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10-K – 2026-02-23 – cinf-20251231.htm
Personal Lines Insurance Results
Overview – Three-Year Highlights
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Earned premiums $ 3,199 $ 2,623 $ 2,044 22 28
Fee revenues 5 5 4 0 25
Total revenues 3,204 2,628 2,048 22 28
Loss and loss expenses from:
Current accident year before catastrophe losses 1,714 1,412 1,154 21 22
Current accident year catastrophe losses 709 409 352 73 16
Prior accident years before catastrophe losses 33 17 (20) 94 nm
Prior accident years catastrophe losses (37) (43) (44) 14 2
Loss and loss expenses 2,419 1,795 1,442 35 24
Underwriting expenses 896 762 610 18 25
Underwriting profit (loss) $ (111) $ 71 $ (4) nm nm
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year before catastrophe losses 53.6 % 53.9 % 56.4 % (0.3) (2.5)
Current accident year catastrophe losses 22.2 15.6 17.3 6.6 (1.7)
Prior accident years before catastrophe losses 1.0 0.7 (1.0) 0.3 1.7
Prior accident years catastrophe losses (1.2) (1.7) (2.2) 0.5 0.5
Loss and loss expenses 75.6 68.5 70.5 7.1 (2.0)
Underwriting expenses 28.0 29.0 29.9 (1.0) (0.9)
Combined ratio 103.6 % 97.5 % 100.4 % 6.1 (2.9)
Combined ratio: 103.6 % 97.5 % 100.4 % 6.1 (2.9)
Contribution from catastrophe losses and prior years
reserve development 22.0 14.6 14.1 7.4 0.5
Combined ratio before catastrophe losses and prior years
reserve development 81.6 % 82.9 % 86.3 % (1.3) (3.4)
Performance highlights for the personal lines insurance segment include:
• Premiums – Earned premiums and net written premiums continued to grow in 2025, due to increases in renewal written premiums that included higher average pricing and a higher level of insured exposures. Renewal written premiums rose $633 million, or 25%, in 2025, compared with 2024, while new business written premiums decreased $128 million, or 21%. Net written premiums included excess and surplus lines homeowner policies with premiums totaling $129 million in 2025 and $166 million in 2024.
• Combined ratio – The 2025 combined ratio increased by 6.1 percentage points, compared with 2024, including an increase of 7.1 points in the ratio for catastrophe losses. The combined ratio increase was partially offset by 0.3 points from a lower ratio for current accident year loss and loss expenses before catastrophe losses. That ratio decrease included an increase of 2.1 points for the IBNR portion and a decrease of 2.4 points for the case incurred portion. Price increases and other underwriting efforts have helped to manage effects of losses that include inflation effects. The combined ratio increase also included an increase of 0.3 points from reserve development on prior accident year loss and loss expenses before catastrophes during 2025 that was unfavorable by 1.0 points compared with 0.7 points in 2024.
We have increased our pricing precision and implemented numerous rate increases in recent years to improve our personal lines insurance segment results. In addition, we have made greater use of higher minimum loss deductibles and enhanced our property inspection processes to verify condition and insurance to value. We have worked to improve our geographic diversification by expanding our personal lines operation to additional states as the type of catastrophe risk can vary by state.
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Our personal lines statutory combined ratio was 102.8% in 2025, compared with 95.5% in 2024 and 98.3% in 2023. The contribution of catastrophe losses to our personal lines statutory combined ratio was 21.0 percentage points in 2025, 13.9 percentage points in 2024 and 15.1 percentage points in 2023.
Personal Lines Insurance Premiums
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Agency renewal written premiums $ 3,128 $ 2,495 $ 1,957 25 27
Agency new business written premiums 476 604 416 (21) 45
Other written premiums (174) (100) (71) (74) (41)
Net written premiums 3,430 2,999 2,302 14 30
Unearned premium change (231) (376) (258) 39 (46)
Earned premiums $ 3,199 $ 2,623 $ 2,044 22 28
Personal lines insurance is a strategic component of our overall relationship with most of our agencies and is an important component of our agencies’ relationships with their clients. We believe agents recommend our personal insurance products to their clients who seek to balance quality and price and who are attracted by our superior claims service and the benefits of our package approach. We also believe our continuing efforts to improve pricing precision are helping us attract and retain more of our agencies’ preferred business, while also obtaining higher rates for more thinly priced business.
The 25% increase in agency renewal written premiums in 2025 included the effect of various rate changes. We estimate that premium rates for our personal auto line of business increased at an average percentage in the high-single-digit range during 2025, with some individual policies experiencing lower or higher rate changes based on enhanced pricing precision enabled by predictive models that consider characteristics of specific risks. For our homeowner line of business, we estimate that price increases during 2025 averaged a percentage in the low-double-digit range. Similar to our personal auto line of business, that average varied widely by state, and some individual policies experienced lower or higher rate changes based on pricing precision and current rate level indications that helped determine appropriate premium rates.
The increase in agency renewal written premiums in 2025 also included a higher level of insured exposures and other factors such as changes in policy deductibles or mix of business. Part of the insured exposure increase reflects our response to inflation effects that increase the cost of building materials to repair damaged homes.
Personal lines new business written premiums decreased by $128 million, or 21%, during 2025, compared with 2024. We believe we maintained underwriting and pricing discipline across all personal lines markets as we expanded use of enhanced pricing precision tools. Some of what we report as new business came from accounts that were not new to our agents. We believe our agents’ seasoned accounts tend to be priced more accurately than business that may be less familiar to them.
Other written premiums primarily consist of premiums that are ceded to reinsurers and lower our net written premiums. An increase in ceded premiums reduced net written premium growth by $75 million in 2025. Ceded premiums for 2025 included $64 million for reinsurance reinstatement premiums related to the January 2025 wildfires in southern California. The $64 million of reinstatement premiums included $61 million for our homeowners line of business.
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Personal Lines Insurance Loss and Loss Expenses
Loss and loss expenses include both net paid losses and reserve changes for unpaid losses as well as the associated loss expenses. Most of the incurred losses and loss expenses shown in the personal lines insurance segment three-year highlights table are for the respective current accident years, with reserve development on prior accident years shown separately. Since approximately two-thirds of our personal lines current accident year incurred losses and loss expenses represent net paid amounts, the remaining one-third represents reserves for our estimate of ultimate losses and loss expenses. These reserves develop over time, and we re-estimate previously reported reserves as we learn more about the development on the related claims. The table below illustrates that development. For example, the 69.5% accident year 2024 loss and loss expense ratio reported as of December 31, 2024, developed favorably by 1.8 percentage points to 67.7% due to claims settling for less than previously estimated, or due to updated reserve estimates for unpaid claims, as of December 31, 2025. Accident year 2023 for the personal lines segment developed favorably for the two-year period ending December 31, 2025, as indicated by the progression over time for the ratios in the table. It experienced unfavorable development during 2025, driven by the other personal line of business, and favorable development during 2024.
(Dollars in millions)
Accident year loss and loss expenses incurred and ratios to earned premiums:
Accident year: 2025 2024 2023 2025 2024 2023
as of December 31, 2025 $ 2,423 $ 1,775 $ 1,474 75.8 % 67.7 % 72.1 %
as of December 31, 2024 1,821 1,454 69.5 71.1
as of December 31, 2023 1,506 73.7
Catastrophe losses, as discussed in Consolidated Property Casualty Insurance Results, explain some of the movement in the current accident year loss and loss expense ratio for accident year 2025, compared with accident year 2024. Catastrophe losses added 22.2 percentage points in 2025, 15.6 points in 2024 and 17.3 points in 2023 to the respective personal lines current accident year loss and loss expense ratios in the table above. Personal lines catastrophe losses for 2025 resulted in a ratio higher than our 12.1% 10-year annual average for personal lines. Personal lines catastrophe losses are inherently volatile, as discussed above and in Consolidated Property Casualty Insurance Results.
The 53.6% ratio for current accident year loss and loss expenses before catastrophe losses for 2025 improved 0.3 percentage points compared with the 53.9% accident year 2024 ratio measured as of December 31, 2024. The decrease was partially offset by an increase in the ratios for new losses above $2 million, with a 0.5 percentage-point increase in the 2025 ratio. The 2025 ratio also included an unfavorable 1.1 points for the effect of reinstatement premiums. Other contributions included inflation effects that were offset by the favorable impact from various initiatives, such as those to improve pricing precision, risk selection and loss experience related to claims and loss control practices.
Personal lines loss and loss expense reserve development on prior accident years recognized in 2025 was favorable by $4 million, in aggregate, compared with $26 million in 2024. The 2025 net favorable reserve development included $49 million for our homeowner line of business partially offset by $36 million of unfavorable development for our other personal line of business, primarily from personal umbrella claims. The 2024 net favorable reserve development included $54 million for our homeowner line of business and an unfavorable $20 million for our personal auto line of business. As discussed in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, stable paid and reported loss patterns are a key assumption used to make projections necessary for estimating IBNR reserves. Development by accident year and other trends for personal lines loss and loss expenses and the related ratios are further discussed in Liquidity and Capital Resources, Property Casualty Insurance Development of Estimated Reserves by Accident Year.
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Personal Lines Insurance Losses by Size
(Dollars in millions, net of reinsurance) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Current accident year losses greater than $5,000,000 $ 45 $ 17 $ 32 165 (47)
Current accident year losses $2,000,000-$5,000,000 71 64 45 11 42
Large loss prior accident year reserve development 30 2 7 nm (71)
Total large losses incurred 146 83 84 76 (1)
Losses incurred but not reported 182 108 65 69 66
Other losses excluding catastrophe losses 1,125 988 809 14 22
Catastrophe losses 651 353 298 84 18
Total losses incurred $ 2,104 $ 1,532 $ 1,256 37 22
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year losses greater than $5,000,000 1.4 % 0.7 % 1.6 % 0.7 (0.9)
Current accident year losses $2,000,000-$5,000,000 2.2 2.4 2.2 (0.2) 0.2
Large loss prior accident year reserve development 0.9 0.1 0.3 0.8 (0.2)
Total large loss ratio 4.5 3.2 4.1 1.3 (0.9)
Losses incurred but not reported 5.7 4.1 3.2 1.6 0.9
Other losses excluding catastrophe losses 35.2 37.6 39.5 (2.4) (1.9)
Catastrophe losses 20.4 13.5 14.6 6.9 (1.1)
Total loss ratio 65.8 % 58.4 % 61.4 % 7.4 (3.0)
In 2025, personal lines total large losses incurred increased by $63 million, or 76%, net of reinsurance. The corresponding 2025 ratio increased 1.3 percentage points, compared with 2024. The 2025 increase was primarily due to a higher amount for our homeowner line of business. The large loss prior accident year reserve development of $30 million for 2025 was primarily due to personal umbrella and homeowner claims. In 2024, total large losses decreased, compared with 2023, primarily due to lower amounts for our homeowner line of business. Our analysis indicated no unexpected concentration of these losses and reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. We believe the inherent volatility 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 volatility in addition to general inflationary trends in loss costs.
Personal Lines Insurance Underwriting Expenses
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Commission expenses $ 616 $ 501 $ 391 23 28
Other underwriting expenses 280 261 219 7 19
Total underwriting expenses $ 896 $ 762 $ 610 18 25
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Commission expenses 19.3 % 19.1 % 19.2 % 0.2 (0.1)
Other underwriting expenses 8.7 9.9 10.7 (1.2) (0.8)
Total underwriting expense ratio 28.0 % 29.0 % 29.9 % (1.0) (0.9)
Personal lines commission expense as a percent of earned premiums increased slightly in 2025 compared with 2024, reflecting an increase in the ratio for profit-sharing commissions for agencies. The ratio for 2024 decreased slightly compared with 2023, as earned premiums rose at a faster pace than commission expenses. Other underwriting expenses as a percent of earned premiums in 2025 decreased, compared with 2024, reflecting ongoing expense management efforts, as premium growth outpaced growth in other underwriting expenses. The 2025 ratio also included an unfavorable 0.5 points for the effect of reinstatement premiums. In 2024, other underwriting expenses as a percent of earned premiums decreased, compared with the 2023 percentage, reflecting ongoing expense management efforts, as the pace of premium growth outpaced growth in other expenses.
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Personal Lines Insurance Outlook
The personal lines market of the U.S. property casualty industry experienced softening market conditions and increased competition, particularly in the personal auto line, during 2025, which will pressure premium growth into 2026. We believe we can continue to profitably grow premiums in our personal lines insurance segment through continued pricing precision of individual risks, new agency appointments and an ongoing focus on diversification of product and geography. We serve middle market, mass affluent and high net worth clients, helping us grow across the U.S. and spreading our catastrophe risk. Drivers of profitable growth for our Cincinnati Private Client business also include selectively using non-admitted insurance property forms and rates in certain catastrophe-prone states and geographies.
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Excess and Surplus Lines Insurance Results
Overview – Three-Year Highlights
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Earned premiums $ 698 $ 615 $ 542 13 13
Fee revenues 4 3 3 33 0
Total revenues 702 618 545 14 13
Loss and loss expenses from:
Current accident year before catastrophe losses 440 395 357 11 11
Current accident year catastrophe losses 4 8 4 (50) 100
Prior accident years before catastrophe losses (17) 8 (11) nm nm
Prior accident years catastrophe losses (2) — — nm 0
Loss and loss expenses 425 411 350 3 17
Underwriting expenses 192 167 141 15 18
Underwriting profit $ 85 $ 40 $ 54 113 (26)
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year before catastrophe losses 63.1 % 64.2 % 65.9 % (1.1) (1.7)
Current accident year catastrophe losses 0.5 1.3 0.7 (0.8) 0.6
Prior accident years before catastrophe losses (2.5) 1.4 (2.0) (3.9) 3.4
Prior accident years catastrophe losses (0.2) 0.0 (0.1) (0.2) 0.1
Loss and loss expenses 60.9 66.9 64.5 (6.0) 2.4
Underwriting expenses 27.5 27.1 26.1 0.4 1.0
Combined ratio 88.4 % 94.0 % 90.6 % (5.6) 3.4
Combined ratio: 88.4 % 94.0 % 90.6 % (5.6) 3.4
Contribution from catastrophe losses and prior years
reserve development (2.2) 2.7 (1.4) (4.9) 4.1
Combined ratio before catastrophe losses and prior years
reserve development 90.6 % 91.3 % 92.0 % (0.7) (0.7)
Our excess and surplus lines insurance segment includes results of The Cincinnati Specialty Underwriters Insurance Company and CSU Producer Resources Inc. Performance highlights for this segment include:
• Premiums – Earned premiums and net written premiums continued to grow during 2025, primarily due to higher renewal written premiums that included average renewal estimated price increases in the high-single-digit range. New business written premiums rose 17% in 2025, compared with 2024, and also contributed to premium growth.
• Combined ratio – The combined ratio improved by 5.6 percentage points in 2025, compared with 2024, primarily due to favorable reserve development on prior accident year loss and loss expenses and a lower ratio for current accident year loss and loss expenses before catastrophe losses. Approximately 89% of our 2025 earned premiums for the excess and surplus lines insurance segment provided commercial casualty coverages for various insured liability claims. The lower 2025 combined ratio also included a decrease in the ratio for catastrophe losses and an increase in the ratio for underwriting expenses.
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Excess and Surplus Lines Insurance Premiums
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Agency renewal written premiums $ 545 $ 498 $ 428 9 16
Agency new business written premiums 230 196 177 17 11
Other written premiums (46) (40) (35) (15) (14)
Net written premiums 729 654 570 11 15
Unearned premium change (31) (39) (28) 21 (39)
Earned premiums $ 698 $ 615 $ 542 13 13
The $47 million increase in 2025 renewal premiums largely reflected higher renewal pricing. Average renewal estimated price increases were in the high-single-digit range during 2025. We measure average changes in excess and surplus lines renewal pricing as the 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 respective policies.
New business written premiums in 2025 grew by $34 million, or 17%, compared with 2024, as we continued to carefully underwrite each policy in a highly competitive market. Other written premiums in 2025 reduced net written premium growth by $6 million more than in 2024 and are primarily premiums that are ceded to reinsurers.
Excess and Surplus Lines Loss and Loss Expenses
Loss and loss expenses include both net paid losses and reserve changes for unpaid losses, as well as the associated loss expenses. The majority of the total incurred losses and loss expenses shown above in the three-year highlights table are for the respective current accident years, with reserve development on prior accident years shown separately. Since less than 20% of our excess and surplus lines current accident year incurred losses and loss expenses represents net paid amounts, a large majority represents reserves for our estimate of unpaid losses and loss expenses. These reserves develop over time, and we update our estimates of previously reported reserves as we learn more about the development on the related claims. The table below illustrates that development. For example, the 65.5% accident year 2024 loss and loss expense ratio reported as of December 31, 2024, developed favorably by 4.9 percentage points to 60.6% due to claims settling for less than previously estimated, or due to updated reserve estimates for unpaid claims, as of December 31, 2025. Accident year 2023 for the segment developed favorably for the two-year period ending December 31, 2025, as indicated by the progression over time for the ratios in the table. It experienced a small amount of unfavorable development during 2025 and favorable development during 2024.
(Dollars in millions)
Accident year loss and loss expenses incurred and ratios to earned premiums:
Accident year: 2025 2024 2023 2025 2024 2023
as of December 31, 2025 $ 444 $ 373 $ 304 63.6 % 60.6 % 56.2 %
as of December 31, 2024 403 304 65.5 56.1
as of December 31, 2023 361 66.6
Catastrophe losses, as discussed in Consolidated Property Casualty Insurance Results, explain some of the movement among components of the current accident year loss and loss expense ratio for accident year 2025, compared with 2024. Catastrophe losses added 0.5 percentage points in 2025, 1.3 points in 2024 and 0.7 points in 2023 to the respective excess and surplus lines current accident year loss and loss expense ratios in the table above.
The 63.1% ratio for current accident year loss and loss expenses before catastrophe losses for 2025 improved by 1.1 percentage points compared with the 64.2% accident year 2024 ratio measured as of December 31, 2024. The decrease included a 0.4 percentage-point decrease in the ratio for current accident year losses of $2 million or more per claim, shown in the table below.
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Excess and surplus lines reserve development on prior accident years was a net favorable $19 million for 2025 and a net unfavorable $8 million for 2024. The net favorable amount for 2025 was primarily for accident year 2024 and was due primarily to lower-than-anticipated loss emergence on known claims.
We believe the loss and loss expense reserves for our excess and surplus lines business are adequate. The amount of outstanding reserves for our excess and surplus lines operation can be seen in a table in Liquidity and Capital Resources, Property Casualty Loss and Loss Expense Obligations and Reserves. One indication of how long it takes for most of the outstanding reserves to be settled is to measure outstanding reserves by accident year at different points in time, using Item 8, Note 4 of the Consolidated Financial Statements. For example, for accident years 2018, 2017 and 2016, in aggregate, after subtracting cumulative paid amounts from incurred amounts at December 31, 2018, reserves for estimated unpaid losses, plus the portion of loss expenses known as ALAE, equaled $222 million. For those same accident years, at December 31, 2025, the reserve estimate for the remaining unpaid amount equaled $17 million. As discussed in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves, stable paid and reported loss patterns are a key assumption used to make projections necessary for estimating IBNR reserves. The inherent uncertainty in estimating reserves is discussed in Liquidity and Capital Resources, Property Casualty Insurance Loss and Loss Expense Obligations and Reserves. Development trends by accident year are further discussed in Property Casualty Insurance Development of Estimated Reserves by Accident Year.
Excess and Surplus Lines Insurance Losses by Size
(Dollars in millions, net of reinsurance) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Current accident year losses greater than $5,000,000 $ — $ — $ — nm nm
Current accident year losses $2,000,000-$5,000,000 2 4 — (50) nm
Large loss prior accident year reserve development — — (2) nm 100
Total large losses incurred 2 4 (2) (50) nm
Losses incurred but not reported 117 87 79 34 10
Other losses excluding catastrophe losses 173 189 170 (8) 11
Catastrophe losses 2 8 3 (75) 167
Total losses incurred $ 294 $ 288 $ 250 2 15
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Current accident year losses greater than $5,000,000 0.0 % 0.0 % 0.0 % 0.0 0.0
Current accident year losses $2,000,000-$5,000,000 0.3 0.7 0.0 (0.4) 0.7
Large loss prior accident year reserve development 0.0 0.0 (0.3) 0.0 0.3
Total large loss ratio 0.3 0.7 (0.3) (0.4) 1.0
Losses incurred but not reported 16.8 14.2 14.6 2.6 (0.4)
Other losses excluding catastrophe losses 24.8 30.8 31.3 (6.0) (0.5)
Catastrophe losses 0.2 1.2 0.5 (1.0) 0.7
Total loss ratio 42.1 % 46.9 % 46.1 % (4.8) 0.8
In 2025, total large losses decreased by $2 million, net of reinsurance. The ratio for 2025 large losses as a percent of earned premiums decreased by 0.4 percentage points, compared with 2024. That ratio for 2024 increased by 1.0 points, compared with 2023. Our analysis indicated no unexpected concentration of these losses and reserve increases by risk category, geographic region, policy inception, agency or field marketing territory. We believe the inherent volatility 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 volatility in addition to general inflationary trends in loss costs.
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Excess and Surplus Lines Insurance Underwriting Expenses
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Commission expenses $ 124 $ 107 $ 93 16 15
Other underwriting expenses 68 60 48 13 25
Total underwriting expenses $ 192 $ 167 $ 141 15 18
Ratios as a percent of earned premiums: Pt. Change Pt. Change
Commission expenses 17.8 % 17.4 % 17.1 % 0.4 0.3
Other underwriting expenses 9.7 9.7 9.0 0.0 0.7
Total underwriting expenses ratio 27.5 % 27.1 % 26.1 % 0.4 1.0
Excess and surplus lines commission expense as a percent of earned premiums for 2025 increased compared with 2024, in part due to an increase in the ratio for business factored in for agency profit-sharing agreements with The Cincinnati Insurance Companies. The ratio for 2024 increased compared with 2023, primarily from an increase in the ratio for profit-sharing commissions for agencies. The ratio for other underwriting expenses in 2025 matched the ratio in 2024. The ratio for other underwriting expenses increased slightly in 2024. The three-year period ending in 2025 also reflected ongoing expense management efforts and changes in the pace of premium growth.
Excess and Surplus Lines Insurance Outlook
Strong premium growth continues in both general liability and excess casualty across the excess and surplus lines industry, but net rates remain under pressure. Similar to casualty, large-account property business is softer than small business. We expect to maintain rate increases as we continue to manage competitive markets and challenges such as third-party litigation funding, nuclear verdicts and aggressive plaintiff bar tactics.
Technology remains a key driver of efficiency and data transparency. Our implementation of technology enhancements should continue to decrease data entry time and improve the quality of our analytics, positioning us to realize sustained benefits going forward.
We continue to execute our strategy of delivering superior service and disciplined underwriting across our excess and surplus lines insurance segment. Despite ongoing market challenges, we expect the segment to contribute to profitable growth through careful risk selection and pricing. Our mix of field-based and headquarters-based underwriters and claims managers provides specialized excess and surplus lines expertise, offering additional oversight and technical support and helping to ensure consistent underwriting, claims and loss control practices across the organization.
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Life Insurance Results
Overview – Three-Year Highlights
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Earned premiums $ 330 $ 321 $ 313 3 3
Fee revenues 6 5 10 20 (50)
Total revenues 336 326 323 3 1
Contract holders' benefits incurred 305 301 316 1 (5)
Investment interest credited to contract holders (127) (125) (121) (2) (3)
Underwriting expenses incurred 93 93 87 0 7
Total benefits and expenses 271 269 282 1 (5)
Life insurance segment profit $ 65 $ 57 $ 41 14 39
Performance highlights for the life insurance segment include:
• Revenues – Earned premiums increased 3% for the year 2025, as shown in the table below that includes details by major line of business. Our largest life insurance product line, term life insurance, also rose 3%. Net in-force policy face amounts rose 4% to $87.311 billion at year-end 2025 from $84.245 billion at year-end 2024 and $82.361 billion at year-end 2023.
• Profitability – Our life insurance segment typically reports a smaller profit compared with the life insurance subsidiary because profits from investment income spreads are included in our investments segment results. We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in life insurance segment results. A profit of $65 million for our life insurance segment in 2025, compared with $57 million in 2024, was primarily due to increased earned premiums and more favorable mortality experience. A profit of $57 million in 2024 compared with $41 million in 2023 was primarily due to more favorable unlocking of interest rate and other actuarial adjustments and more favorable mortality experience.
Earned premiums increased $9 million in 2025, primarily due to a $7 million increase in term life insurance earned premiums, as shown in the table below.
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Term life insurance $ 240 $ 233 $ 227 3 3
Whole life insurance 54 52 50 4 4
Universal life and other 36 36 36 0 0
Earned premiums $ 330 $ 321 $ 313 3 3
Products we market include term, whole and universal life insurance and also fixed annuities. In addition, we offer term and whole life insurance to employees at their worksite. These products provide our property casualty agency force with excellent cross-serving opportunities for both commercial and personal accounts.
Over the past several years, we have worked to maintain a portfolio of simple, yet competitive, products. Our product development efforts emphasize death benefit protection and guarantees. Distribution expansion within our property casualty insurance agencies remains a high priority. Our 39 life field marketing representatives work in partnership with our property casualty field marketing representatives. Approximately 62% of our term and other life insurance product premiums were generated through our property casualty insurance agency relationships.
Life insurance segment expenses consist principally of:
• Contract holders’ benefits incurred, related to traditional life and interest-sensitive products, accounted for 76.6% of 2025 total benefits and expenses (inclusive of investment interest credited to contract holders) compared with 76.4% in 2024 and 78.4% in 2023. Total contract holders’ benefits increased in 2025, compared with 2024, largely due to continued growth of in-force policy face amounts and less favorable impacts from the unlocking of interest rate and other actuarial assumptions, partially offset by more favorable mortality experience.
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Total contract holder benefits decreased in 2024, compared with 2023, largely due to more favorable impacts from the unlocking of interest rate and other actuarial assumptions. Mortality experience was more favorable in 2025, compared with 2024, and net death claims were below our mortality projections.
• Underwriting expenses incurred, net of deferred acquisition costs, accounted for 23.4% of 2025 total benefits and expenses (inclusive of investment interest credited to contract holders) compared with 23.6% in 2024 and 21.6% in 2023. Expenses in 2025 decreased by less than 1%, compared with 3% growth in earned premiums. Expenses in 2024 increased 7%, compared with 3% growth in earned premiums. The 2025 decrease in underwriting expenses was largely due to lower general insurance expense levels. The 2024 increase in underwriting expenses was largely due to higher general insurance expense levels and increased amortization of deferred policy acquisition costs.
Life insurance segment profitability depends largely on premium levels, the adequacy of product pricing, underwriting skill and operating efficiencies. This segment’s results include only investment interest credited to contract holders (interest assumed in life insurance policy reserve calculations). The remaining investment income is reported in the investments segment results. The life investment portfolio is managed to earn target spreads between earned investment rates on general account assets and rates credited to policyholders. We consider the value of assets under management and investment income for the life investment portfolio as key performance indicators for the life insurance segment. We seek to maintain a competitive advantage with respect to benefits paid and reserve increases by consistently achieving better than average claims experience due to skilled underwriting.
We recognize that assets under management, capital appreciation and investment income are integral to evaluation of the success of the life insurance segment because of the long duration of life products. On a basis that includes investment income and investment gains or losses from life insurance-related invested assets, our life insurance subsidiary reported net income of $106 million in 2025, compared with $91 million in 2024 and $75 million in 2023. The life insurance subsidiary portfolio had after-tax net investment losses of $5 million in 2025 compared with $6 million in 2024 and $7 million in 2023. Investment gains and losses are discussed under Investments Results. We exclude most of our life insurance company investment income from investments segment results.
Life Insurance Outlook
We believe the life insurance market remains attractive from both a macro view and as a valuable complement to our property casualty operation. Life insurance ownership remains low compared to historical levels and research continues to show that people prefer to buy their life insurance from a professional agent. Our strong agency relationships and expanding base of agencies give us a competitive edge in marketing our life products.
We have developed the practice of reviewing and adopting new technology into our business, with an eye on continuous improvement of our operations. We also continue to shorten the time it takes to underwrite new business, helping to remove one of the main hurdles that discourage property casualty agents from offering life products. Our overarching strategy with technology is to enhance our associates’ ability to serve our agents and customers by allowing them to focus on solving problems rather than simply processing transactions.
Within the life insurance market, we continue to view the voluntary life space as particularly attractive. With our large commercial lines presence, our agencies have tremendous opportunities to serve the employees of these businesses with a simple, voluntary life product. We have an expanding team of associates who conduct enrollments on behalf of our agencies, allowing us to grow this business at an attractive rate. In addition, these accounts often lead to business life insurance opportunities that are designed to ensure the viability of the businesses in the event of a death of a key employee or business owner.
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Investments Results
Overview – Three-Year Highlights
Investments Results
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Total investment income, net of expenses $ 1,165 $ 1,025 $ 894 14 15
Investment interest credited to contract holders (127) (125) (121) (2) (3)
Investment gains and losses, net 1,442 1,391 1,127 4 23
Investments profit, pretax $ 2,480 $ 2,291 $ 1,900 8 21
The investments segment contributes investment income and investment gains and losses to results of operations. Investment income is generally our primary source of pretax and after-tax profits.
• Investment income – Pretax investment income grew $140 million, or 14%, in 2025, primarily due to an increase in interest income. Interest income grew 19% in 2025, compared with 2024, as net purchases of fixed-maturity securities in recent years and higher average yields for bonds are working to generally offset effects of the low interest rate environment for several years prior to 2022. Dividend income decreased 1% in 2025, compared with 2024. Dividend rates generally have increased, although more slowly than in prior years. Larger than usual net sales of equity securities during the second half of 2024 unfavorably affected dividend income during 2025. Pretax investment income rose 15% in 2024, including increases in interest and dividend income. Average yields in the investment income table below are based on the average invested asset and cash amounts indicated in the table using fixed-maturity securities valued at amortized cost and all other securities at fair value.
• Investment gains and losses – We reported an investment gain in 2025, 2024 and 2023, primarily due to favorable changes in fair values of equity securities even though we continue to hold the securities or as otherwise required by GAAP.
We believe it is useful to analyze our overall investment performance by using total investment return over several years. Total investment return considers changes in unrealized gains and losses that are not included in net income, in addition to net investment income and investment gains and losses that are included in net income. Changes in unrealized gains and losses shown in the table below include other invested assets. Considering total investment gains and losses over several years helps evaluate performance since gains and losses may experience typical variability during shorter periods of time.
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The table below shows total return based on assumptions that simplify cash flow timing that is commonly used in total return measures. This simplified calculation uses data shown in our consolidated financial statements or notes to those statements. Added to invested asset amounts from our consolidated balance sheets are 50% of annual amounts pertaining to invested asset categories included in net cash used in investing activities from our consolidated statements of cash flows. The cash flow amounts are reduced by net gains from investment portfolio securities sales or called bonds, with the net result reduced by 50% to represent estimated new cash invested during each respective year. All new cash is assumed to be invested at the midpoint of the year.
Total investment return of 10.2% in 2025 was higher than the 9.3% return in 2024. The 2025 contribution from the investment income component was enhanced by the net favorable effect of the investment gains and losses components. Comparing contributions for 2025 with 2024, investment income rose $140 million, investment gains increased by $51 million and the invested assets net change in unrealized gains and losses increased by $355 million. The base component of the return calculation, annual average invested assets, was up 11% in 2025. For 2024 compared with 2023, total investment return of 9.3% in 2024 was lower than the 9.9% return in 2023, and included increases in investment income, investment gains, and annual average invested assets. The base component of the return calculation, annual average invested assets, increased 13% in 2024.
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Invested assets beginning balance:
Fixed maturities $ 16,182 $ 13,791 $ 12,132 17 14
Equity securities 11,185 10,989 9,841 2 12
Short-term investments 298 — — nm nm
Other invested assets 713 577 452 24 28
Invested assets beginning balance 28,378 25,357 22,425 12 13
Average acquisitions (dispositions), net 817 875 779 (7) 12
Annual average invested assets $ 29,195 $ 26,232 $ 23,204 11 13
Total investment return:
Investment income, net of expenses $ 1,165 $ 1,025 $ 894 14 15
Investment gains and losses, net 1,442 1,391 1,127 4 23
Total invested assets change in unrealized gains and losses 372 17 277 nm (94)
Total $ 2,979 $ 2,433 $ 2,298 22 6
Total return on invested assets, pretax 10.2 % 9.3 % 9.9 %
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Investment Income
The primary drivers of investment income are highlighted below, followed by additional details of our investment results.
• Interest income increased by $142 million, or 19%, in 2025, compared with 2024. The average fixed-maturity pretax yield increased by 26 basis points in addition to a larger fixed-maturity portfolio that rose 13% on an average amortized cost basis. Interest income in 2024 increased by $133 million, compared with 2023, when that yield increased by 28 basis points while the portfolio rose 15% on an amortized cost basis.
• Dividend income decreased $3 million, or 1%, in 2025. Larger than usual net sales of equity securities during the second half of 2024 unfavorably affected dividend income in 2025. That effect was partially offset by net purchases of equity securities and dividend rates that have generally been increasing, although more slowly in recent quarters. Dividend income rose $1 million, or less than 1%, in 2024 reflecting dividend rates that generally increased, minor asset allocations and larger than usual net sales of equity securities during the second half of 2024.
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Investment income:
Interest $ 875 $ 733 $ 600 19 22
Dividends 280 283 282 (1) 0
Other 27 25 25 8 0
Less investment expenses 17 16 13 6 23
Investment income, pretax 1,165 1,025 894 14 15
Less income taxes 200 172 145 16 19
Total investment income, after-tax $ 965 $ 853 $ 749 13 14
Investment returns:
Average invested assets plus cash and cash equivalents $ 31,655 $ 28,374 $ 25,685
Average yield pretax 3.68 % 3.61 % 3.48 %
Average yield after-tax 3.05 3.01 2.92
Effective tax rate 17.2 16.8 16.2
Fixed-maturity returns:
Average amortized cost $ 17,743 $ 15,697 $ 13,670
Average yield pretax 4.93 % 4.67 % 4.39 %
Average yield after-tax 4.02 3.83 3.62
Effective tax rate 18.4 18.0 17.5
In 2025, we continued to invest available cash flow in both fixed income and equity securities in a manner that we believe balances current income needs with longer-term invested asset growth goals. As bonds in our generally laddered portfolio mature or are called over the near term, we reinvest with a balanced approach, keeping in mind our long-term strategy and pursuing attractive risk-adjusted after-tax yields. While our bond portfolio more than covers our insurance reserve liabilities, we believe our diversified common stock portfolio of mainly blue chip, dividend-paying companies represents one of our best investment opportunities for the long term. We continually perform fundamental analysis of both industry and company-specific opportunities as well as the potential impact from changes in the interest rate environment and the potential for elevated inflation.
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The table below summarizes pretax yield to amortized costs excluding any book value adjustments due to impairment for bonds in our fixed-maturity portfolio by various maturity periods.
(Dollars in millions) Principal
At December 31, 2025 % Yield redemptions
Fixed-maturity yield profile:
Expected to mature during 2026 4.73 % $ 950
Expected to mature during 2027 5.17 1,052
Expected to mature during 2028 5.38 1,180
Average yield and total expected redemptions from 2026 through 2028 5.12 $ 3,182
The average pretax yield of 5.60% for fixed-maturity securities acquired during 2025, shown in the table below, was higher than the 5.11% average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2025.
Years ended December 31,
2025 2024
Average pretax yield-to-amortized cost on new fixed maturities:
Acquired taxable fixed maturities 5.70 % 5.78 %
Acquired tax-exempt fixed maturities 4.68 4.15
Average total fixed maturities acquired 5.60 5.66
We discussed our portfolio strategies in Item 1, Investments Segment. We discuss risks related to our investment income and our fixed-maturity and equity investment portfolios in Item 7A, Quantitative and Qualitative Disclosures About Market Risk.
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Total Investment Gains and Losses
Investment gains and losses are recognized on the sales of investments, for certain changes in fair values of securities even though we continue to hold the securities or as otherwise required by GAAP. The change in fair value for equity securities still held is reported in net income, as disclosed in Note 1, Summary of Significant Accounting Policies. Total investment gains and losses in 2025 included $1.448 billion of net gains from the recognition of fair value changes of equity securities still held that prior to 2018 would have been reported in other comprehensive income (OCI) instead of net income. Change in unrealized gains or losses for fixed-maturity securities are included as a component of OCI. Accounting requirements for the allowance for credit losses and impairment charges for write-downs of impaired securities in the fixed-maturity portfolio are disclosed in Item 8, Note 1 of the Consolidated Financial Statements. The factors we consider when evaluating impairments are also discussed in Critical Accounting Estimates, Asset Impairment.
The timing of gains or losses from sales can have a material effect on results in any given period. However, such gains or losses usually have little, if any, effect on total shareholders’ equity because most equity and fixed-maturity investments are carried at fair value.
As appropriate, we buy, hold or sell both fixed-maturity and equity securities on an ongoing basis to help achieve our portfolio objectives. We generally purchase fixed-maturity securities with the intention to hold until maturity. If they no longer meet our investment criteria, they are divested. Sales of fixed-maturity securities are usually due to a change in credit fundamentals. Pretax total investment gains in 2025, 2024 and 2023 were largely due to favorable changes in fair values of equity securities, even though we continue to hold the securities, as shown in the table below. Additional information about investment gains or losses is included in Item 8, Note 2 of the Consolidated Financial Statements.
The table below summarizes total investment gains and losses, before taxes.
(Dollars in millions) Years ended December 31,
2025 2024 2023
Investment gains and losses
Equity securities:
Investment gains and losses on securities sold, net $ (13) $ 181 $ (17)
Unrealized gains and losses on securities still held, net 1,448 1,275 1,168
Subtotal 1,435 1,456 1,151
Fixed-maturity securities:
Gross realized gains 7 5 4
Gross realized losses (2) (95) (5)
Change in allowance for credit losses, net (30) (26) (17)
Write-down of impaired securities with intent to sell — — (4)
Subtotal (25) (116) (22)
Other 32 51 (2)
Total investment gains and losses reported in net income $ 1,442 $ 1,391 $ 1,127
Change in unrealized investment gains and losses reported in OCI
Fixed-maturity securities 372 17 277
Total $ 1,814 $ 1,408 $ 1,404
There were no fixed maturity securities written down to fair value, due to an intention to be sold, for the years ended December 31, 2025 and 2024. There was one taxable fixed maturity within the real estate sector written down to fair value, due to an intention to be sold with an impairment amount of $4 million for the year ended December 31, 2023.
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Investments Outlook
Equity markets experienced volatility in 2025 from factors such as growth driven by AI, uncertainty related to U.S. trade and tariff policy and government shutdowns. Our focus on managing our portfolio for the long term kept us well positioned to maneuver through short-term fluctuations.
Heading into 2026, we see signs of resilient economic growth and moderating inflation with expectations for Federal Reserve actions that may lower interest rates. While this indicates a favorable investment environment, we must be prepared for changing conditions or other challenges.
Our consistent style and disciplined focus enable us to execute a balanced approach to seek both growth of investment income and portfolio appreciation. We discuss our portfolio strategies in Item 1, Our Segments, Investments Segment.
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Other
Total revenues in 2025 and 2024 for our Other operations increased, compared with the respective prior-year periods, primarily due to higher earned premiums from Cincinnati Re and Cincinnati Global in total. Other also includes noninvestment operations of the parent company and its commercial leasing and financial services subsidiary, CFC Investment Company. Total expenses for Other increased in 2025 and 2024, with the change for both years primarily due to losses and loss expenses and underwriting expenses from Cincinnati Re and Cincinnati Global.
Other income in the table below represents profit or losses before income taxes. For 2025, 2024 and 2023, Other income was driven by underwriting profit for Cincinnati Re and Cincinnati Global. Net results for the combination of Cincinnati Re and Cincinnati Global were an underwriting profit of $88 million in 2025, $158 million in 2024 and $183 million in 2023.
Cincinnati Re represented 65% of Other earned premiums in 2025 and 27% of underwriting profit. Earned premiums in 2025, compared with 2024, grew 2%. The mix of 2025 earned premiums for Cincinnati Re by primary type of insured exposures included 49% for casualty, 35% for property and 16% for specialty. Cincinnati Re in total generated an underwriting profit of $24 million in 2025, $86 million in 2024 and $118 million in 2023.
Cincinnati Global represented 35% of Other earned premiums in 2025 and 73% of underwriting profit. In 2025, earned premiums rose 15%, compared with 2024. Underwriting profit for Cincinnati Global was $64 million in 2025, $72 million in 2024 and $65 million in 2023.
(Dollars in millions) Years ended December 31, 2025-2024 2024-2023
2025 2024 2023 Change % Change %
Interest and fees on loans and leases $ 11 $ 9 $ 8 22 13
Earned premiums 893 844 795 6 6
Other revenues 10 6 5 67 20
Total revenues 914 859 808 6 6
Interest expense 53 53 54 0 (2)
Loss and loss expenses 521 435 379 20 15
Underwriting expenses 284 251 233 13 8
Operating expenses 34 32 25 6 28
Total expenses 892 771 691 16 12
Other income $ 22 $ 88 $ 117 (75) (25)
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Taxes
We had a $587 million income tax expense in 2025, compared with $566 million in 2024 and $433 million in 2023. The corporate effective tax rate for 2025 was 19.7% compared with 19.8% in 2024 and 19.0% in 2023.
The changes in our effective tax rate between periods were primarily due to large changes in our net investment gains and losses included in income for the periods, and changes in underwriting income and investment income.
Historically, we have pursued a strategy of investing some portion of cash flow in tax-advantaged, fixed-maturity securities and some in equity securities to minimize our overall tax liability and maximize after-tax earnings. See Item 1, Our Segments, Fixed-Maturity Securities Investments, for further discussion on municipal bond purchases in our fixed-maturity investment portfolio.
For tax years after 2017, for our property casualty insurance subsidiaries, approximately 75% of interest from tax-advantaged, fixed-maturity investments and approximately 40% of dividends from qualified equities are exempt from federal tax after applying proration. For our noninsurance companies, the dividend received deduction exempts 50% of dividends from qualified equities. Our life insurance company does not own tax-advantaged, fixed-maturity investments or equities subject to the dividend received deduction.
Our effective tax rate reconciliation is found in Item 8, Note 11 of the Consolidated Financial Statements.
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Liquidity and Capital Resources
We seek to maintain prudent levels of liquidity and financial strength for the protection of our policyholders, creditors and shareholders. We manage liquidity at two levels to meet the short- and long-term cash requirements of business obligations and growth needs. The first is the liquidity of the parent company. The second is the liquidity of our lead insurance subsidiary. Management of liquidity at both levels is essential because each has different funding needs and sources, and each is subject to certain regulatory guidelines and requirements.
In addition to our historically positive operating cash flow to meet the needs of operations, we have the ability to slow investing activities if such need arises or to sell a portion of our high-quality, liquid investment portfolio. We also have additional capacity to borrow on our revolving short-term line of credit, as described further below.
Parent Company Liquidity
At December 31, 2025, the parent company had $5.568 billion in cash and marketable securities, providing strong liquidity to fund cash outflows, as needed. The parent company’s primary sources of cash inflows are dividends from our lead insurance subsidiary, investment income and sale proceeds from investments. The parent company’s cash outflows are primarily interest and principal payments on long- and short-term debt, dividends to shareholders, common stock repurchases, and general operating expenses. To support our shareholders' dividend payment, we could use subsidiary dividends, our line of credit or sell a portion of our marketable securities.
The table below shows a summary, by the direct cash flow method, of the major sources and uses of cash flow of the parent company.
(Dollars in millions) Years ended December 31,
2025 2024 2023
Sources of liquidity:
Subsidiary dividends received $ 565 $ 300 $ 526
Investment income received 121 121 107
Proceeds from stock options exercised 10 10 9
Uses of liquidity:
Shareholders' dividend payments $ 525 $ 490 $ 454
Share repurchases 205 126 67
Debt interest payments 52 52 52
Use of liquidity for share repurchases are discretionary depending on cash availability and capital management decisions. In addition, the subsidiaries have the discretion to pay dividends to the parent company. Cincinnati Global is required to maintain certain capital funding requirements with Lloyd’s, which the parent company may deposit on its behalf. These funding requirements may fluctuate based on the profitability of Cincinnati Global and syndicate solvency capital requirements as set by Lloyd's, which may result in additional contributions to or return of funds on deposit. Other than share repurchases and funding at Lloyd's, the majority of expenditures for the parent company have been consistent during the last three years, and we expect future expenditures to remain stable.
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Insurance Subsidiary Liquidity
The parent company’s lead insurance subsidiary largely represents the operations of the property casualty segments. The primary sources of cash inflows are collection of premiums, investment income, maturity of fixed-income securities and sale proceeds from investments. Property casualty insurance premiums generally are received before losses are paid under the policies purchased with those premiums. Cash outflows are primarily loss and loss expenses, commissions, salaries, taxes, operating expenses and investment purchases. Over the three-year period ended December 31, 2025, premium receipts and investment income have been more than sufficient to pay claims and operating expenses. Excess cash flows were partially used to pay dividends to the parent company. We are not aware of any known trends that would materially change historical cash flow results, other than fluctuations in catastrophe claims and other large losses, either individually or in aggregate.
The table below shows a summary of operating cash flow for property casualty insurance (direct method). Historically, annual variation in operating cash flow has been largely related to changes in amounts of catastrophe losses.
(Dollars in millions) Years ended December 31,
2025 2024 2023
Premiums collected $ 9,879 $ 8,895 $ 7,785
Loss and loss expenses paid (4,991) (4,381) (4,276)
Commissions and other underwriting expenses paid (2,865) (2,607) (2,287)
Cash flow from underwriting 2,023 1,907 1,222
Investment income received 857 714 609
Cash flow from operations $ 2,880 $ 2,621 $ 1,831
Other Sources of Liquidity
Cash in excess of operating requirements is invested in fixed-maturity and equity securities. Cash generated from investment income provides an important investment contribution to cash flow and liquidity. The sale of investments could provide an additional source of liquidity at either the parent company or insurance subsidiary level, if required. In addition to possible sales of investments, proceeds of calls or maturities of fixed-maturity securities also can provide liquidity. During the five-year period beginning in 2026, fair value of $4.572 billion, or 25.0%, of our fixed-maturity and short-term portfolio is scheduled to mature. At December 31, 2025, we had $12.373 billion of common stock securities, with $ 5.123 billion, or 41% , h eld by the parent company.
Financial resources of the parent company also could be made available to our insurance subsidiaries, if circumstances required it. This flexibility would include our ability to access the capital markets and short-term bank borrowings. We generally have minimized our reliance on debt financing, although we may use the line of credit to fund short-term cash needs.
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Long-Term Debt
We provide details of our three long-term notes in Item 8, Note 8 of the Consolidated Financial Statements. None of the notes are encumbered by rating triggers. The total principal amount of our long-term debt at December 31, 2025, was $793 million and included:
• $28 million aggregate principal amount of 6.900% senior debentures due 2028.
• $391 million aggregate principal amount of 6.920% senior debentures due 2028.
• $374 million aggregate principal amount of 6.125% senior debentures due 2034.
The company’s senior debt is rated investment grade by four independent rating agencies. On September 3, 2025, Fitch Ratings upgraded our parent company debt rating to A from A-. No additional changes to our parent company debt ratings occurred during 2025. At February 20, 2026, our debt ratings from the rating agencies were: a from A.M. Best, A from Fitch, A3 from Moody’s and BBB+ from S&P.
Note Payable
On October 10, 2025, w e terminated our $300 million credit agreement, which was due to expire on February 4, 2026, and simultaneously entered into a new $400 million unsecured revolving credit agreement expiring on October 10, 2030, with two optional one-year extensions. The credit facility is fully subscribed among four lenders and includes a $400 million accordion feature, a $400 million sublimit for letters of credit, and a $75 million sublimit for swing line loans. The debt-to-total-capital ratio covenant threshold remains at 35%. We had $25 million borrowed at both December 31, 2025 and 2024. At year-end 2025, we were in compliance with all covenants under the credit agreement and believe we will remain in compliance. The credit agreement provides alternative interest charges based on the type of borrowing and our debt rating.
Capital Resources
Capital resources, consisting of shareholders’ equity and total debt, represent our overall financial strength to support current obligations and growth in our insurance businesses. At December 31, 2025, we had total capital of $16.726 billion. Shareholders’ equity was $ 15.911 billion, an increase of $1.976 billion, or 14%, from the prior year. Our total debt was $815 million, unchanged from a year ago. We seek to maintain a solid financial position and provide capital flexibility by keeping our ratio of debt to total capital moderate. At year-end 2025, the ratio was 4.9%, compared with 5.5% at year-end 2024.
At times we enter into letter of credit agreements to support our Cincinnati Re and Cincinnati Global operations. On December 23, 2024, we entered into a reimbursement agreement to allow for issuances of letters of credit necessary for the operations of Cincinnati Re, not to exceed $25 million. No amounts were drawn at December 31, 2025 or 2024. On September 12, 2024, we terminated our unsecured letter of credit agreement, which provided a portion of the capital needed to support Cincinnati Global's obligations at Lloyds. We replaced the letter of credit agreement with common equities, bringing total common equities held in Lloyd's trust accounts to $229 million, at December 31, 2025.
At the discretion of the board of directors, the company can return capital directly to shareholders as discussed below.
• Dividends to shareholders – The ability of our company to continue paying cash dividends is subject to factors the board of directors deems relevant. While the board and management believe there is merit to sustaining the company’s long record of dividend increases, our first priority is the company’s financial strength. Over the past 10 years, the company has paid an average of 25% of net income as dividends. Through 2025, the board had increased our cash dividend for 65 consecutive years. The board's decision in January 2026 to increase the dividend demonstrated confidence in the company’s strong capital, liquidity, financial flexibility and initiatives to grow earnings.
• Common stock repurchase – Generally, our board believes that share repurchases can help fulfill our commitment to enhancing shareholder value. Consequently, the board has authorized the repurchase of outstanding shares, giving management discretion to purchase shares at reasonable prices in light of circumstances at the time of purchase. Our approach has been to hold capital adequate to support future growth of our insurance operations and repurchase shares at management's discretion. Repurchases are intended to offset the issuance of shares through equity compensation plans, primarily due to vesting of service-based restricted stock units of equity awards granted in the past. The amount of future repurchases may be more, or less, than the past, depending on circumstances and discretion exercised by management. Our corporate Code of Conduct restricts
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repurchases during certain time periods. The details of the repurchase authorizations and activity are described in Item 5, Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Obligations
We pay obligations to customers, suppliers and associates in the normal course of our business operations. Some are contractual obligations that define the amount, circumstances and/or timing of payments, such as commissions paid to our agents, including profit-sharing, and other commissions. We have other commitments for business expenditures, such as $399 million we expect to fund for our private equity and real estate investments, as well as $52 million for current income tax payable. However, the amount, circumstances and/or timing of our other commitments are not dictated by contractual arrangements.
Contractual Obligations
At December 31, 2025, we estimated our significant future contractual obligations as follows:
(Dollars in millions) Year Years There-
Payment due by period 2026 2027-2030 after Total
Gross property casualty loss and loss expense payments $ 3,725 $ 5,735 $ 1,990 $ 11,450
Gross life policyholder obligations 131 436 5,494 6,061
Long-term debt — 419 374 793
Interest on long-term debt 52 135 80 267
Commissions 609 — — 609
Other liabilities 114 66 7 187
Total $ 4,631 $ 6,791 $ 7,945 $ 19,367
Liquidity and Capital Resources Outlook
At December 31, 2025, we had $1.431 billio n in cash and cash equivalents. During 2026, our lead insurance subsidiary may pay a maximum of $975 million in dividends to our parent company without regulatory approval. That strong liquidity and our consistent cash flows give us the flexibility to meet current obligations and commitments while building value by prudently investing where we see potential for both current income and long-term return. Our cash and cash equivalents provide adequate financial cushion when short-term operating results do not meet our objectives.
A long-term perspective governs our liquidity and capital resources decisions, with the goal of benefiting our policyholders, agents, shareholders and associates over time. Our underwriting philosophy and initiatives can drive performance to achieve underwriting profit. Our GAAP combined ratio averaged 93.9% over the five-year period 2021 through 2025, resulting in strong underwriting profits.
In any year, we consider the most likely source of pressure on liquidity would be an unusually high level of catastrophe loss payments within a short period of time. There could be additional obligations for our insurance operations due to increasing severity or frequency of noncatastrophe claims. To address the risk of unusually large insurance loss obligations, including catastrophe events, we maintain property casualty reinsurance contracts with highly rated reinsurers, as discussed under 2026 Reinsurance Ceded Programs. We also monitor the financial condition of our reinsurers because their insolvency could jeopardize a portion of our $ 655 million reinsurance recoverable asset at December 31, 2025. Parent-company liquidity could also be constrained by Ohio regulatory requirements that restrict the dividends insurance subsidiaries can pay.
Economic weakness also has the potential to affect our liquidity and capital resources in a number of different ways, including delinquent payments from agencies, defaults on interest payments by fixed-maturity holdings in our portfolio, dividend reductions by holdings in our equity portfolio or declines in the market value of holdings in our portfolio.
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Off-Balance-Sheet Arrangements
We do not use any special-purpose financing vehicles or have any undisclosed off-balance-sheet arrangements (as that term is defined in applicable SEC rules) that are reasonably likely to have a current or future material effect on the company’s financial condition, results of operation, liquidity, capital expenditures or capital resources.
Property Casualty Loss and Loss Expense Obligations and Reserves
Our estimate of future gross property casualty loss and loss expense payments of $11.450 billion is lower than loss and loss expense reserves of $11.507 billion reported on our balance sheet at December 31, 2025. The $57 million difference is due to certain life and health loss reserves. Reserving practices are discussed in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves.
For the business lines in the commercial and personal lines insurance segments, and in total for the excess and surplus lines insurance segment and for other parts of our property casualty insurance operations, the following table details gross reserves among case, IBNR and loss expense reserves, net of salvage and subrogation. The $1.513 billion increase in total gross reserves included a $291 million increase in case loss reserves, a $891 million increase in IBNR loss reserves and a $331 million increase in loss expense reserves. The increase in total gross reserves included $444 million for our commercial casualty line of business, $151 million for our commercial auto line of business, $229 million for our homeowner line of business, $190 million for excess and surplus lines and $150 million for Cincinnati Re.
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Property Casualty Gross Loss and Loss Expense Reserves
(Dollars in millions) Loss reserves Loss expense reserves Total gross reserves
Case reserves IBNR reserves Percent of total
At December 31, 2025
Commercial lines insurance:
Commercial casualty $ 1,246 $ 1,736 $ 905 $ 3,887 34.0 %
Commercial property 210 195 109 514 4.5
Commercial auto 448 455 185 1,088 9.5
Workers' compensation 369 595 101 1,065 9.3
Other commercial 172 73 193 438 3.8
Subtotal 2,445 3,054 1,493 6,992 61.1
Personal lines insurance:
Personal auto 314 152 135 601 5.2
Homeowner 330 235 130 695 6.1
Other personal 120 259 10 389 3.4
Subtotal 764 646 275 1,685 14.7
Excess and surplus lines 407 544 348 1,299 11.4
Cincinnati Re 218 1,003 8 1,229 10.7
Cincinnati Global 111 131 3 245 2.1
Total $ 3,945 $ 5,378 $ 2,127 $ 11,450 100.0 %
At December 31, 2024
Commercial lines insurance:
Commercial casualty $ 1,121 $ 1,498 $ 824 $ 3,443 34.7 %
Commercial property 251 199 90 540 5.4
Commercial auto 423 355 159 937 9.4
Workers' compensation 389 564 89 1,042 10.5
Other commercial 159 45 137 341 3.4
Subtotal 2,343 2,661 1,299 6,303 63.4
Personal lines insurance:
Personal auto 260 106 100 466 4.7
Homeowner 244 134 88 466 4.7
Other personal 102 166 9 277 2.8
Subtotal 606 406 197 1,209 12.2
Excess and surplus lines 395 425 289 1,109 11.2
Cincinnati Re 191 880 8 1,079 10.8
Cincinnati Global 119 115 3 237 2.4
Total $ 3,654 $ 4,487 $ 1,796 $ 9,937 100.0 %
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Asbestos and Environmental Loss and Loss Expense Reserves
We carried $136 million of net loss and loss expense reserves for asbestos and environmental claims at year-end 2025, compared with $119 million at year-end 2024. The asbestos and environmental claims amounts for each respective year constituted less than 2.0% of total net loss and loss expense reserves at these year-end dates.
We believe our exposure to asbestos and environmental claims is limited, largely because our reinsurance retention was $500,000 or below prior to 1987. We also were predominantly a personal lines company in the 1960s and 1970s, when asbestos and pollution exclusions were not widely used by commercial lines insurers. During the 1980s and early 1990s, commercial lines grew as a percentage of our overall business and our exposure to asbestos and environmental claims grew accordingly. Over that period, we endorsed to or included in most policies an asbestos and environmental exclusion.
Additionally, since 2002, we have revised policy terms where permitted by state regulation to limit our exposure to mold claims prospectively and further reduce our exposure to environmental claims generally. Finally, we have not engaged in any mergers or acquisitions through which such a liability could have been assumed. We continue to monitor our claims for evidence of material exposure to other mass tort classes, but we have found no such credible evidence to date.
Reserving data for asbestos and environmental claims has characteristics that limit the usefulness of the methods and models used to analyze loss and loss expense reserves for other claims. Specifically, asbestos and environmental loss and loss expenses for different accident years do not emerge independently of one another as loss development and Bornhuetter-Ferguson methods assume. In addition, asbestos and environmental loss and loss expense data available to date did not reflect a well-defined tail, greatly complicating the identification of an appropriate stochastic reserving model. At year-end 2025, we used a weighted average of a paid survival ratio method and report year method to estimate reserves for IBNR asbestos and environmental claims. Our exposure to such claims is limited; we believe a weighted average of both methods produces a sufficient level of reserves.
Gross Property Casualty Loss and Loss Expense Payments
While we believe that historical performance of property casualty and life loss payment patterns is a reasonable source for projecting future claim payments, there is inherent uncertainty in this estimate of contractual obligations. We believe that we could meet our obligations under a significant and unexpected change in the timing of these payments because of the liquidity of our invested assets, strong financial position and access to lines of credit.
Our estimates of gross property casualty loss and loss expense payments do not include reinsurance receivables or ceded losses. As discussed in 2026 Reinsurance Ceded Programs, we purchase reinsurance to mitigate our property casualty risk exposure. Ceded property casualty reinsurance unpaid receivables of $438 million at year-end 2025 are an offset to our gross property casualty loss and loss expense obligations. Our reinsurance program mitigates the liquidity risk of a single large loss or an unexpected rise in claim severity or frequency due to a catastrophic event. Reinsurance does not relieve us of our obligation to pay covered claims. The financial strength of our reinsurers is important because our ability to recover losses under our reinsurance agreements depends on the financial viability of the reinsurers.
We direct our associates to settle claims and pay losses as quickly as is practical, and we made $4.991 billion of net claim payments during 2025. At year-end 2025, total net property casualty reserves of $11.012 billion reflected $3.700 billion in unpaid amounts on reported claims (case reserves), $2.119 billion in loss expense reserves and $5.193 billion in estimates of claims that were incurred but had not yet been reported (IBNR). The specific amounts and timing of obligations related to case reserves and associated loss expenses are not set contractually. The amounts and timing of obligations for IBNR claims and related loss expenses are unknown. We discuss our methods of establishing loss and loss expense reserves and our belief that reserves are adequate in Critical Accounting Estimates, Property Casualty Insurance Loss and Loss Expense Reserves.
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The historical pattern of using premium receipts for the payment of loss and loss expenses has enabled us to extend slightly the maturities of our investment portfolio beyond the estimated settlement date of the loss reserves. The effective duration of our consolidated property casualty fixed-maturity portfolio was 5.8 years at year-end 2025. By contrast, the duration of our loss and loss expense reserves was approximately 3.6 years. We believe this difference in duration does not affect our ability to meet current obligations because cash flow from operations is sufficient to meet these obligations. In addition, investment holdings could be sold, if necessary, to meet higher than anticipated loss and loss expenses.
Range of Reasonable Reserves
The company established a reasonably likely range for net loss and loss expense reserves of $10.073 billion to $11.141 billion at year-end 2025, with the company carrying net reserves of $11.012 billion. The range was $8.948 billion to $9.816 billion at year-end 2024, with the company carrying net reserves of $9.668 billion. Our loss and loss expense reserves are not discounted for the time-value of money, but we have reduced the reserves by an estimate of the amount of salvage and subrogation payments we expect to recover.
The low point of each year’s range corresponds to approximately one standard error below each year’s mean reserve estimate, while the high point corresponds to approximately one standard error above each year’s mean reserve estimate. We discussed management’s reasons for basing reasonably likely reserve ranges on standard errors in Critical Accounting Estimates, Reserve Estimate Variability.
The ranges reflect our assessment of the most likely unpaid loss and loss expenses at year-end 2025 and 2024. However, actual unpaid loss and loss expenses could nonetheless fall outside of the indicated ranges.
Management’s best estimate of total loss and loss expense reserves as of year-end 2025 and 2024 was consistent with the corresponding actuarial best estimate.
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Property Casualty Insurance Development of Estimated Reserves by Accident Year
The following table shows net reserve changes at year-end 2025, 2024 and 2023 by property casualty segment and accident year:
(Dollars in millions) Commercial Personal E&S
lines lines lines Other Totals
As of December 31, 2025
2024 accident year $ (158) $ (46) $ (30) $ (41) $ (275)
2023 accident year (22) 20 — (6) (8)
2022 accident year 2 10 6 6 24
2021 accident year 3 7 2 (5) 7
2020 accident year 34 — 1 (1) 34
2019 accident year 22 5 (1) 5 31
2018 and prior accident years (11) — 3 (1) (9)
(Favorable)/unfavorable $ (130) $ (4) $ (19) $ (43) $ (196)
As of December 31, 2024
2023 accident year $ (217) $ (52) $ (57) $ (43) $ (369)
2022 accident year (89) 6 5 15 (63)
2021 accident year (5) 17 21 (38) (5)
2020 accident year 24 1 14 (7) 32
2019 accident year 43 3 8 (2) 52
2018 accident year 25 1 6 2 34
2017 and prior accident years 81 (2) 11 (7) 83
(Favorable)/unfavorable $ (138) $ (26) $ 8 $ (80) $ (236)
As of December 31, 2023
2022 accident year $ (67) $ (45) $ (16) $ (9) $ (137)
2021 accident year (29) (5) — 13 (21)
2020 accident year (42) (1) (7) (18) (68)
2019 accident year 5 (3) 4 — 6
2018 accident year (3) (3) (1) (1) (8)
2017 accident year (6) (5) 4 — (7)
2016 and prior accident years 19 (2) 5 (2) 20
(Favorable)/unfavorable $ (123) $ (64) $ (11) $ (17) $ (215)
Overall favorable development for consolidated property casualty reserves of $196 million in 2025 illustrated the potential for revisions inherent in estimating reserves, especially for long-tail lines such as commercial casualty and workers’ compensation. As noted in Critical Accounting Estimates, Key Assumptions Loss Reserving, our models predict that actual loss and loss expense emergence will differ from projections, and we do not attempt to monitor or identify such normal variations. The table in Property Casualty Loss and Loss Expense Obligations and Reserves shows reserves by segment and lines of business and the components of gross reserves among case, IBNR and loss expense reserves.
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Favorable reserve development was $126 million for our commercial property line of business, $65 million for our workers' compensation line of business and $49 million for our homeowner line of business. Unfavorable, or adverse, reserve development included $41 million for our commercial auto line of business, $36 million for our other personal line of business and $21 million for our commercial casualty line of business. Drivers of significant reserve development typically reflect loss emergence on known claims that was more favorable or less favorable than previously anticipated for various lines of business and are discussed below.
• Commercial casualty – During 2025 and 2024, we experienced unfavorable development on prior accident years in aggregate, driven by general liability and commercial umbrella coverages. Loss emergence for general liability and commercial umbrella claims rose more than anticipated and reflected economic or other forms of inflation. 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. We continue to monitor activity for various commercial casualty coverages so we can detect changes in trends on a timely basis.
• Workers’ compensation – We experienced favorable reserve development again during 2025, for all prior accident years in aggregate, as claim frequencies continued to decline more than we expected. However, we continue to monitor this line of business closely, as a sudden increase in trend for future payments has a highly leveraged effect.
• Commercial auto – Ultimate losses developed unfavorably during calendar year 2025 and favorably during calendar year 2024, for all prior accident years in aggregate. We believe inflation in recent years and reduced driving during the pandemic caused deviations from historical loss patterns. 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.
• Commercial property and homeowner – Loss emergence was less than anticipated for both 2025 and 2024. The majority of homeowner favorable reserve development for both years related to natural catastrophe events with inherently variable loss patterns. For commercial property, catastrophe events accounted for a significant portion, but less than half, of the favorable reserve development for both years.
• Other personal – Personal umbrella claims were the primary driver of unfavorable development on prior accident years in aggregate during 2025 within the other personal line of business. Loss emergence for personal umbrella claims rose more than anticipated and reflected economic or other forms of inflation. 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.
For the excess and surplus lines insurance segment, the table showing reserves by segment and lines of business in Property Casualty Loss and Loss Expense Obligations and Reserves, shows the components of gross reserves among case, IBNR and loss expense reserves. Total gross reserves increased $190 million from year-end 2024, largely due to the increase in premiums and exposures for this segment, as we discussed in Excess and Surplus Lines Insurance Results. Net reserve development was a favorable $19 million during 2025, following unfavorable development of $8 million during 2024 and favorable development of $11 million during 2023. Approximately 89% of our excess and surplus lines insurance premiums are for commercial casualty coverages. In 2025, loss emergence for claims was less than anticipated but still reflected economic or other forms of inflation, similar to our commercial casualty line of business. Unfavorable reserve development following a period of favorable development, or vice-versa, shown in the table above, illustrates the potential for revisions inherent in estimating reserves.
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Life Insurance Policyholder Obligations and Reserves
Gross Life Insurance Policyholder Obligations
Our estimates of life, annuity and disability policyholder obligations reflect future estimated cash payments to be made to policyholders for future policy benefits, policyholders’ account balances and separate account liabilities. These estimates include death and disability income claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on separate account products, commissions and premium taxes offset by expected future deposits and premiums on in-force contracts. Further, these estimates are based on mortality, morbidity and lapse assumptions reflective of our recent experience and expectations of future payment obligations.
Our estimates of gross life, annuity and disability obligations do not reflect net recoveries from reinsurance agreements. Ceded life reinsurance receivables were $180 million at year-end 2025. As discussed in 2026 Reinsurance Ceded Programs, we purchase reinsurance to mitigate our life insurance risk exposure. At year-end 2025, ceded death benefits represented approximately 31% of our total gross policy face amounts in force.
These estimated cash outflows are undiscounted with respect to interest. As a result, the sum of the cash outflows for all years of $6.061 billion (total of life insurance obligations) exceeds the liabilities recorded in life policy and investment contract reserves and separate accounts for future policy benefits and claims of $3.969 billion (total of life insurance policy reserves and separate account policy reserves). A significant portion of the difference can be attributed to the time value of money.
We have made significant assumptions to determine the estimated undiscounted cash flows of these policies and contracts that include mortality, morbidity, future lapse rates and interest crediting rates. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results.
Life Insurance Reserves
Gross life policy and investment contract reserves were $2.992 billion at year-end 2025, compared with $2.960 billion at year-end 2024. The increase was primarily due to a decrease in market value discount rates and continued growth in net in-force life insurance policy face amounts. We establish reserves for traditional life insurance policies based on certain cash flow assumptions including mortality, morbidity and lapse rates as well as a discount rate assumption. The cash flow assumptions are based on our current expectations and are reviewed annually to determine any necessary updates. These assumptions are also updated on an interim basis if evidence suggests that they should be revised. The discount rate assumption is based on upper-medium grade fixed-income instrument yields (market value discount rates) and is updated quarterly. We use both our own experience and industry experience adjusted for historical trends in arriving at our cash flow assumptions.
We establish reserves for our universal life, deferred annuity and other investment contracts equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life insurance policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance based on expected no-lapse guarantee benefits and expected policy assessments.
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Modeled Catastrophe Loss Exposure
A single large loss or an unexpected rise in claims severity or frequency due to a catastrophic event is a risk to the company's liquidity and financial strength. To control such losses, we limit marketing property casualty insurance in specific geographic areas and monitor our exposure in certain coastal and wildfire regions. Examples of this include limiting our earthquake writings in the New Madrid region or leveraging more restrictive terms and conditions through the use of our excess and surplus company in higher risk areas for wildfire or hurricane. Loss exposures in these areas have been identified as a major contributor to our catastrophe probable maximum loss estimates. We also continually review aggregate exposures to large disasters and purchase reinsurance protection to cover these exposures. For business other than Cincinnati Re and Cincinnati Global, we use the Risk Management Solutions (RMS) and Verisk models to evaluate exposures to a once-in-a-100-year and a once-in-a-250-year event to help determine appropriate reinsurance coverage programs. In conjunction with these activities, we also continue to evaluate information provided by our reinsurance broker. Examples include deterministic modeling of probable maximum loss contribution from growth in new geographic territories.
To help determine appropriate reinsurance coverage for hurricane, earthquake and severe convective storm exposures, for business other than Cincinnati Re and Cincinnati Global, we use the RMS and Verisk models to estimate the probable maximum loss from a single event or multiple events occurring in a one-year period. The models are proprietary in nature, and the vendors that provide them periodically update the models, sometimes resulting in significant changes to their estimate of probable maximum loss. As of the end of 2025, both models indicated that a hurricane event represents our largest amount of exposure to losses. The table below summarizes estimated probabilities and the corresponding probable maximum loss from a single hurricane event occurring in a one-year period and indicates the effect of such losses on consolidated shareholders’ equity at December 31, 2025. Net losses are net of reinsurance, estimated reinstatement premiums and income taxes, assuming a 21% federal tax rate, and assume our 2026 reinsurance programs apply.
According to these models, probable maximum loss estimates from a single hurricane event that combine the effects of property casualty insurance written on a direct basis by The Cincinnati Insurance Companies, the Cincinnati Re reinsurance portfolio and risks insured by Cincinnati Global include the following amounts, net of amounts recoverable through reinsurance ceded and also income taxes, and including the effects of estimated reinstatement premiums: $632 million for a once-in-a-100-year event and $987 million for a once-in-a-250-year event.
For business other than Cincinnati Re and Cincinnati Global:
(Dollars in millions) RMS Model Verisk Model
Percent Percent
Gross Net of total Gross Net of total
Probability at December 31, 2025 losses losses equity losses losses equity
2.0% (1 in 50 year event) $ 745 $ 306 1.9 % $ 846 $ 318 2.0 %
1.0% (1 in 100 year event) 1,201 361 2.3 1,358 379 2.4
0.4% (1 in 250 year event) 2,011 499 3.1 2,167 617 3.9
0.2% (1 in 500 year event) 2,844 1,112 7.0 2,994 1,269 8.0
The modeled losses according to RMS in the table are based on its RiskLink version 25 catastrophe model and use a long-term storm catalog methodology. The modeled losses according to Verisk in the table are based on its Touchstone ® version 12.0 catastrophe model and use a long-term methodology. The Verisk and RMS storm catalogs include decades of documented weather events used in simulations for probable maximum loss projections.
Based on treaties in effect at January 1, 2026, the largest loss exposure to us for Cincinnati Re is from natural catastrophe events. That exposure includes probable maximum loss estimates of the following amounts: $242 million for a once-in-a-100-year event and $324 million for a once-in-a-250-year event. Those effects are on a standalone basis and represent a single hurricane event and include the effects of income taxes, estimated reinstatement premiums and applicable reinsurance ceded, including any retrocessions for reinsurance assumed, and estimated reinstatement premiums. They are based on probable maximum loss estimates from the Verisk Touchstone ® version 12.0 catastrophe model.
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For Cincinnati Re:
(Dollars in millions) Standalone Basis
Percent
Net of total
Probability at December 31, 2025 losses equity
1.0% (1 in 100 year event) $ 242 1.5 %
0.4% (1 in 250 year event) 324 2.0 %
At January 1, 2026, the largest loss exposure to us for Cincinnati Global is from natural catastrophe events. Cincinnati Global's exposure from such events includes probable maximum loss estimates of the following amounts: $33 million for a once-in-a-100-year event and $61 million for a once-in-a-250-year event. Those effects are on a standalone basis and represent a single hurricane event and include the effects of income taxes, applicable reinsurance ceded and estimated reinstatement premiums. They are based on probable maximum loss estimates from the Verisk Touchstone ® version 12.0 catastrophe model.
For Cincinnati Global:
(Dollars in millions) Standalone Basis
Percent
Net of total
Probability at December 31, 2025 losses equity
1.0% (1 in 100 year event) $ 33 0.2 %
0.4% (1 in 250 year event) 61 0.4 %
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2026 Reinsurance Ceded Programs
Reinsurance mitigates the risk of highly uncertain exposures and limits the maximum net loss that can arise from large risks or risks concentrated in areas of exposure. Management’s decisions about the appropriate structure of reinsurance protection and level of risk retention are affected by various factors, including changes in our underwriting practices, capacity to retain risks and reinsurance market conditions.
Reinsurance does not relieve us of our obligation to pay covered claims. The financial strength of our reinsurers is important because our ability to recover for losses covered under any reinsurance agreement depends on the financial viability of the reinsurer.
For 2026, the primary participants on our standard market property and casualty per-risk and per-occurrence reinsurance ceded programs include Hannover Ruck SE, Munich Reinsurance America, Partner Reinsurance Company of the U.S., Transatlantic Reinsurance Company and Swiss Reinsurance America Corporation, all of which had A.M. Best insurer financial strength ratings of A+ (Superior) or better as of December 31, 2025. Our property catastrophe program is subscribed through a broker by reinsurers from the U.S., Bermuda, London and the European markets. The largest participant in our property catastrophe program, representing approximately 15% of total participation, is the Lloyd's of London placement that features numerous syndicates. Some of the other reinsurers with large participation in the program include Partner Reinsurance Company Ltd., Mapfre Re, Chubb Tempest Reinsurance Ltd. and Lancashire Insurance Company Limited.
The following table shows our five largest property casualty reinsurance receivable amounts by reinsurer at year-end 2025 and the total receivable amount at year-end 2024. Michigan Catastrophic Claims Association is a mandatory nonprofit association which runs a reinsurance program funded by an annual premium assessment per vehicle. This assessment covers Michigan’s automobile no-fault policies, which provide unlimited lifetime coverage for medical expenses resulting from auto accidents. The A.M. Best insurer financial strength ratings as of the end of the two most recent years are also shown for each of those reinsurers that have an applicable rating.
(Dollars in millions) 2025 2024
Name of reinsurer Total
receivable A.M. Best
Rating Total
receivable A.M. Best
Rating
General Reinsurance Corporation $ 53 A++ $ 28 A++
Hannover Ruck SE 47 A+ 35 A+
Munich Reinsurance America 46 A+ 43 A+
Hartford Steam Boiler Inspection & Insurance Company 38 A++ 35 A++
Michigan Catastrophic Claims Association 27 NA 30 NA
Primary components of the 2026 property and casualty reinsurance programs are summarized below. The premium estimates below occurred near the beginning of each respective year, when direct written premiums that were subject to applicable reinsurance treaties were also estimated.
• Property per risk treaty – The primary purpose of the property treaty is to provide capacity up to $50 million, adequate for the majority of the risks we write. It also includes protection for extra-contractual liability coverage losses. We retain the first $15 million of each loss. Losses between $15 million and $50 million are reinsured at 100%. The 2026 ceded premium estimate was $54 million, compared with $52 million for the 2025 estimate.
• Property excess treaty – We purchased a property reinsurance treaty that provides an additional $75 million in protection for certain property losses. This treaty, along with the property per risk treaty, provides a total of $125 million of protection. The 2026 ceded premium estimate was approximately $14 million, matching the 2025 estimate.
• Casualty per occurrence treaty – The casualty treaty provides capacity up to $25 million. Similar to the property treaty, it provides sufficient capacity to cover the vast majority of casualty accounts we insure and also includes protection for extra-contractual liability coverage losses. We retain the first $10 million of each loss. Losses between $10 million and $25 million are reinsured at 100%. The 2026 ceded premium estimate was $23 million, compared with $21 million for the 2025 estimate.
• Casualty excess treaty – We purchase a casualty reinsurance treaty that provides an additional $55 million in protection for certain casualty losses. This treaty, along with the casualty per occurrence treaty, provides a total of $80 million of protection for workers’ compensation, extra-contractual liability coverage and clash coverage
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losses, which would apply when a single occurrence involves multiple policyholders of The Cincinnati Insurance Companies or multiple coverages for one insured. The 2026 ceded premium estimate was approximately $5 million, matching the 2025 estimate.
• Property catastrophe treaty – To protect against catastrophic events such as wind and hail, wildfires, winter storms, hurricanes or earthquakes, we purchased property catastrophe reinsurance with a limit up to $2.000 billion. This treaty and our property and casualty treaties contain exclusions for communicable disease and cyber losses. Aggregation of losses into one event, sometimes referred to as an hours clause, varies by peril. For example, the general provision in this treaty is 168 hours, but it is 96 hours for a riot or civil commotion event. Losses from the same occurrence can be aggregated into one limit over the hour period applicable to the peril causing the loss and applied to the treaty towards recovery. The treaty is effective January 1, 2026, and contains one reinstatement provision. The 2026 ceded premium estimate was $108 million, compared with $98 million for the 2025 estimate when the limit of coverage was $1.500 billion. We retain the first $200 million of any loss, and a share of losses up to $2.000 billion.
Effective July 1, 2025, we purchased an additional layer on our 2025 property catastrophe reinsurance treaty with a limit of $300 million, increasing the total limit from $1.500 billion to $1.800 billion. We can recover up to $129 million under this coverage for a loss between $1.500 billion and $1.800 billion for a covered event occurring prior to July 1, 2026. The provisions of this additional layer are similar to those in the other layers of the 2025 property catastrophe treaty. The annual ceded premiums for this additional coverage are estimated to be less than $5 million.
• Catastrophe bonds – Effective January 2026, we purchased collateralized reinsurance funded through the issuance of collateralized insurance-linked securities, also known as catastrophe bonds. We entered into a reinsurance agreement with Skyline Re II Ltd. ("Skyline"), an independent Bermuda company registered as a special purpose insurer under the Bermuda Insurance Act of 1978. This agreement provides up to $150 million in reinsurance protection for an event between $1.000 billion and $1.800 billion with no reinstatement provision. This agreement is generally designed to supplement coverage provided under the property catastrophe treaty, however, terrorism and strike, riot, or civil commotion events are not covered. Skyline issued notes to unrelated investors for a total principal amount of $150 million, equal to the full reinsurance coverage provided under the reinsurance agreement. The proceeds of the issuance were deposited into a reinsurance trust account. The catastrophe bonds expire in January 2030. The reinsurance agreement meets the requirements to be accounted for as reinsurance in accordance with the guidance for reinsurance contracts.
As of January 1, 2026, the table below shows the maximum reinsurance coverage percentage and the share we retain for a single event across each layer of our property catastrophe program, excluding losses from Cincinnati Re and Cincinnati Global.
(Dollars in millions) Maximum percentage of loss covered by reinsurance and company retention
Gross loss amount Property catastrophe treaty Catastrophe
bond Company retention Total
$0 - $200 — % — % 100.00 % 100 %
$200 - $300 36.00 — 64.00 100
$300 - $400 82.00 — 18.00 100
$400 - $700 90.00 — 10.00 100
$700 - $1,000 90.00 — 10.00 100
$1,000 - $1,500 69.60 18.75 11.65 100
$1,500 - $1,800 71.25 18.75 10.00 100
$1,800 - $2,000 53.41 — 46.59 100
After reinsurance, our maximum exposure to a catastrophic event that causes $2.000 billion in covered losses in 2026 would be $523 million, compared with retention of $803 million as of July 1, 2025, for an event causing $2.000 billion in covered losses. The largest catastrophe loss event in our history occurred during 2025 from the January 7-28 California wildfires. Our losses from that event, including losses from Cincinnati Re and Cincinnati Global, were estimated to be $942 million, before reinsurance, as of December 31, 2025. The second largest catastrophe loss event occurred during 2022 from a December 21-31 winter storm system that affected many states in the U.S. Our losses from that storm were estimated to be $247 million, before reinsurance, as of December 31, 2024.
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Individual risks with insured values in excess of $125 million, as identified in the policy, are handled through a different reinsurance mechanism. We typically reinsure commercial property coverage for individual risks with insured values between $125 million and $365 million under an automatic facultative agreement. For commercial property risks with property values exceeding $365 million, we negotiate the purchase of facultative coverage on an individual certificate basis. For casualty coverage on individual risks with limits exceeding $25 million, facultative reinsurance coverage is placed on an individual certificate basis. For risks with casualty limits that are between $25 million and $27 million, we sometimes forego facultative reinsurance and retain an additional $2 million of loss exposure.
Terrorism coverage at various levels has been secured in most of our reinsurance agreements. The broadest coverage for this peril is found in the property and casualty working treaties, the property per risk treaty and the casualty per occurrence treaty, which provide coverage for commercial and personal risks. Our property catastrophe treaty provides terrorism coverage for personal risks and commercial risks. For insured values between $15 million and $125 million, there also may be coverage in the property working treaty.
A form of reinsurance is also provided through The Terrorism Risk Insurance Act of 2002 (TRIA). TRIA was originally signed into law on November 26, 2002, and extended on several occasions. The most recent extension was signed into law on December 20, 2019, and is scheduled to expire on December 31, 2027. TRIA provides a temporary federal backstop for losses related to the writing of the terrorism peril in property casualty insurance policies. Under regulations promulgated under this statute, insurers are required to offer terrorism coverage for certain lines of property casualty insurance, including property, commercial multi-peril, fire, ocean marine, inland marine, liability, aircraft and workers’ compensation. In the event of a terrorism event defined by TRIA, the federal government would reimburse terrorism claim payments subject to the insurer’s deductible. The deductible is calculated as a percentage of subject written premiums for the preceding calendar year. Our deductible in 2025 was $815 million (20% of 2024 subject premiums), and we estimate it is $888 million (20% of 2025 subject premiums) for 2026.
Reinsurance protection for the company’s surety business is covered under a separate treaty with many of the same reinsurers that write the property casualty working treaties.
Reinsurance protection for cyber coverage is also through a separate treaty. We offer cyber insurance as an affirmative coverage option on various insurance policies written on a direct basis and subsequently cede all of the related cyber insurance premiums to a reinsurer, therefore transferring substantially all of that risk.
Certain earthquake risks are also covered by a quota share reinsurance arrangement for personal lines and commercial lines risks in California that we insure through excess and surplus lines policies. We cede all of the related premiums to a reinsurer, therefore transferring substantially all of that risk. Ceded premiums for this treaty in 2025 totaled $3 million.
Effective June 1, 2025, we renewed the reinsurance program for Cincinnati Re only, which provides retrocession coverages with various triggers, exclusions and unique features. The program includes property catastrophe excess of loss coverage in excess of $90 million per occurrence with a total available limit of $73 million per occurrence.
Reinsurance protection for Cincinnati Global's business is also provided through separate treaties.
The Cincinnati Specialty Underwriters Insurance Company has separate property and casualty reinsurance treaties for 2026 through its parent, The Cincinnati Insurance Company. Primary components of the treaties include:
• Property per risk treaty – The property treaty provides limits up to $6 million, which is adequate capacity for the risk profile we insure. It also includes protection for extra-contractual liability coverage losses. Cincinnati Specialty Underwriters retains the first $2 million of any policy loss. Losses between $2 million and $6 million are reinsured at 100% by The Cincinnati Insurance Company.
• Casualty treaties – The casualty treaty is written on an excess of loss basis and provides limits up to $6 million, which is adequate capacity for the risk profile we insure. A second treaty layer of $5 million excess of $6 million is written to provide coverage for extra contractual obligations or clash exposures. The maximum retention for any one casualty loss is $2 million by Cincinnati Specialty Underwriters. Losses on a per occurrence basis between $2 million and $6 million and extra contractual and clash losses between $6 million and $11 million are reinsured at 100% by The Cincinnati Insurance Company.
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• Basket retention – Cincinnati Specialty Underwriters has purchased this coverage to limit their retention to $2 million in the event that the same occurrence results in both a property and a casualty loss.
• Property catastrophe treaty – As a subsidiary of The Cincinnati Insurance Company, Cincinnati Specialty Underwriters is a named insured under our corporate property catastrophe treaty. All terms and conditions of this reinsurance coverage apply to policies underwritten by Cincinnati Specialty Underwriters.
For property or casualty risks with limits exceeding $6 million, underwriters place facultative reinsurance coverage on an individual certificate basis.
Cincinnati Life, our life insurance subsidiary, purchases reinsurance under separate treaties with many of the same reinsurers that write the property casualty working treaties. Our corporate retention is $2 million on a single life. For our core term life insurance line of business, effective January 15, 2025, we doubled our retention to $2 million for issue ages up to 61 years on new term life insurance sales, ceding the balance using excess over retention mortality coverage, and retaining the policy reserve. For issue ages 61 years or older, our retention is now $1 million. Prior to January 15, 2025, and after November 1, 2015, we retained $1 million for issue ages up to 61 years on term life insurance sales. For issue ages 61 years or older, our retention was $500,000. Prior to November 1, 2015, and after 2004, we retain $500,000 per life. For term life insurance business written prior to 2005, we retain 10% to 25% of each term policy, not to exceed $500,000, ceding the balance of mortality risk and policy reserve.
The following table shows our five largest life reinsurance receivable amounts by reinsurer at year-end 2025 and 2024. Insurer financial strength ratings are also shown.
(Dollars in millions) 2025 2024
Name of reinsurer Total
receivable Rating agency Rating Total
receivable Rating Agency Rating
Swiss Re Life & Health America, Inc. $ 53 A.M. Best A+ $ 58 A.M. Best A+
General Re Life Corporation 49 A.M. Best A++ 49 A.M. Best A++
Lincoln National Life Insurance Company 21 A.M. Best A 25 A.M. Best A
Hannover Life Reassurance Co. of America 14 A.M. Best A 12 A.M. Best A
Employers Reassurance Corporation 13 S&P BBB+ 13 S&P BBB+
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Safe Harbor Statement
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:
Insurance-Related Risks
• Risks and uncertainties associated with our loss reserves or actual claim costs exceeding reserves
• Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance
• 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
• Risks associated with analytical models in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance, and catastrophe risk management
• Inadequate estimates or assumptions, or reliance on third-party data used for critical accounting estimates
• 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
• Mergers, acquisitions, and other consolidations of agencies that result in a concentration of a significant amount of premium in one agency or agency group and/or alter our competitive advantages
• Our inability to manage business opportunities, growth prospects, and expenses for our ongoing operations
• Changing consumer insurance-buying habits
• 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
• 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:
◦ Securities market disruption or volatility and related effects such as decreased economic activity and continued supply chain disruptions that affect our investment portfolio and book value
◦ Significant or prolonged decline in the fair value of securities and impairment of the assets
◦ Significant decline in investment income due to reduced or eliminated dividend payouts from securities
◦ Significant rise in losses from surety or director and officer policies written for financial institutions or other insured entities or in losses from policies written by Cincinnati Re or Cincinnati Global
◦ An unusually high level of claims in our insurance or reinsurance operations that increase litigation-related expenses
◦ Decreased premium revenue and cash flow from disruption to our distribution channel of independent agents, consumer self-isolation, travel limitations, business restrictions and decreased economic activity
◦ The inability of our workforce, agencies, or vendors to perform necessary business functions
Financial, Economic, and Investment Risks
• Declines in overall stock market values negatively affecting our equity portfolio and book value
• Downgrades in our financial strength ratings
• Interest rate fluctuations or other factors that could significantly affect:
◦ Our ability to generate growth in investment income
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◦ Values of our fixed-maturity investments and accounts in which we hold bank-owned life insurance contract assets
◦ Our traditional life policy reserves
• Economic volatility and illiquidity associated with our alternative investments in private equity, private credit, real property, and limited partnerships
• Failure to comply with covenants and other requirements under our credit facilities, senior debt, and other debt obligations
• Recession, prolonged elevated inflation, or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies
• The inability of our subsidiaries to pay dividends consistent with current or past levels impacting our ability to pay shareholder dividends or repurchase shares
General Business, Technology, and Operational Risks
• Ineffective information technology systems or failing to develop and implement improvements in technology
• 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
• 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
• Disruption of the insurance market caused by technology innovations - such as driverless cars - that could decrease consumer demand for insurance products
• 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
• 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
• 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
• 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
• Our inability, or the inability of our independent agents, to attract and retain personnel
• 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
Regulatory, Compliance, and Legal Risks
• Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:
◦ Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates
◦ Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules, and regulations
◦ Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business
◦ 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 laws, regulations, or interpretations
◦ Increase other expenses
◦ Limit our ability to set fair, adequate, and reasonable rates
◦ Restrict our ability to cancel policies
◦ Impose new underwriting standards
◦ Place us at a disadvantage in the marketplace
◦ Restrict our ability to execute our business model, including the way we compensate agents
• 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
• 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
• Effects of changing social, global, economic, and regulatory environments
• Additional measures affecting corporate financial reporting and governance that can affect the market value of our common stock
Risks and uncertainties are further discussed in Item 1A, Risk Factors.
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I TEM 7 A . Quantitative and Qualitative Disclosures About Market Risk
Introduction
Market risk is the potential for a decrease in securities value resulting from broad yet uncontrollable forces such as inflation, economic growth, interest rates, world political conditions or other widespread unpredictable events. It is comprised of many individual risk categories that, when combined, create a macroeconomic impact. These risk categories include political, regulatory, economic and interest-rate risks. Company-specific risk is the potential for a particular issuer to experience a decline in value due to the impact of sector or market risk on the holding or because of issues specific to the firm. These risk categories include fraud, credit and default risks. The company accepts and manages risks in its investment portfolio as part of the means of achieving portfolio objectives.
The investment committee of the board of directors monitors the investment risk management process primarily through its executive oversight of our investment activities. We take an active approach to managing market and other investment risks, including the accountabilities and controls over these activities. Actively managing these market risks is integral to our operations and could require us to change the character of future investments purchased or sold or require us to shift the existing asset portfolios to manage exposure to market risk within acceptable ranges.
Sector risk is the potential for a negative impact on a particular industry due to its sensitivity to factors that make up market risk. Market risk affects general supply or demand factors for an industry and affects companies within that industry to varying degrees.
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Fixed-Maturity Securities Investments
For both taxable and tax-exempt fixed-maturity securities, the inverse relationship between interest rates and bond prices leads to falling bond values during periods of increasing interest rates. We address this risk by attempting to construct a generally laddered maturity schedule that allows us to reinvest cash flows at prevailing rates. Although the potential for a worsening financial condition, and ultimately default, does exist with investment-grade corporate bonds, we address this risk by performing credit analysis and monitoring as well as maintaining a diverse portfolio of holdings.
As discussed in Item 1, Our Segments, Investments Segment, investment-grade fixed-maturity securities represented 97.5% of the portfolio. Further, of our $14.010 billion taxable fixed-maturity portfolio, $9.505 billion were investment-grade corporate securities with only $307 million being noninvestment-grade. For these noninvestment-grade holdings, the primary risk is credit risk. A weak financial profile can lead to rating downgrades from the credit rating agencies, which can put further downward pressure on bond prices. This puts more emphasis on the financial results achieved by the issuer rather than on general economic trends or statistics within the marketplace. We address this concern by analyzing issuer- and industry-specific financial results and by closely monitoring holdings within this asset class.
In addition to interest rate risk, the primary risk related to tax-exempt bonds is political risk associated with the specific environment within the boundaries of the issuing municipal entity. We address this concern by focusing on municipalities’ general-obligation debt and on essential-service bonds. Essential-service bonds derive a revenue stream from municipal services that are vital to the people living in the area (water service, sewer service, etc.). Another risk related to tax-exempt bonds is regulatory risk or the potential for legislative changes that would negate the benefit of owning tax-exempt bonds. We monitor regulatory activity for situations that may negatively affect current holdings and our ongoing strategy for investing in these securities.
A less significant risk is our exposure to credit risk for a portion of the tax-exempt portfolio that has support from corporate entities. Examples are bonds insured by corporate bond insurers or bonds with interest payments made by a corporate entity through a municipal conduit or authority. Our decisions regarding these investments primarily consider the underlying municipal situation. The existence of third-party insurance is intended to reduce risk in the event of default. In circumstances in which the municipality is unable to meet its obligations, risk would be increased if the insuring entity were experiencing financial duress. Because of our diverse exposure and selection of higher-rated entities with strong financial profiles, we do not believe this is a material concern as we discuss in Item 1, Our Segments, Investments Segment.
Interest Rate Sensitivity Analysis
Because of our strong shareholders’ equity, long-term investment horizon and ability to hold most fixed-maturity investments to maturity, we believe the company is well-positioned if interest rates were to rise. A higher rate environment would provide the opportunity to invest cash flow in higher-yielding securities, while reducing the likelihood of untimely redemptions of currently callable securities. While higher interest rates would be expected to increase the number of fixed-maturity holdings fair valued below 100% of amortized cost, we believe lower fixed-maturity security values due solely to interest rate changes would not signal a decline in credit quality.
Our dynamic financial planning model uses analytical tools to assess market risks. As part of this model, the effective duration of the fixed-maturity portfolio is continually monitored by our investment department to evaluate the theoretical impact of interest rate movements.
The table below summarizes the effect of an instantaneous hypothetical change in interest rates on the fair value of our fixed-maturity portfolio.
(Dollars in millions) Effect from interest rate change in basis points
-200 -100 — 100 200
At December 31, 2025 $ 20,177 $ 19,142 $ 18,123 $ 17,008 $ 15,891
At December 31, 2024 $ 17,750 $ 16,967 $ 16,182 $ 15,317 $ 14,433
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The effective duration of the fixed-maturity portfolio was 5.6 years at year-end 2025, up from 5.0 years at year-end 2024. A 100-basis-point movement in interest rates would result in an approximately 5.9% change in the fair value of the fixed-maturity portfolio. Generally speaking, the higher a bond is rated, the more directly correlated movements in its fair value are to changes in the general level of interest rates, exclusive of call features. The fair values of average- to lower-rated corporate bonds are additionally influenced by the expansion or contraction of credit spreads.
In the dynamic financial planning model, the selected interest rate change of 100 to 200 basis points represents our views of a shift in rates that is quite possible over a one-year period. The rates modeled should not be considered a prediction of future events as interest rates may be much more volatile in the future. The analysis is not intended to provide a precise forecast of the effect of changes in rates on our results or financial condition, nor does it take into account any actions that we might take to reduce exposure to such risks.
Short-Term Investments
Our short-term investments consist of commercial paper purchased within one year of maturity. We make short-term investments primarily with funds to be used to make upcoming cash payments, such as dividends, taxes or other corporate purposes. At year-end 2025, we had $148 million of short-term investments compared with $298 million at year-end 2024.
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Equity Securities Investments
Our equity portfolio is subject to a variety of risk factors encompassed under the umbrella of market risk. General economic swings influence the performance of the underlying industries and companies within those industries. Industry- and company-specific risks also have the potential to substantially affect the value of our portfolio. Our investment guidelines help address these risks by diversifying the portfolio and establishing parameters to help manage exposures.
The table below summarizes the effect of hypothetical changes in market prices on the fair value of our equity portfolio.
(Dollars in millions) Effect from market price change in percent
-30% -20% -10% — 10% 20% 30%
At December 31, 2025 $ 8,886 $ 10,155 $ 11,425 $ 12,694 $ 13,963 $ 15,233 $ 16,502
At December 31, 2024 $ 7,830 $ 8,948 $ 10,067 $ 11,185 $ 12,304 $ 13,422 $ 14,541
Our equity holdings represented $12.694 billion in fair value at year-end 2025. No holding had a fair value greater than 7.8% of our $12.373 billion common stock portfolio. We had 44 holdings (among nine different sectors) each with a fair value greater than $100 million. See Item 1, Our Segments, Investments Segment and Item 8, Note 2 of the Consolidated Financial Statements, for additional details on our holdings.
The primary risks related to preferred stocks are similar to those related to investment-grade corporate bonds. Rising interest rates adversely affect market values due to the normal inverse relationship between interest rates and bond prices. Credit risk exists due to the subordinate position of preferred stocks in the capital structure. We minimize this risk by primarily purchasing investment-grade preferred stocks of issuers with a strong history of paying a common stock dividend.
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Application of Asset Impairment Policy
As discussed in Item 7, Critical Accounting Estimates, Asset Impairment, our fixed-maturity investment portfolio is evaluated for credit-related impairments . The company’s asset impairment committee monitors a number of significant factors for indications of investments with a fair value below the carrying amount that may not be recoverable. During 2025 and 2024, no fixed maturity securities were written down to fair value, due to an intention to be sold. The application of our impairment policy resulted in write-downs of impaired securities intended to be sold that reduced our income before income taxes by $4 million in 2023. Impairments are discussed in Item 7, Investments Results.
We expect the number of fixed-maturity and short-term securities with a fair value below 100% of amortized cost to fluctuate as interest rates rise or fall and credit spreads expand or contract due to prevailing economic conditions. Further, amortized cost for some securities have been revised due to impairment charges recognized in prior periods. At year-end 2025, 2,597 of the 5,358 fixed-maturity and short-term securities we owned had a fair value below 100% of amortized cost compared with 3,723 of the 5,090 at year-end 2024 and 2,840 of the 4,738 at year-end 2023.
The 2,597 holdings fair valued below amortized cost at year-end 2025 represented 43.1% of our fixed-maturity and short-term investments portfolio and $397 million in unrealized losses.
• 1,974 of these holdings were fair valued between 90% and 100% of amortized cost. The value of these securities fluctuates primarily because of changes in interest rates. The fair value of these 1,974 securities was $6.734 billion at year-end 2025, and they accounted for $144 million in unrealized losses.
• 610 of these holdings were fair valued between 70% and 90% of amortized cost. The fair value of these holdings was $1.126 billion, and they accounted for $240 million in unrealized losses.
• 13 of these holdings had a fair value below 70% of amortized cost. The fair value of these holdings was $17 million, and they accounted for $13 million in unrealized losses.
The following table summarizes the length of time securities in the investment portfolio have been in a continuous unrealized loss position.
(Dollars in millions) Less than 12 months 12 months or more Total
At December 31, 2025 Fair
value Unrealized
losses Fair
value Unrealized
losses Fair
value Unrealized
losses
Fixed-maturity:
Corporate $ 849 $ 15 $ 2,926 $ 188 $ 3,775 $ 203
States, municipalities and political subdivisions 204 2 2,346 179 2,550 181
Government-sponsored enterprises 983 3 195 1 1,178 4
Asset-backed 101 2 184 6 285 8
United States government 69 — 20 1 89 1
Total fixed-maturity $ 2,206 $ 22 $ 5,671 $ 375 $ 7,877 $ 397
At December 31, 2024
Fixed-maturity:
Corporate $ 2,815 $ 78 $ 3,634 $ 255 $ 6,449 $ 333
States, municipalities and political subdivisions 1,513 25 1,898 245 3,411 270
Government-sponsored enterprises 1,876 8 92 1 1,968 9
Asset-backed 331 10 96 7 427 17
United States government 48 — 100 2 148 2
Foreign government — — 3 — 3 —
Total fixed-maturity 6,583 121 5,823 510 12,406 631
Short-term 100 — — — 100 —
Total fixed-maturity and short-term investments $ 6,683 $ 121 $ 5,823 $ 510 $ 12,506 $ 631
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The following table summarizes and classifies securities based on fair values relative to amortized cost:
(Dollars in millions) Number
of issues Amortized
cost Fair
value Gross
unrealized
gain (loss) Gross
investment
income
At December 31, 2025
Taxable fixed maturities:
Fair valued below 70% of amortized cost 6 $ 20 $ 12 $ (8) $ 1
Fair valued at 70% to less than 100% of amortized cost 1,358 6,266 5,965 (301) 249
Fair valued at 100% and above of amortized cost 1,379 7,848 8,033 185 366
Investment income on securities sold in current year — — — — 109
Total 2,743 14,134 14,010 (124) 725
Tax-exempt fixed maturities:
Fair valued below 70% of amortized cost 7 10 5 (5) —
Fair valued at 70% to less than 100% of amortized cost 1,226 1,978 1,895 (83) 62
Fair valued at 100% and above of amortized cost 1,379 2,182 2,213 31 74
Investment income on securities sold in current year — — — — 8
Total 2,612 4,170 4,113 (57) 144
Fixed-maturities summary:
Fair valued below 70% of amortized cost 13 30 17 (13) 1
Fair valued at 70% to less than 100% of amortized cost 2,584 8,244 7,860 (384) 311
Fair valued at 100% and above of amortized cost 2,758 10,030 10,246 216 440
Investment income on securities sold in current year — — — — 117
Total 5,355 18,304 18,123 (181) 869
Short-term investments:
Fair valued below 70% of cost — — — — —
Fair valued at 70% to less than 100% of cost — — — — —
Fair valued at 100% and above of cost 3 148 148 — —
Investment income on securities sold in current year — — — — 9
Total 3 148 148 — 9
Fixed maturities and short-term investments summary:
Fair valued below 70% of cost 13 30 17 (13) 1
Fair valued at 70% to less than 100% of cost 2,584 8,244 7,860 (384) 311
Fair valued at 100% and above of cost 2,761 10,178 10,394 216 440
Investment income on securities sold in current year — — — — 126
Total 5,358 $ 18,452 $ 18,271 $ (181) $ 878
At December 31, 2024
Fixed maturities and short-term investments summary:
Fair valued below 70% of amortized cost 19 $ 43 $ 28 $ (15) $ 2
Fair valued at 70% to less than 100% of amortized cost 3,704 13,094 12,478 (616) 461
Fair valued at 100% and above of amortized cost 1,367 3,896 3,974 78 184
Investment income on securities sold in current year — — — — 86
Total 5,090 $ 17,033 $ 16,480 $ (553) $ 733
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I TEM 8. Financial Statements and Supplementary Data
Responsibility for Financial Statements
We have prepared the consolidated financial statements of Cincinnati Financial Corporation and our subsidiaries for the year ended December 31, 2025, in accordance with accounting principles generally accepted in the United States of America (GAAP).
We are responsible for the integrity and objectivity of these financial statements. The amounts, presented on an accrual basis, reflect our best estimates and judgment. These statements are consistent in all material aspects with other financial information in the Annual Report on Form 10-K. Our accounting system and related internal controls are designed to assure that our books and records accurately reflect the company’s transactions in accordance with established policies and procedures as implemented by qualified personnel.
Our board of directors has established an audit committee of independent outside directors. We believe these directors are free from any relationships that could interfere with their independent judgment as audit committee members.
The audit committee meets periodically with management, our independent registered public accounting firm and our internal auditors to discuss how each is handling its respective responsibilities. The audit committee reports its findings to the board of directors. The audit committee recommends to the board the annual appointment of the independent registered public accounting firm. The audit committee reviews with this firm the scope of the audit assignment and the adequacy of internal controls and procedures.
Deloitte & Touche LLP, our independent registered public accounting firm, audited the consolidated financial statements of Cincinnati Financial Corporation and subsidiaries for the year ended December 31, 2025. Deloitte & Touche LLP met with our audit committee to discuss the results of its audit. They have the opportunity to discuss the adequacy of internal controls and the quality of financial reporting without management present.
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Management’s Annual Report on Internal Control Over Financial Reporting
The management of Cincinnati Financial Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal controls, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). The company’s internal control over financial reporting includes those policies and procedures that:
• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the company are being made only in accordance with authorizations of management and the directors of the company; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
The company’s management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2025, as required by Section 404 of the Sarbanes Oxley Act of 2002. Management’s assessment was based on the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and was designed to provide reasonable assurance that the company maintained effective internal control over financial reporting as of December 31, 2025. The assessment led management to conclude that, as of December 31, 2025, the company’s internal control over financial reporting was effective based on those criteria.
The company’s independent registered public accounting firm has issued an audit report on our internal control over financial reporting as of December 31, 2025.
/S/ Stephen M. Spray
Stephen M. Spray
President and Chief Executive Officer
/S/ Michael J. Sewell
Michael J. Sewell, CPA
Chief Financial Officer, Executive Vice President and Treasurer
(Principal Accounting Officer)
February 23, 2026
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Cincinnati Financial Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Cincinnati Financial Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and the schedules listed in the Index at Item 15(b) (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Property and Casualty Insurance Loss and Loss Expense Reserves — Refer to Note 4 to the financial statements .
Critical Audit Matter Description
The Company’s property and casualty insurance loss and loss expense reserves for long-tailed lines of business, such as workers’ compensation, commercial casualty and certain other liability lines (referred to as “loss and loss expense reserves”), are determined by the Company using actuarial methods, models, assumptions, and judgment to estimate the reserves (“actuarial estimates”) required to pay for and settle all outstanding insured claims, including incurred but not reported (IBNR) claims, as of the financial statement date. The actuarial estimates of loss and loss expense reserves are subject to review and adjustment by Company management.
Loss and loss expense reserves are inherently uncertain as to timing and amount and the recorded loss and loss expense reserves may vary materially from the actual ultimate cost of claims. Given the subjectivity in estimating ultimate loss and loss expense reserves, due to uncertainties concerning the future emergence of loss and loss expenses, inflation trends, and the judicial environment, among other factors, auditing loss and loss expense reserves involved an especially high degree of auditor judgment, including the need to involve our actuarial specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to loss and loss expense reserves included the following, among others:
• We tested the effectiveness of controls related to loss and loss expense reserves, including those over the review of actuarial methods, models, assumptions and judgments used, and management’s review of the estimates.
• We tested the underlying data that served as the basis for the actuarial analyses, including historical claims data, to test the reasonableness of key inputs to the actuarial estimates.
• With the assistance of our actuarial specialists, we used the Company’s claims data and other inputs, to develop a range of independent estimates for the loss and loss expense reserves. We used these independent estimates to assess the reasonableness of the Company’s reserves by comparing our estimates to the Company’s recorded loss and loss expense reserves.
• We compared the Company’s prior year estimates of expected incurred losses to actual experience during the current year to identify potential bias in the determination of loss and loss expense reserves.
/S/ DELOITTE & TOUCHE LLP
Cincinnati, Ohio
February 23, 2026
We have served as the Company’s auditor since 1980.
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Cincinnati Financial Corporation and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions, except per share data) December 31, December 31,
2025 2024
Assets
Investments
Fixed maturities, at fair value (amortized cost: 2025—$ 18,304 ; 2024—$ 16,735 )
$ 18,123 $ 16,182
Equity securities, at fair value (cost: 2025—$ 4,155 ; 2024—$ 3,953 )
12,694 11,185
Short-term investments, at fair value (amortized cost: 2025—$ 148 ; 2024—$298)
148 298
Other invested assets 818 713
Total investments 31,783 28,378
Cash and cash equivalents 1,431 983
Investment income receivable 235 222
Finance receivable 146 120
Premiums receivable 3,142 2,969
Reinsurance recoverable 655 523
Prepaid reinsurance premiums 71 70
Deferred policy acquisition costs 1,344 1,242
Land, building and equipment, net, for company use (accumulated depreciation:
2025—$ 367 ; 2024—$ 347 )
219 214
Other assets 995 828
Separate accounts 981 952
Total assets $ 41,002 $ 36,501
Liabilities
Insurance reserves
Loss and loss expense reserves $ 11,507 $ 10,003
Life policy and investment contract reserves 2,992 2,960
Unearned premiums 5,254 4,813
Other liabilities 1,638 1,487
Deferred income tax 1,833 1,476
Note payable 25 25
Long-term debt and lease obligations 861 850
Separate accounts 981 952
Total liabilities 25,091 22,566
Commitments and contingent liabilities (Note 16)
Shareholders' Equity
Common stock, par value—$ 2 per share; (authorized: 2025 and 2024— 500 million shares;
issued: 2025 and 2024— 198.3 million shares)
397 397
Paid-in capital 1,561 1,502
Retained earnings 16,719 14,869
Accumulated other comprehensive loss ( 34 ) ( 309 )
Treasury stock, at cost (2025— 42.9 million shares and 2024— 41.9 million shares)
( 2,732 ) ( 2,524 )
Total shareholders' equity 15,911 13,935
Total liabilities and shareholders' equity $ 41,002 $ 36,501
Accompanying Notes are an integral part of these Consolidated Financial Statements.
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Cincinnati Financial Corporation and Subsidiaries
Consolidated Statements of Income
(Dollars in millions, except per share data) Years ended December 31,
2025 2024 2023
Revenues
Earned premiums $ 9,983 $ 8,889 $ 7,958
Investment income, net of expenses 1,165 1,025 894
Investment gains and losses, net 1,442 1,391 1,127
Fee revenues 20 17 21
Other revenues 21 15 13
Total revenues 12,631 11,337 10,013
Benefits and Expenses
Insurance losses and contract holders' benefits 6,640 5,737 5,274
Underwriting, acquisition and insurance expenses 2,924 2,657 2,384
Interest expense 53 53 54
Other operating expenses 34 32 25
Total benefits and expenses 9,651 8,479 7,737
Income Before Income Taxes 2,980 2,858 2,276
Provision for Income Taxes
Current 304 449 210
Deferred 283 117 223
Total provision for income taxes 587 566 433
Net Income $ 2,393 $ 2,292 $ 1,843
Per Common Share
Net income—basic $ 15.32 $ 14.65 $ 11.74
Net income—diluted 15.17 14.53 11.66
Accompanying Notes are an integral part of these Consolidated Financial Statements.
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Cincinnati Financial Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Dollars in millions) Years ended December 31,
2025 2024 2023
Net Income $ 2,393 $ 2,292 $ 1,843
Other Comprehensive Income (Loss)
Change in unrealized gains and losses on investments, net of tax of $ 79 , $ 4 and $ 59 , respectively
293 13 218
Amortization of pension actuarial gains and losses and prior service cost, net of tax (benefit) of $ 2 , $ 9 and $( 1 ), respectively
8 36 ( 5 )
Change in life policy reserves, reinsurance recoverable and other, net of tax (benefit) of $( 7 ), $ 21 and $( 8 ), respectively
( 26 ) 77 ( 34 )
Other comprehensive income 275 126 179
Comprehensive Income $ 2,668 $ 2,418 $ 2,022
Accompanying Notes are an integral part of these Consolidated Financial Statements.
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Cincinnati Financial Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity
(Dollars in millions) Years ended December 31,
2025 2024 2023
Common Stock
Beginning of year $ 397 $ 397 $ 397
Share-based awards — — —
End of year 397 397 397
Paid-In Capital
Beginning of year 1,502 1,437 1,392
Share-based awards 1 8 ( 3 )
Share-based compensation 46 46 40
Other 12 11 8
End of year 1,561 1,502 1,437
Retained Earnings
Beginning of year 14,869 13,084 11,711
Net income 2,393 2,292 1,843
Dividends declared ( 543 ) ( 507 ) ( 470 )
End of year 16,719 14,869 13,084
Accumulated Other Comprehensive Income (Loss)
Beginning of year ( 309 ) ( 435 ) ( 614 )
Other comprehensive income 275 126 179
End of year ( 34 ) ( 309 ) ( 435 )
Treasury Stock
Beginning of year ( 2,524 ) ( 2,385 ) ( 2,324 )
Share-based awards 14 18 11
Shares acquired - share repurchase authorization ( 205 ) ( 126 ) ( 67 )
Shares acquired - share-based compensation plans ( 19 ) ( 33 ) ( 8 )
Other 2 2 3
End of year ( 2,732 ) ( 2,524 ) ( 2,385 )
Total Shareholders' Equity $ 15,911 $ 13,935 $ 12,098
(In millions)
Common Stock - Shares Outstanding
Beginning of year 156.4 157.0 157.1
Share-based awards 0.4 0.7 0.4
Shares acquired - share repurchase authorization ( 1.4 ) ( 1.1 ) ( 0.6 )
Shares acquired - share-based compensation plans ( 0.1 ) ( 0.3 ) —
Other 0.1 0.1 0.1
End of year 155.4 156.4 157.0
Accompanying Notes are an integral part of these Consolidated Financial Statements.
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Cincinnati Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in millions) Years ended December 31,
2025 2024 2023
Cash Flows From Operating Activities
Net income $ 2,393 $ 2,292 $ 1,843
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other 168 130 112
Investment gains and losses, net ( 1,405 ) ( 1,367 ) ( 1,108 )
Interest credited to contract holders 44 44 45
Deferred income tax expense 283 117 223
Changes in:
Premiums and reinsurance receivable ( 306 ) ( 266 ) ( 264 )
Deferred policy acquisition costs ( 102 ) ( 149 ) ( 80 )
Other assets ( 73 ) ( 14 ) ( 30 )
Loss and loss expense reserves 1,504 953 650
Life policy and investment contract reserves 55 69 99
Unearned premiums 441 694 430
Other liabilities 84 134 90
Current income tax receivable/payable 26 12 42
Net cash provided by operating activities 3,112 2,649 2,052
Cash Flows From Investing Activities
Sale, call or maturity of fixed maturities 3,777 3,202 1,136
Sale of equity securities 335 1,599 206
Purchase of fixed maturities ( 5,388 ) ( 5,732 ) ( 2,554 )
Purchase of equity securities ( 409 ) ( 321 ) ( 220 )
Change in short-term investments, net 156 ( 295 ) —
Changes in finance receivables ( 30 ) ( 15 ) ( 15 )
Investment in buildings and equipment ( 20 ) ( 22 ) ( 18 )
Change in other invested assets, net ( 112 ) ( 112 ) ( 143 )
Net cash used in investing activities ( 1,691 ) ( 1,696 ) ( 1,608 )
Cash Flows From Financing Activities
Payment of cash dividends to shareholders ( 525 ) ( 490 ) ( 454 )
Shares acquired - share repurchase authorization ( 205 ) ( 126 ) ( 67 )
Changes in note payable — — ( 25 )
Proceeds from stock options exercised 10 10 9
Contract holders' funds deposited 66 73 83
Contract holders' funds withdrawn ( 166 ) ( 190 ) ( 218 )
Other ( 153 ) ( 154 ) ( 129 )
Net cash used in financing activities ( 973 ) ( 877 ) ( 801 )
Net change in cash and cash equivalents 448 76 ( 357 )
Cash and cash equivalents at beginning of year 983 907 1,264
Cash and cash equivalents at end of year $ 1,431 $ 983 $ 907
Supplemental Disclosures of Cash Flow Information
Interest paid $ 53 $ 53 $ 54
Income taxes paid 220 395 136
Noncash Activities
Equipment acquired under finance lease obligations $ 24 $ 19 $ 20
Share-based compensation 37 51 19
Other assets and other liabilities 113 103 77
Accompanying Notes are an integral part of these Consolidated Financial Statements.
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Notes to Consolidated Financial Statements
NOTE 1 – Summary of Significant Accounting Policies
Nature of Operations
Cincinnati Financial Corporation (CFC) operates through The Cincinnati Insurance Company and Cincinnati Global Underwriting Ltd. SM (Cincinnati Global) insurance subsidiaries and two complementary subsidiary companies.
The Cincinnati Insurance Company leads our insurance group that also includes two subsidiaries: The Cincinnati Casualty Company and The Cincinnati Indemnity Company. This group markets a broad range of standard market commercial and personal policies. The group focuses on delivery of quality customer service to our select group of 2,292 independent insurance agencies with 3,702 reporting locations across 46 states. Other subsidiaries of The Cincinnati Insurance Company include: The Cincinnati Life Insurance Company, which markets life insurance and fixed annuities; and The Cincinnati Specialty Underwriters Insurance Company, which offers excess and surplus lines property casualty insurance products. The Cincinnati Insurance Company also conducts the business of our reinsurance assumed operations, Cincinnati Re ® .
The two CFC complementary subsidiaries are CSU Producer Resources Inc., which provides insurance brokerage services to our independent agencies so their clients can access our excess and surplus lines insurance products, and CFC Investment Company, which offers commercial leasing and financing services to our agents, their clients and other customers.
Basis of Presentation
Our consolidated financial statements include the accounts of the parent and its wholly owned subsidiaries and are presented in conformity with accounting principles generally accepted in the United States of America (GAAP). Foreign exchange rates related to Cincinnati Global's operations did not have a material impact to our consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Our actual results could differ from those estimates.
Investments
Our portfolio investments are primarily in publicly traded fixed-maturity, equity security and short-term investments. Fixed-maturity (taxable bonds, including redeemable preferred equities, tax-exempt bonds and asset-backed securities) and short-term (commercial paper purchased within one year of maturity) investments classified as available for sale and equity security investments (common and nonredeemable preferred equities) are recorded at fair value in the consolidated financial statements. Changes in fair value of fixed-maturity and short-term investments are reported in other comprehensive income while changes in fair value of equity securities are reported in net income. The number of fixed-maturity securities with fair values below 100% of amortized cost can be expected to fluctuate as interest rates rise or fall. Because of our strong capital and long-term investment horizon, our general intent is to hold fixed-maturity investments until maturity, regardless of short-term fluctuations in fair values.
An available for sale fixed maturity is impaired if the fair value of the security is below amortized cost. The impaired loss is charged to net income when we have the intent to sell the security or it is more likely than not we will be required to sell the security before recovery of the amortized cost. For impaired securities we intend to hold, an allowance for credit related losses is recorded in investment losses when the company determines a credit loss has been incurred based on certain factors such as adverse conditions, credit rating downgrades or failure of the issuer to make scheduled principal or interest payments. A credit loss is determined using a discounted cash flow analysis by comparing the present value of expected cash flows with the amortized cost basis, limited to the difference between fair value and amortized cost. Noncredit losses are recognized in other comprehensive income as a change in unrealized gains and losses on investments. As securities are sold, we recognize the gain or loss in net income based on the trade date.
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Included within our other invested assets were $ 641 million and $ 567 million of private equity investments, $ 123 million and $ 94 million of real estate through direct property ownership and development projects in the United States, $ 38 million and $ 36 million of life policy loans and $ 16 million and $ 16 million held on deposit at Lloyd's at December 31, 2025 and 2024, respectively. The private equity investments provide their financial statements to us and generally report investments on their balance sheets at fair value. We use the equity method of accounting for private equity and real estate development investments. Lloyd's deposits primarily consist of highly liquid short-term investment instruments. Life policy loans are carried at the receivable value.
Investment income, net of expenses, consists mainly of interest and dividends. We record interest on an accrual basis and record dividends at the ex-dividend date. We amortize premiums and discounts on fixed-maturity securities using the effective interest method over the expected life of the security.
Fair Value Disclosures
Fair value is defined as the exit price or the amount that would be (1) received to sell an asset or (2) paid to transfer a liability in an orderly transaction between marketplace participants at the measurement date. When determining an exit price, we rely upon observable market data whenever possible. We primarily base fair value for investments in equity, fixed-maturity and short-term securities (including assets held in separate accounts) on quoted market prices or on prices from the company’s nationally recognized pricing vendors, outside resources that supply global securities pricing, dividend, corporate action and descriptive information to support fund pricing, securities operations, research and portfolio management. The company obtains and reviews the pricing services' valuation methodologies and related inputs and validates these prices by replicating a sample across each asset class using a discounted cash flow model. When a price is not available from these sources, as in the case of securities that are not publicly traded, we determine the fair value using various inputs including quotes from independent brokers. The fair value of investments not priced by the company’s nationally recognized pricing vendors is immaterial.
For the purpose of Accounting Standards Codification (ASC) 825, Financial Instruments disclosure, we estimate the fair value of our long-term senior notes on market pricing of similar debt instruments that are actively trading. We estimate the fair value of our note payable on the year-end outstanding balance because it is short term and tied to a variable interest rate. We estimate the fair value of liabilities for investment contracts and annuities using discounted cash flow calculations across a wide range of economic interest rate scenarios with a provision for our nonperformance risk. We estimate the fair value for policyholder loans on insurance contracts using a discounted cash flow model. Determination of fair value for structured settlements assumes the discount rates used to calculate the present value of expected payments are the risk-free spot rates plus an A3 rated bond spread for financial issuers at December 31, 2025, to account for nonperformance risk. See Note 3, Fair Value Measurements, for further details.
Cash and Cash Equivalents
Cash and cash equivalents are highly liquid instruments that include liquid debt instruments with original maturities of less than three months. These are carried at cost, which approximates fair value.
Property Casualty Insurance
The consolidated property casualty companies actively write property casualty insurance through independent agencies in 46 states. Our 10 largest states generated 50.2 % and 50.1 % of total earned premiums in 2025 and 2024, respectively. Ohio, our largest state, accounted for 12.8 % and 13.1 % of total earned premiums in 2025 and 2024, respectively. Illinois, New York, and North Carolina each accounted for between 4 % and 6 % of total earned premiums in 2025. Our largest single agency relationship accounted for approximately 0.5 % of our total property casualty earned premiums in 2025. No aggregate agency relationship locations under a single ownership structure accounted for more than 8 % of our total property casualty earned premiums in 2025. We record revenues for installment charges as fee revenues in the consolidated statements of income.
Property casualty written premiums are deferred and recorded as earned premiums primarily on a pro rata basis over the terms of the policies. We record as unearned premiums the portion of written premiums that applies to unexpired policy terms. Expenses associated with successfully acquiring insurance policies – commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We assess recoverability of deferred acquisition costs at a level consistent with the way we acquire, service and manage insurance policies and measure profitability. We analyze our acquisition cost assumptions to reflect actual experience, and we evaluate potential premium deficiencies.
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Certain property casualty policies are not entered into policy underwriting systems as of the effective date of coverage. An estimate is recorded for these unprocessed written premiums. A large majority of the estimate is unearned and has no material impact on earned premiums.
An allowance for credit losses on uncollectible property casualty premiums is updated and reviewed on a quarterly basis. The allowance for credit losses was $ 18 million, $ 18 million and $ 16 million at December 31, 2025, 2024 and 2023, respectively. Changes in the amount for each period were immaterial.
We establish reserves to cover the expected cost of claims, losses and expenses related to investigating, processing and resolving claims. Although the appropriate amount of reserves is inherently uncertain, we base our decisions on past experience and current facts. Reserves are based on claims reported prior to the end of the year and estimates of incurred but not reported (IBNR) claims. We regularly review and update reserves using the most current information available. Any resulting adjustments are reflected in current calendar year insurance losses and policyholder benefits. We estimate that we may recover some of our costs through salvage and subrogation.
Policyholder Dividends
Certain workers’ compensation policies include the possibility of a policyholder earning a return of a portion of premium in the form of a policyholder dividend. The dividend generally is calculated by determining the profitability of a policy year along with the associated premium. We reserve for all probable future policyholder dividend payments. We record policyholder dividends as other underwriting expenses.
Life Insurance
We offer several types of life insurance and we account for each according to the duration of the contract. Short-duration life and health contracts are written to cover claims that arise during a short, fixed term of coverage. We generally have the right to change the amount of premium charged or cancel the coverage at the end of each contract term. We record premiums for short-duration life and health contracts similarly to property casualty contracts.
Long-duration contracts are written to provide coverage for an extended period of time. Traditional long-duration contracts require policyholders to pay scheduled gross premiums, generally not less frequently than annually, over the term of the coverage. Premiums for these contracts, such as whole life insurance, are recognized as revenue when due. Some traditional long-duration contracts, such as ten-pay whole life insurance, have premium payment periods shorter than the period over which coverage is provided. For these contracts, the excess of premium over the amount required to pay expenses and benefits is recognized over the term of the coverage rather than over the premium payment period.
We establish reserves for traditional long-duration contracts, including term, whole life and other products, based on th e present value of future benefits and claim expenses less the present value of future net premiums. Net premium is the portion of gross premium required to provide for all benefits and claim expenses. We estimate future benefits and claim expenses and net pr emium using certain cash flow assumptions including mortality, morbidity and lapse rates as well as a discount rate assumption. The cash flow assumptions are established based on our current expectations and are reviewed annually to determine any necessary updates. These assumptions are also updated on an interim basis if evidence suggests that they should be revised. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our cash flow assumptions. The discount rate assumption is based on upper-medium grade fixed-income instrument yields (market value discount rates) and is updated quarterly. Certain assumptions, including the mortality, lapse and long-term interest rate reversion targets, were updated in 2025 as part of our annual assumption unlocking. See Note 5, Life Policy and Investment Contract Reserves, for further detail regarding the measurement impact on traditional long-duration contract reserves due to changes in the inputs, judgments and assumptions during the period.
We also offer universal life, deferred annuity and other investment contracts. Universal life contracts are long-duration contracts for which contractual provisions are not fixed, unlike whole life insurance. Universal life contracts allow policyholders to vary the amount of premium, within limits, without our consent. However, we may vary the mortality, expense charges and the interest crediting rate, within limits, used to accumulate policy values. We do not record universal life premiums as revenue. Instead we recognize as revenue the mortality charges, administration charges and surrender charges when assessed. Some of our universal life contracts assess administration charges in the early years of the contract that are compensation for services we will provide in the later years of the contract.
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These administrati on charges are deferred and are recognized over the period when we provide those future services. Deferred annuities provide regular income payments to annuitants once certain criteria are met. During the deferral period, payments made by the annuitants under the contract accumulate at the crediting rate declared by the company but not less than a contract-specified guaranteed minimum interest rate. We also do not record deferred annuity premiums as revenue.
We establish reserves for our universal life, deferred annuity and other investment contracts equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life insurance policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance based on expected no-lapse guarantee benefits and expected policy assessments.
We capitalize acquisition costs associated with successfully acquiring traditional and universal life long-duration contracts. We charge these capitalized costs to expenses on a constant-level basis that approximates straight-line amortization over the expected term of the related contracts.
An allowance for credit losses on uncollectible life insurance premiums is updated and reviewed on a quarterly basis. At December 31, 2025, 2024 and 2023, the allowance, including changes in the amount for each period, was immaterial.
Separate Accounts
We have issued universal life contracts with guaranteed minimum returns, referred to as bank-owned life insurance contracts (BOLIs). A BOLI is designed so the bank is the policy owner and the policy beneficiary. We legally segregate and record as separate accounts the assets and liabilities for certain BOLIs, when required by the specific contract provisions. We guarantee minimum investment returns, account values and death benefits for our separate account BOLIs. Our other BOLIs are general account products.
We carry the assets of separate account BOLIs at fair value. The liabilities on separate account BOLIs primarily are carried at an amount equal to the contract holders’ account value, plus any cumulative unrealized gains on the related assets impacting separate account liabilities. The contract holders’ account value exceeded the current fair value of the BOLI invested assets and cash by approximately $ 19 million and $ 42 million at December 31, 2025 and 2024, respectively.
Generally, investment income and investment gains and losses of the separate accounts accrue directly to the contract holder, and we do not include them in the consolidated statements of income. Revenues and expenses related to separate accounts consist of contractual fees and mortality, surrender and expense risk charges. Also, each separate account BOLI includes a negotiated capital gain and loss sharing arrangement between the company and the bank. A percentage of each separate account’s investment gains and losses representing contract fees and assessments accrues to us and is transferred from the separate account to our general account and is recognized as revenue or expense. We record as revenues separate account investment management fees in fee revenues of the consolidated statements of income.
Reinsurance
The Cincinnati Insurance Company offers reinsurance assumed for casualty (predominantly domestic exposure), specialty and property (worldwide exposure). Treaties are written on a pro rata and excess of loss basis. We also continue to assume risk with limited exposure as a reinsurer for involuntary state pools.
Written premium is recorded, net of contract specific retrocessions, on an ultimate estimate basis and primarily earned on a pro rata basis over the coverage period of the treaty. Expenses are recorded as per contract terms and deferred over the earning period of the premium.
We establish known loss reserves when reported. We establish reserves for losses in excess of reported activity in the form of IBNR. Reserves are established using actuarial analysis, which includes models and methods traditionally used for the types of exposures written. We establish reserves for event specific occurrences using modeling data and company specific data when available.
We enter into other reinsurance transactions to reduce risk and uncertainty by buying property casualty reinsurance and retrocessional reinsurance as well as life reinsurance. Reinsurance and retrocessional reinsurance contracts do
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