CINCINNATI FINANCIAL CORP

Previous wording

This is our “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995. Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by the forward-looking statements in this report. Some of those risks and uncertainties are discussed in our 2024 Annual Report on Form 10-K, Item 1A, Risk Factors, Page 30.

Current wording

Our business is subject to certain risks and uncertainties that may cause actual results to differ materially from those suggested by forward-looking statements. Any forward-looking statements contained herein, are based upon our current estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words like “seek,” “expect,” “will,” “should,” “could,” “might,” “anticipate,” “believe,” “estimate,” “intend,” “likely,” “future,” or other similar expressions. Forward-looking statements speak only as of the date they were made; we assume no obligation to update such statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include, but are not limited to:

Previous wording

•Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance, due to inflationary trends or other causes

Current wording

•Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance

Previous 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

Current wording

•Unusually high levels of catastrophe losses due to risk concentrations or changes in weather patterns, environmental events, war or political unrest, terrorism incidents, cyberattacks, civil unrest or other causes; and our ability to manage catastrophe risk

Previous wording

•Events or conditions that could weaken or harm our relationships with our independent agencies and hamper opportunities to add new agencies, resulting in limitations on our opportunities for growth, such as:

Current wording

•Events or conditions that could weaken or harm our relationships with our independent agencies and hamper opportunities to add new agencies, resulting in limitations on our opportunities for growth

Previous wording

•Inability to obtain adequate ceded reinsurance on acceptable terms, amount of reinsurance coverage purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers

Current wording

•The inability to obtain adequate ceded reinsurance on acceptable terms, for acceptable amounts, and from financially strong reinsurers; and the potential for nonpayment or delay in payment by reinsurers

Previous 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:

Current wording

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

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•Significant or prolonged decline in the fair value of a particular security or group of securities and impairment of the asset(s)

Current wording

◦Significant or prolonged decline in the fair value of securities and impairment of the assets

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•Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities

Current wording

◦Significant decline in investment income due to reduced or eliminated dividend payouts from securities

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•Inability of our workforce, agencies or vendors to perform necessary business functions

Current wording

◦The inability of our workforce, agencies, or vendors to perform necessary business functions

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•Values of our fixed-maturity investments, including accounts in which we hold bank-owned life insurance contract assets

Current wording

◦Values of our fixed-maturity investments and accounts in which we hold bank-owned life insurance contract assets

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•Inability of our subsidiaries to pay dividends consistent with current or past levels

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•The inability of our subsidiaries to pay dividends consistent with current or past levels impacting our ability to pay shareholder dividends or repurchase shares

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•Ineffective information technology systems or discontinuing to develop and implement improvements in technology may impact our success and profitability

Current wording

•Ineffective information technology systems or failing to develop and implement improvements in technology

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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

Current wording

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

Previous wording

•Difficulties with our operations and technology that may negatively impact our ability to conduct business, including cloud-based data information storage, data security, cyberattacks, remote working capabilities, and/or outsourcing relationships and third-party operations and data security

Current wording

•Difficulties with our operations and technology that may negatively impact our ability to conduct business, including cloud-based data information storage, data security, remote working capabilities, and/or outsourcing relationships and third-party operations and data security

Previous wording

•Delays, inadequate data developed internally or from third parties, or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness

Current wording

•Delays, inadequate data developed internally or from third parties, or performance inadequacies from ongoing development and implementation of underwriting and pricing models and methods, including usage-based insurance methods, automation, artificial intelligence, or technology projects and enhancements expected to increase our efficiency, pricing accuracy, underwriting profit, and competitiveness

Previous wording

•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

Current wording

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

Previous wording

•Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability

Current wording

•Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that the segment could not achieve sustainable profitability

Previous wording

•Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others

Current wording

•Unforeseen departure of certain executive officers or other key employees that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others

Previous wording

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

Current wording

•Our inability, or the inability of our independent agents, to attract and retain personnel

Previous wording

•Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location or work effectively in a remote environment

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•Events, such as a pandemic, an epidemic, natural catastrophe, or terrorism, which could hamper our ability to assemble our workforce, work effectively in a remote environment, or other failures of business continuity or disaster recovery programs

Previous wording

•Add assessments for guaranty funds, other insurance‑related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes

Current wording

◦Increase assessments for guaranty funds, other insurance‑related assessments, or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes

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•Increase our provision for federal income taxes due to changes in tax law

Current wording

◦Increase our provision for federal income taxes due to changes in tax laws, regulations, or interpretations

Previous wording

Further, our insurance businesses are subject to the effects of changing social, global, economic and regulatory environments. Public and regulatory initiatives have included efforts to adversely influence and restrict premium rates, restrict the ability to cancel policies, impose underwriting standards and expand overall regulation. We also are subject to public and regulatory initiatives that can affect the market value for our common stock, such as measures affecting corporate financial reporting and governance. The ultimate changes and eventual effects, if any, of these initiatives are uncertain.

Current wording

◦Restrict our ability to cancel policies

Previous wording

•Adverse outcomes from litigation or administrative proceedings, including effects of social inflation and third-party litigation funding on the size of litigation awards

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•Adverse outcomes from litigation, environmental claims, mass torts or administrative proceedings, including effects of social inflation and third-party litigation funding on the size and frequency of litigation awards

Previous wording

•Events or actions, including unauthorized intentional circumvention of controls, that reduce our future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002

Current wording

•Events or actions, including unauthorized intentional circumvention of controls, which reduce our future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002

Previous 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.

Current wording

Total revenues increased $704 million for the second quarter of 2025, compared with the second quarter of 2024, including higher net investment gains, earned premiums and investment income. For the first six months of 2025, compared with the same period of 2024, total revenues increased $335 million, primarily due to higher earned premiums and investment income offset by a decrease in net investment gains. Premium and investment revenue trends are discussed further in the respective sections of Financial Results.

Previous 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.

Current wording

Net income for the second quarter of 2025, compared with the second quarter of 2024, increased $373 million, including increases of $266 million in after-tax net investment gains and losses, $73 million in after-tax property casualty underwriting profit and $34 million in after-tax investment income. Catastrophe losses for the second quarter of 2025, mostly weather related, were $45 million higher after taxes and unfavorably affected both net income and property casualty underwriting profit. Life insurance segment results decreased by $3 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 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.

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 six 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 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.

Current wording

Total assets at June 30, 2025, increased 6% compared with year-end 2024, and included an increase of 4% in total investments that reflected net purchases and higher fair values for many securities in our equity portfolio. Shareholders' equity increased 3% and book value per share also increased 3% during the first six months of 2025. Our debt-to-total-capital ratio (capital is the sum of debt plus shareholders' equity) decreased 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 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.

Current wording

Our value creation ratio is our primary performance metric. As shown in the tables below, that ratio was 4.6% for the first six months of 2025, compared with 8.2% 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 increased $2.35 during the first six months of 2025 and contributed 2.6 percentage points to the value creation ratio, while dividends declared at $1.74 per share contributed 2.0 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 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.

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 June 30, 2025, we actively marketed through 2,258 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 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.

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 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 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.

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 2025, our GAAP combined ratio was 103.8%, including 19.4 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 102.6% for the first six 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 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.

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 2025, pretax investment income was $565 million, up 16% 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 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.

Current wording

At June 30, 2025, we held $5.094 billion of our cash and cash equivalents and invested assets at the parent-company level, of which $4.719 billion, or 92.6%, was invested in common stocks, and $70 million, or 1.4%, was cash or cash equivalents. Our debt-to-total-capital ratio was 5.4% at June 30, 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 June 30, 2025, compared with 1.0-to-1 at year-end 2024.

Previous 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.

Current wording

Our consolidated property casualty insurance operations generated an underwriting profit of $128 million for the second quarter of 2025 and an underwriting loss of $170 million for the first six months of 2025. The second-quarter 2025 underwriting profit increase of $93 million, compared with second-quarter 2024, included an unfavorable increase of $57 million in losses from catastrophes, mostly caused by severe weather, and a higher amount of total favorable reserve development on prior accident years. The change in underwriting profitability for the second 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. The six-month underwriting loss of $170 million, compared with an underwriting profit of $166 million for the first six months of 2024, included an unfavorable increase of $501 million in current accident year catastrophe losses, mostly caused by the January 2025 wildfires in southern California, partially offset by a higher amount of total favorable reserve development on prior accident years. For the first six months of 2025, the combined ratio before catastrophe losses and prior years reserve development improved by 1.9 percentage points compared with the same period of 2024.

Previous 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.

Current wording

Underwriting results for the second quarter and first six months 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 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.

Current wording

For all property casualty lines of business in aggregate, net loss and loss expense reserves at June 30, 2025, were $829 million, or 9%, higher than at year-end 2024, including an increase of $711 million for the incurred but not reported (IBNR) portion.

Previous 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.

Current wording

Our consolidated property casualty combined ratio for the second quarter of 2025 decreased by 3.6 percentage points, compared with the same period of 2024, including an increase of 1.0 points from catastrophe losses and loss expenses. For the first six months of 2025, compared with the 2024 six-month period, our combined ratio increased by 7.7 percentage points, including an increase of 9.8 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 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.

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 3.3 percentage points in the first six months of 2025, compared with 3.4 percentage points in the same period of 2024. Net favorable development is discussed in further detail in Financial Results by property casualty insurance segment.