Cincinnati Financial Corporation

Ladies and gentlemen, good morning. You are connected to the Cincinnati Financial Corporation conference call. We request that you please stay connected. This conference will begin within the next two minutes. We thank you for your patience. Ladies and gentlemen, good morning. You are connected to the Cincinnati Financial Corporation earnings conference call. We request that you please stay connected. This conference will begin within the next two minutes. We thank you for your patience. Thank you. Thank you. Thanks for watching! Good day and welcome to the Cincinnati Financial Corporation second quarter earnings conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

Hello, this is Dennis McDaniel of Cincinnati Financial. Thank you for joining us for our second quarter 2025 earnings conference call. Late yesterday, we issued a news release on our results, along with our supplemental financial package, including our quarter end investment portfolio. To find copies of any of these documents, please visit our investor website, investors.centhen.com. The shortest route to the information is the quarterly results section near the middle of the investor overview page. On this call, you'll first hear from President and Chief Executive Officer Steve Sprague, and then from Executive Vice President and Chief Financial Officer Mike Sewell. After their prepared remarks, investors participating on the call may ask questions. At that time, some responses may be made by others in the room with us, including Executive Chairman Steve Johnston, Chief Investment Officer Steve Soloria, and Cincinnati Insurance's Chief Claims Officer Mark Shambo, and Senior Vice President of Corporate Finance Teresa Hopper. Please note that some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties. With respect to these risks and uncertainties, We direct your attention to our news release and to our various filings with the SEC. Also, a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP. Now, I'll turn over the call to Steve.

Good morning, and thank you for joining us today to hear more about our results. I'm pleased to report strong operating performance. Because we are confident in the long-term direction and strategy of our insurance business, we didn't lose focus after the California wildfires early in the year. We stayed anchored to our agent-centered strategy, continuing to balance profitability and growth. We also continued to benefit from rebalancing our investment portfolio in the second half of last year and reported very strong investment income growth in the second quarter of this year. Our commercial lines and excess and surplus lines insurance segments again produced combined ratios below 93%. Second quarter 2025 results for Cincinnati REIT and Cincinnati Global were also outstanding, each with a combined ratio below 85%. Spring and summer storms added 23.8 percentage points to our purse lines combined ratio, and its combined ratio was still just two percentage points shy of an underwriting profit for the quarter. The second half of the year is typically more profitable for our purse lines business. Over the past five years, we've seen an average improvement of eight points in the second half of the year for that segment. Net income of $685 million for the second quarter of 2025 more than doubled our result from a year ago and included recognition of $380 million on an after-tax basis for the increase in fair value of equity securities still held. Non-GAAP operating income of $311 million for the second quarter was up 52%. Our 94.9% second quarter 2025 property casualty combined ratio improved by 3.6 percentage points compared with second quarter last year, despite a one-point increase in catastrophe losses. The 85.1% accident year 2025 combined ratio before catastrophe losses for the second quarter improved by 3.1 percentage points compared with the accident year 2024. Our consolidated property casualty net written premiums grew 11% for the quarter, including 16% growth in agency renewal premiums. New business written premiums continued to grow in our commercial and excess and surplus line segments. However, they decreased by $22 million in our personal line segment, in part from a $13 million reduction in California as we slowed growth in some parts of that state. Steady premium growth and reinsurance market opportunities prompted us to add an additional layer of $300 million on top of our property catastrophe reinsurance program. Expanded coverage totaling $129 million, or 43% of the layer, was placed with reinsurers for an estimated seeded premium cost of less than $5 million. We continue to focus on our profitable premium growth objectives that are supported by various efforts, including superior claims service and fostering relationships with the best independent insurance agents in our industry. Our underwriters excel in pricing and risk segmentation on a policy by policy basis as they make risk selection decisions. Combining that with average price increases should help us continue to improve our underwriting profitability. Estimated average renewal price increases for most lines of business during the second quarter were lower than the first quarter of 2025, but still at a level we believe was healthy. Commercial lines in total averaged increases near the high end of the mid-single-digit percentage range, and excess and surplus lines was again in the high single-digit range. Our personal line segment included homeowner in the low double-digit range and personal auto in the high single-digit range. Moving on to highlight second quarter performance by insurance segment, I'll note premium growth and underwriting profitability compared with a year ago. Commercial lines grew net written premiums 9% with an excellent 92.9% combined ratio that improved by 6.2 percentage points. including 2.3 points from lower catastrophe losses. Personal lines grew net written premiums 20%, including growth in middle market accounts and Cincinnati private client. Its combined ratio was 102%, 4.9 percentage points better than last year, despite an increase of 2.9 points from higher catastrophe losses. Access and surplus lines grew net written premiums 12% with a nice profit margin. That segment produced a combined ratio of 91.1%, an improvement of 4.3 percentage points. Cincinnati RE and Cincinnati Global each had an outstanding quarter and continue to reflect our efforts to diversify risk and further improve income stability. Cincinnati Re's second quarter 2025 net written premiums decreased by 21%, reflecting pricing discipline where market conditions softened. Its combined ratio was 82.8%. Cincinnati Global's combined ratio was 78.4%, along with premium growth of 45%, as it continues to benefit from product expansion in recent years. Our life insurance subsidiary had another strong quarter, including 8% net income growth. In addition, term life insurance earned premiums grew 3%. I'll end my commentary with a summary of our primary measure of long-term financial performance, the value creation ratio. Our VCR was 5.2% for the second quarter of 2025. Net income before investment gains or losses for the quarter contributed 2.3%. Higher overall valuation of our investment portfolio and other items contributed 2.9%. Now I'll turn it over to Chief Financial Officer Mike Sewell for additional insights regarding our financial performance.