CINCINNATI FINANCIAL CORP

Previous wording

Total revenues increased $694 million for the first quarter of 2024, compared with the first quarter of 2023, primarily due to an increase in net investment gains in addition to higher earned premiums and investment income. Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

Current wording

Total revenues decreased $61 million for the second quarter of 2024, compared with the second quarter of 2023, primarily due to a decrease in net investment gains that offset higher earned premiums and investment income. For the first six months of 2024, compared with the same period of 2023, total revenues increased $633 million, including higher earned premiums, investment income and net investment gains. Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

Previous wording

Net income for the first quarter of 2024, compared with first-quarter 2023, increased $530 million, including increases of $399 million in after-tax net investment gains and losses, $111 million in after-tax property casualty underwriting income and $28 million in after-tax investment income. Catastrophe losses for the first quarter of 2024, mostly weather related, were $93 million lower after taxes and favorably affected both net income and property casualty underwriting income. Life insurance segment results increased by $2 million on a pretax basis.

Current wording

Net income for the second quarter of 2024, compared with the second quarter of 2023, decreased $222 million, including decreases of $235 million in after-tax net investment gains and losses and $9 million in after-tax property casualty underwriting income that offset an increase of $17 million in after-tax investment income. Catastrophe losses for the second quarter of 2024, mostly weather related, were $7 million higher after taxes and unfavorably affected both net income and property casualty underwriting income. Life insurance segment results increased by $9 million on a pretax basis.

Previous wording

The board of directors is committed to rewarding shareholders directly through cash dividends and through share repurchase authorizations. Through 2023, the company had increased the annual cash dividend rate for 63 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2024, the board of directors increased the regular quarterly dividend to 81 cents per share, setting the stage for our 64 th consecutive year of increasing cash dividends. During the first three months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2024 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

Current wording

The board of directors is committed to rewarding shareholders directly through cash dividends and through share repurchase authorizations. Through 2023, the company had increased the annual cash dividend rate for 63 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2024, the board of directors increased the regular quarterly dividend to 81 cents per share, setting the stage for our 64 th consecutive year of increasing cash dividends. During the first six months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2024 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

Previous wording

Total assets at March 31, 2024, increased 3% compared with year-end 2023, and included a 4% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio. Shareholders' equity increased 5% and book value per share also increased 5% during the first three months of 2024. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased compared with year-end 2023.

Current wording

Total assets at June 30, 2024, increased 6% compared with year-end 2023, and included a 5% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio. Shareholders' equity increased 6% and book value per share also increased 6% during the first six months of 2024. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased compared with year-end 2023.

Previous wording

Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was 5.9% for the first three months of 2024, better than the same period in 2023, including higher net income before investment gains and a higher amount in overall net gains from our investment portfolio. Book value per share increased $3.77 during the first three months of 2024 and contributed 4.9 percentage points to the value creation ratio, while dividends declared at $0.81 per share contributed 1.0 points. Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.

Current wording

Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was 8.2% for the first six months of 2024, better than 7.2% for the same period in 2023, primarily due to higher net income before investment gains. Book value per share increased $4.73 during the first six months of 2024 and contributed 6.1 percentage points to the value creation ratio, while dividends declared at $1.62 per share contributed 2.1 points. Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.

Previous wording

Operating through The Cincinnati Insurance Company, Cincinnati Financial Corporation is one of the 25 largest property casualty insurers in the nation, based on 2023 net written premiums for approximately 2,000 U.S. stock and mutual insurer groups. We market our insurance products through a select group of independent insurance agencies as discussed in our 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At March 31, 2024, we actively marketed through 2,125 agencies located in 46 states. We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.

Current wording

Operating through The Cincinnati Insurance Company, Cincinnati Financial Corporation is one of the 25 largest property casualty insurers in the nation, based on 2023 net written premiums for approximately 2,000 U.S. stock and mutual insurer groups. We market our insurance products through a select group of independent insurance agencies as discussed in our 2023 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At June 30, 2024, we actively marketed through 2,171 agencies located in 46 states. We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.

Previous wording

•Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average. For the first three months of 2024, our consolidated property casualty net written premium year-over-year growth was 11%. As of March 2024, A.M. Best projected the industry's full-year 2024 written premium growth at approximately 9%. For the five-year period 2019 through 2023, our growth rate exceeded that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business.

Current wording

•Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average. For the first six months of 2024, our consolidated property casualty net written premium year-over-year growth was 13%. As of March 2024, A.M. Best projected the industry's full-year 2024 written premium growth at approximately 9%. For the five-year period 2019 through 2023, our growth rate exceeded that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business.

Previous wording

•Combined ratio – We believe our underwriting philosophy and initiatives can generate a GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%. For the first three months of 2024, our GAAP combined ratio was 93.6%, including 7.5 percentage points of current accident year catastrophe losses partially offset by 5.0 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 92.3% for the first three months of 2024. As of March 2024, A.M. Best projected the industry's full-year 2024 statutory combined ratio at approximately 101%, including approximately 7 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years. The industry's ratio again excludes its mortgage and financial guaranty lines of business.

Current wording

•Combined ratio – We believe our underwriting philosophy and initiatives can generate an average GAAP combined ratio over any five-year period that is consistently within the range of 92% to 98%. For the first six months of 2024, our GAAP combined ratio was 96.1%, including 9.9 percentage points of current accident year catastrophe losses partially offset by 3.4 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 94.6% for the first six months of 2024. As of March 2024, A.M. Best projected the industry's full-year 2024 statutory combined ratio at approximately 101%, including approximately 7 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years. The industry's ratio again excludes its mortgage and financial guaranty lines of business.

Previous wording

•Investment contribution – We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor's 500 Index. For the first three months of 2024, pretax investment income was $245 million, up 17% compared with the same period in 2023. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

Current wording

•Investment contribution – We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor's 500 Index. For the first six months of 2024, pretax investment income was $487 million, up 13% compared with the same period in 2023. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

Previous wording

At March 31, 2024, we held $4.906 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.543 billion, or 92.6%, was invested in common stocks, and $163 million, or 3.3%, was cash or cash equivalents. Our debt-to-total-capital ratio was 6.1% at March 31, 2024. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.0-to-1 for the 12 months ended March 31, 2024, matching year-end 2023.

Current wording

At June 30, 2024, we held $5.002 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.643 billion, or 92.8%, was invested in common stocks, and $166 million, or 3.3%, was cash or cash equivalents. Our debt-to-total-capital ratio was 6.0% at June 30, 2024. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.1-to-1 for the 12 months ended June 30, 2024, compared with 1.0-to-1 at year-end 2023.

Previous wording

Our consolidated property casualty insurance operations generated an underwriting profit of $131 million for the first quarter of 2024. Compared with an underwriting loss of $10 million for the first quarter of 2023, the first-quarter 2024 improvement of $141 million included a favorable decrease of $118 million in losses from catastrophes, mostly caused by severe weather. The first-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slightly faster than earned premiums and higher amounts of favorable reserve development on prior accident years.

Current wording

Our consolidated property casualty insurance operations generated an underwriting profit of $35 million for the second quarter and $166 million for the first six months of 2024. The second-quarter 2024 underwriting profit decrease of $12 million, compared with second-quarter 2023, included an unfavorable increase of $9 million in losses from catastrophes, mostly caused by severe weather. The second-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and lower amounts of favorable reserve development on prior accident years. The six-month underwriting profit increase of $129 million, compared with the first six months of 2023, included a favorable decrease of $109 million in losses from catastrophes. The six-month 2023 period also experienced higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and lower amounts of favorable reserve development on prior accident years.

Previous wording

Underwriting results for the first quarter of 2024 included improved overall insured loss experience before catastrophe effects, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation. Elevated inflation was a driver of higher losses and loss expenses in both 2024 and 2023 as costs have increased significantly to repair damaged autos or other property that we insure. We also experienced higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear. The higher loss experience is discussed in Financial Results by property casualty insurance segment. We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices.

Current wording

Underwriting results for the second quarter and first six months of 2024 included improved current accident year loss experience, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation. Elevated inflation was a driver of higher losses and loss expenses in both 2024 and 2023 as costs have increased significantly to repair damaged autos or other property that we insure. We also experienced higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear. The higher loss experience is discussed in Financial Results by property casualty insurance segment. We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices.

Previous wording

For all property casualty lines of business in aggregate, net loss and loss expense reserves at March 31, 2024, were $233 million, or 3%, higher than at year-end 2023, including an increase of $272 million for the incurred but not reported (IBNR) portion.

Current wording

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

Previous wording

Our consolidated property casualty combined ratio for the first quarter of 2024 improved by 7.1 percentage points, compared with the same period of 2023, including a decrease of 6.9 points from lower catastrophe losses and loss expenses. Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.

Current wording

Our consolidated property casualty combined ratio for the second quarter of 2024 increased by 0.9 percentage points, compared with the same period of 2023, including a decrease of 0.8 points from catastrophe losses and loss expenses. For the first six months of 2024, compared with the 2023 six-month period, our combined ratio improved by 3.1 percentage points, including a decrease of 3.8 points from catastrophe losses and loss expenses. Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.

Previous wording

The combined ratio can be affected significantly by natural catastrophe losses and other large losses as discussed in detail below. The combined ratio can also be affected by updated estimates of loss and loss expense reserves established for claims that occurred in prior periods, referred to as prior accident years. Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 5.0 percentage points in the first three months of 2024, compared with 3.2 percentage points in the same period of 2023. Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.

Current wording

The combined ratio can be affected significantly by natural catastrophe losses and other large losses as discussed in detail below. The combined ratio can also be affected by updated estimates of loss and loss expense reserves established for claims that occurred in prior periods, referred to as prior accident years. Net favorable development on prior accident year reserves, including reserves for catastrophe losses, benefited the combined ratio by 3.4 percentage points in the first six months of 2024, compared with 4.3 percentage points in the same period of 2023. Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.

Previous wording

The ratio for current accident year loss and loss expenses before catastrophe losses increased in the first three months of 2024. That 61.3% ratio was 0.3 percentage points higher, compared with the 61.0% accident year 2023 ratio measured as of March 31, 2023, including a decrease of 1.6 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio increase of 0.3 percentage points included an increase of 1.8 points for the IBNR portion and a decrease of 1.5 points for the case incurred portion.

Current wording

The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first six months of 2024. That 59.5% ratio was 1.3 percentage points lower, compared with the 60.8% accident year 2023 ratio measured as of June 30, 2023, including a decrease of 1.5 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio improvement of 1.3 percentage points included an increase of 0.5 points for the IBNR portion and a decrease of 1.8 points for the case incurred portion.

Previous wording

Consolidated property casualty net written premiums for the three months ended March 31, 2024, grew $229 million compared with the same period of 2023. Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.

Current wording

Consolidated property casualty net written premiums for the second quarter and six months ended June 30, 2024, grew $309 million and $538 million compared with the same periods of 2023. Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.

Previous wording

Consolidated property casualty agency new business written premiums increased by $95 million for the first three months of 2024, compared with the same period of 2023. New agency appointments during 2024 and 2023 produced a $24 million increase in standard lines new business for the first three months of 2024 compared with the same period of 2023. As we appoint new agencies that choose to move accounts to us, we report these accounts as new business. While this business is new to us, in many cases it is not new to the agent. We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent.

Current wording

Consolidated property casualty agency new business written premiums increased by $104 million and $199 million for the second quarter and first six months of 2024, compared with the same periods of 2023. New agency appointments during 2024 and 2023 produced a $52 million increase in standard lines new business for the first six months of 2024 compared with the same period of 2023. As we appoint new agencies that choose to move accounts to us, we report these accounts as new business. While this business is new to us, in many cases it is not new to the agent. We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent.

Previous wording

Net written premiums for Cincinnati Re, included in other written premiums, decreased by $28 million to $202 million for the three months ended March 31, 2024, compared with the same period of 2023. 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.

Current wording

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

Previous wording

Cincinnati Global is also included in other written premiums. Net written premiums increased for Cincinnati Global by $18 million to $82 million for the three months ended March 31, 2024, compared with the same period of 2023.

Current wording

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

Previous wording

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. An increase in ceded premiums reduced net written premiums by $5 million for the first three months of 2024, compared with the same period of 2023.

Current wording

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. An increase in ceded premiums reduced net written premiums by $11 million and $16 million for the second quarter and first six months of 2024, compared with the same period of 2023.

Previous wording

Catastrophe losses and loss expenses typically have a material effect on property casualty results and can vary significantly from period to period. Losses from catastrophes contributed 5.9 percentage points to the combined ratio in the first three months of 2024, compared with 12.8 percentage points in the same period of 2023.

Current wording

Catastrophe losses and loss expenses typically have a material effect on property casualty results and can vary significantly from period to period. Losses from catastrophes contributed 11.2 and 8.6 percentage points to the combined ratio in the second quarter and first six months of 2024, compared with 12.0 and 12.4 percentage points in the same period of 2023.

Previous wording

We believe the inherent variability of aggregate loss experience for our portfolio of larger policies is greater than that of our portfolio of smaller policies, and we continue to monitor the variability in addition to general inflationary trends in loss costs. Our analysis continues to indicate no unexpected concentration of large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The first-quarter 2024 property casualty total large losses incurred of $44 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $60 million experienced for the first quarter of 2023. The ratio for these large losses was 1.0 percentage point lower compared with last year's first quarter. We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Losses by size are discussed in further detail in results of operations by property casualty insurance segment.

Current wording

We believe the inherent variability of aggregate loss experience for our portfolio of larger policies is greater than that of our portfolio of smaller policies, and we continue to monitor the variability in addition to general inflationary trends in loss costs. Our analysis continues to indicate no unexpected concentration of large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The second-quarter 2024 property casualty total large losses incurred of $74 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $97 million experienced for the second quarter of 2023. The ratio for these large losses was 1.7 percentage points lower compared with last year's second quarter. The second-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the six-month 2024 total large loss ratio, compared with 2023, in addition to a first-quarter 2024 ratio that was 1.0 point lower than the first quarter of 2023. We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Losses by size are discussed in further detail in results of operations by property casualty insurance segment.

Previous wording

•Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the first three months of 2024, compared with the same period a year ago, due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums. The table below analyzes the primary components of premiums. We continue to use predictive analytics tools to improve pricing precision and segmentation while leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy.

Current wording

•Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the second quarter and first six months of 2024, compared with the same periods a year ago, due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums. The table below analyzes the primary components of premiums. We continue to use predictive analytics tools to improve pricing precision and segmentation while leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy.

Previous wording

Agency renewal written premiums increased by 3% for the first three months of 2024, compared with the same period of 2023, including price increases. During the first quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-single-digit range. We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing. Conversely, we have been seeking stricter renewal terms and conditions on policies we believe have relatively weaker pricing, thus retaining fewer of those policies. We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.

Current wording

Agency renewal written premiums increased by 4% for both the second quarter and first six months of 2024, compared with the same periods of 2023, including price increases. During the second quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-single-digit range. We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing. Conversely, we have been seeking stricter renewal terms and conditions on policies we believe have relatively weaker pricing, thus retaining fewer of those policies. We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.

Previous wording

Our average overall commercial lines renewal pricing change includes the impact of flat pricing for certain coverages within package policies written for a three-year term that were in force but did not expire during the period being measured. Therefore, our reported change in average commercial lines renewal pricing reflects a blend of three-year policies that did not expire and other policies that did expire during the measurement period. For commercial lines policies that did expire and were then renewed during the first quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines of business. The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.

Current wording

Our average overall commercial lines renewal pricing change includes the impact of flat pricing for certain coverages within package policies written for a three-year term that were in force but did not expire during the period being measured. Therefore, our reported change in average commercial lines renewal pricing reflects a blend of three-year policies that did not expire and other policies that did expire during the measurement period. For commercial lines policies that did expire and were then renewed during the second quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines of business. The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.

Previous wording

Our commercial lines segment's increase in agency renewal written premiums for the first three months of 2024 also included changes in the level of insured exposures. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged commercial structures. We use building valuation software to automate much of that underwriting process and may also manually adjust premiums to reflect property costs.

Current wording

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

Previous wording

Renewal premiums for certain policies, primarily our commercial casualty and workers' compensation lines of business, include the results of policy audits that adjust initial premium amounts based on differences between estimated and actual sales or payroll related to a specific policy. Audits completed during the first three months of 2024 contributed $29 million to net written premiums, compared with $35 million for the same period of 2023.

Current wording

Renewal premiums for certain policies, primarily our commercial casualty and workers' compensation lines of business, include the results of policy audits that adjust initial premium amounts based on differences between estimated and actual sales or payroll related to a specific policy. Audits completed during the first six months of 2024 contributed $54 million to net written premiums, compared with $73 million for the same period of 2023.

Previous wording

New business written premiums for commercial lines increased $48 million during the first three months of 2024, compared with the same period of 2023, as we continued to carefully underwrite each policy in a highly competitive market. Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability. That variability is often driven by larger policies with annual premiums greater than $100,000.

Current wording

New business written premiums for commercial lines increased $44 million and $92 million during the second quarter and first six months of 2024, compared with the same periods of 2023, as we continued to carefully underwrite each policy in a highly competitive market. Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability. That variability is often driven by larger policies with annual premiums greater than $100,000.

Previous wording

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. For our commercial lines insurance segment, an increase in ceded premiums reduced net written premiums by less than $1 million for the first three months of 2024, compared with the same period of 2023.

Current wording

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

Previous wording

•Combined ratio – The first-quarter 2024 commercial lines combined ratio improved by 3.9 percentage points, compared with the first quarter of 2023, including a decrease of 4.2 points in losses from catastrophes. The first-quarter combined ratio also decreased 0.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 1.7 points for the IBNR portion and a decrease of 2.6 points for the case incurred portion. Underwriting results also included a higher level of favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of March 31 of the respective years and included a decrease of 2.9 percentage points for the first three months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

Current wording

•Combined ratio – The second-quarter 2024 commercial lines combined ratio increased by 2.2 percentage points, compared with the second quarter of 2023, including a decrease of 1.8 points in losses from catastrophes. The second-quarter combined ratio also decreased 0.3 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.8 points for the IBNR portion and a decrease of 3.1 points for the case incurred portion. For the first six months of 2024, the combined ratio improved by 0.7 percentage points, compared with the same period a year ago, including a decrease of 2.9 points in losses from catastrophes. The six-month 2024 combined ratio also included a decrease of 0.6 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.2 points in the IBNR portion and a decrease of 2.8 points for the case incurred portion. Underwriting results also included a lower level of favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of June 30 of the respective years and included a decrease of 2.3 percentage points for the first six months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

Previous wording

Catastrophe losses and loss expenses accounted for 6.2 percentage points of the combined ratio for the first three months of 2024, compared with 10.4 percentage points for the same period a year ago. Through 2023, the 10-year annual average for that catastrophe measure for the commercial lines segment was 5.9 percentage points, and the five-year annual average was 6.5 percentage points.

Current wording

Catastrophe losses and loss expenses accounted for 9.3 and 7.8 percentage points of the combined ratio for the second quarter and first six months of 2024, compared with 11.1 and 10.7 percentage points for the same periods a year ago. Through 2023, the 10-year annual average for that catastrophe measure for the commercial lines segment was 5.9 percentage points, and the five-year annual average was 6.5 percentage points.

Previous wording

The net effect of reserve development on prior accident years during the first three months of 2024 was favorable for commercial lines overall by $38 million, compared with $32 million for the same period in 2023. For the first three months of 2024, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development on prior accident years. The net favorable reserve development recognized during the first three months of 2024 for our commercial lines insurance segment was mainly for accident years 2023 and 2022 and was primarily due to lower-than-anticipated loss emergence on known claims. Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

Current wording

The net effect of reserve development on prior accident years during the second quarter and first six months of 2024 was favorable for commercial lines overall by $29 million and $67 million, compared with $59 million and $91 million for the same periods in 2023. For the second quarter of 2024, our commercial casualty line of business included $28 million of unfavorable reserve development on prior accident years. For the first six months of 2024, our commercial property and workers' compensation lines of business were the main contributors to the commercial lines net favorable reserve development. The net favorable reserve development recognized during the first six months of 2024 for our commercial lines insurance segment was mainly for accident years 2023 and 2022 and was primarily due to lower-than-anticipated loss emergence on known claims. Reserve estimates are inherently uncertain as described in our 2023 Annual Report on Form 10-K, Item 7, Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, Page 53.

Previous wording

We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The first-quarter 2024 commercial lines total large losses incurred of $23 million, net of reinsurance, was lower than the quarterly average of $74 million during full-year 2023 and the $45 million of total large losses incurred for the first quarter of 2023. The decrease in commercial lines large losses for the first three months of 2024 was primarily due to our commercial property line of business. The first-quarter 2024 ratio for commercial lines total large losses was 2.1 percentage points lower than last year's first-quarter ratio. We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Current wording

We continue to monitor new losses and case reserve increases greater than $2 million for trends in factors such as initial reserve levels, loss cost inflation and claim settlement expenses. Our analysis continues to indicate no unexpected concentration of these large losses and case reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. The second-quarter 2024 commercial lines total large losses incurred of $64 million, net of reinsurance, was lower than the quarterly average of $74 million during full-year 2023 and the $75 million of total large losses incurred for the second quarter of 2023. The decrease in commercial lines large losses for the first six months of 2024 was primarily due to our commercial property line of business. The second-quarter 2024 ratio for commercial lines total large losses was 1.3 percentage points lower than last year's second-quarter ratio. The second-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the six-month 2024 total large loss ratio, compared with 2023, in addition to a first-quarter 2024 ratio that was 2.1 points lower than the first quarter of 2023. We believe results for the three- and six-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million.

Previous wording

•Premiums – Personal lines earned premiums and net written premiums continued to grow during the first three months of 2024, including increased agency new business and renewal written premiums that included higher average pricing. Cincinnati Private Client SM net written premiums included in the personal lines insurance segment results totaled approximately $330 million for the first three months of 2024, compared with $233 million for the same period of 2023. Cincinnati Private Client net written premiums for the respective periods included excess and surplus lines homeowner policies with premiums totaling $34 million in first three months of 2024 and $19 million for the first three months of 2023. The table below analyzes the primary components of premiums.

Current wording

•Premiums – Personal lines earned premiums and net written premiums continued to grow during the second quarter and first six months of 2024, including increased agency new business and renewal written premiums that included higher average pricing. Cincinnati Private Client SM net written premiums included in the personal lines insurance segment results totaled approximately $472 million and $802 million for the second quarter and first six months of 2024, compared with $349 million and $582 million for the same periods of 2023. Cincinnati

Previous wording

Agency renewal written premiums increased 27% for the first three months of 2024, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as higher policy retention rates and changes in policy deductibles or mix of business. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials used to repair damaged homes.

Current wording

Agency renewal written premiums increased 26% for both the second quarter and first six months of 2024, reflecting rate increases in selected states, a higher level of insured exposures and other factors such as higher policy retention rates and changes in policy deductibles or mix of business. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials used to repair damaged homes.

Previous wording

We estimate that premium rates for our personal auto line of business increased at average percentages in the low-double-digit range during the first three months of 2024. For our homeowner line of business, we estimate that premium rates for the first three months of 2024 increased at average percentages in the high-single-digit range. For both our personal auto and homeowner lines of business, some individual policies experienced lower or higher rate changes based on each risk's specific characteristics and enhanced pricing precision enabled by predictive models.

Current wording

We estimate that premium rates for our personal auto line of business increased at average percentages in the low-double-digit range during the first six months of 2024. For our homeowner line of business, we estimate that premium rates for the first six months of 2024 increased at average percentages in the high-single-digit range. For both our personal auto and homeowner lines of business, some individual policies experienced lower or higher rate changes based on each risk's specific characteristics and enhanced pricing precision enabled by predictive models.

Previous wording

Personal lines new business written premiums increased $43 million or 54% for the first three months of 2024, compared with the same period of 2023, including approximately $15 million from Cincinnati Private Client policies and $28 million from middle-market policies. We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools.

Current wording

Personal lines new business written premiums increased $57 million or 54% for the second quarter of 2024, compared with the same period of 2023, including approximately $25 million from Cincinnati Private Client policies and $32 million from middle-market policies. For the first six months of 2024, compared with the same period of 2023, personal lines new business written premiums increased $100 million or 54%, including approximately $40 million from Cincinnati Private Client policies and $60 million from middle-market policies. We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools.

Previous wording

Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. For our personal lines insurance segment, an increase in 2024 ceded premiums reduced net written premiums by approximately $2 million for the first three months of 2024, compared with the same period of 2023.

Current wording

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

Previous wording

•Combined ratio – Our personal lines combined ratio for the first quarter of 2024 improved by 18.6 percentage points, compared with first-quarter 2023, including a decrease of 15.9 points in losses from catastrophes. The first-quarter 2024 combined ratio also included a decrease of 2.2 percentage points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.2 points for the IBNR portion and a decrease of 4.4 points for the case incurred portion. Those current accident year ratios were measured as of March 31 of the respective years and included a decrease of 0.1 percentage points for the first three months of 2024, in the ratio for large losses of $2 million or more per claim, discussed below.

Current wording

•Combined ratio – Our personal lines combined ratio for the second quarter of 2024 improved by 0.7 percentage points, compared with second-quarter 2023, despite an increase of 1.2 points in losses from catastrophes. The second-quarter 2024 combined ratio also included a decrease of 4.0 percentage points from current accident year loss and loss expenses before catastrophe losses, including a decrease of 0.9 points for the IBNR portion and a decrease of 3.1 points for the case incurred portion. For the first six months of 2024, the combined ratio improved by 9.4 percentage points, compared with the same period a year ago, including a decrease of 7.1 points in losses from catastrophes. The six-month 2024 combined ratio also included a decrease of 3.2 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 0.6 points in the IBNR portion and a decrease of 3.8 points for the case incurred portion. Those current accident year ratios were measured as of June 30 of the respective years and included a decrease of 1.1 percentage points for the first six months of 2024, in the ratio for large losses of $2 million or more per claim, discussed below.