CINCINNATI FINANCIAL CORP

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

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•Effects of any future pandemic that could affect results for reasons such as:

Previous wording

•Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns (whether as a result of global climate change or otherwise), environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes

Current wording

•Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns (whether as a result of climate change or otherwise), environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes and our ability to manage catastrophe risk due to inaccurate catastrophe models or incomplete data

Previous wording

•Domestic and global events, such as Russia’s invasion of Ukraine, war in the Middle East and disruptions in the banking and financial services industry, resulting in insurance losses, capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:

Current wording

•Domestic and global events, such as the wars in Ukraine and in the Middle East, recent tariff and trade policy announcements, and disruptions in the banking and financial services industry, resulting in insurance losses, capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:

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•Our inability to manage Cincinnati Global or other subsidiaries to produce related business opportunities and growth prospects for our ongoing operations

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•Our inability to manage business opportunities, growth prospects, and expenses for our ongoing operations

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•Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our or our agents’ ability to conduct business; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability under federal and state laws

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•Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our or our agents’ ability to conduct business; disrupt our relationships with agents, policyholders and others; cause reputational damage, mitigation expenses and data loss and expose us to liability

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•Intense competition, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and profitability

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•Intense competition, and the impact of innovation, artificial intelligence and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and profitability

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•Our inability, or the inability of our independent agents, to attract and retain personnel in a competitive labor market, impacting the customer experience and altering our competitive advantages

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•Our inability, or the inability of our independent agents, to attract and retain personnel in a competitive labor market

Previous wording

Total revenues increased $1.509 billion for the third quarter of 2024, compared with the third quarter of 2023, including higher earned premiums, investment income and net investment gains. For the first nine months of 2024, compared with the same period of 2023, total revenues increased $2.142 billion, including higher earned premiums, investment income and net investment gains. Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

Current wording

Total revenues decreased $369 million for the first quarter of 2025, compared with the first quarter of 2024, as a reduction in net investment gains offset higher earned premiums and investment income. Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

Previous wording

Net income for the third quarter of 2024, compared with the third quarter of 2023, increased $919 million, including increases of $956 million in after-tax net investment gains and losses and $26 million in after-tax investment income, partially offset by a $40 million decrease in after-tax property casualty underwriting income. Catastrophe losses for the third quarter of 2024, mostly weather related, were $86 million higher after taxes and unfavorably affected both net income and property casualty underwriting income. Life insurance segment results decreased by $7 million on a pretax basis.

Current wording

The net loss for the first quarter of 2025, compared with first-quarter 2024 net income, was a change of $845 million, including decreases of $536 million in after-tax net investment gains and losses and $339 million in after-tax property casualty underwriting profit, partially offset by a $28 million increase in after-tax investment income. Catastrophe losses for the first quarter of 2025, primarily from January 2025 wildfires in southern California, were $356 million higher after taxes and unfavorably affected both net income and property casualty underwriting profit. Life insurance segment results decreased by $1 million on a pretax basis.

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 nine months of 2024, cash dividends declared by the company increased 8% compared with the same period of 2023. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2024 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

Current wording

The board of directors is committed to rewarding shareholders directly through cash dividends and through share repurchase authorizations. Through 2024, the company had increased the annual cash dividend rate for 64 consecutive years, a record we believe is matched by only seven other U.S. publicly traded companies. In January 2025, the board of directors increased the regular quarterly dividend to 87 cents per share, setting the stage for our 65 th consecutive year of increasing cash dividends. During the first three months of 2025, cash dividends declared by the company increased 7% compared with the same period of 2024. Our board regularly evaluates relevant factors in decisions related to dividends and share repurchases. The 2025 dividend increase reflected our strong operating performance and signaled management's and the board's positive outlook and confidence in our outstanding capital, liquidity and financial flexibility.

Previous wording

Total assets at September 30, 2024, increased 13% compared with year-end 2023, and included an 11% increase in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio. Shareholders' equity increased 14% and book value per share increased 15% during the first nine months of 2024. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased compared with year-end 2023.

Current wording

Total assets at March 31, 2025, increased 2% compared with year-end 2024, and included an increase of less than 1% in total investments that reflected net purchases that were partially offset by lower fair values for many securities in our equity portfolio. Shareholders' equity decreased 2% and book value per share decreased 1% during the first three months of 2025. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) increased slightly compared with year-end 2024.

Previous wording

Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was 17.8% for the first nine months of 2024, better than 4.4% for the same period in 2023, primarily due to a higher amount in overall net gains from our investment portfolio. Book value per share increased $11.26 during the first nine months of 2024 and contributed 14.6 percentage points to the value creation ratio, while dividends declared at $2.43 per share contributed 3.2 points. Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.

Current wording

Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was negative 0.5% for the first three months of 2025, compared with positive 5.9% for the same period in 2024. The decrease was primarily due to a reduction in overall net gains from our investment portfolio and an underwriting loss from our insurance operations. Book value per share decreased $1.33 during the first three months of 2025 and contributed negative 1.5 percentage points to the value creation ratio, while dividends declared at $0.87 per share contributed positive 1.0 point. Value creation ratio major contributors and in total, along with calculations from per-share amounts, are shown in the tables below.

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 September 30, 2024, we actively marketed through 2,196 agencies located in 46 states. We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.

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 2024 net written premiums for approximately 2,000 U.S. stock and mutual insurer groups. We market our insurance products through a select group of independent insurance agencies as discussed in our 2024 Annual Report on Form 10-K, Item 1, Our Business and Our Strategy, Page 6. At March 31, 2025, we actively marketed through 2,199 agencies located in 46 states. We maintain a long-term perspective that guides us in addressing immediate challenges or opportunities while focusing on the major decisions that best position our company for success through all market cycles.

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 nine months of 2024, our consolidated property casualty net written premium year-over-year growth was 14%, comparing favorably with the industry's 10% growth rate reported by A.M. Best for the first six months of 2024. For the five-year period 2019 through 2023, our growth rate exceeded that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business.

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 three months of 2025, our consolidated property casualty net written premium year-over-year growth was 11%. As of February 2025, A.M. Best projected the industry's full-year 2025 written premium growth at approximately 7%. For the five-year period 2020 through 2024, our growth rate exceeded that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business.

Previous 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 nine months of 2024, our GAAP combined ratio was 96.5%, including 11.2 percentage points of current accident year catastrophe losses partially offset by 3.3 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 95.7% for the first nine months of 2024, comparing favorably with the industry's 97.7% reported by A.M. Best for the first six months of 2024. The industry's ratio again excludes its mortgage and financial guaranty lines of business.

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 three months of 2025, our GAAP combined ratio was 113.3%, including 26.8 percentage points of current accident year catastrophe losses partially offset by 4.0 percentage points of favorable loss reserve development on prior accident years. Our statutory combined ratio was 112.3% for the first three months of 2025. As of February 2025, A.M. Best projected the industry's full-year 2025 statutory combined ratio at approximately 99%, including approximately 9 percentage points of catastrophe losses and a favorable effect of less than 1 percentage point of loss reserve development on prior accident years. The industry's ratio again excludes its mortgage and financial guaranty lines of business.

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 nine months of 2024, pretax investment income was $745 million, up 14% compared with the same period in 2023. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

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 three months of 2025, pretax investment income was $280 million, up 14% compared with the same period in 2024. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

Previous wording

At September 30, 2024, we held $5.419 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.639 billion, or 85.6%, was invested in common stocks, and $645 million, or 11.9%, was cash or cash equivalents. Our debt-to-total-capital ratio was 5.6% at September 30, 2024. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.0-to-1 for the 12 months ended September 30, 2024, matching year-end 2023.

Current wording

At March 31, 2025, we held $5.028 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.479 billion, or 89.1%, was invested in common stocks, and $241 million, or 4.8%, was cash or cash equivalents. Our debt-to-total-capital ratio was 5.6% at March 31, 2025. Another important indicator of financial strength is our ratio of property casualty net written premiums to statutory surplus, which was 1.1-to-1 for the 12 months ended March 31, 2025, compared with 1.0-to-1 at year-end 2024.

Previous wording

Our consolidated property casualty insurance operations generated an underwriting profit of $62 million for the third quarter and $228 million for the first nine months of 2024. The third-quarter 2024 underwriting profit decrease of $50 million, compared with third-quarter 2023, included an unfavorable increase of $109 million in losses from catastrophes, mostly caused by severe weather. The third-quarter 2024 change in underwriting profitability also included higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and higher amounts of favorable reserve development on prior accident years. The nine-month 2024 underwriting profit increase of $79 million, compared with the first nine months of 2023, included losses from catastrophes that matched. In addition, the nine-month 2024 period experienced higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums and a lower amount of favorable reserve development on prior accident years before catastrophe losses.

Current wording

Our consolidated property casualty insurance operations generated an underwriting loss of $298 million for the first quarter of 2025. Compared with an underwriting profit of $131 million for the first quarter of 2024, the first-quarter 2025 decrease of $429 million included an unfavorable increase of $450 million in losses from catastrophes, mostly caused by January 2025 wildfires in southern California, and a slightly lower amount of total favorable reserve development on prior accident years. The change in underwriting profitability for the first quarter of 2025 also included a favorable effect from higher current accident year loss and loss expenses before catastrophe losses that grew slower than earned premiums.

Previous wording

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

Current wording

Underwriting results for the first quarter of 2025 included improved current accident year loss experience before catastrophe losses, as price increases have helped to offset recent-year elevated paid losses reflecting economic or other forms of inflation. Elevated inflation was a driver of higher losses and loss expenses in recent years as costs have increased significantly to repair damaged autos or other property that we insure. We also experienced higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear. The higher loss experience is discussed in Financial Results by property casualty insurance segment. We believe future property casualty underwriting results will continue to benefit from price increases and our ongoing initiatives to improve pricing precision and loss experience related to claims and loss control practices.

Previous wording

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

Current wording

For all property casualty lines of business in aggregate, net loss and loss expense reserves at March 31, 2025, were $488 million, or 5%, higher than at year-end 2024, including an increase of $454 million for the incurred but not reported (IBNR) portion.

Previous wording

Our consolidated property casualty combined ratio for the third quarter of 2024 increased by 3.0 percentage points, compared with the same period of 2023, including an increase of 3.9 points from catastrophe losses and loss expenses. For the first nine months of 2024, compared with the 2023 nine-month period, our combined ratio improved by 1.0 percentage points, including a decrease of 1.2 points from catastrophe losses and loss expenses. Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.

Current wording

Our consolidated property casualty combined ratio for the first quarter of 2025 increased by 19.7 percentage points, compared with the same period of 2024, including an increase of 19.1 points from catastrophe losses and loss expenses. Other combined ratio components that changed are discussed below and in further detail in Financial Results by property casualty insurance segment.

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 3.3 percentage points in the first nine months of 2024, compared with 3.8 percentage points in the same period of 2023. Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.

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 4.0 percentage points in the first three months of 2025, compared with 5.0 percentage points in the same period of 2024. Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.

Previous wording

The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first nine months of 2024. That 58.6% ratio was 1.1 percentage points lower, compared with the 59.7% accident year 2023 ratio measured as of September 30, 2023, including a decrease of 1.2 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio improvement of 1.1 percentage points included an increase of 1.1 points for the IBNR portion and a decrease of 2.2 points for the case incurred portion.

Current wording

The ratio for current accident year loss and loss expenses before catastrophe losses improved in the first three months of 2025. That 60.5% ratio was 0.8 percentage points lower, compared with the 61.3% accident year 2024 ratio measured as of March 31, 2024, including an increase of 1.0 points in the ratio for large losses of $2 million or more per claim, discussed below. The ratio improvement of 0.8 percentage points included a decrease of 0.2 points for the IBNR portion and a decrease of 0.6 points for the case incurred portion. It also included an unfavorable 1.4 points for the net effect of $52 million for reinsurance treaty reinstatement premiums related to the January 2025 wildfires in southern California.

Previous wording

Consolidated property casualty net written premiums for the third quarter and nine months ended September 30, 2024, grew $336 million and $874 million compared with the same periods of 2023. Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.

Current wording

Consolidated property casualty net written premiums for the three months ended March 31, 2025, grew $247 million compared with the same period of 2024. Our premium growth initiatives from prior years have provided an ongoing favorable effect on growth during the current year, particularly as newer agency relationships mature over time.

Previous wording

Consolidated property casualty agency new business written premiums increased by $93 million and $292 million for the third quarter and first nine months of 2024, compared with the same periods of 2023. New agency appointments during 2024 and 2023 produced a $82 million increase in standard lines new business for the first nine months of 2024 compared with the same period of 2023. As we appoint new agencies that choose to move accounts to us, we report these accounts as new business. While this business is new to us, in many cases it is not new to the agent. We believe these seasoned accounts tend to be priced more accurately than business that may be less familiar to our agent upon obtaining it from a competing agent.

Current wording

Consolidated property casualty agency new business written premiums increased by $37 million for the first three months of 2025, compared with the same period of 2024. New agency appointments during 2025 and 2024 produced a $24 million increase in standard lines new business for the first three months of 2025 compared with the same period of 2024. As we appoint new agencies that choose to move accounts to us, we report these accounts as new business. While this business is new to us, in many cases it is not new to the agent. We believe these 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, increased by $4 million in the third quarter and $6 million for the nine months ended September 30, 2024, compared with the same periods of 2023, to $89 million and $498 million, respectively. Cincinnati Re assumes risks through reinsurance treaties and in some cases cedes part of the risk and related premiums to one or more unaffiliated reinsurance companies through transactions known as retrocessions.

Current wording

Net written premiums for Cincinnati Re, included in other written premiums, increased by $53 million to $255 million for the three months ended March 31, 2025, compared with the same period of 2024. Cincinnati Re assumes risks through reinsurance treaties and in some cases cedes part of the risk and related premiums to one or more unaffiliated reinsurance companies through transactions known as retrocessions. The increase included a $12 million net favorable effect from estimated premiums to reinstate treaties affected by the California wildfires.

Previous wording

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

Current wording

Cincinnati Global is also included in other written premiums. Net written premiums for Cincinnati Global decreased by $7 million to $75 million for the three months ended March 31, 2025, compared with the same period of 2024.

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 $16 million and $32 million for the third quarter and first nine 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 $65 million for the first three months of 2025, compared with the same period of 2024. Other written premiums for the first quarter of 2025 included a net unfavorable amount of $52 million for reinsurance treaty reinstatement premiums related to the California wildfires, including a favorable $12 million for Cincinnati Re and an unfavorable $64 million for our personal lines insurance segment.

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

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 25.0 percentage points to the combined ratio in the first three months of 2025, compared with 5.9 percentage points in the same period of 2024.

Previous wording

Effective June 1, 2024, we restructured our reinsurance program for Cincinnati Re only, providing retrocession coverages with various triggers, exclusions and unique features. That program included property catastrophe excess of loss coverage with a total available aggregate limit of $60 million in excess of $80 million per occurrence. Coverage for Cincinnati Re only with a total available aggregate limit of $20 million in excess of $80 million per occurrence expired during the second quarter of 2024. That expiration also included the shared coverage for Cincinnati Re and the direct business applying to catastrophe losses in excess of $600 million. Ceded premiums for the one-year renewal period of coverage from the treaty effective June 1, 2024, are estimated to be approximately $16 million.

Current wording

The reinsurance program for Cincinnati Re only effective June 1, 2024, provides retrocession coverages with various triggers, exclusions and unique features. The program includes property catastrophe excess of loss coverage in excess of $80 million per occurrence. During 2024, the program had a total available limit of $60 million per occurrence and there was no recovery from reinsurers pertaining to these treaties. During the first three months of 2025, recoveries of $38 million were estimated related to the California wildfires. As of March 31, 2025, the remaining coverage provides a total available limit of $41 million per occurrence in excess of $80 million.

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 third-quarter 2024 property casualty total large losses incurred of $88 million, net of reinsurance, was lower than the $95 million quarterly average during full-year 2023 and the $108 million experienced for the third quarter of 2023. The ratio for these large losses was 1.5 percentage points lower compared with last year's third quarter. The third-quarter 2024 amount of total large losses incurred helped contribute to the decrease in the nine-month 2024 total large loss ratio, compared with 2023, in addition to a first-half 2024 ratio that was 1.4 points lower than the first half of 2023. We believe results for the three- and nine-month periods largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Losses by size are discussed in further detail in results of operations by property casualty insurance segment.

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 first-quarter 2025 property casualty total large losses incurred of $102 million, net of reinsurance, was higher than the $70 million quarterly average during full-year 2024 and the $44 million experienced for the first quarter of 2024. The ratio for these large losses was 2.3 percentage points higher compared with last year's first quarter. We believe results for the three-month period largely reflected normal fluctuations in loss patterns and normal variability in large case reserves for claims above $2 million. Losses by size are discussed in further detail in results of operations by property casualty insurance segment.

Previous wording

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

Current wording

•Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the first three months of 2025, compared with the same period a year ago, primarily due to agency renewal written premium growth that continued to include higher average pricing as well as growth in agency new business written premiums. The table below analyzes the primary components of premiums. We continue to use predictive analytics tools to improve pricing precision and segmentation while leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a policy-by-policy basis whether to write or renew a policy.

Previous wording

Agency renewal written premiums increased 8% for the third quarter and 5% for the first nine months of 2024, compared with the same periods of 2023, including price increases. During the third quarter of 2024, our overall standard commercial lines policies averaged estimated renewal price increases at percentages in the high-single-digit range. We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing. Conversely, we have been seeking stricter renewal terms and conditions on policies we believe have relatively weaker pricing, thus retaining fewer of those policies. We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.

Current wording

Agency renewal written premiums increased 7% for the first three months of 2025, compared with the same period of 2024, including price increases. During the first quarter of 2025, our overall standard commercial lines policies averaged estimated renewal price increases at percentages near the low end of the high-single-digit range. We continue to segment commercial lines policies, emphasizing identification and retention of those we believe have relatively stronger pricing. Conversely, we have been seeking stricter renewal terms and conditions on policies we believe have relatively weaker pricing, thus retaining fewer of those policies. We measure average changes in commercial lines renewal pricing as the percentage rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for the respective policies.

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 third quarter of 2024, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty, commercial property and commercial auto lines of business. The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.

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 first quarter of 2025, we estimate that our average percentage price increases were in the high-single-digit range for our commercial casualty and commercial property lines of business and in the mid-single-digit range for our commercial auto line of business. The estimated average percentage price change for workers' compensation was a decrease in the mid-single-digit range.

Previous wording

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

Current wording

Our commercial lines segment's increase in agency renewal written premiums for the first three months of 2025 also included changes in the level of insured exposures. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged commercial structures. We use building valuation software to automate much of that underwriting process and may also manually adjust premiums to reflect property costs.

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 nine months of 2024 contributed $81 million to net written premiums, compared with $105 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 three months of 2025 contributed $23 million to net written premiums, compared with $29 million for the same period of 2024.

Previous wording

New business written premiums for commercial lines increased $39 million and $131 million during the third quarter and first nine months of 2024, compared with the same periods of 2023, as we continued to carefully underwrite each policy in a highly competitive market. Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability. That variability is often driven by larger policies with annual premiums greater than $100,000.

Current wording

New business written premiums for commercial lines increased $21 million during the first three months of 2025, compared with the same period of 2024, as we continued to carefully underwrite each policy in a highly competitive market. Trend analysis for year-over-year comparisons of individual quarters is more difficult to assess for commercial lines new business written premiums, due to inherent variability. That variability is often driven by larger policies with annual premiums greater than $100,000.

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 $5 million and $11 million for the third quarter and first nine months of 2024, compared with the same periods 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, a decrease in ceded premiums increased net written premiums by approximately $4 million for the first three months of 2025, compared with the same period of 2024.

Previous wording

•Combined ratio – The third-quarter 2024 commercial lines combined ratio improved by 2.2 percentage points, compared with the third quarter of 2023, including a decrease of 1.3 points in losses from catastrophes. The third-quarter combined ratio increased by 0.2 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.9 points for the IBNR portion and a decrease of 2.7 points for the case incurred portion. For the first nine months of 2024, the combined ratio improved by 1.3 percentage points, compared with the same period a year ago, including a decrease of 2.5 points in losses from catastrophes. The nine-month 2024 combined ratio also included a decrease of 0.3 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 2.4 points in the IBNR portion and a decrease of 2.7 points for the case incurred portion. Underwriting results also included higher third-quarter 2024 and lower nine-month 2024 levels of favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of September 30 of the respective years and included a decrease of 1.5 percentage points for the first nine months of 2024 in the ratio for large losses of $2 million or more per claim, discussed below.

Current wording

•Combined ratio – The first-quarter 2025 commercial lines combined ratio improved by 4.6 percentage points, compared with the first quarter of 2024, including a decrease of 2.6 points in losses from catastrophes. The first-quarter combined ratio decreased by 1.9 points from current accident year loss and loss expenses before catastrophe losses, including an increase of 0.7 points for the IBNR portion and a decrease of 2.6 points for the case incurred portion. Underwriting results also included favorable reserve development on prior accident years, as discussed below. The current accident year ratios were measured as of March 31 of the respective years and included an increase of 0.8 percentage points for the first three months of 2025 in the ratio for large losses of $2 million or more per claim, discussed below.

Previous wording

When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends for inflation, historical paid and reported losses, large loss activity and other data or information for the industry or our company. Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged business property or autos that we insure, in addition to 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.

Current wording

When estimating the ultimate cost of total loss and loss expenses, we consider many factors, including trends for inflation, historical paid and reported losses, large loss activity and other data or information for the industry or our company. Elevated inflation in recent years has been a driver of higher losses and loss expenses as costs have increased significantly to repair damaged business properties or autos that we insure, in addition to higher losses for liability coverages for some of our lines of business. Due to increased uncertainty regarding ultimate losses, we intend to remain prudent in reserving for estimated ultimate losses until longer-term loss cost trends become more clear.