Cincinnati Financial Corporation Q2 FY2025 earnings call

• Strong operating performance with commercial and excess & surplus lines combined ratios below 93%, Cincinnati Re and Global below 85%. - 18% growth in investment income due to 2024 portfolio rebalancing. - Consolidated property casualty net written premiums grew 11%, agency renewal premiums 16%, personal lines decreased $22M partly from CA. - Added $300M property catastrophe reinsurance, expanded coverage $129M. - Property casualty underwriting expense ratio decreased 1.8 points, aiming for below 30% run rate. - Net addition to loss reserves $829M, $63M favorable reserve development in Q2.

Commercial Lines: Net written premiums grew 9%, combined ratio 92.9% (improved by 6.2 points, 2.3 points from lower catastrophe losses). Personal Lines: Net written premiums grew 20%, combined ratio 102% (4.9 points better than last year, 2.9 points from higher catastrophe losses). Excess and Surplus Lines: Net written premiums grew 12%, combined ratio 91.1% (improved by 4.3 points). Cincinnati Re: Net written premiums decreased 21% (pricing discipline), combined ratio 82.8%. Cincinnati Global: Combined ratio 78.4%, premium growth 45% (product expansion). Life Insurance: 8% net income growth, term life insurance earned premiums grew 3%.

• Investment income expected to continue growing from rebalanced portfolio. - Targeting below 30% run rate for expense ratio, focusing on premium growth outpacing expenses. - Will continue to assess market opportunities for property catastrophe reinsurance.

• Spring/summer storms and wildfires impacted personal lines combined ratio. - Softening property market and social inflation affecting certain lines. - Uncertainty in loss reserves and potential variability in reserve development.

Q: Differences in commercial lines renewal pricing commentary A: Commercial lines moved to high end of mid-single digits, net rate changes strong, segmentation and pricing sophistication driving results.

Q: Reserves in commercial casualty A: Consistent reserving process, favorable development in recent accident years, prudent approach.

Q: Expense ratio and operating leverage A: Expense ratio better than expected, aiming for below 30% run rate, premium growth helping operating leverage.

Q: Work comp and commercial auto loss trends A: Work comp is long tail, prudent approach; commercial auto affected by social inflation, actuaries acting prudently.

Q: Personal lines private client and reinsurance A: Supporting California agents, purchased additional $300M property cat reinsurance, $300M retention on all-perils contract.

Q: Loss trend shifts and growth prospect between property and casualty A: No significant loss trend shifts, commercial package and property business still healthy, property market softening in large properties.

Q: Reinsurance strategy and portfolio changes A: Cinci Re executing underwriting discipline, pulled back on property and casualty, portfolio slightly changed but no major impact on California wildfires.

Q: Competitive marketplace and SME market A: SME market uses risk-by-risk underwriting, sophisticated tools, confident in pricing and underwriting, will act risk-by-risk on competitive pressures.