Earnings call transcript: Cincinnati Financial beats Q3 2025 earnings forecasts

Cincinnati Financial Corporation (CINF) reported robust financial results for the third quarter of 2025, significantly surpassing earnings expectations. The company posted earnings per share (EPS) of $2.85, exceeding the forecasted $2.08 by 37.02%. Revenue came in at $2.57 billion, slightly above the anticipated $2.55 billion. The company’s strong performance is reflected in its InvestingPro Financial Health Score of 3.19, rated as "GREAT." Despite these strong results, Cincinnati Financial’s stock fell 1.74% to $155.05 in premarket trading, reflecting broader market concerns. According to InvestingPro data, the stock currently trades near its Fair Value, with analysts maintaining a moderate buy consensus.

Key Takeaways

• Cincinnati Financial’s EPS of $2.85 significantly outperformed the forecast of $2.08.
• Revenue reached $2.57 billion, slightly above expectations.
• Stock price fell by 1.74% in premarket trading, closing at $155.05.
• Net income for Q3 2025 was $1.1 billion, with non-GAAP operating income doubling from the previous year.
• Fitch Ratings upgraded the insurer’s financial strength ratings to AA-.

Company Performance

Cincinnati Financial demonstrated strong performance in Q3 2025, with net income reaching $1.1 billion. This robust financial outcome was bolstered by a 9% growth in consolidated property casualty net written premiums and a 14% increase in investment income. The company’s property casualty combined ratio improved to 88.2%, reflecting a 9.2 percentage point enhancement from the previous year. These results underscore Cincinnati Financial’s competitive positioning and effective risk management strategies. Notable achievements include maintaining dividend payments for 53 consecutive years, with a current dividend yield of 2.27% and a 7.41% dividend growth rate over the last twelve months. For deeper insights into CINF’s financial metrics and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

Financial Highlights

• Revenue: $2.57 billion, slightly above the forecast of $2.55 billion.
• Earnings per share: $2.85, a 37.02% surprise over the forecast of $2.08.
• Net income: $1.1 billion for Q3 2025.
• Non-GAAP operating income: $449 million, doubled from the previous year.
• Investment income growth: 14%.
• Bond interest income growth: 21%.

Earnings vs. Forecast

Cincinnati Financial’s actual EPS of $2.85 surpassed the forecasted $2.08 by 37.02%, marking a significant earnings surprise. This performance reflects the company’s strong operational execution and effective cost management. Revenue also slightly exceeded expectations, coming in at $2.57 billion against a forecast of $2.55 billion.

Market Reaction

Despite the earnings beat, Cincinnati Financial’s stock price dropped by 1.74% in premarket trading, closing at $155.05. This decline might be attributed to broader market trends or investor concerns over future market conditions. The stock remains within its 52-week range, with a high of $166.9 and a low of $123.02. InvestingPro analysis reveals the company maintains strong fundamentals with a P/E ratio of 13.57 and a return on equity of 13%. The company’s beta of 0.73 indicates lower volatility compared to the broader market, while its 8.4% one-year total return demonstrates resilient performance.

Outlook & Guidance

Looking forward, Cincinnati Financial plans to continue its agency expansion strategy and maintain a conservative investment approach. The company anticipates potential growth in its Excess and Surplus (E&S) lines, particularly in California. The management reaffirmed its commitment to maintaining a $200 million catastrophe retention through its reinsurance strategy.

Executive Commentary

CEO Steve Spray emphasized the company’s focus on individualized risk assessment, stating, "We’re underwriting and pricing risk by risk." CFO Mike Sewell highlighted the importance of reinvesting in the business: "Our number one is invest in the business." These comments reflect the company’s strategic emphasis on growth and operational excellence.

Risks and Challenges

• Legal system abuse and social inflation continue to challenge the commercial insurance market.
• The pricing environment is softening, which could impact future profitability.
• The company faces ongoing adaptation challenges related to California wildfire risks.
• Broader macroeconomic pressures may influence investment income and underwriting results.

Q&A

During the earnings call, analysts inquired about the company’s strategies in the commercial auto and general liability reserve segments. Management provided insights into their approach to the California market and detailed their investment portfolio management. These discussions highlighted the company’s strategic focus on capital allocation and risk management.

Full transcript - Cincinnati Financial Corporation (CINF) Q3 2025:

Conference Operator: Today, and welcome to the Cincinnati Financial Corporation 2025 third quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

Dennis McDaniel, Investor Relations Officer, Cincinnati Financial Corporation: Hello, this is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our third quarter 2025 earnings conference call. Late yesterday, we issued a news release on our results along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents, please visit our investor website, investors.cincinnati.com. The shortest route to the information is the quarterly results section near the middle of the investor overview page. On this call, you’ll first hear from President and Chief Executive Officer Steve Spray, and then from Executive Vice President and Chief Financial Officer Mike Sewell. After their prepared remarks, investors participating on the call may ask questions.

At that time, some responses may be made by others in the room with us, including Executive Chairman Steve Johnston, Chief Investment Officer Steve Seloria, and Cincinnati Insurance’s Chief Claims Officer Mark Shambo, and Senior Vice President of Corporate Finance Andy Schnell. Please note that some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties. With respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the SEC. Also, a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP. Now, I’ll turn over the call to Steve.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Good morning, and thank you for joining us today to hear more about our results. We had an excellent quarter of operating performance and remained confident in the long-term direction and strategy of our insurance business. We also reported very strong investment income growth in the third quarter of this year, with ongoing benefits from rebalancing our investment portfolio in the second half of last year. Net income of $1.1 billion for the third quarter of 2025 included recognition of $675 million on an after-tax basis for the increase in fair value of equity securities still held. Non-GAAP operating income of $449 million for the third quarter more than doubled the third quarter from a year ago. Our 88.2% third quarter 2025 property casualty combined ratio improved by 9.2 percentage points compared with third quarter last year, including a decrease of 9.3 points for catastrophe losses.

The 84.7% accident year 2025 combined ratio before catastrophe losses for the third quarter improved by 2.1 percentage points compared with accident year 2024. Although the pace of growth slowed, our consolidated property casualty net written premiums still grew at a healthy 9% for the quarter. Our underwriters continue to emphasize pricing and risk segmentation on a policy-by-policy basis in their underwriting decisions. Estimated average renewal price increases for most lines of business during the third quarter were lower than the second quarter of 2025, but still at a level we believe was healthy. Commercial lines in total averaged increases in the mid-single-digit percentage range, and E&S lines were again in the high single-digit range. Our personal line segment included homeowner in the low double-digit range and personal auto in the high single-digit range.

Additional support for our premium growth objectives includes outstanding claims service and strong relationships with independent insurance agents who enthusiastically partner with us. Next, I’ll highlight third quarter performance by insurance segment compared with a year ago. In addition to premium growth, underwriting profitability for each area was excellent. Commercial lines grew net written premiums 5% with a 91.1% combined ratio that improved by 1.9 percentage points, including 2.8 points from lower catastrophe losses. Personal lines grew net written premiums 14%, including growth in middle market accounts and Cincinnati private client. Its combined ratio was 88.2%, 22.1 percentage points better than last year, including a decrease of 19.5 points from lower catastrophe losses. Excess and surplus lines grew net written premiums 11% and produced a combined ratio of 89.8%, an improvement of 5.5 percentage points.

Cincinnati RE and Cincinnati Global each had an outstanding quarter and continue to reflect our efforts to diversify risk and further improve income stability. Cincinnati RE third quarter 2025 net written premiums decreased by 2%, primarily due to changing conditions in the property market. Its combined ratio was 80.8%. Cincinnati Global’s combined ratio was 61.2%, along with premium growth of 6%, as it continues to benefit from product expansion in recent years. Our life insurance subsidiary had another strong quarter, including 40% net income growth. In addition, term life insurance earned premiums grew 5%. I’ll end my comments with a summary of our primary measure of long-term financial performance, the value creation ratio. Our VCR was 8.9% for the third quarter of 2025. Net income before investment gains or losses for the quarter contributed 3.1%. Our overall valuation of our investment portfolio and other items contributed 5.8%.

Now, I’ll turn it over to Chief Financial Officer Mike Sewell for additional insights regarding our financial performance.

Mike Sewell, Executive Vice President and Chief Financial Officer, Cincinnati Financial Corporation: Thank you, Steve, and thanks to all of you for joining us today. We reported growth of 14% in investment income in the third quarter of 2025, reflecting efforts during 2024 to rebalance our investment portfolio in addition to strong cash flow from insurance operations. Bond interest income grew 21%, and net purchases of fixed maturity securities totaled $232 million for the quarter and $944 million for the first nine months of this year. The third quarter pre-tax average yield of 5.10% for the fixed maturity portfolio was up 30 basis points compared with last year. The average pre-tax yield for the total of purchased taxable and tax-exempt bonds during the third quarter of this year was 5.52%. Dividend income was up 1%, and net purchases of equity securities totaled $57 million for the quarter and $118 million on a year-to-date basis.

Valuation changes in aggregate for the third quarter were favorable for both our equity portfolio and our bond portfolio. Before tax effects, the net gain was $846 million for the equity portfolio and $242 million for the bond portfolio. At the end of the third quarter, the total investment portfolio net appreciated value was approximately $8.2 billion. The equity portfolio was in a net gain position of $8.4 billion, while the fixed maturity portfolio was in a net loss position of $217 million. Cash flow, in addition to higher bond yields, contributed to investment income growth. Cash flow from operating activities for the first nine months of 2025 was $2.2 billion, up 8%. Turning to expense management, our third quarter 2025 property casualty underwriting expense ratio decreased by 0.5 percentage points, primarily due to growth in earned premiums outpacing growth in expenses.

For loss reserves, our approach remains consistent and aims for net amounts in the upper half of the actuarially estimated range of net loss and loss expense reserves. As we do each quarter, we consider new information such as paid losses and case reserves. We then updated estimated ultimate losses and loss expenses by accident year and line of business. For the first nine months of 2025, our net addition to property casualty loss and loss expense reserves was $1.1 billion, including $900 million for the IBNR portion. During the third quarter, we experienced $22 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 0.9 percentage points.

On an all-lines basis by accident year, net favorable reserve development for the first nine months of 2025 totaled $176 million, including favorable $236 million for 2024, favorable $16 million for 2023, and an unfavorable $76 million in aggregate for accident years prior to 2023. I’ll conclude my comments with capital management highlights. We paid $134 million in dividends to shareholders during the third quarter of 2025. During the quarter, we repurchased approximately 404,000 shares at an average price per share of $149.75. We believe both our financial flexibility and our financial strength are in excellent shape. Parent company cash and marketable securities at quarter end was $5.5 billion. Debt to total capital remained under 10%. On October 10, we terminated our existing $300 million line of credit agreement that was set to expire on February 4, 2026, and entered into a new $400 million unsecured revolving credit agreement.

This new agreement has a five-year term with two optional one-year extensions and is fully subscribed among our four lenders. Our quarter-end book value was a record high, $98.76 per share, with $15.4 billion of GAAP consolidated shareholders’ equity providing ample capacity for profitable growth of our insurance operations. Now, I’ll turn the call back over to Steve.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Thanks, Mike. I think this quarter’s strong results demonstrate that we have the people and plans in place to keep building on our success. Our associates continue to answer the call for our agents and the communities they serve, building strong relationships and informing smart underwriting decisions. In September, Fitch Ratings recognized our decade of delivering profitability and growth by upgrading our insurer financial strength ratings for all of our standard market property casualty and life insurance subsidiaries to AA-, very strong from A+, all with a stable outlook. As our 75th anniversary celebration winds down, we are looking ahead to the future, and we are excited by the opportunities we see to keep living the golden rule, meeting the evolving needs of agents and policyholders, and creating value for shareholders. I’ll also note that Senior Vice President Andy Schnell is on the call and will be in future quarters.

Following Teresa Hoffer’s retirement, Andy joined Cincinnati Insurance 23 years ago and has worked his way up the accounting ranks, proving his business acumen and his leadership abilities. He, Teresa, and Mike all worked closely over the past year to ensure a smooth transition that maintained our consistent accounting processes and procedures. As a reminder, with Andy, Mike, and me today are Steve Johnston, Steve Seloria, and Mark Shambo. Chloe, please open the call for questions.

Conference Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Michael Phillips with Oppenheimer. Please go ahead.

Thank you, and good morning, everybody. I wanted to start with commercial auto, if I could try to drill down a little bit to kind of what’s happening there for you guys. You’ve taken small bites, obviously really pretty small bites of the apple PYD, I think five quarters in a row. How do we, I guess, how do we get comfortable with PYD charges at the same time your current picks are kind of coming down at the same time? Can you talk about that, please?

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Yeah, Mike, this is Steve Spray. I can start there. Let me just talk about maybe overall reserves in general, because I think that’s a question that we’d love to address. The way I look at it is, you know, we’ve had 30-plus years of all lines, favorable development. Through the nine months of this year, we’re favorable. The quarter is favorable. Every quarter we’re getting, you know, I notice we get movement to and fro. This quarter, commercial property, work comp, very favorable. Obviously, commercial auto and casualty, you know, we’re having a little bit of a prior year. I think the one way I get really comfortable, the data point that I’m getting comfortable with, is if you look at, on an all-lines basis, from each accident year from 2020 forward, our initial pick for each of those accident years has developed favorably as of 9/30.

Now, commercial auto has had maybe a little bit of a noise in it there by accident year, but you know, we’re profitable through nine months on commercial auto. I just feel like the prudent approach that we have taken, the consistent approach, the consistent team, we’re just, we’re trying to, you know, stay ahead of that, stay ahead of that line of business that has, you know, run a little bit of a temperature.

Yeah, okay, Steve, I guess that’s it. I mean, a little bit of a temperature. We’ve seen some companies take some charges, some not, but some, I think, more have than those that haven’t. When we see, you know, kind of the decrease in your current picks that maybe has some, for that line specifically, Steve, that makes some worry that maybe down the road, some of that could reverse back and those PYD charges could increase. Anything in particular on commercial auto specifically that, you know, worries you or that you see that would give cause for alarm there?

Now, the one thing I look at there too is, as you know, Mike, we’re a package underwriter, a package company, typically small to mid-market. We don’t write a lot of transportation business. We don’t have a big heavy auto fleet. I think some of the challenges, especially with severity that you’ve seen in the industry over the last several years, has really come from that segment. Just in the book itself, I’ve got confidence over the long pole. Especially, again, we’re profitable in 2025 here, both for the quarter and for the full nine months in commercial auto. I don’t know, Mike, if you want to add something here.

Mike Sewell, Executive Vice President and Chief Financial Officer, Cincinnati Financial Corporation: Just real quick, Mike, to put that $10 million of unfavorable development into perspective, about $7 million of it was from accident year 2019 and 2020. A little bit older, total reserves for commercial auto is approaching $1 billion. When you kind of put it all together, like Steve said, I think we feel really good where we’re at and with the reserving that we do.

Okay, yeah, no, Mike, thanks for that. That’s good color. I guess last one then, if you look at your incurred loss detail by line for commercial lines, and this could be just an anomaly, but is there anything you’re seeing? The large losses with $5 million and up kind of picked up. It looks like the largest in quite a while. Anything you’re seeing on the large claims that is worrisome, or is this more of a quarterly anomaly?

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: I would say this is Mike Sewell again. Let me just answer that real quick. For the current accident year, we had about the same number of large losses in total. There were 44 new losses in the current year versus 45 last year, so one less large loss. That would be for a current accident year basis. It’s about $34 million higher in the current year than last year. That was led, I’ll say, by both the, or at least the increase was led by commercial property. The commercial property was up $30 million. The homeowner was up about $27 million. On the other side, commercial casualty was down $12 million, and other commercial was down $12 million. You’ve got some ups and downs, I would say, from looking at the large losses.

There was no indication of anything that was an unexpected concentration, I’ll say, of the large losses, whether it was by risk category, geographic region, agency, or field marketing territory. There’s just going to be some volatility from quarter to quarter, but nothing too exciting to point out.

Okay, Mike, thank you very much. Appreciate it.

Conference Operator: The next question comes from Paul Newsom with Piper Sandler. Please go ahead.

Good morning. Thanks for the call. Could you take Mike’s question and insert general liability instead of commercial auto and maybe give us some thoughts here? Obviously, everyone’s referring back to the selective bad quarter and their issues in both of those lines. It’s fairly natural given that they’ve long thought of themselves as a peer of yours.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Good morning, Paul. Appreciate the question. Kind of what I was talking about before where I get the confidence. One thing I would say, again, maybe kind of a bigger picture is I think it’s well documented across our country how legal system abuse is impacting all of us, including our industry, including Cincinnati Insurance. That is certainly adding some pressure there. Let me go back to what gives me the confidence, and I’ll specifically speak to casualty as well. It’s just, again, the consistent process we have, the consistent team, the overall all-lines track record of 30-plus years of favorable development. Again, favorable for the quarter, favorable for the full nine months.

The other data point that I was really paying attention to for this quarter is just, again, if you look at each of the accident years from 2020 and forward, if you look at our initial pick for each of those accident years, it has developed favorably on an all-lines basis as of 9:30. That holds true for casualty as well.

Fantastic. On a completely different subject, we got some questions this morning on the investment portfolio. Ordinarily, I never ask about this because the credit quality in the book has been extraordinarily high for a long time. Just kind of looking at a couple of runs, it looks like there may be some subprime borrowers in there. I’m just curious if there’s been any change in the credit quality profile and any thoughts that you have about, I guess, what Prima land or whatever you got in there that might be a little different than what you’ve historically seen in the bond portfolio.

Steve Seloria, Chief Investment Officer, Cincinnati Financial Corporation: Thanks, Paul. This is Steve. Overall, the strategy hasn’t changed. Our focus has been more on the higher quality bond area. If we were involved in the high yield area, it would be in the double Bs. For the most part, we’re buying investment-grade quality bonds, tending to keep quality in the portfolio as opposed to reach for yield where we don’t need to.

Great. Thank you, guys. Appreciate the help as always.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Thank you, Paul.

Conference Operator: The next question comes from Gregory Peters with Raymond James. Please go ahead.

Hey, good morning, everyone. The first question is just on the new business trends. Obviously, there’s probably some price competition issues that are affecting some of your new business, but maybe you could speak to the results in the third quarter and what you think about new business going forward, you know, because it is a competitive marketplace.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Yeah, thanks, Greg. Steve Spray again here. If you look, first of all, I would say, feel really good about the new business numbers for all segments, all majors, you know, of our standard segments plus our E&S company on an absolute basis. I admittedly hate saying there’s a tough comp in the prior year. It sounds like an excuse. We don’t do that around here. If you kind of hearken back to 2024, let me talk about, let me just talk about personal lines first. For the last couple of years, we’ve been talking about this once in a generation, once in a lifetime, hard market in personal lines. 2024 was probably the peak of that.

We were able, as a company, because of our balance sheet, because of our financial strength, because of the relationships we have with our agents, we were able to take advantage of that hard market opportunity and really, you know, pick up the pace, I’d say, on new business growth or take advantage of that opportunity. Matter of fact, over the last three and a half years, we’ve doubled our personal lines net written premium as a company. Again, hard market there, and we were able to take advantage of that. That new business this year is still strong. California’s making a little bit of an impact there, but just on an absolute basis, personal lines new business strong. Commercial lines, same kind of thing going. If you look on an absolute basis, the new business dollars there are, again, very strong. You’re right.

There’s pressure from a competitive standpoint, but our underwriters, both new and renewal, are executing on our segmentation strategy and not giving up, you know, an ounce of profit over the long term for any short-term top line growth. I feel on an absolute basis with the numbers, I feel really good about the new business given the market. I also feel good about, more importantly, how we’re pricing and underwriting that business. Our E&S company, the new business, again, maybe under a little bit of pressure, but on an absolute basis, it’s something that I’m very comfortable with and think that our runway by appointing more agencies, continuing to expand our appetite and expertise, I just feel good about where we’re heading for the future on that.

Yeah, thanks for that detail. You brought up in your answer California, and you also mentioned the once-in-a-generation hard market in personal lines. Given the events of the first quarter, the big fire loss in California, can you talk about how you’re viewing California and the opportunity for growth in that state, whether it’s E&S, personal, or commercial, or maybe even admitted, as you think about the plans for 2026?

Yeah, absolutely. First, I’d comment that we’ve got great agents and policyholders in California, and as a company, we want to continue to be a stable, consistent market for them. As we’ve talked over the, you know, since the fire, we always do a deep dive on large losses and see if there’s any lessons learned. I think it’s safe to say that we and the industry have an updated view of risk resulting from that fire. Cutting to the chase on that for you, Greg, it really is around just updating the model view, conflagration, the sustained level of winds, and it’s giving us a different view of risk on aggregation. From my perspective, our E&S pricing in terms and conditions pre-fire, even post-fire, I look at them and say very solid, really comfortable with where we were there.

We’re focused on just a new view of aggregation, and our plans are already in motion and being executed from that standpoint. Now, to your question on E&S or admitted and then commercial, as of 12/31/2024, 77% of our homeowner premiums in California were already written on an E&S basis. You can expect that number will grow. We put some moratoriums in place for new business while we were gaining our lessons learned, and we’ve begun writing some more new business in non-aggregation areas, as you might imagine. I think E&S is going to continue to be a big portion of what we do in California going forward. Now, commercially, we are not active in California on an admitted basis. When I say active, we’re not appointing agencies in California from an admitted commercial. We don’t have associates on the ground in California calling on agents from an admitted standpoint.

We did just several months ago enter California for commercial E&S business, and that’s going well. It’s early, but that’s going well also.

I guess, and related to that answer, just on California, you said that E&S lines are still a focus for you for personal lines. Do you have any view on the regulatory framework around the sustainable insurance mechanism that they’re trying to roll out? I guess the fact that you’re focused still on E&S lines suggests that you’re somewhat skeptical or cautious about that, but just curious if you have a view on that initiative by the politicians in the Department of Insurance.

Yeah, that’s something we’re watching closely, and we continue to work with the California Department of Insurance to say in areas where we’re not wildfire prone, in areas where we do write admitted business, our auto, our other coverages would be written on an admitted basis. The homeowner is primarily where you’re going to find the E&S. We just continue to work with the California DOI to try to get to a win-win for everybody. Like I said before, we’ve got great agents and we’ve got great policyholders, and our claims staff just did an outstanding job through the fire. The feedback we got from agents and policyholders alike didn’t surprise me, but it just validated everything we’ve done at this company, delivering on the promise for the last 75 years. California was a microcosm of, I think, everything we do well when things go bad.

Thanks for the color.

Yeah, thank you, Greg.

Conference Operator: The next question comes from Mike Zuramski with BMW. Please go ahead.

Hey, thanks. Circling back to, I was trying to think of a joke at BMO, obviously. Circling back to the capital investment portfolio questions, Steve, you started out saying, talking about the strength of investment income from the rebalancing last year. I guess, you know, we can see the equity markets have been extremely strong here to date, which has helped you all. I’m just trying to understand, is there a fast and hard kind of ratio that if the equity markets still keep going up, you’ll need to do another rebalancing? Just related, has Cincinnati’s view of excess capital changed at all in recent quarters? Thanks.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: This is Steve Seloria. In regards to the equity portfolio, we have always managed and trimmed around growth and individual names or sector exposures, kind of adhering to our investment policy statements. We continue to evaluate it. Last year’s move was kind of a compilation of a lot of internal discussion, but a lot of external factors driving our action. Our initial decision to trim was a typical one that we would have. It just kind of grew as we began to look at external factors like the upcoming election, potential tax rate changes, and the implications for the capital gains we might have to pay. There were a lot of external factors driving it, which made it a larger bite of the apple, so to speak. I wouldn’t take it off the table moving forward, but those external factors aren’t weighing on us right now.

We’ll continue to kind of manage it more at the individual security and industry level where we need to just trim to manage the portfolio. I’ll leave the capital management discussion for a different audience.

Yeah, got it. I guess just sticking with excess capital and the investment portfolio, you know, from the outside looking in, at a high level, you know, Cincinnati Financial would appear to have a very large excess capital position. Would you not agree with that because, you know, the regulatory framework or your internal model would say, hey, you need to factor in a big equity market decline that stays there for a period of time? You know, you’re really just effectively not holding excess because you want to have that money for potential worst times of the equity markets.

You know, thanks for the question. This is Mike Sewell. Really, our capital position of how we manage capital has not, I’ll say, has not changed. We think of it, you know, there’s five ways to invest your capital. Our number one is invest in the business. We’re holding enough capital to grow the business. We’ve gone through those details with whether it’s Cincinnati RE, Cincinnati Global, California, etc., E&S lines business. That’s our number one use of capital. We do think, obviously, of dividends that we pay to shareholders, buybacks, and other things. There are some regulatory requirements that we watch to make sure that we don’t hold too much equity securities. We’re well within any parameters there. I think it’s been a winning strategy what Steve Seloria has done with the portfolio. Looking at the results this year, I think it’s been very exciting.

I’m excited to see what we do with that capital as we grow our business for the remainder of this year and 2026, 2027, and beyond.

Got it. Maybe lastly, moving to the commercial competitive environment, probably not non-E&S, let’s just say traditional standard commercial. You know, a lot of questions fielded all around on kind of the cycle. No surprise, right? You talked about pricing power, you know, decelerating a bit sequentially. Should investors, I guess, be prepared for pricing, you know, to continue to descale on average in the coming years, just given the health of the industry and Cincinnati Financial Corporation included? Is there a dynamic on loss trend, right? You’ve got a lot of questions on casualty flare-ups on, right, and little additions to reserves. Is there a dynamic on loss cost trend that we’re not appreciating that might kind of keep this cycle from looking like many previous soft cycles? Thanks.

Yeah, thanks, Mike. I’d say on the commercial standard, the admitted business, I would call the market, it’s competitive, but I would still call it rational, stable. I think there are still loss headwinds for our industry that impact that commercial severe convective storm or just cat losses in general. Q3 was a light cat quarter, but you know, let’s look at a full year and just the trends that have been going on with catastrophes. I think the legal system, we talk about legal system abuse or social inflation, however you want to look at that. I think that is still facing us as an industry. Certainly here at Cincinnati Insurance, we’re paying attention to it. I think we’re still in a favorable rate environment. Now, for us specifically at Cincinnati, it literally, you know, we talk about this all the time.

I think it’s key is it’s we’re underwriting and pricing risk by risk. The next risk in front of us is how we’re viewing it. Maybe on a, and I won’t speak necessarily for the go-forward for the industry, but I can tell you for Cincinnati, our net written premium growth for commercial lines here was, I think we announced 5%. Commercial lines, again, standard admitted commercial lines, 13 consecutive years of underwriting profit. Our underwriters working with our agents, executing on a segmentation strategy or just doing, they’re doing exactly what we ask of them. As that book continues to perform well, I think it’s reasonable to understand that the price adequacy of the book continues to improve.

Just as we ask our underwriters to take appropriate action on the business that is, we’ll call it least adequately priced, we tell them to, on the other end, that business that’s very adequately priced, do what we need to do to retain it. As that book becomes more and more adequately priced and we are executing on that segmentation strategy, I think what you’re seeing is some pressure on the average net rate. Does that make sense?

Yeah, it does. I guess we’re all trying to figure out if others are also feeling like they’ve re-underwritten well enough to kind of do the same. Clearly, you guys are in a great position. Thanks.

Yeah, Mike, I would make sure I make a point that for us, it’s not a re-underwriting. This is the strategy that we’ve been executing really for the last decade that has served us well. We’re going to stick to it going forward too. It’s profit first and, you know, stable, consistent financial strength for our agents and policyholders over the long pole, which comes with a modest underwriting profit.

Thank you.

Conference Operator: The next question comes from Josh Schenker with Bank of America. Please go ahead.

Yeah, thank you very much for taking my question. Obviously, the growth, even though it’s decelerating, is still better than most of your competitors. A lot of that is due to the significant increase in agency appointments and whatnot. Is there anything you can do to help us to sort of disaggregate how much of the growth is expansion into new agencies and how much is further penetration into the agencies you already have?

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Yeah, Josh, that’s Steve again. You know, I forget the exact number that we disclosed as far as how much the new agency appointments have impacted new business. What I would tell you there is, we’ve got a proven strategy, I think, of really knowing how to underwrite agencies and vet agencies and do business with the most professional agencies, go into an agency out in the field and find agencies where we’re aligned and be very deliberate about expanding the distribution. We build deep relationships with them. When we onboard an agency, you’ve seen one agency, you’ve seen one agency, to be perfectly candid, that some will take off faster than others. What we focus on is the relationship that we have with those agencies. I guess a long-winded answer way of saying this is a long-term thing for us.

Can we see an uptick in new business quarter to quarter from the new agencies we appoint? Yes. That’s not what we’re focused on. We’re focused on these relationships and making sure that we’re aligned and that we’re deepening the relationship. We’re giving each one of these agencies what I call the Cincinnati experience. Over the long haul, the premium, the growth will take care of itself.

The Cincinnati experience, you know, I remember when I started covering the site, I think you had 1,600 agents. In the last nine months, you’ve appointed 355. Part of that experience was the direct relationship with the agents in a very intimate manner. At this level of growth, how are you maintaining that cultural part of what the Cincinnati agency experience used to be?

Yeah, thanks, Josh. I think it’s all relative. You’re right, we were at 1,600. Now we’re at, say, roughly 2,300 agencies. If you look at us relative to our peers, we still have an extremely exclusive contract. Agencies run in different circles. Agencies have different centers of influence. They write, two agencies in the same town obviously write different business. We’ve got plenty of room to continue to expand the distribution, to keep appointing agencies across the country in our footprint and not dilute that franchise. The franchise value, I think, is the, like you said, the Cincinnati experience. By that, I mean associates on the ground in the community where the agents are, calling on them on a regular basis, making decisions locally. That’s the Cincinnati experience. We can repeat that over even, you know, even continuing to add more and more agencies.

We’ve seen over the last several years, as we’ve added more agencies in our current footprint, that our relationships with our long-term partners stay solid. In many cases, we continue to grow even more with those agencies. Now we’ve picked up an additional partner, and we get access to the book of business that they have. We’re going to be, I don’t want to be willy-nilly about it, Josh, at all, because it’s anything but that. This is the same thing we’ve done for 75 years in partnering with professional agents. It’s just that we are picking up the pace a bit.

Would you expect to have more agency appointments in 2026 than in 2025?

Yeah, we haven’t put out any goals on that. The last thing we want is just to be appointing an agency to be appointing an agency. We ask every single one of our field reps, 185 of them across the country, to know every single independent agent in their territory and make sure those agencies, identify those agencies where we are most aligned. When it’s time to make another appointment for whatever reason, they go ahead and do that. We’re not putting out any goals. We’re not putting any additional requirements on the field reps. We’re just adding more territories. That’s one key to it is we’re not going to, our field territories right now, our field reps average, they call on an average of about 14 agencies. We don’t see that changing over time. Again, the same Cincinnati experience, just more of the same.

Hey, Josh, let me just mention on page 42 of our 10-Q, we do give some information on premiums by new appointed agencies in 2025 and 2024.

Thank you very much.

Thanks, Josh.

Conference Operator: Again, if you have a question, please press star then one. The next question comes from Meyer Shields with KBW. Please go ahead.

Great, thanks so much. I wanted to get a sense as to how you’re thinking about catastrophe reinsurance for 2026. I don’t know whether that thought process has changed from early in the year when we had these very significant fire losses to more recent periods where catastrophes have been benign.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Yeah, thanks, Mayor. Steve Spray again. Obviously, we are in the throes of renewal season specifically for property CAT cover, just as a reminder. Right now, we have a $200 million retention on any individual CAT event, and then we buy 1.6x of that $200 million up the tower. Without committing to what we’re going to do on 1/1/2026, because that’s not been finalized, I can say that we will remain consistent in the way that we purchase property CAT cover, and that is for balance sheet protection. We talked a little earlier about our strong capital position. We believe in underwriting and pricing our own business and sharing in the losses.

Over time, we’ve always continued, as we’ve grown and as our capital position has grown, we’ve moved up in retention, and we continue to buy more on top of the program for that, again, for that balance sheet protection. That philosophy, that strategy will not change.

Okay, perfect. Thank you very much.

Thanks, Mayor.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Steve Spray, CEO, for any closing remarks.

Steve Spray, President and Chief Executive Officer, Cincinnati Financial Corporation: Thank you, Chloe, and thank you all for joining us today. We also look forward to speaking with you again on our fourth quarter call.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation.

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