before catastrophe losses
56.8
%
56.6
%
58.4
%
0.2
(1.8)
Current accident year catastrophe losses
10.8
9.6
9.3
1.2
0.3
Prior accident years before catastrophe losses
(1.3)
(1.6)
(2.2)
0.3
0.6
Prior accident years catastrophe losses
(0.7)
(1.1)
(0.6)
0.4
(0.5)
Loss and loss expenses
65.6
63.5
64.9
2.1
(1.4)
Underwriting expenses
29.3
29.9
30.0
(0.6)
(0.1)
Combined ratio
94.9
%
93.4
%
94.9
%
1.5
(1.5)
Combined ratio:
94.9
%
93.4
%
94.9
%
1.5
(1.5)
Contribution from catastrophe losses and prior years
reserve development
8.8
6.9
6.5
1.9
0.4
Combined ratio before catastrophe losses and prior years
reserve development
86.1
%
86.5
%
88.4
%
(0.4)
(1.9)
Performance highlights for consolidated property casualty operations include:
•Premiums – Agency renewal written premiums increased $943 million or 13% in 2025, compared with 2024, and continued to contribute to growth in earned premiums and net written premiums that rose in each of our property casualty insurance segments. The renewal premium increase was largely due to average renewal price
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increases and a higher level of insured exposures. Price increases with enhanced precision continue to benefit operating results.
New business written premiums produced through agencies decreased $67 million in 2025, compared with 2024. Agents appointed during 2025 or 2024 produced a 2025 increase in standard lines new business of $87 million. Growth initiatives also favorably affect growth in subsequent years, particularly as newer agency relationships mature over time.
Cincinnati Re produced $591 million of 2025 net written premiums, a $6 million decrease in other written premiums, compared with 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 decrease included a $12 million net favorable effect from estimated premiums to reinstate treaties affected by the California wildfires. In 2025, earned premiums for Cincinnati Re totaled $582 million.
Net written premiums for Cincinnati Global were $334 million in 2025, an increase of $31 million in other written premiums, compared with 2024. In 2025, earned premiums for Cincinnati Global totaled $311 million.
Other written premiums also include premiums ceded to reinsurers as part of our ceded reinsurance program. An increase in ceded premiums, other than Cincinnati Re and Cincinnati Global premiums, reduced net written premium growth by $58 million in 2025. Other written premiums for 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.
The table below analyzes premium revenue components and trends.
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Agency renewal written premiums
$
8,023
$
7,080
$
6,261
13
13
Agency new business written premiums
1,474
1,541
1,177
(4)
31
Other written premiums
585
622
608
(6)
2
Net written premiums
10,082
9,243
8,046
9
15
Unearned premium change
(429)
(675)
(401)
36
(68)
Earned premiums
$
9,653
$
8,568
$
7,645
13
12
•Combined ratio – The combined ratio increased by 1.5 percentage points in 2025, compared with 2024, including a 1.6 percentage-point increase in the ratio for catastrophe losses. The 2025 ratio for current accident year losses and loss expenses before catastrophes increased by 0.2 percentage points. That ratio increase included an increase of 1.4 points for the IBNR portion and a decrease of 1.2 points for the case incurred portion. Price increases and other underwriting efforts have helped to manage effects of losses that include inflation effects. The remainder of the 2025 combined ratio increase included a decrease of 0.6 percentage points in the ratio for underwriting expenses, partially offset by 0.3 percentage points less benefit in the ratio for prior accident year losses and loss expenses before catastrophes. We further discuss ratios related to reserve development in the sections that follow the Catastrophe Losses Incurred table below.
Our statutory combined ratio was 94.7% in 2025 compared with 92.9% in 2024 and 94.6% in 2023. The estimated statutory combined ratio for the property casualty industry, with the industry’s ratio excluding its mortgage and financial guaranty lines of business and based on industry data reported through the first nine months of 2025, was 94.0% in 2025, 98.9% in 2024 and 101.9% in 2023. The contribution of catastrophe losses to our statutory combined ratio was 10.1 percentage points in 2025, 8.4 percentage points in 2024 and 8.8 percentage points in 2023, compared with industry estimates of 8.0, 7.7 and 8.5 percentage points, respectively, with 2025 representing industry data reported through the first nine months of 2025. Components of the combined ratio are discussed below.
Catastrophe loss trends are an important factor in assessing trends for overall underwriting results. Our 10-year historical annual average contribution of catastrophe losses to the combined ratio was 8.6 percentage points at December 31, 2025. Our five-year average was 9.0 percentage points.
Net losses from catastrophes for 2025 included recoveries from various reinsurers that participate in our reinsurance ceded treaties. The recovery related to the California wildfires based on loss estimates as of December 31, 2025, was $435 million, excluding reinsurance recoveries from Cincinnati Re.
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During 2025, there was no recovery from reinsurers for losses pertaining to the Cincinnati Re only reinsurance program effective June 1, 2025. For the program effective June 1, 2024, recoveries of $34 million were estimated for the 2025 California wildfires. See Item 7, Liquidity and Capital Resources, 2026 Reinsurance Ceded Programs, for a discussion of the Cincinnati Re only reinsurance program and other reinsurance coverage.
The following table shows catastrophe losses incurred for the past two calendar years, net of reinsurance, as well as the effect of loss development on prior period catastrophe reserves. We individually list declared catastrophe events for which our incurred losses reached or exceeded $25 million.
Catastrophe Losses Incurred
(Dollars in millions, net of reinsurance)
Excess and surplus lines
Commercial lines
Personal lines
Dates
Events
Regions
Other
Total
2025
Jan. 7-28
Wildfire
West
$
1
$
325
$
—
$
122
$
448
Mar. 14-17
Flood, Lightning, Wind
Midwest, Northeast, South
56
96
1
1
154
Apr. 1-7
Flood, Lightning, Wind
Midwest, South
14
32
—
—
46
May 15-16
Flood, Lightning, Wind
Midwest, Northeast
31
91
1
2
125
All other 2025 catastrophes
86
165
2
20
273
Development on 2024 and prior catastrophes
(20)
(37)
(2)
(9)
(68)
Calendar year incurred total
$
168
$
672
$
2
$
136
$
978
2024
Mar. 12-17
Flood, Lightning, Wind
Midwest, South
$
30
$
31
$
—
$
—
$
61
Mar. 31 - Apr. 4
Flood, Lightning, Wind
Midwest, Northeast, South
9
23
—
—
32
May 6-10
Flood, Lightning, Wind
Midwest, South
25
30
1
—
56
May 25-26
Flood, Lightning, Wind
Midwest, South
38
29
1
—
68
Jul. 13-18
Flood, Lightning, Wind
Midwest, Northeast
18
11
—
—
29
Sep. 25-28
Flood, Lightning, Wind
Midwest, South (Helene)
55
133
2
43
233
Oct. 9-10
Flood, Lightning, Wind
South (Milton)
6
3
—
61
70
All other 2024 catastrophes
92
149
4
30
275
Development on 2023 and prior catastrophes
(31)
(43)
—
(21)
(95)
Calendar year incurred total
$
242
$
366
$
8
$
113
$
729
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Consolidated Property Casualty Insurance Loss and Loss Expenses
Loss and loss expenses include both net paid losses and reserve changes for unpaid losses as well as the associated loss expenses. For all property casualty lines of business in aggregate, net loss and loss expense reserves at December 31, 2025, were $1.344 billion higher than at year-end 2024, including $1.143 billion for incurred but not reported (IBNR) reserves. The $1.344 billion reserve increase raised year-end 2024 net loss and loss expense reserves by 14%, compared with a 13% increase in 2025 earned premiums.
Most of the incurred losses and loss expenses shown in the consolidated property casualty insurance results three-year highlights table are for the respective current accident years, with reserve development on prior accident years shown separately. Since less than half of our consolidated property casualty current accident year incurred losses and loss expenses represents net paid amounts, the majority represents reserves for our estimate of ultimate losses and loss expenses. These reserves develop over time, and we re-estimate previously reported reserves as we learn more about the development of the related claims. The table below illustrates that development. For example, the 66.2% accident year 2024 loss and loss expense ratio reported as of December 31, 2024, developed favorably by 3.2 percentage points to 63.0% due to claims settling for less than previously estimated, or due to updated reserve estimates for unpaid claims, as of December 31, 2025. Accident years 2024 and 2023 have both developed favorably, as indicated by the progression over time for the ratios in the table.
(Dollars in millions)
Accident year loss and loss expenses incurred and ratios to earned premiums:
Accident year:
2025
2024
2023
2025
2024
2023
as of December 31, 2025
$
6,531
$
5,396
$
4,796
67.6
%
63.0
%
62.7
%
as of December 31, 2024
5,672
4,804
66.2
62.8
as of December 31, 2023
5,173
67.7
Catastrophe loss trends, discussed above, accounted for some of the movement in the current accident year loss and loss expense ratio for 2025, compared with 2024. Catastrophe losses added 10.8 percentage points in 2025, 9.6 points in 2024 and 9.3 points in 2023 to the respective consolidated property casualty current accident year loss and loss expense ratios in the table above.
The 56.8% ratio for current accident year loss and loss expenses before catastrophe losses for 2025 increased 0.2 percentage points compared with the 56.6% accident year 2024 ratio measured as of December 31, 2024. The increase included a 0.4 percentage-point increase in the ratio for current accident year losses of $2 million or more per claim, shown in the table below. It also included an unfavorable 0.3 points for the net effect of $52 million for reinsurance treaty reinstatement premiums related to the January 2025 wildfires in southern California.
Reserve development on prior accident years continued to net to a favorable amount in 2025, and was primarily due to less-than-anticipated loss emergence on known claims. We recognized $196 million of favorable development in 2025, compared with $236 million in 2024 and $215 million in 2023. Of the $40 million decrease in 2025, compared with 2024, $46 million was attributable to our commercial auto line of business. Approximately 97% of our net favorable reserve development on prior accident years recognized during 2025 occurred in our commercial property and workers' compensation lines of business. In 2024, our workers' compensation, commercial property and homeowner lines of business were responsible for approximately 89% of the favorable reserve development. As discussed in Liquidity and Capital Resources, Property Casualty Loss and Loss Expense Obligations and Reserves, Property Casualty Insurance Development of Estimated Reserves by Accident Year, commercial casualty and workers' compensation are considered long-tail lines with the potential for revisions inherent in estimating reserves. Favorable development recognized during 2023 was primarily from our workers’ compensation, commercial property and homeowner lines of business. Development by accident year is further discussed in Liquidity and Capital Resources, Property Casualty Insurance Development of Estimated Reserves by Accident Year.
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Consolidated Property Casualty Insurance Losses by Size
(Dollars in millions, net of reinsurance)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Current accident year losses greater than $5,000,000
$
116
$
68
$
141
71
(52)
Current accident year losses $2,000,000-$5,000,000
156
138
144
13
(4)
Large loss prior accident year reserve development
172
75
94
129
(20)
Total large losses incurred
444
281
379
58
(26)
Losses incurred but not reported
814
783
596
4
31
Other losses excluding catastrophe losses
3,046
2,782
2,571
9
8
Catastrophe losses
939
704
634
33
11
Total losses incurred
$
5,243
$
4,550
$
4,180
15
9
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year losses greater than $5,000,000
1.2
%
0.8
%
1.9
%
0.4
(1.1)
Current accident year losses $2,000,000-$5,000,000
1.6
1.6
1.9
0.0
(0.3)
Large loss prior accident year reserve development
1.8
0.9
1.2
0.9
(0.3)
Total large loss ratio
4.6
3.3
5.0
1.3
(1.7)
Losses incurred but not reported
8.4
9.1
7.8
(0.7)
1.3
Other losses excluding catastrophe losses
31.6
32.5
33.6
(0.9)
(1.1)
Catastrophe losses
9.7
8.2
8.3
1.5
(0.1)
Total loss ratio
54.3
%
53.1
%
54.7
%
1.2
(1.6)
In 2025, total large losses incurred increased by $163 million, or 58%, net of reinsurance, largely due to an increase for our commercial lines insurance segment. The corresponding 2025 ratio increased 1.3 percentage points, compared with 2024. The large loss data in the table above does not include Cincinnati Re and Cincinnati Global. Our analysis of large losses incurred indicated no unexpected concentration of these losses and reserve increases by geographic region, policy inception, agency or field marketing territory. We believe the inherent volatility 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 volatility in addition to general inflationary trends in loss costs.
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Consolidated Property Casualty Insurance Underwriting Expenses
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Commission expenses
$
1,845
$
1,605
$
1,438
15
12
Other underwriting expenses
981
953
854
3
12
Policyholder dividends
5
6
5
(17)
20
Total underwriting expenses
$
2,831
$
2,564
$
2,297
10
12
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Commission expenses
19.1
%
18.7
%
18.8
%
0.4
(0.1)
Other underwriting expenses
10.1
11.1
11.1
(1.0)
0.0
Policyholder dividends
0.1
0.1
0.1
0.0
0.0
Total underwriting expense ratio
29.3
%
29.9
%
30.0
%
(0.6)
(0.1)
Consolidated property casualty commission expenses rose $240 million, or 15%, in 2025, with profit-sharing commissions for agencies increasing by $41 million. The 2025 ratio of commission expenses as a percent of earned premiums increased by 0.4 percentage points, compared with 2024. The ratio for 2024 decreased compared with 2023. In 2025, other underwriting expenses as a percent of earned premiums decreased by 1.0 percentage points, compared with 2024, as earned premiums rose faster than other underwriting expenses. The ratio improvement was primarily from a decrease in employee-related expenses. The 2025 ratio also included an unfavorable 0.2 points for the effect of reinstatement premiums. In 2024, other underwriting expenses as a percent of earned premiums matched 2023, as earned premiums kept pace with other underwriting expenses. The three-year period ending in 2025 also included ongoing expense management efforts.
Commission expenses include our profit-sharing commissions, which are primarily based on one-year and three-year profitability of an agency’s business. The aggregate profit trend for agencies that earn these profit-based commissions can differ from the aggregate profit trend for all agencies reflected in our consolidated property casualty results.
Salaries, benefits and payroll taxes for our associates account for approximately half of our property casualty other underwriting expenses. Most of our associates either provide direct service to the property casualty portion of our agencies’ businesses or provide support to those associates.
Discussions below of our property casualty insurance segments provide additional details about our results.
Cincinnati Financial Corporation - 2025 10-K - Page 63
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Commercial Lines Insurance Results
Overview – Three-Year Highlights
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Earned premiums
$
4,863
$
4,486
$
4,264
8
5
Fee revenues
5
4
4
25
0
Total revenues
4,868
4,490
4,268
8
5
Loss and loss expenses from:
Current accident year before catastrophe losses
2,912
2,660
2,594
9
3
Current accident year catastrophe losses
188
273
316
(31)
(14)
Prior accident years before catastrophe losses
(110)
(107)
(112)
(3)
4
Prior accident years catastrophe losses
(20)
(31)
(11)
35
(182)
Loss and loss expenses
2,970
2,795
2,787
6
0
Underwriting expenses
1,459
1,384
1,313
5
5
Underwriting profit
$
439
$
311
$
168
41
85
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year before catastrophe losses
59.9
%
59.3
%
60.8
%
0.6
(1.5)
Current accident year catastrophe losses
3.9
6.1
7.4
(2.2)
(1.3)
Prior accident years before catastrophe losses
(2.3)
(2.4)
(2.6)
0.1
0.2
Prior accident years catastrophe losses
(0.4)
(0.7)
(0.2)
0.3
(0.5)
Loss and loss expenses
61.1
62.3
65.4
(1.2)
(3.1)
Underwriting expenses
30.0
30.9
30.8
(0.9)
0.1
Combined ratio
91.1
%
93.2
%
96.2
%
(2.1)
(3.0)
Combined ratio:
91.1
%
93.2
%
96.2
%
(2.1)
(3.0)
Contribution from catastrophe losses and prior years
reserve development
1.2
3.0
4.6
(1.8)
(1.6)
Combined ratio before catastrophe losses and prior years
reserve development
89.9
%
90.2
%
91.6
%
(0.3)
(1.4)
Performance highlights for the commercial lines insurance segment include:
•Premiums – Earned premiums and net written premiums rose in 2025, including a $263 million, or 6%, increase in renewal written premiums that continued to include higher average pricing and a higher level of insured exposures. New business written premiums in 2025 increased $27 million, or 4%, compared with 2024, as we continued to carefully underwrite each policy in a highly competitive market.
•Combined ratio – The 2025 combined ratio improved by 2.1 percentage points compared with 2024, including a 1.9 percentage-point decrease in the ratio component for catastrophe losses. The 2025 combined ratio improvement was partially offset by 0.6 points from a higher ratio for current accident year loss and loss expenses before catastrophe losses, compared with 2024. That ratio increase included an increase of 1.9 points for the IBNR portion and a decrease of 1.3 points for the case incurred portion. Price increases and other underwriting actions have helped to manage effects of losses that include inflation effects. Development on prior accident years loss and loss expense reserves before catastrophes during 2025 was 0.1 percentage points less favorable than in 2024, as discussed below.
Pricing precision and other initiatives to improve commercial lines underwriting profitability complement our business practices that continue to leverage the local presence of our field associates. Field marketing representatives meet with local agencies to assess each risk, determine limits of insurance and establish appropriate terms and conditions. They underwrite new business, with collaboration and expertise from headquarters associates as needed, while field loss control, machinery and equipment and claims representatives conduct on-site inspections. Field claims representatives also assist underwriters by preparing full reports on their first-hand observations of risk quality.
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Our commercial lines statutory combined ratio was 90.3% in 2025, compared with 92.2% in 2024 and 95.6% in 2023. The contribution of catastrophe losses to our commercial lines statutory combined ratio was 3.5 percentage points in 2025, 5.4 percentage points in 2024 and 7.2 percentage points in 2023.
Commercial Lines Insurance Premiums
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Agency renewal written premiums
$
4,350
$
4,087
$
3,876
6
5
Agency new business written premiums
768
741
584
4
27
Other written premiums
(120)
(138)
(124)
13
(11)
Net written premiums
4,998
4,690
4,336
7
8
Unearned premium change
(135)
(204)
(72)
34
(183)
Earned premiums
$
4,863
$
4,486
$
4,264
8
5
We continue to refine our use of predictive analytics tools to improve pricing precision as we further segment commercial lines policies, emphasizing identification and retention of policies we believe have relatively stronger price adequacy. These tools better align individual insurance policy pricing to risk attributes, providing our underwriters with enhanced abilities to target profitability and to discuss pricing impacts with our agencies. We also continue to leverage our local relationships with agents through the efforts of our teams that work closely with them. We believe our field focus is unique and has several advantages, including providing us with quality intelligence on local market conditions. We seek to maintain appropriate pricing discipline for both new and renewal business as management continues to emphasize the importance of our agencies and underwriters assessing account quality to make careful decisions on a case-by-case basis whether to write new business or renew a policy. Premium rate credits may be used to retain renewals of quality business and to earn new business, but we do so selectively in order to avoid commercial accounts that we believe have insufficient profit margins.
Our 6% increase in 2025 agency renewal written premiums included higher average pricing. We measure average changes in commercial lines renewal pricing as the 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. In 2025, our standard commercial lines policies averaged an estimated pricing change at a percentage in the mid-single-digit range. Our average commercial lines pricing change includes the flat pricing effect of 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, the average commercial lines pricing change we report reflects a blend of policies that did not expire and other policies that did expire during the measurement period.
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For only those commercial lines policies that did expire and were then renewed during 2025, we estimate that the average price increase was at a percentage near the high end of the mid-single-digit range. During 2025, we continued to further segment our commercial lines policies, emphasizing identification and retention of policies we believed had relatively stronger price adequacy. Conversely, we continued to seek more aggressive renewal terms and conditions on policies we believed had relatively weaker pricing, in turn retaining fewer of those policies.
Our 2025 increase of 6% for the commercial lines segment's agency renewal written premiums also included a higher level of insured exposures, in addition to other factors such as changes in policy retention rates or changes in mix of business that can cause variations in average premiums per policy. 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.
Changes in the economy can affect insured exposures that directly relate to premium amounts charged for some policies. For commercial accounts, we usually calculate initial estimates for general liability premiums based on estimated sales or payroll volume, while we calculate workers’ compensation premiums based on estimated payroll volume. A change in sales or payroll volume generally indicates a change in demand for a business’s goods or services, as well as a change in its exposure to risk. Policyholders who experience sales or payroll volume changes due to economic factors may also have other exposures requiring insurance, such as commercial auto or commercial property. Premium levels for these other types of coverages generally are not linked directly to sales or payroll volumes.
Premiums resulting from audits of actual sales or payrolls that confirmed or adjusted initial premium estimates are part of net written premiums and earned premiums. They also contribute to increases or decreases in our agency renewal written premiums. The contribution to our commercial lines earned premiums was $92 million, $107 million and $157 million in 2025, 2024 and 2023, respectively. The contribution on a net written premium basis was $92 million, $108 million and $136 million in 2025, 2024 and 2023, respectively. These net written premium amounts are included with agency renewal written premiums in the Commercial Lines Insurance Premiums table above.
In 2025, our commercial lines new business premiums written by our agencies increased $27 million, or 4%, compared with 2024, as we continued to carefully underwrite each policy in a highly competitive market. New business premium volume in recent years has been significantly influenced by new agency appointments. Agencies appointed since the beginning of 2024 produced commercial lines new business written premiums of $80 million, in aggregate, during 2025, up $58 million from what they produced during 2024. All other agencies contributed the remaining $688 million, down $31 million from the $719 million they produced in 2024.
For new business, our field associates are frequently meeting with our agents to: help judge the quality of each account; emphasize the Cincinnati value proposition; call on sales prospects with those agents; and provide appropriate quotes after carefully evaluating risk exposures. Some of our new business comes from accounts that are not new to the agent. We believe these seasoned accounts tend to be priced more accurately than business that is new to us and the agency. As we appoint new agencies who choose to move accounts to us, we report these accounts as new business to us.
Other written premiums primarily consist of premiums that are ceded to reinsurers and lower our net written premiums. A decrease in ceded premiums increased net written premium growth by $17 million in 2025.
Cincinnati Financial Corporation - 2025 10-K - Page 66
Table of Contents
Commercial Lines Insurance Loss and Loss Expenses
Loss and loss expenses include both net paid losses and reserve changes for unpaid losses as well as the associated loss expenses. Most of the incurred losses and loss expenses shown in the commercial lines insurance segment three-year highlights table are for the respective current accident years, with reserve development on prior accident years shown separately. Since less than half of our commercial lines insurance segment current accident year incurred losses and loss expenses represents net paid amounts, the majority represents reserves for our estimate of ultimate losses and loss expenses. These reserves develop over time, and we re-estimate previously reported reserves as we learn more about development on the related claims. The table below illustrates that development. For example, the 65.4% accident year 2024 loss and loss expense ratio reported as of December 31, 2024, developed favorably by 3.5 percentage points to 61.9% due to claims settling for less than previously estimated, or due to updates to reserve estimates for unpaid claims, as of December 31, 2025. Accident years 2024 and 2023 for the commercial lines insurance segment have both developed favorably, as indicated by the progression over time of the ratios in the table.
(Dollars in millions)
Accident year loss and loss expenses incurred and ratios to earned premiums:
Accident year:
2025
2024
2023
2025
2024
2023
as of December 31, 2025
$
3,100
$
2,775
$
2,672
63.8
%
61.9
%
62.7
%
as of December 31, 2024
2,933
2,693
65.4
63.2
as of December 31, 2023
2,910
68.2
Catastrophe losses, as discussed in Consolidated Property Casualty Insurance Results, explain some of the movement in the current accident year loss and loss expense ratio for accident year 2025, compared with 2024. Catastrophe losses added 3.9 percentage points in 2025, 6.1 points in 2024 and 7.4 points in 2023 to the respective commercial lines current accident year loss and loss expense ratios in the table above.
The 59.9% ratio for current accident year loss and loss expenses before catastrophe losses for 2025 increased 0.6 percentage points compared with the 59.3% accident year 2024 ratio measured as of December 31, 2024. The change included an increase in large losses incurred, described below including a table with corresponding ratios for new losses above $2 million, with a 0.6 percentage-point increase in the 2025 ratio. Contributions to the ratio increase included inflation effects that were partially offset by favorable impacts from various initiatives, such as those to improve pricing precision, risk selection and loss experience related to claims and loss control practices.
Commercial lines reserve development on prior accident years of $130 million in 2025 continued to net to a favorable amount and provided a smaller benefit than the $138 million recognized in 2024. The $8 million net decrease in 2025, compared with 2024, included $46 million from our commercial auto line of business and $18 million from our workers' compensation line of business, partially offset by a $52 million increase from our commercial property line of business. Most of our commercial lines net favorable reserve development on prior accident years recognized during 2025 occurred in our commercial property and workers’ compensation lines of business. Net unfavorable reserve development on prior accident years of $41 million for commercial auto and $21 million for commercial casualty was recognized during 2025. Favorable development recognized during 2024 and 2023 was also mostly from our workers’ compensation and commercial property lines of business. As discussed in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, stable paid and reported loss patterns are a key assumption used to make projections necessary for estimating IBNR reserves. Development by accident year and other trends for commercial lines loss and loss expenses and the related ratios are further discussed in Liquidity and Capital Resources, Property Casualty Insurance Development of Estimated Reserves by Accident Year.
Cincinnati Financial Corporation - 2025 10-K - Page 67
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Commercial Lines Insurance Losses by Size
(Dollars in millions, net of reinsurance)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Current accident year losses greater than $5,000,000
$
71
$
51
$
109
39
(53)
Current accident year losses $2,000,000-$5,000,000
83
70
99
19
(29)
Large loss prior accident year reserve development
142
73
89
95
(18)
Total large losses incurred
296
194
297
53
(35)
Losses incurred but not reported
380
470
328
(19)
43
Other losses excluding catastrophe losses
1,514
1,417
1,393
7
2
Catastrophe losses
157
231
291
(32)
(21)
Total losses incurred
$
2,347
$
2,312
$
2,309
2
0
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year losses greater than $5,000,000
1.5
%
1.1
%
2.5
%
0.4
(1.4)
Current accident year losses $2,000,000-$5,000,000
1.7
1.5
2.3
0.2
(0.8)
Large loss prior accident year reserve development
2.9
1.7
2.1
1.2
(0.4)
Total large loss ratio
6.1
4.3
6.9
1.8
(2.6)
Losses incurred but not reported
7.8
10.5
7.7
(2.7)
2.8
Other losses excluding catastrophe losses
31.2
31.5
32.7
(0.3)
(1.2)
Catastrophe losses
3.2
5.2
6.8
(2.0)
(1.6)
Total loss ratio
48.3
%
51.5
%
54.1
%
(3.2)
(2.6)
In 2025, total large losses incurred increased by $102 million, or 53%, net of reinsurance. The corresponding 2025 ratio increased 1.8 percentage points, compared with 2024. The 2025 increase on a dollar basis was primarily due to an increase of $66 million for our commercial property line of business and $46 million for our commercial casualty line of business. The commercial casualty increase included $49 million from prior accident years. In 2024, total large losses incurred and the corresponding ratio were lower than in 2023, largely due to lower amounts of large losses for our commercial property line of business. Our analysis indicated no unexpected concentration of these losses and reserve increases by geographic region, policy inception, agency or field marketing territory. We believe the inherent volatility 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 volatility in addition to general inflationary trends in loss costs.
Commercial Lines Insurance Underwriting Expenses
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Commission expenses
$
900
$
818
$
780
10
5
Other underwriting expenses
554
560
528
(1)
6
Policyholder dividends
5
6
5
(17)
20
Total underwriting expenses
$
1,459
$
1,384
$
1,313
5
5
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Commission expenses
18.5
%
18.2
%
18.3
%
0.3
(0.1)
Other underwriting expenses
11.4
12.6
12.4
(1.2)
0.2
Policyholder dividends
0.1
0.1
0.1
0.0
0.0
Total underwriting expense ratio
30.0
%
30.9
%
30.8
%
(0.9)
0.1
Commercial lines commission expenses as a percent of earned premiums increased slightly in 2025, compared with 2024, reflecting an increase in the ratio for profit-sharing commissions for agencies. The ratio for 2024 decreased slightly compared with 2023. In 2025, other underwriting expenses as a percent of earned premiums decreased, compared with 2024, as other underwriting expenses decreased, primarily from employee-related expenses. In 2024, other underwriting expenses as a percent of earned premiums increased, compared with 2023, as earned
Cincinnati Financial Corporation - 2025 10-K - Page 68
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premiums rose at a slower pace than other underwriting expenses. The three-year period ending in 2025 also included ongoing expense management efforts.
Commercial Lines Insurance Outlook
Managing our commercial lines insurance segment includes efforts to address challenges in the commercial lines market of the U.S. property casualty industry. Competitive pressure is increasing and we continue to respond with enhanced pricing analytics and careful risk selection. We are committed to our agencies and focus on a long-term strategy when considering how to successfully navigate market pressures and changing conditions while profitably growing this segment.
We intend to grow through additional agency appointments, expansion of our local field presence, enhancing underwriting expertise and cross-selling or product expansion that meets the needs of an even larger percentage of our agencies' total commercial portfolio. Our goal is to provide flexibility in our process so that we can deliver an industry-leading agency experience to all of our agents as we work to be the first and last solution when they are considering business placement.
We intend to keep marketing our products to a broad range of business classes with a total account approach, while also continuing to diversify our book of business. Work continues to improve our pricing precision that enhances our segmentation of commercial risks, as underwriters emphasize underwriting discipline and careful management of rate levels. They seek to accurately assess risk by matching exposures and terms and conditions with appropriate premiums, evaluating each account on its individual characteristics. We believe that our initiatives to continually improve pricing precision and underwriting decision processes to manage loss cost effects will continue to benefit commercial lines profitability during 2026.
Cincinnati Financial Corporation - 2025 10-K - Page 69
Table of Contents
Personal Lines Insurance Results
Overview – Three-Year Highlights
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Earned premiums
$
3,199
$
2,623
$
2,044
22
28
Fee revenues
5
5
4
0
25
Total revenues
3,204
2,628
2,048
22
28
Loss and loss expenses from:
Current accident year before catastrophe losses
1,714
1,412
1,154
21
22
Current accident year catastrophe losses
709
409
352
73
16
Prior accident years before catastrophe losses
33
17
(20)
94
nm
Prior accident years catastrophe losses
(37)
(43)
(44)
14
2
Loss and loss expenses
2,419
1,795
1,442
35
24
Underwriting expenses
896
762
610
18
25
Underwriting profit (loss)
$
(111)
$
71
$
(4)
nm
nm
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year before catastrophe losses
53.6
%
53.9
%
56.4
%
(0.3)
(2.5)
Current accident year catastrophe losses
22.2
15.6
17.3
6.6
(1.7)
Prior accident years before catastrophe losses
1.0
0.7
(1.0)
0.3
1.7
Prior accident years catastrophe losses
(1.2)
(1.7)
(2.2)
0.5
0.5
Loss and loss expenses
75.6
68.5
70.5
7.1
(2.0)
Underwriting expenses
28.0
29.0
29.9
(1.0)
(0.9)
Combined ratio
103.6
%
97.5
%
100.4
%
6.1
(2.9)
Combined ratio:
103.6
%
97.5
%
100.4
%
6.1
(2.9)
Contribution from catastrophe losses and prior years
reserve development
22.0
14.6
14.1
7.4
0.5
Combined ratio before catastrophe losses and prior years
reserve development
81.6
%
82.9
%
86.3
%
(1.3)
(3.4)
Performance highlights for the personal lines insurance segment include:
•Premiums – Earned premiums and net written premiums continued to grow in 2025, due to increases in renewal written premiums that included higher average pricing and a higher level of insured exposures. Renewal written premiums rose $633 million, or 25%, in 2025, compared with 2024, while new business written premiums decreased $128 million, or 21%. Net written premiums included excess and surplus lines homeowner policies with premiums totaling $129 million in 2025 and $166 million in 2024.
•Combined ratio – The 2025 combined ratio increased by 6.1 percentage points, compared with 2024, including an increase of 7.1 points in the ratio for catastrophe losses. The combined ratio increase was partially offset by 0.3 points from a lower ratio for current accident year loss and loss expenses before catastrophe losses. That ratio decrease included an increase of 2.1 points for the IBNR portion and a decrease of 2.4 points for the case incurred portion. Price increases and other underwriting efforts have helped to manage effects of losses that include inflation effects. The combined ratio increase also included an increase of 0.3 points from reserve development on prior accident year loss and loss expenses before catastrophes during 2025 that was unfavorable by 1.0 points compared with 0.7 points in 2024.
We have increased our pricing precision and implemented numerous rate increases in recent years to improve our personal lines insurance segment results. In addition, we have made greater use of higher minimum loss deductibles and enhanced our property inspection processes to verify condition and insurance to value. We have worked to improve our geographic diversification by expanding our personal lines operation to additional states as the type of catastrophe risk can vary by state.
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Our personal lines statutory combined ratio was 102.8% in 2025, compared with 95.5% in 2024 and 98.3% in 2023. The contribution of catastrophe losses to our personal lines statutory combined ratio was 21.0 percentage points in 2025, 13.9 percentage points in 2024 and 15.1 percentage points in 2023.
Personal Lines Insurance Premiums
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Agency renewal written premiums
$
3,128
$
2,495
$
1,957
25
27
Agency new business written premiums
476
604
416
(21)
45
Other written premiums
(174)
(100)
(71)
(74)
(41)
Net written premiums
3,430
2,999
2,302
14
30
Unearned premium change
(231)
(376)
(258)
39
(46)
Earned premiums
$
3,199
$
2,623
$
2,044
22
28
Personal lines insurance is a strategic component of our overall relationship with most of our agencies and is an important component of our agencies’ relationships with their clients. We believe agents recommend our personal insurance products to their clients who seek to balance quality and price and who are attracted by our superior claims service and the benefits of our package approach. We also believe our continuing efforts to improve pricing precision are helping us attract and retain more of our agencies’ preferred business, while also obtaining higher rates for more thinly priced business.
The 25% increase in agency renewal written premiums in 2025 included the effect of various rate changes. We estimate that premium rates for our personal auto line of business increased at an average percentage in the high-single-digit range during 2025, with some individual policies experiencing lower or higher rate changes based on enhanced pricing precision enabled by predictive models that consider characteristics of specific risks. For our homeowner line of business, we estimate that price increases during 2025 averaged a percentage in the low-double-digit range. Similar to our personal auto line of business, that average varied widely by state, and some individual policies experienced lower or higher rate changes based on pricing precision and current rate level indications that helped determine appropriate premium rates.
The increase in agency renewal written premiums in 2025 also included 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 to repair damaged homes.
Personal lines new business written premiums decreased by $128 million, or 21%, during 2025, compared with 2024. We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools. 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.
Other written premiums primarily consist of premiums that are ceded to reinsurers and lower our net written premiums. An increase in ceded premiums reduced net written premium growth by $75 million in 2025. Ceded premiums for 2025 included $64 million for reinsurance reinstatement premiums related to the January 2025 wildfires in southern California. The $64 million of reinstatement premiums included $61 million for our homeowners line of business.
Cincinnati Financial Corporation - 2025 10-K - Page 71
Table of Contents
Personal Lines Insurance Loss and Loss Expenses
Loss and loss expenses include both net paid losses and reserve changes for unpaid losses as well as the associated loss expenses. Most of the incurred losses and loss expenses shown in the personal lines insurance segment three-year highlights table are for the respective current accident years, with reserve development on prior accident years shown separately. Since approximately two-thirds of our personal lines current accident year incurred losses and loss expenses represent net paid amounts, the remaining one-third represents reserves for our estimate of ultimate losses and loss expenses. These reserves develop over time, and we re-estimate previously reported reserves as we learn more about the development on the related claims. The table below illustrates that development. For example, the 69.5% accident year 2024 loss and loss expense ratio reported as of December 31, 2024, developed favorably by 1.8 percentage points to 67.7% due to claims settling for less than previously estimated, or due to updated reserve estimates for unpaid claims, as of December 31, 2025. Accident year 2023 for the personal lines segment developed favorably for the two-year period ending December 31, 2025, as indicated by the progression over time for the ratios in the table. It experienced unfavorable development during 2025, driven by the other personal line of business, and favorable development during 2024.
(Dollars in millions)
Accident year loss and loss expenses incurred and ratios to earned premiums:
Accident year:
2025
2024
2023
2025
2024
2023
as of December 31, 2025
$
2,423
$
1,775
$
1,474
75.8
%
67.7
%
72.1
%
as of December 31, 2024
1,821
1,454
69.5
71.1
as of December 31, 2023
1,506
73.7
Catastrophe losses, as discussed in Consolidated Property Casualty Insurance Results, explain some of the movement in the current accident year loss and loss expense ratio for accident year 2025, compared with accident year 2024. Catastrophe losses added 22.2 percentage points in 2025, 15.6 points in 2024 and 17.3 points in 2023 to the respective personal lines current accident year loss and loss expense ratios in the table above. Personal lines catastrophe losses for 2025 resulted in a ratio higher than our 12.1% 10-year annual average for personal lines. Personal lines catastrophe losses are inherently volatile, as discussed above and in Consolidated Property Casualty Insurance Results.
The 53.6% ratio for current accident year loss and loss expenses before catastrophe losses for 2025 improved 0.3 percentage points compared with the 53.9% accident year 2024 ratio measured as of December 31, 2024. The decrease was partially offset by an increase in the ratios for new losses above $2 million, with a 0.5 percentage-point increase in the 2025 ratio. The 2025 ratio also included an unfavorable 1.1 points for the effect of reinstatement premiums. Other contributions included inflation effects that were offset by the favorable impact from various initiatives, such as those to improve pricing precision, risk selection and loss experience related to claims and loss control practices.
Personal lines loss and loss expense reserve development on prior accident years recognized in 2025 was favorable by $4 million, in aggregate, compared with $26 million in 2024. The 2025 net favorable reserve development included $49 million for our homeowner line of business partially offset by $36 million of unfavorable development for our other personal line of business, primarily from personal umbrella claims. The 2024 net favorable reserve development included $54 million for our homeowner line of business and an unfavorable $20 million for our personal auto line of business. As discussed in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, stable paid and reported loss patterns are a key assumption used to make projections necessary for estimating IBNR reserves. Development by accident year and other trends for personal lines loss and loss expenses and the related ratios are further discussed in Liquidity and Capital Resources, Property Casualty Insurance Development of Estimated Reserves by Accident Year.
Cincinnati Financial Corporation - 2025 10-K - Page 72
Table of Contents
Personal Lines Insurance Losses by Size
(Dollars in millions, net of reinsurance)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Current accident year losses greater than $5,000,000
$
45
$
17
$
32
165
(47)
Current accident year losses $2,000,000-$5,000,000
71
64
45
11
42
Large loss prior accident year reserve development
30
2
7
nm
(71)
Total large losses incurred
146
83
84
76
(1)
Losses incurred but not reported
182
108
65
69
66
Other losses excluding catastrophe losses
1,125
988
809
14
22
Catastrophe losses
651
353
298
84
18
Total losses incurred
$
2,104
$
1,532
$
1,256
37
22
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year losses greater than $5,000,000
1.4
%
0.7
%
1.6
%
0.7
(0.9)
Current accident year losses $2,000,000-$5,000,000
2.2
2.4
2.2
(0.2)
0.2
Large loss prior accident year reserve development
0.9
0.1
0.3
0.8
(0.2)
Total large loss ratio
4.5
3.2
4.1
1.3
(0.9)
Losses incurred but not reported
5.7
4.1
3.2
1.6
0.9
Other losses excluding catastrophe losses
35.2
37.6
39.5
(2.4)
(1.9)
Catastrophe losses
20.4
13.5
14.6
6.9
(1.1)
Total loss ratio
65.8
%
58.4
%
61.4
%
7.4
(3.0)
In 2025, personal lines total large losses incurred increased by $63 million, or 76%, net of reinsurance. The corresponding 2025 ratio increased 1.3 percentage points, compared with 2024. The 2025 increase was primarily due to a higher amount for our homeowner line of business. The large loss prior accident year reserve development of $30 million for 2025 was primarily due to personal umbrella and homeowner claims. In 2024, total large losses decreased, compared with 2023, primarily due to lower amounts for our homeowner line of business. Our analysis indicated no unexpected concentration of these losses and reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. We believe the inherent volatility 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 volatility in addition to general inflationary trends in loss costs.
Personal Lines Insurance Underwriting Expenses
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Commission expenses
$
616
$
501
$
391
23
28
Other underwriting expenses
280
261
219
7
19
Total underwriting expenses
$
896
$
762
$
610
18
25
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Commission expenses
19.3
%
19.1
%
19.2
%
0.2
(0.1)
Other underwriting expenses
8.7
9.9
10.7
(1.2)
(0.8)
Total underwriting expense ratio
28.0
%
29.0
%
29.9
%
(1.0)
(0.9)
Personal lines commission expense as a percent of earned premiums increased slightly in 2025 compared with 2024, reflecting an increase in the ratio for profit-sharing commissions for agencies. The ratio for 2024 decreased slightly compared with 2023, as earned premiums rose at a faster pace than commission expenses. Other underwriting expenses as a percent of earned premiums in 2025 decreased, compared with 2024, reflecting ongoing expense management efforts, as premium growth outpaced growth in other underwriting expenses. The 2025 ratio also included an unfavorable 0.5 points for the effect of reinstatement premiums. In 2024, other underwriting expenses as a percent of earned premiums decreased, compared with the 2023 percentage, reflecting ongoing expense management efforts, as the pace of premium growth outpaced growth in other expenses.
Cincinnati Financial Corporation - 2025 10-K - Page 73
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Personal Lines Insurance Outlook
The personal lines market of the U.S. property casualty industry experienced softening market conditions and increased competition, particularly in the personal auto line, during 2025, which will pressure premium growth into 2026. We believe we can continue to profitably grow premiums in our personal lines insurance segment through continued pricing precision of individual risks, new agency appointments and an ongoing focus on diversification of product and geography. We serve middle market, mass affluent and high net worth clients, helping us grow across the U.S. and spreading our catastrophe risk. Drivers of profitable growth for our Cincinnati Private Client business also include selectively using non-admitted insurance property forms and rates in certain catastrophe-prone states and geographies.
Cincinnati Financial Corporation - 2025 10-K - Page 74
Table of Contents
Excess and Surplus Lines Insurance Results
Overview – Three-Year Highlights
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Earned premiums
$
698
$
615
$
542
13
13
Fee revenues
4
3
3
33
0
Total revenues
702
618
545
14
13
Loss and loss expenses from:
Current accident year before catastrophe losses
440
395
357
11
11
Current accident year catastrophe losses
4
8
4
(50)
100
Prior accident years before catastrophe losses
(17)
8
(11)
nm
nm
Prior accident years catastrophe losses
(2)
—
—
nm
0
Loss and loss expenses
425
411
350
3
17
Underwriting expenses
192
167
141
15
18
Underwriting profit
$
85
$
40
$
54
113
(26)
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year before catastrophe losses
63.1
%
64.2
%
65.9
%
(1.1)
(1.7)
Current accident year catastrophe losses
0.5
1.3
0.7
(0.8)
0.6
Prior accident years before catastrophe losses
(2.5)
1.4
(2.0)
(3.9)
3.4
Prior accident years catastrophe losses
(0.2)
0.0
(0.1)
(0.2)
0.1
Loss and loss expenses
60.9
66.9
64.5
(6.0)
2.4
Underwriting expenses
27.5
27.1
26.1
0.4
1.0
Combined ratio
88.4
%
94.0
%
90.6
%
(5.6)
3.4
Combined ratio:
88.4
%
94.0
%
90.6
%
(5.6)
3.4
Contribution from catastrophe losses and prior years
reserve development
(2.2)
2.7
(1.4)
(4.9)
4.1
Combined ratio before catastrophe losses and prior years
reserve development
90.6
%
91.3
%
92.0
%
(0.7)
(0.7)
Our excess and surplus lines insurance segment includes results of The Cincinnati Specialty Underwriters Insurance Company and CSU Producer Resources Inc. Performance highlights for this segment include:
•Premiums – Earned premiums and net written premiums continued to grow during 2025, primarily due to higher renewal written premiums that included average renewal estimated price increases in the high-single-digit range. New business written premiums rose 17% in 2025, compared with 2024, and also contributed to premium growth.
•Combined ratio – The combined ratio improved by 5.6 percentage points in 2025, compared with 2024, primarily due to favorable reserve development on prior accident year loss and loss expenses and a lower ratio for current accident year loss and loss expenses before catastrophe losses. Approximately 89% of our 2025 earned premiums for the excess and surplus lines insurance segment provided commercial casualty coverages for various insured liability claims. The lower 2025 combined ratio also included a decrease in the ratio for catastrophe losses and an increase in the ratio for underwriting expenses.
Cincinnati Financial Corporation - 2025 10-K - Page 75
Table of Contents
Excess and Surplus Lines Insurance Premiums
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Agency renewal written premiums
$
545
$
498
$
428
9
16
Agency new business written premiums
230
196
177
17
11
Other written premiums
(46)
(40)
(35)
(15)
(14)
Net written premiums
729
654
570
11
15
Unearned premium change
(31)
(39)
(28)
21
(39)
Earned premiums
$
698
$
615
$
542
13
13
The $47 million increase in 2025 renewal premiums largely reflected higher renewal pricing. Average renewal estimated price increases were in the high-single-digit range during 2025. We measure average changes in excess and surplus lines renewal pricing as the 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 in 2025 grew by $34 million, or 17%, compared with 2024, as we continued to carefully underwrite each policy in a highly competitive market. Other written premiums in 2025 reduced net written premium growth by $6 million more than in 2024 and are primarily premiums that are ceded to reinsurers.
Excess and Surplus Lines Loss and Loss Expenses
Loss and loss expenses include both net paid losses and reserve changes for unpaid losses, as well as the associated loss expenses. The majority of the total incurred losses and loss expenses shown above in the three-year highlights table are for the respective current accident years, with reserve development on prior accident years shown separately. Since less than 20% of our excess and surplus lines current accident year incurred losses and loss expenses represents net paid amounts, a large majority represents reserves for our estimate of unpaid losses and loss expenses. These reserves develop over time, and we update our estimates of previously reported reserves as we learn more about the development on the related claims. The table below illustrates that development. For example, the 65.5% accident year 2024 loss and loss expense ratio reported as of December 31, 2024, developed favorably by 4.9 percentage points to 60.6% due to claims settling for less than previously estimated, or due to updated reserve estimates for unpaid claims, as of December 31, 2025. Accident year 2023 for the segment developed favorably for the two-year period ending December 31, 2025, as indicated by the progression over time for the ratios in the table. It experienced a small amount of unfavorable development during 2025 and favorable development during 2024.
(Dollars in millions)
Accident year loss and loss expenses incurred and ratios to earned premiums:
Accident year:
2025
2024
2023
2025
2024
2023
as of December 31, 2025
$
444
$
373
$
304
63.6
%
60.6
%
56.2
%
as of December 31, 2024
403
304
65.5
56.1
as of December 31, 2023
361
66.6
Catastrophe losses, as discussed in Consolidated Property Casualty Insurance Results, explain some of the movement among components of the current accident year loss and loss expense ratio for accident year 2025, compared with 2024. Catastrophe losses added 0.5 percentage points in 2025, 1.3 points in 2024 and 0.7 points in 2023 to the respective excess and surplus lines current accident year loss and loss expense ratios in the table above.
The 63.1% ratio for current accident year loss and loss expenses before catastrophe losses for 2025 improved by 1.1 percentage points compared with the 64.2% accident year 2024 ratio measured as of December 31, 2024. The decrease included a 0.4 percentage-point decrease in the ratio for current accident year losses of $2 million or more per claim, shown in the table below.
Cincinnati Financial Corporation - 2025 10-K - Page 76
Table of Contents
Excess and surplus lines reserve development on prior accident years was a net favorable $19 million for 2025 and a net unfavorable $8 million for 2024. The net favorable amount for 2025 was primarily for accident year 2024 and was due primarily to lower-than-anticipated loss emergence on known claims.
We believe the loss and loss expense reserves for our excess and surplus lines business are adequate. The amount of outstanding reserves for our excess and surplus lines operation can be seen in a table in Liquidity and Capital Resources, Property Casualty Loss and Loss Expense Obligations and Reserves. One indication of how long it takes for most of the outstanding reserves to be settled is to measure outstanding reserves by accident year at different points in time, using Item 8, Note 4 of the Consolidated Financial Statements. For example, for accident years 2018, 2017 and 2016, in aggregate, after subtracting cumulative paid amounts from incurred amounts at December 31, 2018, reserves for estimated unpaid losses, plus the portion of loss expenses known as ALAE, equaled $222 million. For those same accident years, at December 31, 2025, the reserve estimate for the remaining unpaid amount equaled $17 million. As discussed in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, stable paid and reported loss patterns are a key assumption used to make projections necessary for estimating IBNR reserves. The inherent uncertainty in estimating reserves is discussed in Liquidity and Capital Resources, Property Casualty Insurance Loss and Loss Expense Obligations and Reserves. Development trends by accident year are further discussed in Property Casualty Insurance Development of Estimated Reserves by Accident Year.
Excess and Surplus Lines Insurance Losses by Size
(Dollars in millions, net of reinsurance)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Current accident year losses greater than $5,000,000
$
—
$
—
$
—
nm
nm
Current accident year losses $2,000,000-$5,000,000
2
4
—
(50)
nm
Large loss prior accident year reserve development
—
—
(2)
nm
100
Total large losses incurred
2
4
(2)
(50)
nm
Losses incurred but not reported
117
87
79
34
10
Other losses excluding catastrophe losses
173
189
170
(8)
11
Catastrophe losses
2
8
3
(75)
167
Total losses incurred
$
294
$
288
$
250
2
15
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Current accident year losses greater than $5,000,000
0.0
%
0.0
%
0.0
%
0.0
0.0
Current accident year losses $2,000,000-$5,000,000
0.3
0.7
0.0
(0.4)
0.7
Large loss prior accident year reserve development
0.0
0.0
(0.3)
0.0
0.3
Total large loss ratio
0.3
0.7
(0.3)
(0.4)
1.0
Losses incurred but not reported
16.8
14.2
14.6
2.6
(0.4)
Other losses excluding catastrophe losses
24.8
30.8
31.3
(6.0)
(0.5)
Catastrophe losses
0.2
1.2
0.5
(1.0)
0.7
Total loss ratio
42.1
%
46.9
%
46.1
%
(4.8)
0.8
In 2025, total large losses decreased by $2 million, net of reinsurance. The ratio for 2025 large losses as a percent of earned premiums decreased by 0.4 percentage points, compared with 2024. That ratio for 2024 increased by 1.0 points, compared with 2023. Our analysis indicated no unexpected concentration of these losses and reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. We believe the inherent volatility 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 volatility in addition to general inflationary trends in loss costs.
Cincinnati Financial Corporation - 2025 10-K - Page 77
Table of Contents
Excess and Surplus Lines Insurance Underwriting Expenses
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Commission expenses
$
124
$
107
$
93
16
15
Other underwriting expenses
68
60
48
13
25
Total underwriting expenses
$
192
$
167
$
141
15
18
Ratios as a percent of earned premiums:
Pt. Change
Pt. Change
Commission expenses
17.8
%
17.4
%
17.1
%
0.4
0.3
Other underwriting expenses
9.7
9.7
9.0
0.0
0.7
Total underwriting expenses ratio
27.5
%
27.1
%
26.1
%
0.4
1.0
Excess and surplus lines commission expense as a percent of earned premiums for 2025 increased compared with 2024, in part due to an increase in the ratio for business factored in for agency profit-sharing agreements with The Cincinnati Insurance Companies. The ratio for 2024 increased compared with 2023, primarily from an increase in the ratio for profit-sharing commissions for agencies. The ratio for other underwriting expenses in 2025 matched the ratio in 2024. The ratio for other underwriting expenses increased slightly in 2024. The three-year period ending in 2025 also reflected ongoing expense management efforts and changes in the pace of premium growth.
Excess and Surplus Lines Insurance Outlook
Strong premium growth continues in both general liability and excess casualty across the excess and surplus lines industry, but net rates remain under pressure. Similar to casualty, large-account property business is softer than small business. We expect to maintain rate increases as we continue to manage competitive markets and challenges such as third-party litigation funding, nuclear verdicts and aggressive plaintiff bar tactics.
Technology remains a key driver of efficiency and data transparency. Our implementation of technology enhancements should continue to decrease data entry time and improve the quality of our analytics, positioning us to realize sustained benefits going forward.
We continue to execute our strategy of delivering superior service and disciplined underwriting across our excess and surplus lines insurance segment. Despite ongoing market challenges, we expect the segment to contribute to profitable growth through careful risk selection and pricing. Our mix of field-based and headquarters-based underwriters and claims managers provides specialized excess and surplus lines expertise, offering additional oversight and technical support and helping to ensure consistent underwriting, claims and loss control practices across the organization.
Cincinnati Financial Corporation - 2025 10-K - Page 78
Table of Contents
Life Insurance Results
Overview – Three-Year Highlights
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Earned premiums
$
330
$
321
$
313
3
3
Fee revenues
6
5
10
20
(50)
Total revenues
336
326
323
3
1
Contract holders' benefits incurred
305
301
316
1
(5)
Investment interest credited to contract holders
(127)
(125)
(121)
(2)
(3)
Underwriting expenses incurred
93
93
87
0
7
Total benefits and expenses
271
269
282
1
(5)
Life insurance segment profit
$
65
$
57
$
41
14
39
Performance highlights for the life insurance segment include:
•Revenues – Earned premiums increased 3% for the year 2025, as shown in the table below that includes details by major line of business. Our largest life insurance product line, term life insurance, also rose 3%. Net in-force policy face amounts rose 4% to $87.311 billion at year-end 2025 from $84.245 billion at year-end 2024 and $82.361 billion at year-end 2023.
•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 life insurance segment results. A profit of $65 million for our life insurance segment in 2025, compared with $57 million in 2024, was primarily due to increased earned premiums and more favorable mortality experience. A profit of $57 million in 2024 compared with $41 million in 2023 was primarily due to more favorable unlocking of interest rate and other actuarial adjustments and more favorable mortality experience.
Earned premiums increased $9 million in 2025, primarily due to a $7 million increase in term life insurance earned premiums, as shown in the table below.
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Term life insurance
$
240
$
233
$
227
3
3
Whole life insurance
54
52
50
4
4
Universal life and other
36
36
36
0
0
Earned premiums
$
330
$
321
$
313
3
3
Products we market include term, whole and universal life insurance and also fixed annuities. In addition, we offer term and whole life insurance to employees at their worksite. These products provide our property casualty agency force with excellent cross-serving opportunities for both commercial and personal accounts.
Over the past several years, we have worked to maintain a portfolio of simple, yet competitive, products. Our product development efforts emphasize death benefit protection and guarantees. Distribution expansion within our property casualty insurance agencies remains a high priority. Our 39 life field marketing representatives work in partnership with our property casualty field marketing representatives. Approximately 62% of our term and other life insurance product premiums were generated through our property casualty insurance agency relationships.
Life insurance segment expenses consist principally of:
•Contract holders’ benefits incurred, related to traditional life and interest-sensitive products, accounted for 76.6% of 2025 total benefits and expenses (inclusive of investment interest credited to contract holders) compared with 76.4% in 2024 and 78.4% in 2023. Total contract holders’ benefits increased in 2025, compared with 2024, largely due to continued growth of in-force policy face amounts and less favorable impacts from the unlocking of interest rate and other actuarial assumptions, partially offset by more favorable mortality experience.
Cincinnati Financial Corporation - 2025 10-K - Page 79
Table of Contents
Total contract holder benefits decreased in 2024, compared with 2023, largely due to more favorable impacts from the unlocking of interest rate and other actuarial assumptions. Mortality experience was more favorable in 2025, compared with 2024, and net death claims were below our mortality projections.
•Underwriting expenses incurred, net of deferred acquisition costs, accounted for 23.4% of 2025 total benefits and expenses (inclusive of investment interest credited to contract holders) compared with 23.6% in 2024 and 21.6% in 2023. Expenses in 2025 decreased by less than 1%, compared with 3% growth in earned premiums. Expenses in 2024 increased 7%, compared with 3% growth in earned premiums. The 2025 decrease in underwriting expenses was largely due to lower general insurance expense levels. The 2024 increase in underwriting expenses was largely due to higher general insurance expense levels and increased amortization of deferred policy acquisition costs.
Life insurance segment profitability depends largely on premium levels, the adequacy of product pricing, underwriting skill and operating efficiencies. This segment’s results include only investment interest credited to contract holders (interest assumed in life insurance policy reserve calculations). The remaining investment income is reported in the investments segment results. The life investment portfolio is managed to earn target spreads between earned investment rates on general account assets and rates credited to policyholders. We consider the value of assets under management and investment income for the life investment portfolio as key performance indicators for the life insurance segment. We seek to maintain a competitive advantage with respect to benefits paid and reserve increases by consistently achieving better than average claims experience due to skilled underwriting.
We recognize that assets under management, capital appreciation and investment income are integral to evaluation of the success of the life insurance segment because of the long duration of life products. On a basis that includes investment income and investment gains or losses from life insurance-related invested assets, our life insurance subsidiary reported net income of $106 million in 2025, compared with $91 million in 2024 and $75 million in 2023. The life insurance subsidiary portfolio had after-tax net investment losses of $5 million in 2025 compared with $6 million in 2024 and $7 million in 2023. Investment gains and losses are discussed under Investments Results. We exclude most of our life insurance company investment income from investments segment results.
Life Insurance Outlook
We believe the life insurance market remains attractive from both a macro view and as a valuable complement to our property casualty operation. Life insurance ownership remains low compared to historical levels and research continues to show that people prefer to buy their life insurance from a professional agent. Our strong agency relationships and expanding base of agencies give us a competitive edge in marketing our life products.
We have developed the practice of reviewing and adopting new technology into our business, with an eye on continuous improvement of our operations. We also continue to shorten the time it takes to underwrite new business, helping to remove one of the main hurdles that discourage property casualty agents from offering life products. Our overarching strategy with technology is to enhance our associates’ ability to serve our agents and customers by allowing them to focus on solving problems rather than simply processing transactions.
Within the life insurance market, we continue to view the voluntary life space as particularly attractive. With our large commercial lines presence, our agencies have tremendous opportunities to serve the employees of these businesses with a simple, voluntary life product. We have an expanding team of associates who conduct enrollments on behalf of our agencies, allowing us to grow this business at an attractive rate. In addition, these accounts often lead to business life insurance opportunities that are designed to ensure the viability of the businesses in the event of a death of a key employee or business owner.
Cincinnati Financial Corporation - 2025 10-K - Page 80
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Investments Results
Overview – Three-Year Highlights
Investments Results
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Total investment income, net of expenses
$
1,165
$
1,025
$
894
14
15
Investment interest credited to contract holders
(127)
(125)
(121)
(2)
(3)
Investment gains and losses, net
1,442
1,391
1,127
4
23
Investments profit, pretax
$
2,480
$
2,291
$
1,900
8
21
The investments segment contributes investment income and investment gains and losses to results of operations. Investment income is generally our primary source of pretax and after-tax profits.
•Investment income – Pretax investment income grew $140 million, or 14%, in 2025, primarily due to an increase in interest income. Interest income grew 19% in 2025, compared with 2024, as net purchases of fixed-maturity securities in recent years and higher average yields for bonds are working to generally offset effects of the low interest rate environment for several years prior to 2022. Dividend income decreased 1% in 2025, compared with 2024. Dividend rates generally have increased, although more slowly than in prior years. Larger than usual net sales of equity securities during the second half of 2024 unfavorably affected dividend income during 2025. Pretax investment income rose 15% in 2024, including increases in interest and dividend income. Average yields in the investment income table below 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.
•Investment gains and losses – We reported an investment gain in 2025, 2024 and 2023, primarily due to favorable changes in fair values of equity securities even though we continue to hold the securities or as otherwise required by GAAP.
We believe it is useful to analyze our overall investment performance by using total investment return over several years. Total investment return considers changes in unrealized gains and losses that are not included in net income, in addition to net investment income and investment gains and losses that are included in net income. Changes in unrealized gains and losses shown in the table below include other invested assets. Considering total investment gains and losses over several years helps evaluate performance since gains and losses may experience typical variability during shorter periods of time.
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The table below shows total return based on assumptions that simplify cash flow timing that is commonly used in total return measures. This simplified calculation uses data shown in our consolidated financial statements or notes to those statements. Added to invested asset amounts from our consolidated balance sheets are 50% of annual amounts pertaining to invested asset categories included in net cash used in investing activities from our consolidated statements of cash flows. The cash flow amounts are reduced by net gains from investment portfolio securities sales or called bonds, with the net result reduced by 50% to represent estimated new cash invested during each respective year. All new cash is assumed to be invested at the midpoint of the year.
Total investment return of 10.2% in 2025 was higher than the 9.3% return in 2024. The 2025 contribution from the investment income component was enhanced by the net favorable effect of the investment gains and losses components. Comparing contributions for 2025 with 2024, investment income rose $140 million, investment gains increased by $51 million and the invested assets net change in unrealized gains and losses increased by $355 million. The base component of the return calculation, annual average invested assets, was up 11% in 2025. For 2024 compared with 2023, total investment return of 9.3% in 2024 was lower than the 9.9% return in 2023, and included increases in investment income, investment gains, and annual average invested assets. The base component of the return calculation, annual average invested assets, increased 13% in 2024.
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Invested assets beginning balance:
Fixed maturities
$
16,182
$
13,791
$
12,132
17
14
Equity securities
11,185
10,989
9,841
2
12
Short-term investments
298
—
—
nm
nm
Other invested assets
713
577
452
24
28
Invested assets beginning balance
28,378
25,357
22,425
12
13
Average acquisitions (dispositions), net
817
875
779
(7)
12
Annual average invested assets
$
29,195
$
26,232
$
23,204
11
13
Total investment return:
Investment income, net of expenses
$
1,165
$
1,025
$
894
14
15
Investment gains and losses, net
1,442
1,391
1,127
4
23
Total invested assets change in unrealized gains and losses
372
17
277
nm
(94)
Total
$
2,979
$
2,433
$
2,298
22
6
Total return on invested assets, pretax
10.2
%
9.3
%
9.9
%
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Investment Income
The primary drivers of investment income are highlighted below, followed by additional details of our investment results.
•Interest income increased by $142 million, or 19%, in 2025, compared with 2024. The average fixed-maturity pretax yield increased by 26 basis points in addition to a larger fixed-maturity portfolio that rose 13% on an average amortized cost basis. Interest income in 2024 increased by $133 million, compared with 2023, when that yield increased by 28 basis points while the portfolio rose 15% on an amortized cost basis.
•Dividend income decreased $3 million, or 1%, in 2025. Larger than usual net sales of equity securities during the second half of 2024 unfavorably affected dividend income in 2025. That effect was partially offset by net purchases of equity securities and dividend rates that have generally been increasing, although more slowly in recent quarters. Dividend income rose $1 million, or less than 1%, in 2024 reflecting dividend rates that generally increased, minor asset allocations and larger than usual net sales of equity securities during the second half of 2024.
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Investment income:
Interest
$
875
$
733
$
600
19
22
Dividends
280
283
282
(1)
0
Other
27
25
25
8
0
Less investment expenses
17
16
13
6
23
Investment income, pretax
1,165
1,025
894
14
15
Less income taxes
200
172
145
16
19
Total investment income, after-tax
$
965
$
853
$
749
13
14
Investment returns:
Average invested assets plus cash and cash equivalents
$
31,655
$
28,374
$
25,685
Average yield pretax
3.68
%
3.61
%
3.48
%
Average yield after-tax
3.05
3.01
2.92
Effective tax rate
17.2
16.8
16.2
Fixed-maturity returns:
Average amortized cost
$
17,743
$
15,697
$
13,670
Average yield pretax
4.93
%
4.67
%
4.39
%
Average yield after-tax
4.02
3.83
3.62
Effective tax rate
18.4
18.0
17.5
In 2025, we continued to invest available cash flow in both fixed income and equity securities in a manner that we believe balances current income needs with longer-term invested asset growth goals. As bonds in our generally laddered portfolio mature or are called over the near term, we reinvest with a balanced approach, keeping in mind our long-term strategy and pursuing attractive risk-adjusted after-tax yields. 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 continually perform fundamental analysis of both industry and company-specific opportunities as well as the potential impact from changes in the interest rate environment and the potential for elevated inflation.
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The table below summarizes pretax yield to amortized costs excluding any book value adjustments due to impairment for bonds in our fixed-maturity portfolio by various maturity periods.
(Dollars in millions)
Principal
At December 31, 2025
% Yield
redemptions
Fixed-maturity yield profile:
Expected to mature during 2026
4.73
%
$
950
Expected to mature during 2027
5.17
1,052
Expected to mature during 2028
5.38
1,180
Average yield and total expected redemptions from 2026 through 2028
5.12
$
3,182
The average pretax yield of 5.60% for fixed-maturity securities acquired during 2025, shown in the table below, was higher than the 5.11% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2025.
Years ended December 31,
2025
2024
Average pretax yield-to-amortized cost on new fixed maturities:
Acquired taxable fixed maturities
5.70
%
5.78
%
Acquired tax-exempt fixed maturities
4.68
4.15
Average total fixed maturities acquired
5.60
5.66
We discussed our portfolio strategies in Item 1, Investments Segment. We discuss risks related to our investment income and our fixed-maturity and equity investment portfolios in Item 7A, Quantitative and Qualitative Disclosures About Market Risk.
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Total Investment Gains and Losses
Investment gains and losses are recognized on the sales 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 reported in net income, as disclosed in Note 1, Summary of Significant Accounting Policies. Total investment gains and losses in 2025 included $1.448 billion of net gains from the recognition of fair value changes of equity securities still held that prior to 2018 would have been reported in other comprehensive income (OCI) instead of net income. Change in unrealized gains or losses for fixed-maturity securities are included as a component of OCI. Accounting requirements for the allowance for credit losses and impairment charges for write-downs of impaired securities in the fixed-maturity portfolio are disclosed in Item 8, Note 1 of the Consolidated Financial Statements. The factors we consider when evaluating impairments are also discussed in Critical Accounting Estimates, Asset Impairment.
The timing of gains or losses from sales can have a material effect on results in any given period. However, such gains or losses usually have little, if any, effect on total shareholders’ equity because most equity and fixed-maturity investments are carried at fair value.
As appropriate, we buy, hold or sell both fixed-maturity and equity securities on an ongoing basis to help achieve our portfolio objectives. We generally purchase fixed-maturity securities with the intention to hold until maturity. If they no longer meet our investment criteria, they are divested. Sales of fixed-maturity securities are usually due to a change in credit fundamentals. Pretax total investment gains in 2025, 2024 and 2023 were largely due to favorable changes in fair values of equity securities, even though we continue to hold the securities, as shown in the table below. Additional information about investment gains or losses is included in Item 8, Note 2 of the Consolidated Financial Statements.
The table below summarizes total investment gains and losses, before taxes.
(Dollars in millions)
Years ended December 31,
2025
2024
2023
Investment gains and losses
Equity securities:
Investment gains and losses on securities sold, net
$
(13)
$
181
$
(17)
Unrealized gains and losses on securities still held, net
1,448
1,275
1,168
Subtotal
1,435
1,456
1,151
Fixed-maturity securities:
Gross realized gains
7
5
4
Gross realized losses
(2)
(95)
(5)
Change in allowance for credit losses, net
(30)
(26)
(17)
Write-down of impaired securities with intent to sell
—
—
(4)
Subtotal
(25)
(116)
(22)
Other
32
51
(2)
Total investment gains and losses reported in net income
$
1,442
$
1,391
$
1,127
Change in unrealized investment gains and losses reported in OCI
Fixed-maturity securities
372
17
277
Total
$
1,814
$
1,408
$
1,404
There were no fixed maturity securities written down to fair value, due to an intention to be sold, for the years ended December 31, 2025 and 2024. There was one taxable fixed maturity within the real estate sector written down to fair value, due to an intention to be sold with an impairment amount of $4 million for the year ended December 31, 2023.
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Investments Outlook
Equity markets experienced volatility in 2025 from factors such as growth driven by AI, uncertainty related to U.S. trade and tariff policy and government shutdowns. Our focus on managing our portfolio for the long term kept us well positioned to maneuver through short-term fluctuations.
Heading into 2026, we see signs of resilient economic growth and moderating inflation with expectations for Federal Reserve actions that may lower interest rates. While this indicates a favorable investment environment, we must be prepared for changing conditions or other challenges.
Our consistent style and disciplined focus enable us to execute a balanced approach to seek both growth of investment income and portfolio appreciation. We discuss our portfolio strategies in Item 1, Our Segments, Investments Segment.
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Other
Total revenues in 2025 and 2024 for our Other operations increased, compared with the respective prior-year periods, primarily due to higher earned premiums from Cincinnati Re and Cincinnati Global in total. Other also includes noninvestment operations of the parent company and its commercial leasing and financial services subsidiary, CFC Investment Company. Total expenses for Other increased in 2025 and 2024, with the change for both years primarily due to losses and loss expenses and underwriting expenses from Cincinnati Re and Cincinnati Global.
Other income in the table below represents profit or losses before income taxes. For 2025, 2024 and 2023, Other income was driven by underwriting profit for Cincinnati Re and Cincinnati Global. Net results for the combination of Cincinnati Re and Cincinnati Global were an underwriting profit of $88 million in 2025, $158 million in 2024 and $183 million in 2023.
Cincinnati Re represented 65% of Other earned premiums in 2025 and 27% of underwriting profit. Earned premiums in 2025, compared with 2024, grew 2%. The mix of 2025 earned premiums for Cincinnati Re by primary type of insured exposures included 49% for casualty, 35% for property and 16% for specialty. Cincinnati Re in total generated an underwriting profit of $24 million in 2025, $86 million in 2024 and $118 million in 2023.
Cincinnati Global represented 35% of Other earned premiums in 2025 and 73% of underwriting profit. In 2025, earned premiums rose 15%, compared with 2024. Underwriting profit for Cincinnati Global was $64 million in 2025, $72 million in 2024 and $65 million in 2023.
(Dollars in millions)
Years ended December 31,
2025-2024
2024-2023
2025
2024
2023
Change %
Change %
Interest and fees on loans and leases
$
11
$
9
$
8
22
13
Earned premiums
893
844
795
6
6
Other revenues
10
6
5
67
20
Total revenues
914
859
808
6
6
Interest expense
53
53
54
0
(2)
Loss and loss expenses
521
435
379
20
15
Underwriting expenses
284
251
233
13
8
Operating expenses
34
32
25
6
28
Total expenses
892
771
691
16
12
Other income
$
22
$
88
$
117
(75)
(25)
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Taxes
We had a $587 million income tax expense in 2025, compared with $566 million in 2024 and $433 million in 2023. The corporate effective tax rate for 2025 was 19.7% compared with 19.8% in 2024 and 19.0% in 2023.
The changes in our effective tax rate between periods were 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 securities and some in equity securities to minimize our overall tax liability and maximize after-tax earnings. See Item 1, Our Segments, Fixed-Maturity Securities Investments, 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.
Our effective tax rate reconciliation is found in Item 8, Note 11 of the Consolidated Financial Statements.
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Liquidity and Capital Resources
We seek to maintain prudent levels of liquidity and financial strength for the protection of our policyholders, creditors and shareholders. We manage liquidity at two levels to meet the short- and long-term cash requirements of business obligations and growth needs. The first is the liquidity of the parent company. The second is the liquidity of our lead insurance subsidiary. Management of liquidity at both levels is essential because each has different funding needs and sources, and each is subject to certain regulatory guidelines and requirements.
In addition to our historically positive operating cash flow to meet the needs of operations, we have the ability to slow investing activities if such need arises or to sell a portion of our high-quality, liquid investment portfolio. We also have additional capacity to borrow on our revolving short-term line of credit, as described further below.
Parent Company Liquidity
At December 31, 2025, the parent company had $5.568 billion in cash and marketable securities, providing strong liquidity to fund cash outflows, as needed. The parent company’s primary sources of cash inflows are dividends from our lead insurance subsidiary, investment income and sale proceeds from investments. The parent company’s cash outflows are primarily interest and principal payments on long- and short-term debt, dividends to shareholders, common stock repurchases, and general operating expenses. To support our shareholders' dividend payment, we could use subsidiary dividends, our line of credit or sell a portion of our marketable securities.
The table below shows a summary, by the direct cash flow method, of the major sources and uses of cash flow of the parent company.
(Dollars in millions)
Years ended December 31,
2025
2024
2023
Sources of liquidity:
Subsidiary dividends received
$
565
$
300
$
526
Investment income received
121
121
107
Proceeds from stock options exercised
10
10
9
Uses of liquidity:
Shareholders' dividend payments
$
525
$
490
$
454
Share repurchases
205
126
67
Debt interest payments
52
52
52
Use of liquidity for share repurchases are discretionary depending on cash availability and capital management decisions. In addition, the subsidiaries have the discretion to pay dividends to the parent company. Cincinnati Global is required to maintain certain capital funding requirements with Lloyd’s, which the parent company may deposit on its behalf. These funding requirements may fluctuate based on the profitability of Cincinnati Global and syndicate solvency capital requirements as set by Lloyd's, which may result in additional contributions to or return of funds on deposit. Other than share repurchases and funding at Lloyd's, the majority of expenditures for the parent company have been consistent during the last three years, and we expect future expenditures to remain stable.
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Insurance Subsidiary Liquidity
The parent company’s lead insurance subsidiary largely represents the operations of the property casualty segments. The primary sources of cash inflows are collection of premiums, investment income, maturity of fixed-income securities and sale proceeds from investments. Property casualty insurance premiums generally are received before losses are paid under the policies purchased with those premiums. Cash outflows are primarily loss and loss expenses, commissions, salaries, taxes, operating expenses and investment purchases. Over the three-year period ended December 31, 2025, premium receipts and investment income have been more than sufficient to pay claims and operating expenses. Excess cash flows were partially used to pay dividends to the parent company. We are not aware of any known trends that would materially change historical cash flow results, other than fluctuations in catastrophe claims and other large losses, either individually or in aggregate.
The table below shows a summary of operating cash flow for property casualty insurance (direct method). Historically, annual variation in operating cash flow has been largely related to changes in amounts of catastrophe losses.
(Dollars in millions)
Years ended December 31,
2025
2024
2023
Premiums collected
$
9,879
$
8,895
$
7,785
Loss and loss expenses paid
(4,991)
(4,381)
(4,276)
Commissions and other underwriting expenses paid
(2,865)
(2,607)
(2,287)
Cash flow from underwriting
2,023
1,907
1,222
Investment income received
857
714
609
Cash flow from operations
$
2,880
$
2,621
$
1,831
Other Sources of Liquidity
Cash in excess of operating requirements is invested in fixed-maturity and equity securities. Cash generated from investment income provides an important investment contribution to cash flow and liquidity. The sale of investments could provide an additional source of liquidity at either the parent company or insurance subsidiary level, if required. In addition to possible sales of investments, proceeds of calls or maturities of fixed-maturity securities also can provide liquidity. During the five-year period beginning in 2026, fair value of $4.572 billion, or 25.0%, of our fixed-maturity and short-term portfolio is scheduled to mature. At December 31, 2025, we had $12.373 billion of common stock securities, with $5.123 billion, or 41%, held by the parent company.
Financial resources of the parent company also could be made available to our insurance subsidiaries, if circumstances required it. This flexibility would include our ability to access the capital markets and short-term bank borrowings. We generally have minimized our reliance on debt financing, although we may use the line of credit to fund short-term cash needs.
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Long-Term Debt
We provide details of our three long-term notes in Item 8, Note 8 of the Consolidated Financial Statements. None of the notes are encumbered by rating triggers. The total principal amount of our long-term debt at December 31, 2025, was $793 million and included:
•$28 million aggregate principal amount of 6.900% senior debentures due 2028.
•$391 million aggregate principal amount of 6.920% senior debentures due 2028.
•$374 million aggregate principal amount of 6.125% senior debentures due 2034.
The company’s senior debt is rated investment grade by four independent rating agencies. On September 3, 2025, Fitch Ratings upgraded our parent company debt rating to A from A-. No additional changes to our parent company debt ratings occurred during 2025. At February 20, 2026, our debt ratings from the rating agencies were: a from A.M. Best, A from Fitch, A3 from Moody’s and BBB+ from S&P.
Note Payable
On October 10, 2025, we terminated our $300 million credit agreement, which was due to expire on February 4, 2026, and simultaneously entered into a new $400 million unsecured revolving credit agreement expiring on October 10, 2030, with two optional one-year extensions. The credit facility is fully subscribed among four lenders and includes a $400 million accordion feature, a $400 million sublimit for letters of credit, and a $75 million sublimit for swing line loans. The debt-to-total-capital ratio covenant threshold remains at 35%. We had $25 million borrowed at both December 31, 2025 and 2024. At year-end 2025, we were in compliance with all covenants under the credit agreement and believe we will remain in compliance. The credit agreement provides alternative interest charges based on the type of borrowing and our debt rating.
Capital Resources
Capital resources, consisting of shareholders’ equity and total debt, represent our overall financial strength to support current obligations and growth in our insurance businesses. At December 31, 2025, we had total capital of $16.726 billion. Shareholders’ equity was $15.911 billion, an increase of $1.976 billion, or 14%, from the prior year. Our total debt was $815 million, unchanged from a year ago. We seek to maintain a solid financial position and provide capital flexibility by keeping our ratio of debt to total capital moderate. At year-end 2025, the ratio was 4.9%, compared with 5.5% at year-end 2024.
At times we enter into letter of credit agreements to support our Cincinnati Re and Cincinnati Global operations. On December 23, 2024, we entered into a reimbursement agreement to allow for issuances of letters of credit necessary for the operations of Cincinnati Re, not to exceed $25 million. No amounts were drawn at December 31, 2025 or 2024. 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 Lloyds. We replaced the letter of credit agreement with common equities, bringing total common equities held in Lloyd's trust accounts to $229 million, at December 31, 2025.
At the discretion of the board of directors, the company can return capital directly to shareholders as discussed below.
•Dividends to shareholders – The ability of our company to continue paying cash dividends is subject to factors the board of directors deems relevant. While the board and management believe there is merit to sustaining the company’s long record of dividend increases, our first priority is the company’s financial strength. Over the past 10 years, the company has paid an average of 25% of net income as dividends. Through 2025, the board had increased our cash dividend for 65 consecutive years. The board's decision in January 2026 to increase the dividend demonstrated confidence in the company’s strong capital, liquidity, financial flexibility and initiatives to grow earnings.
•Common stock repurchase – Generally, our board believes that share repurchases can help fulfill our commitment to enhancing shareholder value. Consequently, the board has authorized the repurchase of outstanding shares, giving management discretion to purchase shares at reasonable prices in light of circumstances at the time of purchase. Our approach has been to hold capital adequate to support future growth of our insurance operations and repurchase shares at management's discretion. Repurchases are intended to offset the issuance of shares through equity compensation plans, primarily due to vesting of service-based restricted stock units of equity awards granted in the past. The amount of future repurchases may be more, or less, than the past, depending on circumstances and discretion exercised by management. Our corporate Code of Conduct restricts
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repurchases during certain time periods. The details of the repurchase authorizations and activity are described in Item 5, Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Obligations
We pay obligations to customers, suppliers and associates in the normal course of our business operations. Some are contractual obligations that define the amount, circumstances and/or timing of payments, such as commissions paid to our agents, including profit-sharing, and other commissions. We have other commitments for business expenditures, such as $399 million we expect to fund for our private equity and real estate investments, as well as $52 million for current income tax payable. However, the amount, circumstances and/or timing of our other commitments are not dictated by contractual arrangements.
Contractual Obligations
At December 31, 2025, we estimated our significant future contractual obligations as follows:
(Dollars in millions)
Year
Years
There-
Payment due by period
2026
2027-2030
after
Total
Gross property casualty loss and loss expense payments
$
3,725
$
5,735
$
1,990
$
11,450
Gross life policyholder obligations
131
436
5,494
6,061
Long-term debt
—
419
374
793
Interest on long-term debt
52
135
80
267
Commissions
609
—
—
609
Other liabilities
114
66
7
187
Total
$
4,631
$
6,791
$
7,945
$
19,367
Liquidity and Capital Resources Outlook
At December 31, 2025, we had $1.431 billion in cash and cash equivalents. During 2026, our lead insurance subsidiary may pay a maximum of $975 million in dividends to our parent company without regulatory approval. That strong liquidity and our consistent cash flows give us the flexibility to meet current obligations and commitments while building value by prudently investing where we see potential for both current income and long-term return. Our cash and cash equivalents provide adequate financial cushion when short-term operating results do not meet our objectives.
A long-term perspective governs our liquidity and capital resources decisions, with the goal of benefiting our policyholders, agents, shareholders and associates over time. Our underwriting philosophy and initiatives can drive performance to achieve underwriting profit. Our GAAP combined ratio averaged 93.9% over the five-year period 2021 through 2025, resulting in strong underwriting profits.
In any year, we consider the most likely source of pressure on liquidity would be an unusually high level of catastrophe loss payments within a short period of time. There could be additional obligations for our insurance operations due to increasing severity or frequency of noncatastrophe claims. To address the risk of unusually large insurance loss obligations, including catastrophe events, we maintain property casualty reinsurance contracts with highly rated reinsurers, as discussed under 2026 Reinsurance Ceded Programs. We also monitor the financial condition of our reinsurers because their insolvency could jeopardize a portion of our $655 million reinsurance recoverable asset at December 31, 2025. Parent-company liquidity could also be constrained by Ohio regulatory requirements that restrict the dividends insurance subsidiaries can pay.
Economic weakness also has the potential to affect our liquidity and capital resources in a number of different ways, including delinquent payments from agencies, defaults on interest payments by fixed-maturity holdings in our portfolio, dividend reductions by holdings in our equity portfolio or declines in the market value of holdings in our portfolio.
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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.
Property Casualty Loss and Loss Expense Obligations and Reserves
Our estimate of future gross property casualty loss and loss expense payments of $11.450 billion is lower than loss and loss expense reserves of $11.507 billion reported on our balance sheet at December 31, 2025. The $57 million difference is due to certain life and health loss reserves. Reserving practices are discussed in Critical Accounting Estimates, 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 for other parts of our property casualty insurance operations, the following table details gross reserves among case, IBNR and loss expense reserves, net of salvage and subrogation. The $1.513 billion increase in total gross reserves included a $291 million increase in case loss reserves, a $891 million increase in IBNR loss reserves and a $331 million increase in loss expense reserves. The increase in total gross reserves included $444 million for our commercial casualty line of business, $151 million for our commercial auto line of business, $229 million for our homeowner line of business, $190 million for excess and surplus lines and $150 million for Cincinnati Re.
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Property Casualty Gross Loss and Loss Expense Reserves
(Dollars in millions)
Loss reserves
Loss expense reserves
Total gross reserves
Case reserves
IBNR reserves
Percent of total
At December 31, 2025
Commercial lines insurance:
Commercial casualty
$
1,246
$
1,736
$
905
$
3,887
34.0
%
Commercial property
210
195
109
514
4.5
Commercial auto
448
455
185
1,088
9.5
Workers' compensation
369
595
101
1,065
9.3
Other commercial
172
73
193
438
3.8
Subtotal
2,445
3,054
1,493
6,992
61.1
Personal lines insurance:
Personal auto
314
152
135
601
5.2
Homeowner
330
235
130
695
6.1
Other personal
120
259
10
389
3.4
Subtotal
764
646
275
1,685
14.7
Excess and surplus lines
407
544
348
1,299
11.4
Cincinnati Re
218
1,003
8
1,229
10.7
Cincinnati Global
111
131
3
245
2.1
Total
$
3,945
$
5,378
$
2,127
$
11,450
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
%
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Asbestos and Environmental Loss and Loss Expense Reserves
We carried $136 million of net loss and loss expense reserves for asbestos and environmental claims at year-end 2025, compared with $119 million at year-end 2024. The asbestos and environmental claims amounts for each respective year constituted less than 2.0% of total net loss and loss expense reserves at these year-end dates.
We believe our exposure to asbestos and environmental claims is limited, largely because our reinsurance retention was $500,000 or below prior to 1987. We also were predominantly a personal lines company in the 1960s and 1970s, when asbestos and pollution exclusions were not widely used by commercial lines insurers. During the 1980s and early 1990s, commercial lines grew as a percentage of our overall business and our exposure to asbestos and environmental claims grew accordingly. Over that period, we endorsed to or included in most policies an asbestos and environmental exclusion.
Additionally, since 2002, we have revised policy terms where permitted by state regulation to limit our exposure to mold claims prospectively and further reduce our exposure to environmental claims generally. Finally, we have not engaged in any mergers or acquisitions through which such a liability could have been assumed. We continue to monitor our claims for evidence of material exposure to other mass tort classes, but we have found no such credible evidence to date.
Reserving data for asbestos and environmental claims has characteristics that limit the usefulness of the methods and models used to analyze loss and loss expense reserves for other claims. Specifically, asbestos and environmental loss and loss expenses for different accident years do not emerge independently of one another as loss development and Bornhuetter-Ferguson methods assume. In addition, asbestos and environmental loss and loss expense data available to date did not reflect a well-defined tail, greatly complicating the identification of an appropriate stochastic reserving model. At year-end 2025, we used a weighted average of a paid survival ratio method and report year method to estimate reserves for IBNR asbestos and environmental claims. Our exposure to such claims is limited; we believe a weighted average of both methods produces a sufficient level of reserves.
Gross Property Casualty Loss and Loss Expense Payments
While we believe that historical performance of property casualty and life loss payment patterns is a reasonable source for projecting future claim payments, there is inherent uncertainty in this estimate of contractual obligations. We believe that we could meet our obligations under a significant and unexpected change in the timing of these payments because of the liquidity of our invested assets, strong financial position and access to lines of credit.
Our estimates of gross property casualty loss and loss expense payments do not include reinsurance receivables or ceded losses. As discussed in 2026 Reinsurance Ceded Programs, we purchase reinsurance to mitigate our property casualty risk exposure. Ceded property casualty reinsurance unpaid receivables of $438 million at year-end 2025 are an offset to our gross property casualty loss and loss expense obligations. Our reinsurance program mitigates the liquidity risk of a single large loss or an unexpected rise in claim severity or frequency due to a catastrophic event. Reinsurance does not relieve us of our obligation to pay covered claims. The financial strength of our reinsurers is important because our ability to recover losses under our reinsurance agreements depends on the financial viability of the reinsurers.
We direct our associates to settle claims and pay losses as quickly as is practical, and we made $4.991 billion of net claim payments during 2025. At year-end 2025, total net property casualty reserves of $11.012 billion reflected $3.700 billion in unpaid amounts on reported claims (case reserves), $2.119 billion in loss expense reserves and $5.193 billion in estimates of claims that were incurred but had not yet been reported (IBNR). The specific amounts and timing of obligations related to case reserves and associated loss expenses are not set contractually. The amounts and timing of obligations for IBNR claims and related loss expenses are unknown. We discuss our methods of establishing loss and loss expense reserves and our belief that reserves are adequate in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves.
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The historical pattern of using premium receipts for the payment of loss and loss expenses has enabled us to extend slightly the maturities of our investment portfolio beyond the estimated settlement date of the loss reserves. The effective duration of our consolidated property casualty fixed-maturity portfolio was 5.8 years at year-end 2025. By contrast, the duration of our loss and loss expense reserves was approximately 3.6 years. We believe this difference in duration does not affect our ability to meet current obligations because cash flow from operations is sufficient to meet these obligations. In addition, investment holdings could be sold, if necessary, to meet higher than anticipated loss and loss expenses.
Range of Reasonable Reserves
The company established a reasonably likely range for net loss and loss expense reserves of $10.073 billion to $11.141 billion at year-end 2025, with the company carrying net reserves of $11.012 billion. The range was $8.948 billion to $9.816 billion at year-end 2024, with the company carrying net reserves of $9.668 billion. Our loss and loss expense reserves are not discounted for the time-value of money, but we have reduced the reserves by an estimate of the amount of salvage and subrogation payments we expect to recover.
The low point of each year’s range corresponds to approximately one standard error below each year’s mean reserve estimate, while the high point corresponds to approximately one standard error above each year’s mean reserve estimate. We discussed management’s reasons for basing reasonably likely reserve ranges on standard errors in Critical Accounting Estimates, Reserve Estimate Variability.
The ranges reflect our assessment of the most likely unpaid loss and loss expenses at year-end 2025 and 2024. However, actual unpaid loss and loss expenses could nonetheless fall outside of the indicated ranges.
Management’s best estimate of total loss and loss expense reserves as of year-end 2025 and 2024 was consistent with the corresponding actuarial best estimate.
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Property Casualty Insurance Development of Estimated Reserves by Accident Year
The following table shows net reserve changes at year-end 2025, 2024 and 2023 by property casualty segment and accident year:
(Dollars in millions)
Commercial
Personal
E&S
lines
lines
lines
Other
Totals
As of December 31, 2025
2024 accident year
$
(158)
$
(46)
$
(30)
$
(41)
$
(275)
2023 accident year
(22)
20
—
(6)
(8)
2022 accident year
2
10
6
6
24
2021 accident year
3
7
2
(5)
7
2020 accident year
34
—
1
(1)
34
2019 accident year
22
5
(1)
5
31
2018 and prior accident years
(11)
—
3
(1)
(9)
(Favorable)/unfavorable
$
(130)
$
(4)
$
(19)
$
(43)
$
(196)
As of December 31, 2024
2023 accident year
$
(217)
$
(52)
$
(57)
$
(43)
$
(369)
2022 accident year
(89)
6
5
15
(63)
2021 accident year
(5)
17
21
(38)
(5)
2020 accident year
24
1
14
(7)
32
2019 accident year
43
3
8
(2)
52
2018 accident year
25
1
6
2
34
2017 and prior accident years
81
(2)
11
(7)
83
(Favorable)/unfavorable
$
(138)
$
(26)
$
8
$
(80)
$
(236)
As of December 31, 2023
2022 accident year
$
(67)
$
(45)
$
(16)
$
(9)
$
(137)
2021 accident year
(29)
(5)
—
13
(21)
2020 accident year
(42)
(1)
(7)
(18)
(68)
2019 accident year
5
(3)
4
—
6
2018 accident year
(3)
(3)
(1)
(1)
(8)
2017 accident year
(6)
(5)
4
—
(7)
2016 and prior accident years
19
(2)
5
(2)
20
(Favorable)/unfavorable
$
(123)
$
(64)
$
(11)
$
(17)
$
(215)
Overall favorable development for consolidated property casualty reserves of $196 million in 2025 illustrated the potential for revisions inherent in estimating reserves, especially for long-tail lines such as commercial casualty and workers’ compensation. As noted in Critical Accounting Estimates, Key Assumptions Loss Reserving, our models predict that actual loss and loss expense emergence will differ from projections, and we do not attempt to monitor or identify such normal variations. The table in Property Casualty Loss and Loss Expense Obligations and Reserves shows reserves by segment and lines of business and the components of gross reserves among case, IBNR and loss expense reserves.
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Favorable reserve development was $126 million for our commercial property line of business, $65 million for our workers' compensation line of business and $49 million for our homeowner line of business. Unfavorable, or adverse, reserve development included $41 million for our commercial auto line of business, $36 million for our other personal line of business and $21 million for our commercial casualty line of business. Drivers of significant reserve development typically reflect loss emergence on known claims that was more favorable or less favorable than previously anticipated for various lines of business and are discussed below.
•Commercial casualty – During 2025 and 2024, we experienced unfavorable development on prior accident years in aggregate, driven by general liability and commercial umbrella coverages. Loss emergence for general liability and commercial umbrella claims rose more than anticipated and reflected economic or other forms of inflation. 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. We continue to monitor activity for various commercial casualty coverages so we can detect changes in trends on a timely basis.
•Workers’ compensation – We experienced favorable reserve development again during 2025, for all prior accident years in aggregate, as claim frequencies continued to decline more than we expected. However, we continue to monitor this line of business closely, as a sudden increase in trend for future payments has a highly leveraged effect.
•Commercial auto – Ultimate losses developed unfavorably during calendar year 2025 and favorably during calendar year 2024, for all prior accident years in aggregate. We believe inflation in recent years and reduced driving during the pandemic caused deviations from historical loss patterns. 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.
•Commercial property and homeowner – Loss emergence was less than anticipated for both 2025 and 2024. The majority of homeowner favorable reserve development for both years related to natural catastrophe events with inherently variable loss patterns. For commercial property, catastrophe events accounted for a significant portion, but less than half, of the favorable reserve development for both years.
•Other personal – Personal umbrella claims were the primary driver of unfavorable development on prior accident years in aggregate during 2025 within the other personal line of business. Loss emergence for personal umbrella claims rose more than anticipated and reflected economic or other forms of inflation. 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.
For the excess and surplus lines insurance segment, the table showing reserves by segment and lines of business in Property Casualty Loss and Loss Expense Obligations and Reserves, shows the components of gross reserves among case, IBNR and loss expense reserves. Total gross reserves increased $190 million from year-end 2024, largely due to the increase in premiums and exposures for this segment, as we discussed in Excess and Surplus Lines Insurance Results. Net reserve development was a favorable $19 million during 2025, following unfavorable development of $8 million during 2024 and favorable development of $11 million during 2023. Approximately 89% of our excess and surplus lines insurance premiums are for commercial casualty coverages. In 2025, loss emergence for claims was less than anticipated but still reflected economic or other forms of inflation, similar to our commercial casualty line of business. Unfavorable reserve development following a period of favorable development, or vice-versa, shown in the table above, illustrates the potential for revisions inherent in estimating reserves.
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Life Insurance Policyholder Obligations and Reserves
Gross Life Insurance Policyholder Obligations
Our estimates of life, annuity and disability policyholder obligations reflect future estimated cash payments to be made to policyholders for future policy benefits, policyholders’ account balances and separate account liabilities. These estimates include death and disability income claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on separate account products, commissions and premium taxes offset by expected future deposits and premiums on in-force contracts. Further, these estimates are based on mortality, morbidity and lapse assumptions reflective of our recent experience and expectations of future payment obligations.
Our estimates of gross life, annuity and disability obligations do not reflect net recoveries from reinsurance agreements. Ceded life reinsurance receivables were $180 million at year-end 2025. As discussed in 2026 Reinsurance Ceded Programs, we purchase reinsurance to mitigate our life insurance risk exposure. At year-end 2025, ceded death benefits represented approximately 31% of our total gross policy face amounts in force.
These estimated cash outflows are undiscounted with respect to interest. As a result, the sum of the cash outflows for all years of $6.061 billion (total of life insurance obligations) exceeds the liabilities recorded in life policy and investment contract reserves and separate accounts for future policy benefits and claims of $3.969 billion (total of life insurance policy reserves and separate account policy reserves). A significant portion of the difference can be attributed to the time value of money.
We have made significant assumptions to determine the estimated undiscounted cash flows of these policies and contracts that include mortality, morbidity, future lapse rates and interest crediting rates. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results.
Life Insurance Reserves
Gross life policy and investment contract reserves were $2.992 billion at year-end 2025, compared with $2.960 billion at year-end 2024. The increase was primarily due to a decrease in market value discount rates and continued growth in net in-force life insurance policy face amounts. We establish reserves for traditional life insurance policies based on certain cash flow assumptions including mortality, morbidity and lapse rates as well as a discount rate assumption. The cash flow assumptions are based on our current expectations and are reviewed annually to determine any necessary updates. These assumptions are also updated on an interim basis if evidence suggests that they should be revised. The discount rate assumption is based on upper-medium grade fixed-income instrument yields (market value discount rates) and is updated quarterly. We use both our own experience and industry experience adjusted for historical trends in arriving at our cash flow assumptions.
We establish reserves for our universal life, deferred annuity and other investment contracts equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life insurance policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance based on expected no-lapse guarantee benefits and expected policy assessments.
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Modeled Catastrophe Loss Exposure
A single large loss or an unexpected rise in claims severity or frequency due to a catastrophic event is a risk to the company's liquidity and financial strength. To control such losses, we limit marketing property casualty insurance in specific geographic areas and monitor our exposure in certain coastal and wildfire regions. Examples of this include limiting our earthquake writings in the New Madrid region or leveraging more restrictive terms and conditions through the use of our excess and surplus company in higher risk areas for wildfire or hurricane. Loss exposures in these areas have been identified as a major contributor to our catastrophe probable maximum loss estimates. We also continually review aggregate exposures to large disasters and purchase reinsurance protection to cover these exposures. For business other than Cincinnati Re and Cincinnati Global, we use the Risk Management Solutions (RMS) and Verisk models to evaluate exposures to a once-in-a-100-year and a once-in-a-250-year event to help determine appropriate reinsurance coverage programs. In conjunction with these activities, we also continue to evaluate information provided by our reinsurance broker. Examples include deterministic modeling of probable maximum loss contribution from growth in new geographic territories.
To help determine appropriate reinsurance coverage for hurricane, earthquake and severe convective storm exposures, for business other than Cincinnati Re and Cincinnati Global, we use the RMS and Verisk models to estimate the probable maximum loss from a single event or multiple events occurring in a one-year period. The models are proprietary in nature, and the vendors that provide them periodically update the models, sometimes resulting in significant changes to their estimate of probable maximum loss. As of the end of 2025, both models indicated that a hurricane event represents our largest amount of exposure to losses. The table below summarizes estimated probabilities and the corresponding probable maximum loss from a single hurricane event occurring in a one-year period and indicates the effect of such losses on consolidated shareholders’ equity at December 31, 2025. Net losses are net of reinsurance, estimated reinstatement premiums and income taxes, assuming a 21% federal tax rate, and assume our 2026 reinsurance programs apply.
According to these models, probable maximum loss estimates from a single hurricane event that combine the effects of property casualty insurance written on a direct basis by The Cincinnati Insurance Companies, the Cincinnati Re reinsurance portfolio and risks insured by Cincinnati Global include the following amounts, net of amounts recoverable through reinsurance ceded and also income taxes, and including the effects of estimated reinstatement premiums: $632 million for a once-in-a-100-year event and $987 million for a once-in-a-250-year event.
For business other than Cincinnati Re and Cincinnati Global:
(Dollars in millions)
RMS Model
Verisk Model
Percent
Percent
Gross
Net
of total
Gross
Net
of total
Probability at December 31, 2025
losses
losses
equity
losses
losses
equity
2.0% (1 in 50 year event)
$
745
$
306
1.9
%
$
846
$
318
2.0
%
1.0% (1 in 100 year event)
1,201
361
2.3
1,358
379
2.4
0.4% (1 in 250 year event)
2,011
499
3.1
2,167
617
3.9
0.2% (1 in 500 year event)
2,844
1,112
7.0
2,994
1,269
8.0
The modeled losses according to RMS in the table are based on its RiskLink version 25 catastrophe model and use a long-term storm catalog methodology. The modeled losses according to Verisk in the table are based on its Touchstone® version 12.0 catastrophe model and use a long-term methodology. The Verisk and RMS storm catalogs include decades of documented weather events used in simulations for probable maximum loss projections.
Based on treaties in effect at January 1, 2026, the largest loss exposure to us for Cincinnati Re is from natural catastrophe events. That exposure includes probable maximum loss estimates of the following amounts: $242 million for a once-in-a-100-year event and $324 million for a once-in-a-250-year event. Those effects are on a standalone basis and represent a single hurricane event and include the effects of income taxes, estimated reinstatement premiums and applicable reinsurance ceded, including any retrocessions for reinsurance assumed, and estimated reinstatement premiums. They are based on probable maximum loss estimates from the Verisk Touchstone® version 12.0 catastrophe model.
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For Cincinnati Re:
(Dollars in millions)
Standalone Basis
Percent
Net
of total
Probability at December 31, 2025
losses
equity
1.0% (1 in 100 year event)
$
242
1.5
%
0.4% (1 in 250 year event)
324
2.0
%
At January 1, 2026, the largest loss exposure to us for Cincinnati Global is from natural catastrophe events. Cincinnati Global's exposure from such events includes probable maximum loss estimates of the following amounts: $33 million for a once-in-a-100-year event and $61 million for a once-in-a-250-year event. Those effects are on a standalone basis and represent a single hurricane event and include the effects of income taxes, applicable reinsurance ceded and estimated reinstatement premiums. They are based on probable maximum loss estimates from the Verisk Touchstone® version 12.0 catastrophe model.
For Cincinnati Global:
(Dollars in millions)
Standalone Basis
Percent
Net
of total
Probability at December 31, 2025
losses
equity
1.0% (1 in 100 year event)
$
33
0.2
%
0.4% (1 in 250 year event)
61
0.4
%
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2026 Reinsurance Ceded Programs
Reinsurance mitigates the risk of highly uncertain exposures and limits the maximum net loss that can arise from large risks or risks concentrated in areas of exposure. Management’s decisions about the appropriate structure of reinsurance protection and level of risk retention are affected by various factors, including changes in our underwriting practices, capacity to retain risks and reinsurance market conditions.
Reinsurance does not relieve us of our obligation to pay covered claims. The financial strength of our reinsurers is important because our ability to recover for losses covered under any reinsurance agreement depends on the financial viability of the reinsurer.
For 2026, the primary participants on our standard market property and casualty per-risk and per-occurrence reinsurance ceded programs include Hannover Ruck SE, Munich Reinsurance America, Partner Reinsurance Company of the U.S., Transatlantic Reinsurance Company and Swiss Reinsurance America Corporation, all of which had A.M. Best insurer financial strength ratings of A+ (Superior) or better as of December 31, 2025. Our property catastrophe program is subscribed through a broker by reinsurers from the U.S., Bermuda, London and the European markets. The largest participant in our property catastrophe program, representing approximately 15% of total participation, is the Lloyd's of London placement that features numerous syndicates. Some of the other reinsurers with large participation in the program include Partner Reinsurance Company Ltd., Mapfre Re, Chubb Tempest Reinsurance Ltd. and Lancashire Insurance Company Limited.
The following table shows our five largest property casualty reinsurance receivable amounts by reinsurer at year-end 2025 and the total receivable amount at year-end 2024. Michigan Catastrophic Claims Association is a mandatory nonprofit association which runs a reinsurance program funded by an annual premium assessment per vehicle. This assessment covers Michigan’s automobile no-fault policies, which provide unlimited lifetime coverage for medical expenses resulting from auto accidents. The A.M. Best insurer financial strength ratings as of the end of the two most recent years are also shown for each of those reinsurers that have an applicable rating.
(Dollars in millions)
2025
2024
Name of reinsurer
Total
receivable
A.M. Best
Rating
Total
receivable
A.M. Best
Rating
General Reinsurance Corporation
$
53
A++
$
28
A++
Hannover Ruck SE
47
A+
35
A+
Munich Reinsurance America
46
A+
43
A+
Hartford Steam Boiler Inspection & Insurance Company
38
A++
35
A++
Michigan Catastrophic Claims Association
27
NA
30
NA
Primary components of the 2026 property and casualty reinsurance programs are summarized below. The premium estimates below occurred near the beginning of each respective year, when direct written premiums that were subject to applicable reinsurance treaties were also estimated.
•Property per risk treaty – The primary purpose of the property treaty is to provide capacity up to $50 million, adequate for the majority of the risks we write. It also includes protection for extra-contractual liability coverage losses. We retain the first $15 million of each loss. Losses between $15 million and $50 million are reinsured at 100%. The 2026 ceded premium estimate was $54 million, compared with $52 million for the 2025 estimate.
•Property excess treaty – We purchased a property reinsurance treaty that provides an additional $75 million in protection for certain property losses. This treaty, along with the property per risk treaty, provides a total of $125 million of protection. The 2026 ceded premium estimate was approximately $14 million, matching the 2025 estimate.
•Casualty per occurrence treaty – The casualty treaty provides capacity up to $25 million. Similar to the property treaty, it provides sufficient capacity to cover the vast majority of casualty accounts we insure and also includes protection for extra-contractual liability coverage losses. We retain the first $10 million of each loss. Losses between $10 million and $25 million are reinsured at 100%. The 2026 ceded premium estimate was $23 million, compared with $21 million for the 2025 estimate.
•Casualty excess treaty – We purchase a casualty reinsurance treaty that provides an additional $55 million in protection for certain casualty losses. This treaty, along with the casualty per occurrence treaty, provides a total of $80 million of protection for workers’ compensation, extra-contractual liability coverage and clash coverage
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losses, which would apply when a single occurrence involves multiple policyholders of The Cincinnati Insurance Companies or multiple coverages for one insured. The 2026 ceded premium estimate was approximately $5 million, matching the 2025 estimate.
•Property catastrophe treaty – To protect against catastrophic events such as wind and hail, wildfires, winter storms, hurricanes or earthquakes, we purchased property catastrophe reinsurance with a limit up to $2.000 billion. This treaty and our property and casualty treaties contain exclusions for communicable disease and cyber losses. Aggregation of losses into one event, sometimes referred to as an hours clause, varies by peril. For example, the general provision in this treaty is 168 hours, but it is 96 hours for a riot or civil commotion event. Losses from the same occurrence can be aggregated into one limit over the hour period applicable to the peril causing the loss and applied to the treaty towards recovery. The treaty is effective January 1, 2026, and contains one reinstatement provision. The 2026 ceded premium estimate was $108 million, compared with $98 million for the 2025 estimate when the limit of coverage was $1.500 billion. We retain the first $200 million of any loss, and a share of losses up to $2.000 billion.
Effective July 1, 2025, we purchased an additional layer on our 2025 property catastrophe reinsurance treaty with a limit of $300 million, increasing the total limit from $1.500 billion to $1.800 billion. We can recover up to $129 million under this coverage for a loss between $1.500 billion and $1.800 billion for a covered event occurring prior to July 1, 2026. The provisions of this additional layer are similar to those in the other layers of the 2025 property catastrophe treaty. The annual ceded premiums for this additional coverage are estimated to be less than $5 million.
•Catastrophe bonds – Effective January 2026, we purchased collateralized reinsurance funded through the issuance of collateralized insurance-linked securities, also known as catastrophe bonds. We entered into a reinsurance agreement with Skyline Re II Ltd. ("Skyline"), an independent Bermuda company registered as a special purpose insurer under the Bermuda Insurance Act of 1978. This agreement provides up to $150 million in reinsurance protection for an event between $1.000 billion and $1.800 billion with no reinstatement provision. This agreement is generally designed to supplement coverage provided under the property catastrophe treaty, however, terrorism and strike, riot, or civil commotion events are not covered. Skyline issued notes to unrelated investors for a total principal amount of $150 million, equal to the full reinsurance coverage provided under the reinsurance agreement. The proceeds of the issuance were deposited into a reinsurance trust account. The catastrophe bonds expire in January 2030. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts.
As of January 1, 2026, the table below shows the maximum reinsurance coverage percentage and the share we retain for a single event across each layer of our property catastrophe program, excluding losses from Cincinnati Re and Cincinnati Global.
(Dollars in millions)
Maximum percentage of loss covered by reinsurance and company retention
Gross loss amount
Property catastrophe treaty
Catastrophe
bond
Company retention
Total
$0 - $200
—
%
—
%
100.00
%
100
%
$200 - $300
36.00
—
64.00
100
$300 - $400
82.00
—
18.00
100
$400 - $700
90.00
—
10.00
100
$700 - $1,000
90.00
—
10.00
100
$1,000 - $1,500
69.60
18.75
11.65
100
$1,500 - $1,800
71.25
18.75
10.00
100
$1,800 - $2,000
53.41
—
46.59
100
After reinsurance, our maximum exposure to a catastrophic event that causes $2.000 billion in covered losses in 2026 would be $523 million, compared with retention of $803 million as of July 1, 2025, for an event causing $2.000 billion in covered losses. The largest catastrophe loss event in our history occurred during 2025 from the January 7-28 California wildfires. Our losses from that event, including losses from Cincinnati Re and Cincinnati Global, were estimated to be $942 million, before reinsurance, as of December 31, 2025. The second largest catastrophe loss event occurred during 2022 from a December 21-31 winter storm system that affected many states in the U.S. Our losses from that storm were estimated to be $247 million, before reinsurance, as of December 31, 2024.
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Individual risks with insured values in excess of $125 million, as identified in the policy, are handled through a different reinsurance mechanism. We typically reinsure commercial property coverage for individual risks with insured values between $125 million and $365 million under an automatic facultative agreement. For commercial property risks with property values exceeding $365 million, we negotiate the purchase of facultative coverage on an individual certificate basis. For casualty coverage on individual risks with limits exceeding $25 million, facultative reinsurance coverage is placed on an individual certificate basis. For risks with casualty limits that are between $25 million and $27 million, we sometimes forego facultative reinsurance and retain an additional $2 million of loss exposure.
Terrorism coverage at various levels has been secured in most of our reinsurance agreements. The broadest coverage for this peril is found in the property and casualty working treaties, the property per risk treaty and the casualty per occurrence treaty, which provide coverage for commercial and personal risks. Our property catastrophe treaty provides terrorism coverage for personal risks and commercial risks. For insured values between $15 million and $125 million, there also may be coverage in the property working treaty.
A form of reinsurance is also provided through The Terrorism Risk Insurance Act of 2002 (TRIA). TRIA was originally signed into law on November 26, 2002, and extended on several occasions. The most recent extension was signed into law on December 20, 2019, and is scheduled to expire on December 31, 2027. TRIA provides a temporary federal backstop for losses related to the writing of the terrorism peril in property casualty insurance policies. Under regulations promulgated under this statute, insurers are required to offer terrorism coverage for certain lines of property casualty insurance, including property, commercial multi-peril, fire, ocean marine, inland marine, liability, aircraft and workers’ compensation. In the event of a terrorism event defined by TRIA, the federal government would reimburse terrorism claim payments subject to the insurer’s deductible. The deductible is calculated as a percentage of subject written premiums for the preceding calendar year. Our deductible in 2025 was $815 million (20% of 2024 subject premiums), and we estimate it is $888 million (20% of 2025 subject premiums) for 2026.
Reinsurance protection for the company’s surety business is covered under a separate treaty with many of the same reinsurers that write the property casualty working treaties.
Reinsurance protection for cyber coverage is also through a separate treaty. We offer cyber insurance as an affirmative coverage option on various insurance policies written on a direct basis and subsequently cede all of the related cyber insurance premiums to a reinsurer, therefore transferring substantially all of that risk.
Certain earthquake risks are also covered by a quota share reinsurance arrangement for personal lines and commercial lines risks in California that we insure through excess and surplus lines policies. We cede all of the related premiums to a reinsurer, therefore transferring substantially all of that risk. Ceded premiums for this treaty in 2025 totaled $3 million.
Effective June 1, 2025, we renewed the reinsurance program for Cincinnati Re only, which provides retrocession coverages with various triggers, exclusions and unique features. The program includes property catastrophe excess of loss coverage in excess of $90 million per occurrence with a total available limit of $73 million per occurrence.
Reinsurance protection for Cincinnati Global's business is also provided through separate treaties.
The Cincinnati Specialty Underwriters Insurance Company has separate property and casualty reinsurance treaties for 2026 through its parent, The Cincinnati Insurance Company. Primary components of the treaties include:
•Property per risk treaty – The property treaty provides limits up to $6 million, which is adequate capacity for the risk profile we insure. It also includes protection for extra-contractual liability coverage losses. Cincinnati Specialty Underwriters retains the first $2 million of any policy loss. Losses between $2 million and $6 million are reinsured at 100% by The Cincinnati Insurance Company.
•Casualty treaties – The casualty treaty is written on an excess of loss basis and provides limits up to $6 million, which is adequate capacity for the risk profile we insure. A second treaty layer of $5 million excess of $6 million is written to provide coverage for extra contractual obligations or clash exposures. The maximum retention for any one casualty loss is $2 million by Cincinnati Specialty Underwriters. Losses on a per occurrence basis between $2 million and $6 million and extra contractual and clash losses between $6 million and $11 million are reinsured at 100% by The Cincinnati Insurance Company.
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•Basket retention – Cincinnati Specialty Underwriters has purchased this coverage to limit their retention to $2 million in the event that the same occurrence results in both a property and a casualty loss.
•Property catastrophe treaty – As a subsidiary of The Cincinnati Insurance Company, Cincinnati Specialty Underwriters is a named insured under our corporate property catastrophe treaty. All terms and conditions of this reinsurance coverage apply to policies underwritten by Cincinnati Specialty Underwriters.
For property or casualty risks with limits exceeding $6 million, underwriters place facultative reinsurance coverage on an individual certificate basis.
Cincinnati Life, our life insurance subsidiary, purchases reinsurance under separate treaties with many of the same reinsurers that write the property casualty working treaties. Our corporate retention is $2 million on a single life. For our core term life insurance line of business, effective January 15, 2025, we doubled our retention to $2 million for issue ages up to 61 years on new term life insurance sales, ceding the balance using excess over retention mortality coverage, and retaining the policy reserve. For issue ages 61 years or older, our retention is now $1 million. Prior to January 15, 2025, and after November 1, 2015, we retained $1 million for issue ages up to 61 years on term life insurance sales. For issue ages 61 years or older, our retention was $500,000. Prior to November 1, 2015, and after 2004, we retain $500,000 per life. For term life insurance business written prior to 2005, we retain 10% to 25% of each term policy, not to exceed $500,000, ceding the balance of mortality risk and policy reserve.
The following table shows our five largest life reinsurance receivable amounts by reinsurer at year-end 2025 and 2024. Insurer financial strength ratings are also shown.
(Dollars in millions)
2025
2024
Name of reinsurer
Total
receivable
Rating agency
Rating
Total
receivable
Rating Agency
Rating
Swiss Re Life & Health America, Inc.
$
53
A.M. Best
A+
$
58
A.M. Best
A+
General Re Life Corporation
49
A.M. Best
A++
49
A.M. Best
A++
Lincoln National Life Insurance Company
21
A.M. Best
A
25
A.M. Best
A
Hannover Life Reassurance Co. of America
14
A.M. Best
A
12
A.M. Best
A
Employers Reassurance Corporation
13
S&P
BBB+
13
S&P
BBB+
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Safe Harbor Statement
Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by forward-looking statements. Any forward-looking statements contained herein, are based upon our current estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words like “seek,” “expect,” “will,” “should,” “could,” “might,” “anticipate,” “believe,” “estimate,” “intend,” “likely,” “future,” or other similar expressions. Forward-looking statements speak only as of the date they were made; we assume no obligation to update such statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include, but are not limited to:
Insurance-Related Risks
•Risks and uncertainties associated with our loss reserves or actual claim costs exceeding reserves
•Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance
•Unusually high levels of catastrophe losses due to risk concentrations or changes in weather patterns, environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes; and our ability to manage catastrophe risk
•Risks associated with analytical models in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance, and catastrophe risk management
•Inadequate estimates or assumptions, or reliance on third-party data used for critical accounting estimates
•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
•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
•Our inability to manage business opportunities, growth prospects, and expenses for our ongoing operations
•Changing consumer insurance-buying habits
•The inability to obtain adequate ceded reinsurance on acceptable terms, for acceptable amounts, and from financially strong reinsurers; and the potential for nonpayment or delay in payment by reinsurers
•Domestic and global events, such as the wars in Ukraine and in the Middle East, future pandemics, inflationary trends, changes in U.S. trade and tariff policy, 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:
◦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
◦Significant or prolonged decline in the fair value of securities and impairment of the assets
◦Significant decline in investment income due to reduced or eliminated dividend payouts from 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
◦An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses
◦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
◦The inability of our workforce, agencies, or vendors to perform necessary business functions
Financial, Economic, and Investment Risks
•Declines in overall stock market values negatively affecting our equity portfolio and book value
•Downgrades in our financial strength ratings
•Interest rate fluctuations or other factors that could significantly affect:
◦Our ability to generate growth in investment income
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◦Values of our fixed-maturity investments and accounts in which we hold bank-owned life insurance contract assets
◦Our traditional life policy reserves
•Economic volatility and illiquidity associated with our alternative investments in private equity, private credit, real property, and limited partnerships
•Failure to comply with covenants and other requirements under our credit facilities, senior debt, and other debt obligations
•Recession, prolonged elevated inflation, or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies
•The inability of our subsidiaries to pay dividends consistent with current or past levels impacting our ability to pay shareholder dividends or repurchase shares
General Business, Technology, and Operational Risks
•Ineffective information technology systems or failing to develop and implement improvements in technology
•Difficulties with technology or data security breaches, including cyberattacks, could negatively affect our, or our agents’, ability to conduct business; disrupt our relationships with agents, policyholders, and others; cause reputational damage, mitigation expenses, 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, 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 models and methods, including usage-based insurance methods, automation, artificial intelligence, or technology projects and enhancements expected to increase our efficiency, pricing accuracy, underwriting profit, and competitiveness
•Intense competition, and the impact of innovation, emerging technologies, 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
•Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that the segment could not achieve sustainable profitability
•Unforeseen departure of certain executive officers or other key employees 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
•Events, such as a pandemic, an epidemic, natural catastrophe, or terrorism, which could hamper our ability to assemble our workforce, work effectively in a remote environment, or other failures of business continuity or disaster recovery programs
Regulatory, Compliance, and Legal Risks
•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
◦Increase 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
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◦Increase our provision for federal income taxes due to changes in tax laws, regulations, or interpretations
◦Increase other expenses
◦Limit our ability to set fair, adequate, and reasonable rates
◦Restrict our ability to cancel policies
◦Impose new underwriting standards
◦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, environmental claims, mass torts or administrative proceedings, including effects of social inflation and third-party litigation funding on the size and frequency of litigation awards
•Events or actions, including unauthorized intentional circumvention of controls, which reduce our future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002
•Effects of changing social, global, economic, and regulatory environments
•Additional measures affecting corporate financial reporting and governance that can affect the market value of our common stock
Risks and uncertainties are further discussed in Item 1A, Risk Factors.
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