Item 1. Financial Statements (unaudited)

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Item 1. Financial Statements (unaudited)

Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


(Dollars in millions, except per share data)	September 30,		December 31,
	2024		2023
Assets
Investments
Fixed maturities, at fair value (amortized cost: 2024—$16,074; 2023—$14,361)	$	15,871	$	13,791
Equity securities, at fair value (cost: 2024—$4,034; 2023—$4,282)	11,570		10,989

Other invested assets	663		577
Total investments	28,104		25,357
Cash and cash equivalents	1,752		907

Investment income receivable	199		192
Finance receivable	116		108
Premiums receivable	3,012		2,592
Reinsurance recoverable	548		651
Prepaid reinsurance premiums	94		55
Deferred policy acquisition costs	1,241		1,093
Land, building and equipment, net, for company use (accumulated depreciation: 2024—$342; 2023—$337)	215		208
Other assets	785		681
Separate accounts	943		925
Total assets	$	37,009	$	32,769

Liabilities
Insurance reserves
Loss and loss expense reserves	$	9,928	$	9,050
Life policy and investment contract reserves	3,069		3,068
Unearned premiums	4,874		4,119
Other liabilities	1,917		1,311
Deferred income tax	1,600		1,324
Note payable	25		25
Long-term debt and lease obligations	849		849
Separate accounts	943		925
Total liabilities	23,205		20,671

Commitments and contingent liabilities (Note 12)

Shareholders' Equity
Common stock, par value—$2 per share; (authorized: 2024 and 2023—500 million shares; issued: 2024 and 2023—198.3 million shares)	397		397
Paid-in capital	1,482		1,437
Retained earnings	14,591		13,084
Accumulated other comprehensive loss	(150)		(435)
Treasury stock at cost (2024—42.0 million shares and 2023—41.3 million shares)	(2,516)		(2,385)
Total shareholders' equity	13,804		12,098
Total liabilities and shareholders' equity	$	37,009	$	32,769

Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Income


(Dollars in millions, except per share data)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenues
Earned premiums	$	2,297	$	2,033	$	6,524	$	5,894
Investment income, net of expenses	258		225		745		655
Investment gains and losses, net	758		(456)		1,507		84
Fee revenues	4		6		13		16
Other revenues	3		3		10		8
Total revenues	3,320		1,811		8,799		6,657
Benefits and Expenses
Insurance losses and contract holders' benefits	1,578		1,332		4,407		4,070
Underwriting, acquisition and insurance expenses	683		609		1,954		1,744
Interest expense	13		13		40		40
Other operating expenses	6		5		19		17
Total benefits and expenses	2,280		1,959		6,420		5,871
Income (Loss) Before Income Taxes	1,040		(148)		2,379		786
Provision (Benefit) for Income Taxes
Current	171		57		293		124
Deferred	49		(106)		199		2
Total provision (benefit) for income taxes	220		(49)		492		126
Net Income (Loss)	$	820	$	(99)	$	1,887	$	660
Per Common Share
Net income (loss) — basic	$	5.25	$	(0.63)	$	12.06	$	4.20
Net income (loss) — diluted	5.20		(0.63)		11.97		4.17

Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Net Income (Loss)	$	820	$	(99)	$	1,887	$	660
Other Comprehensive Income (Loss)
Change in unrealized gains and losses on investments, net of tax (benefit) of $106, $(79), $78 and $(76), respectively	391		(290)		289		(284)
Amortization of pension actuarial loss (gain) and prior service cost, net of tax (benefit) of $0, $0, $0 and $(2), respectively	—		—		1		(5)
Change in life policy reserves, reinsurance recoverable and other, net of tax (benefit) of $(20), $22, $(2) and $19, respectively	(71)		89		(5)		76
Other comprehensive income (loss)	320		(201)		285		(213)
Comprehensive Income (Loss)	$	1,140	$	(300)	$	2,172	$	447

Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Common Stock
Beginning of period	$	397	$	397	$	397	$	397
Share-based awards	—		—		—		—
End of period	397		397		397		397

Paid-In Capital
Beginning of period	1,466		1,410		1,437		1,392
Share-based awards	4		1		4		(5)
Share-based compensation	10		9		36		31
Other	2		2		5		4
End of period	1,482		1,422		1,482		1,422

Retained Earnings
Beginning of period	13,897		12,235		13,084		11,711


Net income (loss)	820		(99)		1,887		660
Dividends declared	(126)		(118)		(380)		(353)
End of period	14,591		12,018		14,591		12,018

Accumulated Other Comprehensive Loss
Beginning of period	(470)		(626)		(435)		(614)


Other comprehensive income (loss)	320		(201)		285		(213)
End of period	(150)		(827)		(150)		(827)

Treasury Stock
Beginning of period	(2,513)		(2,386)		(2,385)		(2,324)
Share-based awards	3		1		15		8
Shares acquired - share repurchase authorization	—		—		(121)		(67)
Shares acquired - share-based compensation plans	(7)		(2)		(26)		(5)
Other	1		1		1		2
End of period	(2,516)		(2,386)		(2,516)		(2,386)

Total Shareholders' Equity	$	13,804	$	10,624	$	13,804	$	10,624

(In millions, except per common share)
Common Stock - Shares Outstanding
Beginning of period	156.2		156.8		157.0		157.1
Share-based awards	0.1		—		0.5		0.3
Shares acquired - share repurchase authorization	—		—		(1.1)		(0.6)
Shares acquired - share-based compensation plans	(0.1)		—		(0.2)		—
Other	0.1		0.1		0.1		0.1
End of period	156.3		156.9		156.3		156.9

Dividends declared per common share	$	0.81	$	0.75	$	2.43	$	2.25

Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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Cincinnati Financial Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows


(Dollars in millions)	Nine months ended September 30,
	2024		2023
Cash Flows From Operating Activities
Net income	$	1,887	$	660
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other	115		88
Investment gains and losses, net	(1,499)		(69)

Interest credited to contract holders	34		33
Deferred income tax expense	199		2
Changes in:

Premiums and reinsurance receivable	(356)		(392)
Deferred policy acquisition costs	(148)		(88)
Other assets	(8)		(30)
Loss and loss expense reserves	878		677
Life policy and investment contract reserves	54		73
Unearned premiums	755		506
Other liabilities	55		8
Current income tax receivable/payable	41		7
Net cash provided by operating activities	2,007		1,475
Cash Flows From Investing Activities
Sale, call or maturity of fixed maturities	2,354		826

Sale of equity securities	1,332		68
Purchase of fixed maturities	(3,797)		(1,853)
Purchase of equity securities	(282)		(157)


Changes in finance receivables	(10)		(10)

Investment in building and equipment	(18)		(10)
Change in other invested assets, net	(68)		(102)
Net cash used in investing activities	(489)		(1,238)
Cash Flows From Financing Activities
Payment of cash dividends to shareholders	(365)		(338)
Shares acquired - share repurchase authorization	(121)		(67)
Changes in note payable	—		(25)
Proceeds from stock options exercised	7		7
Contract holders' funds deposited	58		67
Contract holders' funds withdrawn	(152)		(165)
Other	(100)		(81)
Net cash used in financing activities	(673)		(602)
Net change in cash and cash equivalents	845		(365)
Cash and cash equivalents at beginning of year	907		1,264
Cash and cash equivalents at end of period	$	1,752	$	899
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	27	$	28
Income taxes paid	221		94
Noncash Activities

Equipment acquired under finance lease obligations	$	13	$	10
Share-based compensation	41		15
Other assets and other liabilities	562		120

Accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 — Accounting Policies

The condensed consolidated financial statements include the accounts of Cincinnati Financial Corporation and its consolidated subsidiaries, each of which is wholly owned. These statements are presented in conformity with accounting principles generally accepted in the United States of America (GAAP). All intercompany balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Our actual results could differ from those estimates. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been condensed or omitted.

Our September 30, 2024, condensed consolidated financial statements are unaudited. We believe that we have made all adjustments, consisting only of normal recurring accruals, that are necessary for fair presentation. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our 2023 Annual Report on Form 10-K. The results of operations for interim periods do not necessarily indicate results to be expected for the full year.

Pending Accounting Updates

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 enhances reportable segment disclosures by requiring entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure of profit or loss. This ASU also requires disclosure of the title and position of the CODM as well as a description of how the reported measure of profit or loss is used to assess segment performance and allocate resources. The effective date of ASU 2023-07 is for annual reporting periods beginning after December 15, 2023, and interim reporting periods within annual periods beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented. The ASU has not yet been adopted and will not have a material impact on our company’s consolidated financial position, results of operations or cash flows, but the ASU will require additional disclosures in our annual and interim financial statements.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures by requiring entities to disclose specific categories within their rate reconciliation as well as additional items within those categories above a prescribed threshold. This ASU also requires disclosure of the amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes as well as additional items within those categories above a prescribed threshold. The effective date of ASU 2023-09 is for annual reporting periods beginning after December 15, 2024, and should be applied prospectively with retrospective application permitted. The ASU has not yet been adopted and will not have a material impact on our company’s consolidated financial position, results of operations or cash flows, but the ASU will require additional disclosures in our annual financial statements.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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NOTE 2 – Investments

The following table provides amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity securities:


(Dollars in millions)	Amortized cost			Gross unrealized					Fair value
At September 30, 2024			gains			losses
Fixed-maturity securities:
Corporate	$	8,407		$	150		$	218	$	8,339
States, municipalities and political subdivisions	4,944			41			176		4,809
Government-sponsored enterprises	2,147			5			1		2,151
Asset-backed	317			4			7		314
United States government	228			1			2		227
Foreign government	31			—			—		31

Total	$	16,074		$	201		$	404	$	15,871






At December 31, 2023
Fixed-maturity securities:
Corporate	$	7,836		$	70		$	454	$	7,452
States, municipalities and political subdivisions	4,867			44			208		4,703
Government-sponsored enterprises	1,227			3			6		1,224
Asset-backed	203			—			16		187
United States government	203			—			3		200
Foreign government	25			—			—		25






Total	$	14,361		$	117		$	687	$	13,791

The decrease in net unrealized investment losses in our fixed-maturity portfolio at September 30, 2024, is primarily due to a decrease in U.S. Treasury yields and a tightening of corporate credit spreads as well as realized losses on sales of some lower-yielding fixed maturities. Our asset-backed securities had an average rating of Aa2/AA- and Aa3/AA- at September 30, 2024, and December 31, 2023, respectively.

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The table below provides fair values and gross unrealized losses by investment category and by the duration of the securities' continuous unrealized loss positions:


(Dollars in millions)	Less than 12 months				12 months or more				Total
At September 30, 2024	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	402	$	5	$	3,937	$	213	$	4,339	$	218
States, municipalities and political subdivisions	287		4		2,000		172		2,287		176
Government-sponsored enterprises	715		1		128		—		843		1
Asset-backed	48		—		99		7		147		7
United States government	—		—		103		2		103		2
Foreign government	—		—		5		—		5		—
Total	$	1,452	$	10	$	6,272	$	394	$	7,724	$	404





At December 31, 2023
Fixed-maturity securities:
Corporate	$	379	$	13	$	5,560	$	441	$	5,939	$	454
States, municipalities and political subdivisions	313		2		1,932		206		2,245		208
Government-sponsored enterprises	652		3		113		3		765		6
Asset-backed	5		—		172		16		177		16
United States government	32		—		129		3		161		3
Foreign government	3		—		6		—		9		—





Total	$	1,384	$	18	$	7,912	$	669	$	9,296	$	687

Contractual maturity dates for fixed-maturities securities were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At September 30, 2024
Maturity dates:
Due in one year or less	$	1,198	$	1,194	7.5	%
Due after one year through five years	4,011		3,993		25.2
Due after five years through ten years	3,554		3,542		22.3
Due after ten years	7,311		7,142		45.0
Total	$	16,074	$	15,871	100.0	%

Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.

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The following table provides investment income and investment gains and losses, net:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Investment income:
Interest	$	187	$	154	$	529	$	441
Dividends	68		69		209		205
Other	7		5		18		18
Total	262		228		756		664
Less investment expenses	4		3		11		9
Total	$	258	$	225	$	745	$	655

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	24	$	(5)	$	146	$	2
Unrealized gains and losses on securities still held, net	817		(458)		1,446		99
Subtotal	841		(463)		1,592		101
Fixed-maturity securities:
Gross realized gains	1		1		5		2
Gross realized losses	(87)		(1)		(94)		(2)
Change in allowance for credit losses, net	—		1		(25)		(2)
Write-down of impaired securities with intent to sell	—		—		—		(4)
Subtotal	(86)		1		(114)		(6)

Other	3		6		29		(11)

Total	$	758	$	(456)	$	1,507	$	84

The fair value of our equity portfolio was $11.570 billion and $10.989 billion at September 30, 2024, and December 31, 2023, respectively. Apple, Inc. (Nasdaq:AAPL) and Microsoft Corporation (Nasdaq:MSFT), equity holdings, were our largest single investment holdings with a fair value of $885 million and $842 million, which was 7.9% and 7.9% of our publicly traded common equities portfolio and 3.2% and 3.4% of the total investment portfolio at September 30, 2024, and December 31, 2023, respectively.

The allowance for credit losses on fixed-maturity securities was $39 million and $18 million at September 30, 2024, and December 31, 2023, respectively.

There were 2,495 and 2,840 fixed-maturity securities in a total unrealized loss position of $404 million and $687 million at September 30, 2024, and December 31, 2023, respectively. Of those totals, 5 and 20 fixed-maturity securities had fair values below 70% of amortized cost at September 30, 2024, and December 31, 2023, respectively.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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NOTE 3 – Fair Value Measurements

In accordance with accounting guidance for fair value measurements and disclosures, we categorized our financial instruments, based on the priority of the observable and market-based data for the valuation technique used, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest observable input that has a significant impact on fair value measurement is used. Our valuation techniques have not changed from those used at December 31, 2023, and ultimately management determines fair value. See our 2023 Annual Report on Form 10-K, Item 8, Note 3, Fair Value Measurements, Page 139, for information on characteristics and valuation techniques used in determining fair value.

Fair Value Disclosures for Assets

The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at September 30, 2024, and December 31, 2023. We do not have any liabilities carried at fair value.


(Dollars in millions)	Level 1		Level 2		Level 3		Total
At September 30, 2024
Fixed maturities, available for sale:
Corporate	$	—	$	8,339	$	—	$	8,339
States, municipalities and political subdivisions	—		4,809		—		4,809
Government-sponsored enterprises	—		2,151		—		2,151
Asset-backed	—		314		—		314
United States government	227		—		—		227
Foreign government	—		31		—		31


Subtotal	227		15,644		—		15,871
Common equities	11,200		—		—		11,200
Nonredeemable preferred equities	—		370		—		370

Separate accounts taxable fixed maturities	—		894		—		894
Top Hat savings plan mutual funds and common equity (included in Other assets)	84		—		—		84
Total	$	11,511	$	16,908	$	—	$	28,419

At December 31, 2023
Fixed maturities, available for sale:
Corporate	$	—	$	7,452	$	—	$	7,452
States, municipalities and political subdivisions	—		4,703		—		4,703
Government-sponsored enterprises	—		1,224		—		1,224
Asset-backed	—		187		—		187
United States government	200		—		—		200
Foreign government	—		25		—		25

Subtotal	200		13,591		—		13,791
Common equities	10,641		—		—		10,641
Nonredeemable preferred equities	—		348		—		348
Separate accounts taxable fixed maturities	—		854		—		854
Top Hat savings plan mutual funds and common equity (included in Other assets)	67		—		—		67
Total	$	10,908	$	14,793	$	—	$	25,701

We also held Level 1 cash and cash equivalents of $1.752 billion and $907 million at September 30, 2024, and December 31, 2023, respectively.

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Fair Value Disclosures for Assets and Liabilities Not Carried at Fair Value

The disclosures below are presented to provide information about the effects of current market conditions on financial instruments that are not reported at fair value in our condensed consolidated financial statements.

This table summarizes the book value and principal amounts of our long-term debt:


(Dollars in millions)			Book value				Principal amount
Interest rate	Year of issue		September 30,		December 31,		September 30,		December 31,
		2024	2023		2024		2023
6.900%	1998	Senior debentures, due 2028	$	27	$	27	$	28	$	28
6.920%	2005	Senior debentures, due 2028	391		391		391		391
6.125%	2004	Senior notes, due 2034	372		372		374		374
Total			$	790	$	790	$	793	$	793

The following table shows fair values of our note payable and long-term debt:


(Dollars in millions)	Level 1		Level 2		Level 3		Total
At September 30, 2024
Note payable	$	—	$	25	$	—	$	25
6.900% senior debentures, due 2028	—		30		—		30
6.920% senior debentures, due 2028	—		427		—		427
6.125% senior notes, due 2034	—		407		—		407
Total	$	—	$	889	$	—	$	889

At December 31, 2023
Note payable	$	—	$	25	$	—	$	25
6.900% senior debentures, due 2028	—		29		—		29
6.920% senior debentures, due 2028	—		420		—		420
6.125% senior notes, due 2034	—		394		—		394
Total	$	—	$	868	$	—	$	868

The following table shows the fair value of our life policy loans included in other invested assets and the fair values of our deferred annuities and structured settlements included in life policy and investment contract reserves:


(Dollars in millions)	Level 1		Level 2		Level 3		Total
At September 30, 2024
Life policy loans	$	—	$	—	$	41	$	41

Deferred annuities	$	—	$	—	$	576	$	576
Structured settlements	—		136		—		136
Total	$	—	$	136	$	576	$	712

At December 31, 2023
Life policy loans	$	—	$	—	$	39	$	39

Deferred annuities	$	—	$	—	$	603	$	603
Structured settlements	—		141		—		141
Total	$	—	$	141	$	603	$	744

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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Outstanding principal and interest for these life policy loans totaled $35 million and $33 million at September 30, 2024, and December 31, 2023, respectively.

Recorded reserves for the deferred annuities were $605 million and $656 million at September 30, 2024, and December 31, 2023, respectively. Recorded reserves for the structured settlements were $118 million and $123 million at September 30, 2024, and December 31, 2023, respectively.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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NOTE 4 – Property Casualty Loss and Loss Expenses

This table summarizes activity for our consolidated property casualty loss and loss expense reserves:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Gross loss and loss expense reserves, beginning of period	$	9,494	$	8,807	$	8,975	$	8,336
Less reinsurance recoverable	303		424		362		405
Net loss and loss expense reserves, beginning of period	9,191		8,383		8,613		7,931





Net incurred loss and loss expenses related to:
Current accident year	1,570		1,314		4,392		4,053
Prior accident years	(71)		(53)		(211)		(213)
Total incurred	1,499		1,261		4,181		3,840
Net paid loss and loss expenses related to:
Current accident year	574		597		1,262		1,286
Prior accident years	540		461		1,956		1,899
Total paid	1,114		1,058		3,218		3,185
Net loss and loss expense reserves, end of period	9,576		8,586		9,576		8,586
Plus reinsurance recoverable	290		419		290		419
Gross loss and loss expense reserves, end of period	$	9,866	$	9,005	$	9,866	$	9,005

We use actuarial methods, models and judgment to estimate, as of a financial statement date, the property casualty loss and loss expense reserves required to pay for and settle all outstanding insured claims, including incurred but not reported (IBNR) claims, as of that date. The actuarial estimate is subject to review and adjustment by an inter-departmental committee that includes actuarial, claims, underwriting, loss prevention and accounting management. This committee is familiar with relevant company and industry business, claims and underwriting trends, as well as general economic and legal trends that could affect future loss and loss expense payments. The amount we will actually have to pay for claims can be highly uncertain. This uncertainty, together with the size of our reserves, makes the loss and loss expense reserves our most significant estimate. The reserve for loss and loss expenses in the condensed consolidated balance sheets also included $62 million and $72 million at September 30, 2024, and 2023, respectively, for certain life and health loss and loss expense reserves.

We experienced $71 million of favorable development on prior accident years, including $50 million of favorable development in commercial lines, less than $1 million of unfavorable development in personal lines and $5 million of unfavorable development in excess and surplus lines for the three months ended September 30, 2024. Within commercial lines, we recognized favorable reserve development of $33 million for the commercial property line and $16 million for the workers' compensation line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

We experienced $211 million of favorable development on prior accident years, including $117 million of favorable development in commercial lines, $27 million of favorable development in personal lines and $5 million of unfavorable development in excess and surplus lines for the nine months ended September 30, 2024. Within commercial lines, we recognized favorable reserve development of $76 million for the commercial property line, $56 million for the workers' compensation line and $10 million for the commercial auto line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. This was partially offset by unfavorable reserve development of $27 million for the commercial casualty line. Within personal lines, we recognized favorable reserve development of $37 million for the homeowner line.

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We experienced $53 million of favorable development on prior accident years, including $34 million of favorable development in commercial lines, $8 million of favorable development in personal lines and no net development in excess and surplus lines for the three months ended September 30, 2023. Within commercial lines, we recognized favorable reserve development of $20 million for the workers' compensation line and $11 million for the commercial property line due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines.

We experienced $213 million of favorable development on prior accident years, including $125 million of favorable development in commercial lines, $54 million of favorable development in personal lines and $14 million of favorable development in excess and surplus lines for the nine months ended September 30, 2023. Within commercial lines, we recognized favorable reserve development of $46 million for the workers' compensation line and $36 million for both the commercial property and commercial casualty lines due to reduced uncertainty of prior accident year loss and loss adjustment expense for these lines. Within personal lines, we recognized favorable reserve development of $44 million for the homeowner line and $12 million for the personal auto line.

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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NOTE 5 – Life Policy and Investment Contract Reserves

We establish the reserves for traditional life policies including term, whole life and other products based on the 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 premium 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 the second quarter of 2024 as part of our annual assumption unlocking. Changes in the inputs, judgments and assumptions during the period and the related measurement impact on the liability are reflected in the below tables.

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 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.

The following table summarizes our life policy and investment contract reserves and provides a reconciliation of the balances described in the below tables to those in the condensed consolidated balance sheets:


(Dollars in millions)	September 30, 2024		December 31, 2023
Life policy reserves:
Term	$	1,108	$	1,066
Whole life	441		434
Other	100		97
Subtotal	1,649		1,597
Investment contract reserves:
Deferred annuities	605		656
Universal life	590		585
Structured settlements	118		123
Other	107		107
Subtotal	1,420		1,471
Total life policy and investment contract reserves	$	3,069	$	3,068

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The balances and changes in the term and whole life policy reserves included in life policy and investment contract reserves is as follows:


(Dollars in millions)	Three months ended September 30,
	2024				2023
	Term		Whole life		Term		Whole life
Present value of expected net premiums:
Balance, beginning of period	$	1,620	$	215	$	1,664	$	212
Beginning balance at original discount rate	1,701		225		1,712		219
Effect of changes in cash flow assumptions	(1)		(1)		—		(1)
Effect of actual variances from expected experience	(4)		—		(3)		2
Adjusted beginning of period balance	1,696		224		1,709		220
Issuances	34		9		33		7
Interest accrual	20		2		18		3
Net premiums collected	(45)		(8)		(45)		(7)
Ending balance at original discount rate	1,705		227		1,715		223
Effect of changes in discount rate assumptions	3		—		(133)		(17)
Balance, end of period	1,708		227		1,582		206

Present value of expected future policy benefits:
Balance, beginning of period	2,634		619		2,662		633
Beginning balance at original discount rate	2,772		636		2,737		615
Effect of changes in cash flow assumptions	(1)		(2)		—		—
Effect of actual variances from expected experience	(7)		(1)		(6)		2
Adjusted beginning of period balance	2,764		633		2,731		617
Issuances	34		8		33		7
Interest accrual	32		8		30		8
Benefits paid	(48)		(8)		(39)		(9)
Ending balance at original discount rate	2,782		641		2,755		623
Effect of changes in discount rate assumptions	12		27		(234)		(37)
Balance, end of period	2,794		668		2,521		586

Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums	1,086		441		939		380
Impact of flooring at cohort level	22		—		17		1
Net life policy reserves	1,108		441		956		381
Less reinsurance recoverable at original discount rate	(92)		(25)		(99)		(25)
Less effect of discount rate assumption changes on reinsurance recoverable	(10)		(5)		(7)		(3)
Net life policy reserves, after reinsurance recoverable	$	1,006	$	411	$	850	$	353

Weighted-average duration of the net life policy reserves in years	11		16		11		16

Cincinnati Financial Corporation Third-Quarter 2024 10-Q

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(Dollars in millions)	Nine months ended September 30,
	2024				2023
	Term		Whole life		Term		Whole life
Present value of expected net premiums:
Balance, beginning of period	$	1,700	$	223	$	1,643	$	208
Beginning balance at original discount rate	1,712		225		1,708		217
Effect of changes in cash flow assumptions	(13)		—		(5)		(7)
Effect of actual variances from expected experience	(23)		(3)		(15)		3
Adjusted beginning of period balance	1,676		222		1,688		213
Issuances	110		20		111		24
Interest accrual	56		7		53		7
Net premiums collected	(137)		(22)		(137)		(21)
Ending balance at original discount rate	1,705		227		1,715		223
Effect of changes in discount rate assumptions	3		—		(133)		(17)
Balance, end of period	1,708		227		1,582		206

Present value of expected future policy benefits:
Balance, beginning of period	2,751		657		2,584		614
Beginning balance at original discount rate	2,765		628		2,692		607
Effect of changes in cash flow assumptions	(30)		—		5		(10)
Effect of actual variances from expected experience	(35)		(5)		(19)		3
Adjusted beginning of period balance	2,700		623		2,678		600
Issuances	110		20		111		24
Interest accrual	94		24		90		23
Benefits paid	(122)		(26)		(124)		(24)
Ending balance at original discount rate	2,782		641		2,755		623
Effect of changes in discount rate assumptions	12		27		(234)		(37)
Balance, end of period	2,794		668		2,521		586

Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums	1,086		441		939		380
Impact of flooring at cohort level	22		—		17		1
Net life policy reserves	1,108		441		956		381
Less reinsurance recoverable at original discount rate	(92)		(25)		(99)		(25)
Less effect of discount rate assumption changes on reinsurance recoverable	(10)		(5)		(7)		(3)
Net life policy reserves, after reinsurance recoverable	$	1,006	$	411	$	850	$	353

Weighted-average duration of the net life policy reserves in years	11		16		11		16

The total impact of flooring at cohort level in the above tables includes the effect of discount rate assumption changes of $3 million and $5 million at September 30, 2024 and 2023, respectively.

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The following table shows the amount of undiscounted and discounted expected future benefit payments and expected gross premiums for our term and whole life policies:


(Dollars in millions)	At September 30,
	2024				2023
	Undiscounted		Discounted		Undiscounted		Discounted
Term
Expected future benefit payments	$	4,840	$	2,794	$	4,768	$	2,521
Expected future gross premiums	4,524		2,736		4,364		2,464
Whole life
Expected future benefit payments	$	1,702	$	668	$	1,631	$	586
Expected future gross premiums	687		428		653		379

The following table shows the amount of revenue and interest recognized in the condensed consolidated statements of income related to our term and whole life policies:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Gross premiums
Term	$	72	$	71	$	221	$	217
Whole life	15		14		41		39

Total	$	87	$	85	$	262	$	256
Interest accretion
Term	$	12	$	13	$	38	$	37
Whole life	6		5		17		16

Total	$	18	$	18	$	55	$	53

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums was immaterial for the nine months ended September 30, 2024, and 2023.

The following table shows the weighted-average interest rate for our term and whole life products:


	At September 30,
	2024		2023
Term
Interest accretion rate	5.21	%	5.29	%
Current discount rate	4.53		5.73
Whole life
Interest accretion rate	5.89	%	5.92	%
Current discount rate	5.14		5.95

The discount rate assumption was developed by calculating forward rates from market yield curves of upper-medium grade fixed-income instruments.

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The following table shows the balances and changes in policyholders' account balances included in investment contract reserves:


(Dollars in millions)	Three months ended September 30,												Nine months ended September 30,
	2024						2023						2024						2023
	Deferred annuity			Universal life			Deferred annuity			Universal life			Deferred annuity			Universal life			Deferred annuity			Universal life
Balance, beginning of period	$	618		$	456		$	696		$	456		$	656		$	457		$	734		$	457
Premiums received	10			9			13			8			29			28			38			28
Policy charges	—			(10)			—			(9)			—			(30)			—			(29)
Surrenders and withdrawals	(25)			(2)			(32)			(2)			(88)			(9)			(100)			(9)
Benefit payments	(4)			(1)			(3)			(1)			(9)			(4)			(9)			(5)
Interest credited	6			4			6			4			17			14			17			14

Balance, end of period	$	605		$	456		$	680		$	456		$	605		$	456		$	680		$	456

Weighted average crediting rate	3.64		%	4.36		%	3.45		%	4.29		%	3.64		%	4.36		%	3.45		%	4.29		%
Net amount at risk	$	—		$	3,865		$	—		$	3,989		$	—		$	3,865		$	—		$	3,989
Cash surrender value	599			426			675			424			599			426			675			424

The net amount at risk above represents the guaranteed benefit amount in excess of the current account balances.

The following table shows the balance of account values by range of guaranteed minimum crediting rates, in basis points, and the related range of the difference between rates being credited to policyholders and the respective guaranteed minimums for our deferred annuity and universal life contracts:


(Dollars in millions)	At guaranteed minimum		1 to 50 basis points above		51-150 basis points above		Greater than 150 basis points		Total
At September 30, 2024
Deferred annuity
1.00-3.00%	$	4	$	309	$	14	$	231	$	558
3.01-4.00%	47		—		—		—		47

Total	$	51	$	309	$	14	$	231	$	605
Universal life
1.00-3.00%	$	—	$	55	$	64	$	5	$	124
3.01-4.00%	50		—		4		—		54
Greater than 4.00%	278		—		—		—		278
Total	$	328	$	55	$	68	$	5	$	456

At September 30, 2023
Deferred annuity
1.00-3.00%	$	5	$	380	$	16	$	229	$	630
3.01-4.00%	50		—		—		—		50

Total	$	55	$	380	$	16	$	229	$	680
Universal life
1.00-3.00%	$	60	$	—	$	57	$	3	$	120
3.01-4.00%	54		—		—		—		54
Greater than 4.00%	282		—		—		—		282
Total	$	396	$	—	$	57	$	3	$	456

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The following table shows the balances and changes in the other additional liability related to the no-lapse guarantees contained within our universal life contracts:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Balance, beginning of period	$	128	$	122	$	128	$	121

Balance, beginning of period before shadow reserve adjustments	130		124		129		123
Effect of changes in cash flow assumptions	—		—		(2)		(5)
Effect of actual variances from expected experience	—		2		—		1
Adjusted beginning of period balance	130		126		127		119
Interest accrual	1		1		3		3
Excess death benefits	(2)		(4)		(5)		(6)
Attributed assessments	3		3		9		9

Effect of changes in interest rate assumptions	3		(5)		1		(4)
Balance, end of period before shadow reserve adjustments	135		121		135		121
Shadow reserve adjustments	(1)		(2)		(1)		(2)
Balance, end of period	134		119		134		119
Less reinsurance recoverable, end of period	6		7		6		7

Net other additional liability, after reinsurance recoverable	$	140	$	126	$	140	$	126

Weighted-average duration of the other additional liability in years	29		32		29		32

The following table shows balances and changes in separate accounts balances during the period:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Balance, beginning of period	$	948	$	911	$	925	$	892
Interest credited before policy charges	10		11		31		31

Benefit payments	—		(3)		(3)		(6)




Other	(15)		(1)		(10)		1
Balance, end of period	$	943	$	918	$	943	$	918

Cash surrender value	$	941	$	912	$	941	$	912

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NOTE 6 – Deferred Policy Acquisition Costs

Expenses directly related to successfully acquired insurance policies – primarily commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience. For property casualty, we evaluate the costs for recoverability. No premium deficiencies were recorded in the condensed consolidated statements of income, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income.

The table below shows the deferred policy acquisition costs and asset reconciliation.


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	878	$	771	$	749	$	682
Capitalized deferred policy acquisition costs	436		355		1,318		1,134
Amortized deferred policy acquisition costs	(427)		(366)		(1,180)		(1,056)
Deferred policy acquisition costs asset, end of period	$	887	$	760	$	887	$	760

Life:
Deferred policy acquisition costs asset, beginning of period	$	351	$	338	$	344	$	331
Capitalized deferred policy acquisition costs	11		10		33		32
Amortized deferred policy acquisition costs	(8)		(7)		(23)		(22)

Deferred policy acquisition costs asset, end of period	$	354	$	341	$	354	$	341

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	1,229	$	1,109	$	1,093	$	1,013
Capitalized deferred policy acquisition costs	447		365		1,351		1,166
Amortized deferred policy acquisition costs	(435)		(373)		(1,203)		(1,078)

Deferred policy acquisition costs asset, end of period	$	1,241	$	1,101	$	1,241	$	1,101

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The table below shows the life deferred policy acquisition costs asset by product:


(Dollars in millions)
Three months ended September 30, 2024	Term		Whole life		Deferred annuity		Universal life		Total
Balance, beginning of period	$	241	$	50	$	8	$	52	$	351
Capitalized deferred policy acquisition costs	9		1		—		1		11
Amortized deferred policy acquisition costs	(7)		—		—		(1)		(8)
Balance, end of period	$	243	$	51	$	8	$	52	$	354

Three months ended September 30, 2023
Balance, beginning of period	$	233	$	45	$	8	$	52	$	338
Capitalized deferred policy acquisition costs	8		2		—		—		10
Amortized deferred policy acquisition costs	(7)		—		—		—		(7)
Balance, end of period	$	234	$	47	$	8	$	52	$	341


(Dollars in millions)
Nine months ended September 30, 2024	Term		Whole life		Deferred annuity		Universal life		Total
Balance, beginning of period	$	236	$	48	$	8	$	52	$	344
Capitalized deferred policy acquisition costs	25		5		1		2		33
Amortized deferred policy acquisition costs	(18)		(2)		(1)		(2)		(23)
Balance, end of period	$	243	$	51	$	8	$	52	$	354

Nine months ended September 30, 2023
Balance, beginning of period	$	228	$	43	$	7	$	53	$	331
Capitalized deferred policy acquisition costs	24		6		1		1		32
Amortized deferred policy acquisition costs	(18)		(2)		—		(2)		(22)
Balance, end of period	$	234	$	47	$	8	$	52	$	341

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NOTE 7 – Accumulated Other Comprehensive Income

Accumulated other comprehensive income (AOCI) includes changes in unrealized gains and losses on investments, changes in pension obligations and changes in life policy reserves, reinsurance recoverable and other as follows:


(Dollars in millions)	Three months ended September 30,
	2024						2023
	Before tax		Income tax		Net		Before tax		Income tax		Net
Investments:
AOCI, beginning of period	$	(700)	$	(151)	$	(549)	$	(838)	$	(179)	$	(659)


OCI before investment gains and losses, net, recognized in net income	411		88		323		(369)		(79)		(290)
Investment gains and losses, net, recognized in net income	86		18		68		—		—		—
OCI	497		106		391		(369)		(79)		(290)
AOCI, end of period	$	(203)	$	(45)	$	(158)	$	(1,207)	$	(258)	$	(949)

Pension obligations:
AOCI, beginning of period	$	31	$	8	$	23	$	29	$	7	$	22
OCI excluding amortization recognized in net income	—		—		—		—		—		—
Amortization recognized in net income	—		—		—		—		—		—
OCI	—		—		—		—		—		—
AOCI, end of period	$	31	$	8	$	23	$	29	$	7	$	22

Life policy reserves, reinsurance recoverable and other:
AOCI, beginning of period	$	71	$	15	$	56	$	13	$	2	$	11


OCI before investment gains and losses, net, recognized in net income	(91)		(20)		(71)		111		22		89
Investment gains and losses, net, recognized in net income	—		—		—		—		—		—
OCI	(91)		(20)		(71)		111		22		89
AOCI, end of period	$	(20)	$	(5)	$	(15)	$	124	$	24	$	100

Summary of AOCI:
AOCI, beginning of period	$	(598)	$	(128)	$	(470)	$	(796)	$	(170)	$	(626)


Investments OCI	497		106		391		(369)		(79)		(290)
Pension obligations OCI	—		—		—		—		—		—
Life policy reserves, reinsurance recoverable and other OCI	(91)		(20)		(71)		111		22		89
Total OCI	406		86		320		(258)		(57)		(201)
AOCI, end of period	$	(192)	$	(42)	$	(150)	$	(1,054)	$	(227)	$	(827)

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(Dollars in millions)	Nine months ended September 30,
	2024						2023
	Before tax		Income tax		Net		Before tax		Income tax		Net
Investments:
AOCI, beginning of period	$	(570)	$	(123)	$	(447)	$	(847)	$	(182)	$	(665)


OCI before investment gains and losses, net, recognized in net income	253		54		199		(364)		(77)		(287)
Investment gains and losses, net, recognized in net income	114		24		90		4		1		3
OCI	367		78		289		(360)		(76)		(284)
AOCI, end of period	$	(203)	$	(45)	$	(158)	$	(1,207)	$	(258)	$	(949)

Pension obligations:
AOCI, beginning of period	$	30	$	8	$	22	$	36	$	9	$	27
OCI excluding amortization recognized in net income	—		—		—		(5)		(2)		(3)
Amortization recognized in net income	1		—		1		(2)		—		(2)
OCI	1		—		1		(7)		(2)		(5)
AOCI, end of period	$	31	$	8	$	23	$	29	$	7	$	22

Life policy reserves, reinsurance recoverable and other:
AOCI, beginning of period	$	(13)	$	(3)	$	(10)	$	29	$	5	$	24


OCI before investment gains and losses, net, recognized in net income	(7)		(2)		(5)		95		19		76
Investment gains and losses, net, recognized in net income	—		—		—		—		—		—
OCI	(7)		(2)		(5)		95		19		76
AOCI, end of period	$	(20)	$	(5)	$	(15)	$	124	$	24	$	100

Summary of AOCI:
AOCI, beginning of period	$	(553)	$	(118)	$	(435)	$	(782)	$	(168)	$	(614)


Investments OCI	367		78		289		(360)		(76)		(284)
Pension obligations OCI	1		—		1		(7)		(2)		(5)
Life policy reserves, reinsurance recoverable and other OCI	(7)		(2)		(5)		95		19		76
Total OCI	361		76		285		(272)		(59)		(213)
AOCI, end of period	$	(192)	$	(42)	$	(150)	$	(1,054)	$	(227)	$	(827)

Investment gains and losses, net, and other investment gains and losses, net, are recorded in the investment gains and losses, net, line item in the condensed consolidated statements of income. Amortization of pension obligations is recorded in the insurance losses and contract holders' benefits and underwriting, acquisition and insurance expenses line items in the condensed consolidated statements of income.

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NOTE 8 – Reinsurance

Primary components of our property casualty reinsurance assumed operations include involuntary and voluntary assumed as well as contracts from our reinsurance assumed operations, known as Cincinnati Re. Primary components of our ceded reinsurance include a property per risk treaty, property excess treaty, casualty per occurrence treaty, casualty excess treaty, property catastrophe treaty and retrocessions on our reinsurance assumed operations. Management’s decisions about the appropriate level of risk retention are affected by various factors, including changes in our underwriting practices, capacity to retain risks and reinsurance market conditions.

The table below summarizes our consolidated property casualty insurance net written premiums, earned premiums and incurred loss and loss expenses:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Direct written premiums	$	2,285	$	1,939	$	6,772	$	5,869
Assumed written premiums	102		89		577		527
Ceded written premiums	(94)		(71)		(349)		(270)
Net written premiums	$	2,293	$	1,957	$	7,000	$	6,126

Direct earned premiums	$	2,179	$	1,912	$	6,128	$	5,478
Assumed earned premiums	159		142		466		435
Ceded earned premiums	(121)		(97)		(310)		(252)
Earned premiums	$	2,217	$	1,957	$	6,284	$	5,661

Direct incurred loss and loss expenses	$	1,415	$	1,220	$	3,960	$	3,784
Assumed incurred loss and loss expenses	103		82		242		216
Ceded incurred loss and loss expenses	(19)		(41)		(21)		(160)
Incurred loss and loss expenses	$	1,499	$	1,261	$	4,181	$	3,840

Our life insurance company purchases reinsurance for protection of a portion of the risks that are written. Primary components of our life reinsurance program include individual mortality coverage, aggregate catastrophe and accidental death coverage in excess of certain deductibles.

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The table below summarizes our consolidated life insurance earned premiums and contract holders' benefits incurred:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Direct earned premiums	$	101	$	97	$	301	$	293

Ceded earned premiums	(21)		(21)		(61)		(60)
Earned premiums	$	80	$	76	$	240	$	233

Direct contract holders' benefits incurred	$	92	$	92	$	262	$	289

Ceded contract holders' benefits incurred	(13)		(21)		(36)		(59)
Contract holders' benefits incurred	$	79	$	71	$	226	$	230

The ceded benefits incurred can vary depending on the type of life insurance policy held and the year the policy was issued.

The allowance for uncollectible property casualty premiums was $17 million and $16 million at September 30, 2024, and December 31, 2023, respectively. The allowances for credit losses on other premiums receivable and reinsurance recoverable assets were immaterial at September 30, 2024, and December 31, 2023.

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NOTE 9 – Income Taxes

The differences between the 21% statutory federal income tax rate and our effective income tax rate were as follows:


(Dollars in millions)	Three months ended September 30,								Nine months ended September 30,
	2024				2023				2024				2023
Tax at statutory rate:	$	219	21.0	%	$	(31)	21.0	%	$	500	21.0	%	$	165	21.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(5)		(0.5)		(5)		3.4		(16)		(0.7)		(15)		(1.9)
Dividend received exclusion	(6)		(0.6)		(5)		3.4		(16)		(0.7)		(16)		(2.0)

Other	12		1.3		(8)		5.3		24		1.1		(8)		(1.1)
Provision (benefit) for income taxes	$	220	21.2	%	$	(49)	33.1	%	$	492	20.7	%	$	126	16.0	%

The provision (benefit) for federal income taxes is based upon filing a consolidated income tax return for the company and its domestic subsidiaries.

We continue to believe that after considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, it is more likely than not that all of the deferred tax assets on our U.S. domestic operations and those related to Cincinnati Global Underwriting Ltd.SM (Cincinnati Global) will be realized. As a result, we have no valuation allowance for our U.S. domestic operations or Cincinnati Global at both September 30, 2024, and December 31, 2023.

During the third quarter of 2024, we were notified by the Internal Revenue Service (IRS) that the audit of tax years ended December 31, 2021 and 2020, has concluded. Despite this, the statute of limitations remains open through September of 2025.

Cincinnati Global

Cincinnati Global had no operating loss carryforwards in the United States and $85 million and $100 million in the United Kingdom at September 30, 2024, and December 31, 2023, respectively. These Cincinnati Global losses can only be utilized within the Cincinnati Global group.

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NOTE 10 – Net Income (Loss) Per Common Share

Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are computed based on the weighted average number of common and dilutive potential common shares outstanding using the treasury stock method. The table shows calculations for basic and diluted earnings per share:


(In millions, except per share data)		Three months ended September 30,						Nine months ended September 30,
	2024			2023			2024			2023
Numerator:
Net income (loss)—basic and diluted		$	820		$	(99)		$	1,887		$	660
Denominator:
Basic weighted-average common shares outstanding		156.2			156.9			156.5			157.0
Effect of share-based awards:
Stock options		0.9			—			0.7			0.7
Nonvested shares		0.6			—			0.5			0.5
Diluted weighted-average shares		157.7			156.9			157.7			158.2
Earnings (loss) per share:
Basic		$	5.25		$	(0.63)		$	12.06		$	4.20
Diluted		$	5.20		$	(0.63)		$	11.97		$	4.17
Number of anti-dilutive share-based awards		0.6			2.4			1.3			1.3

The source of dilution of our common shares are certain equity-based awards. See our 2023 Annual Report on Form 10-K, Item 8, Note 17, Share-Based Associate Compensation Plans, Page 177, for information about share-based awards. The above table shows the number of anti-dilutive share-based awards for the three and nine months ended September 30, 2024 and 2023. In accordance with Accounting Standards Codification 260, Earnings per Share, the assumed exercise of share-based awards was excluded from the computation of diluted loss per share for the three months ended September 30, 2023 because their exercise would have anti-dilutive effects.

NOTE 11 – Employee Retirement Benefits

The following summarizes the components of net periodic benefit for our qualified and supplemental pension plans:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Service cost	$	1	$	1	$	4	$	4
Non-service (benefit) costs:
Interest cost	4		3		10		9
Expected return on plan assets	(5)		(5)		(16)		(15)
Amortization of actuarial loss (gain) and prior service cost	—		—		1		(2)
Other	—		—		—		(5)
Total non-service benefit	(1)		(2)		(5)		(13)
Net periodic benefit	$	—	$	(1)	$	(1)	$	(9)

See our 2023 Annual Report on Form 10-K, Item 8, Note 13, Employee Retirement Benefits, Page 170, for information on our retirement benefits. The net periodic benefit is allocated in the same proportion primarily to the underwriting, acquisition and insurance expenses line item with the remainder allocated to the insurance losses and contract holders' benefits line item on the condensed consolidated statements of income for both 2024 and 2023.

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We made matching contributions totaling $7 million and $6 million to our 401(k) and Top Hat savings plans during the third quarter of 2024 and 2023, respectively, and contributions of $23 million and $20 million for the first nine months of 2024 and 2023, respectively.

We made no contributions to our qualified pension plan during the first nine months of 2024.

NOTE 12 – Commitments and Contingent Liabilities

The company, through its insurance subsidiaries, is involved in claims litigation arising in the ordinary course of conducting its business, both as a liability insurer defending or providing indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The company accounts for such activity through the establishment of unpaid loss and loss expense reserves. Subject to the uncertainties discussed in Note 4, Property Casualty Loss and Loss Expenses, and in the discussion in the balance of this Note, we believe that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses, costs of defense, and reinsurance recoveries, is immaterial to our consolidated financial position, results of operations and cash flows.

The company and its subsidiaries also are occasionally involved in other legal and regulatory proceedings, some of which assert claims for substantial amounts. These actions include, among others, putative class actions seeking certification of state or national classes. Such proceedings have alleged, for example, improper depreciation of labor costs in repair estimates. The company’s insurance subsidiaries also are occasionally parties to individual actions in which extra-contractual damages, punitive damages or penalties are sought, such as claims alleging bad faith handling of insurance claims or writing unauthorized coverage or claims alleging discrimination by former or current associates.

On a quarterly basis, we review these outstanding matters. Under current accounting guidance, we establish accruals when it is probable that a covered loss has been incurred and we can reasonably estimate its potential exposure. The company accounts for such probable and estimable losses, if any, through the establishment of legal expense reserves. Based on our quarterly review, we believe that our accruals for probable and estimable losses are reasonable and that the amounts accrued do not have a material effect on our consolidated financial position, results of operations and cash flows. However, if any one or more of these matters results in a judgment against us or settlement for an amount that is significantly greater than the amount accrued, the resulting liability could have a material effect on the company’s consolidated financial position, results of operations and cash flows. Based on our most recent review, our estimate for any other matters for which the risk of loss is not probable, but more than remote, is immaterial.

NOTE 13 – Segment Information

We operate primarily in two industries, property casualty insurance and life insurance. Our CODM regularly reviews our reporting segments to make decisions about allocating resources and assessing performance. Our reporting segments are:

Commercial lines insurance
Personal lines insurance
Excess and surplus lines insurance
Life insurance
Investments

We report as Other the noninvestment operations of the parent company and its noninsurer subsidiary, CFC Investment Company. We also report as Other the underwriting results of Cincinnati Re and Cincinnati Global. See our 2023 Annual Report on Form 10-K, Item 8, Note 18, Segment Information, Page 180, for a description of revenue, income or loss before income taxes and identifiable assets for each of the five segments.

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Segment information is summarized in the following table:


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenues:
Commercial lines insurance
Commercial casualty	$	381	$	365	$	1,118	$	1,115
Commercial property	361		321		1,045		933
Commercial auto	231		216		679		644
Workers' compensation	61		66		182		212
Other commercial	103		94		302		280
Commercial lines insurance premiums	1,137		1,062		3,326		3,184
Fee revenues	1		1		3		3
Total commercial lines insurance	1,138		1,063		3,329		3,187

Personal lines insurance
Personal auto	242		185		674		524
Homeowner	352		271		981		755
Other personal	84		71		242		205
Personal lines insurance premiums	678		527		1,897		1,484
Fee revenues	2		1		4		3
Total personal lines insurance	680		528		1,901		1,487

Excess and surplus lines insurance	157		135		447		394
Fee revenues	—		1		2		2
Total excess and surplus lines insurance	157		136		449		396

Life insurance premiums	80		76		240		233
Fee revenues	1		3		4		8
Total life insurance	81		79		244		241

Investments
Investment income, net of expenses	258		225		745		655
Investment gains and losses, net	758		(456)		1,507		84
Total investment revenue	1,016		(231)		2,252		739

Other
Premiums	245		233		614		599

Other	3		3		10		8
Total other revenues	248		236		624		607
Total revenues	$	3,320	$	1,811	$	8,799	$	6,657

Income (loss) before income taxes:
Insurance underwriting results
Commercial lines insurance	$	81	$	52	$	130	$	83
Personal lines insurance	(69)		1		(74)		(92)
Excess and surplus lines insurance	8		14		28		38
Life insurance	10		17		42		38
Investments	984		(262)		2,158		648
Other	26		30		95		71
Total income (loss) before income taxes	$	1,040	$	(148)	$	2,379	$	786


Identifiable assets:	September 30, 2024		December 31, 2023
Property casualty insurance	$	6,223	$	5,294
Life insurance	1,654		1,562
Investments	27,640		24,999
Other	1,492		914
Total	$	37,009	$	32,769

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