Q3 2023 Cincinnati Financial Corporation Earnings Call

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Speaker 1: Good morning and welcome to the Cincinnati Financial Corporation 3rd quarter 2023 earnings conference call. All participants will be

Good morning, and welcome to the Cincinnati Financial Corporation third quarter 2023 earnings Conference call.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

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Speaker 1: After today's presentation, there will be an opportunity to ask questions.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.

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Please note this event is being recorded.

I would now like to turn the conference over to Dennis Mcdaniel Investor Relations Officer. Please go ahead.

Speaker 1: I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

Hello, This is Dennis Mcdaniel Cincinnati financial.

Speaker 3: Thank you for joining us for our third quarter 2023 earnings conference call.

Thank you for joining us for our third quarter 2023 earnings conference call.

Speaker 3: Late yesterday, we issued a news release on our results along with a supplemental financial package, including our quarter and investment portfolio.

Late yesterday, we issued a news release on our results along with a supplemental financial package, including our quarter end investment portfolio.

Speaker 3: To find copies of any of these documents, please visit our investor website, synthin.com slash investors.

To find copies of any of these documents. Please visit our investor website. Since then.

Slash investors.

Speaker 3: The shortest route to the information is the quarterly results link in the navigation menu on the far left.

The shortest route to the information is the quarterly results link in the navigation menu on the far left.

Speaker 3: On this call, you'll first hear from Chairman and Chief Executive Officer Steve Johnston, and then from Executive Vice President and Chief Financial Officer Mike Sewell.

On this call you'll first hear from Chairman and Chief Executive Officer, Steve Johnston, and then from an executive Vice President and Chief Financial Officer, Mike Sewell.

Speaker 3: After their prepared remarks, investors participating on the call may ask questions.

After their prepared remarks investors participating on the call may ask questions.

Speaker 3: At that time, some responses may be made by others in the room with us, including President Steve Sprague, Chief Investment Officer Steve Celoria, and Cincinnati Insurance's Chief Claims Officer Mark Shambo, and Senior Vice President of Corporate Finance Teresa Hopper.

At that time, some responses, maybe made by others in the room with us, including President Steve Spray Chief Investment Officer, Steve So lauria.

And Cincinnati Insurance's, Chief claims officer, Mark Shambaugh, and senior Vice President of corporate Finance Theresa Hoffer.

Speaker 3: First, please note that some of the matters we discussed today are forward-looking.

First please note that some of the matters discussed today are forward looking.

Operator: Part of me, ladies and gentlemen, this is the conference operator. Thank you for connecting to the Cincinnati Financial Corporation conference call. We'll be starting the call in approximately two minutes. We appreciate your patience and please continue to hold for the Cincinnati Financial Corporation conference call. Again, we'll be starting in about two minutes. Thank you.

Speaker 3: These forward-looking statements involve certain risks and uncertainty.

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.

Speaker 3: With respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the SEC.

Speaker 3: Also, a reconciliation of non-GAAP measures was provided with the news release.

Also a reconciliation of non-GAAP measures was provided with the news release.

Speaker 3: Statutory counting data is prepared in accordance with statutory counting rules, and therefore is not reconciled to gap. Now, I'll turn over the call.

Statutory accounting data prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP now.

Now I'll turn it over to call to Steve.

Speaker 3: Good morning, and thank you for joining us today to hear more about our results.

Good morning, and thank you for joining us today to hear more about our results.

Speaker 3: We are pleased with our operating performance in the third quarter, as we again saw improved underwriting ratios for almost every major line of business, compared with the first half of this year.

We are pleased with our operating performance in the third quarter as we again saw improved underwriting ratios for almost every major line of business compared with the first half of this year.

Speaker 3: The net loss of $99 million for the third quarter of 2023 included recognition of $362 million on an after-tax basis for the reduction of fair value of equity securities still held.

The net loss of $99 million for the third quarter of 2023 included recognition of $362 million on an after tax basis for the reduction of fair value of equity Securities still held.

Speaker 3: We continue to believe the value of our equity portfolio will increase over the long term. As of September 30th, it had $5.6 billion in appreciated value.

We continue to believe the value of our equity portfolio will increase over the long term as of September 30, It had five $6 billion and appreciated value.

Speaker 4: It decreased 8% during the third quarter, but has increased 2% since the end of last year.

It decreased 8% during the third quarter, but has increased 2% since the end of last year.

Speaker 4: non-GAAP operating income of $261 million for the third quarter more than doubled last year's $116 million, including a decrease of catastrophe losses of $58 million on an after-tax basis.

non-GAAP operating income of $261 million for the third quarter more than double last year's $116 million, including a decrease of catastrophe losses of $58 million on an after tax basis.

Speaker 4: The 94.4% third quarter 2023 property casualty combined ratio was 9.5 percentage points better than the third quarter of last year, including a decrease of 4.8 points for catastrophe losses.

The 94, 4% third quarter 2023 property casualty combined ratio was nine five percentage points better than the third quarter of last year, including a decrease of four eight points for catastrophe losses.

Our 2023 ex cat accident year combined ratios are also better than 'twenty, two improving three four percentage points for the third quarter and one seven points on a nine month basis.

Speaker 4: Our 2023 XCAT exit year combined ratios are also better than 22, improving 3.4 percentage points for the third quarter and 1.7 points on a nine-month basis.

Similar to last quarter, we also see signs of positive momentum and operating performance.

Speaker 4: Similar to last quarter, we also see signs that posit a momentum in operating performance.

Dennis Mcdaniel: Good morning and welcome to the Cincinnati Financial Corporation third quarter 2023 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker 4: Price and segmentation by risk, the significant average price increases contributed to the increase in our underlying profit, combining with risk selection and other efforts to address elevated inflation effects on incurred losses.

<unk> segmentation by risk significant average price increases contributed to the increase in our underwriting profit combining them with risk selection and other efforts to address elevated inflation effects on incurred losses.

Dennis Mcdaniel: 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.

Speaker 4: On a current accident year basis, measured at September 30th before catastrophe losses, our 2023 Consolidated Property Casualty Loss and Loss Expense Ratio improved from 2022 by 4.3 percentage points on a case incurred basis.

On a current accident year basis measured at September 30th before catastrophe losses, our 2023 consolidated property casualty loss and loss expense ratio improved from 2022 by four three percentage points on a case incurred basis.

Unknown Executive: Please note, this event is being recorded.

Dennis Mcdaniel: I would now like to turn the conference over to Dennis McDaniel, investor relations officer. Please go ahead. Hello, this is Dennis McDaniel, Cincinnati Financial.

Speaker 4: For the same time period, we increase the incurred but not reported, or IBNR, component of the ratio by 3.0 points, as we continue to recognize uncertainty regarding ultimate losses, remaining prudent in our reserve estimates until longer term loss cost trends become more clear.

For the same time period, we increased the incurred but not reported or <unk> component of the ratio by 3.0 points as we continue to recognize uncertainty regarding ultimate losses remain prudent in our reserve estimates until longer term loss cost trends become more clear.

Dennis Mcdaniel: Thank you for joining us for a third quarter 2023 earnings conference call. Like yesterday, we issued a news release on our results along with a supplemental financial package, including a quarter and investment portfolio. To find copies of any of these documents, please visit our investor website, sendthens.com slash investors. The shortest route to the information is a quarterly results link and an navigation menu on the far left.

Speaker 4: Agencies appointed by Cincinnati Insurance are producing profitable business for us, working with associates who provide outstanding service to agents and their clients.

Agencies appointed by Cincinnati insurance.

Producing profitable business for us working with associates, who provide outstanding service to agents and their clients.

Speaker 4: Our underwriters are working diligently to retain profitable accounts while managing ones that we determine have inadequate pricing. They are also careful in selecting risks and pricing new business policies.

Our underwriters are working diligently to retain profitable accounts, while managing malls that we determined.

Dennis Mcdaniel: On this call, you'll first hear from Chairman and Chief Executive Officer Steve Johnston, and then from Executive Vice President and Chief Financial Officer Mike Sewell. After their prepared remarks and lectures participating on the call, may ask questions. At that time, some responses may be made by others in the room with us, including President Steve Spray, Chief Investment Officer Steve Celoria, Incidentity Insuranceist, Chief Plains Officer Mark Shambo, and Senior Vice President of Corporate Finance Teresa Hauffer.

Adequate pricing, they're also careful in selecting risks and pricing new business policies.

Speaker 4: Estimated average renewal price increases for the third quarter continued at a healthy pace. Our commercial line segment, again, averaged near the low end of the high single-digit percentage range, while our excess and surplus lines insurance segment continued in the high single-digit range.

Estimated average renewal price increases for the third quarter continued at a healthy pace.

Our commercial lines segment.

Again averaged near the low end of the high single digit percentage range.

Our excess and surplus lines insurance segment continued in the high single digit range.

Speaker 4: Personalized for the third quarter included auto rising to the low double digit range and homeowner rising to the low end of the high single digit range.

Personal lines for the third quarter included auto rising to the low double digit range and homeowner rising to the low end of the high single digit range.

Dennis Mcdaniel: First please note that some of the matters we discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties, which are respect to these risks and uncertainties we direct your attention to our news release and to our various pylings with the SECs. Also, a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared and affordance to statutory accounting rules and therefore is not reconciled to GAAP.

Speaker 4: we reported 12% growth in consolidated property casualty net written premiums for the quarter. That included an 11% increase in third quarter renewal written premiums, reflecting higher levels of insured exposures in addition to price increases.

We reported 12% growth in consolidated property casualty net written premiums for the quarter that included an 11% increase in third quarter renewal written premiums, reflecting higher levels of insured exposures. In addition to price increases.

Steven Johnston: Now, I'll turn over the call to Steve. Good morning, and thank you for joining us today to hear more about our results. We are pleased with our operating performance in the third quarter, as we again saw improved underwriting ratios for almost every major line of business compared with the first half of this year. Then that loss of $99 million for the third quarter of 2023 included recognition of $362 million on an after-tax basis for the reduction of fair value of equity securities still held.

Okay.

Speaker 4: Considering operating performance by insurance segment, I'll comment on premium growth and how profitability is improving compared to a year ago.

Considering operating performance by insurance segment, I'll comment on premium growth and how profitability is improving compared to a year ago.

Speaker 4: Commercial lines grew net written premiums 5% in the third quarter, reflecting pricing discipline.

Commercial lines grew net written premiums of 5% in the third quarter, reflecting pricing discipline.

Speaker 4: For example, lower written premiums this year for workers' compensation and commercial umbrella together reduced the third quarter 2023 growth rate for total commercial lines by two percentage points.

For example, lower written premiums this year for workers' compensation and commercial umbrella together reduced the third quarter 2023 growth rate for total commercial lines by two percentage points.

Speaker 4: The commercialized combined ratio improved by 3.8 percentage points, despite an increase of 2.2 points from higher catastrophe losses.

The commercial lines combined ratio improved by three eight percentage points. Despite an increase of 2.2 points from higher catastrophe losses.

Steven Johnston: We continue to believe the value of our equity portfolio will increase over the long-term. As of September 30, it had $5.6 billion in appreciated value. It decreased 8% during the third quarter, but has increased 2% since the end of last year. Non-GAAP operating income of $261 million for the third quarter more than double last year's $116 million, including a decrease of catastrophe losses of $58 million on an after-tax basis. The 94.4% third quarter 2023 property casualty combined ratio was 9.5 percentage points better than the third quarter of last year, including a decrease of 4.8 points for catastrophe losses.

Personal lines grew net written premiums, 29% with growth in middle market accounts. In addition to Cincinnati private client business for our agencies high net worth clients.

Speaker 4: Personal lines grew net written premiums 29% with growth in middle market accounts in addition to Cincinnati private client business for our agency's high net worth clients.

Speaker 4: The combined ratio was 4.6 percentage points better than last year, including 2.0 points for lower catastrophe losses.

The combined ratio was four six percentage points better than last year, including 2.0 points from lower catastrophe losses.

Speaker 4: Excess and surplus lines improved its combined ratio by 3.4 percentage points and continue to grow profitably with net written premiums up 6%.

Excess and surplus lines improved its combined ratio by three four percentage points and continue to grow profitably with net written premiums up 6%.

But with Cincinnati re and Cincinnati Global again enhanced our overall combined ratio and continued to demonstrate risk diversification benefits.

Speaker 4: Both Cincinnati Reef and Cincinnati Global, again, enhanced our overall combined ratio and continue to demonstrate risk diversification benefits.

Steven Johnston: Our 2023 XCAT-AXA gear combined ratios are also better than 22, improving 3.4 percentage points for the third quarter and 1.7 points on an eye month basis. Similar to last quarter, we also see signs of positive momentum in operating performance. Price and segmentation by risk, the significant average price increases contributed to the increase in our underlying profit, combining with risk selection and other efforts to address elevated inflation effects on incurred losses. On a current accident year basis, measured at September 30, before catastrophe losses, our 2023 consolidated property casualty loss and loss expense ratio improved from 2022 by 4.3 percentage points on a case incurred basis.

Cincinnati Res combined ratio for the third quarter of 2023 was an excellent 81.0% with net written premiums essentially matching last year's third quarter casualty premiums again decreased as we saw fewer attractive opportunities in certain segments of the market.

Property premiums increased 24% largely due to higher pricing, while specialty premiums increased 31% due to attractive opportunities and pricing.

Speaker 4: Property premiums increase 24% largely due to higher pricing, while specialty premiums increased 31% due to attractive opportunities in price.

Cincinnati Global's combined ratio was an excellent 79, 5% while reporting strong growth with net written premiums up 21%.

Speaker 4: Cincinnati Global's combined ratio was an excellent 79.5% while reporting strong growth with net written premiums up 21%.

Speaker 4: Our life insurance subsidiary again performed well with third quarter 2023 net income up 9% and term life insurance earned premiums growing 2%.

Our life insurance subsidiary again performed well with third quarter 2023 net income, 9% and term life insurance earned premiums growing 2%.

Speaker 4: I conclude with our primary measure of long term financial performance to the value creation ratio. While our VCR on the nine month basis is 4.4%, our third quarter 2023 VCR was negative 2.6%. Net income before investment gains or losses for the quarter contributed positive 2.4%. Lower valuation of our investment portfolio and other items contributed negative 5.0%.

I'll conclude with our primary measure of long term financial performance the value creation ratio.

Steven Johnston: Service. For the same time period, we increase the incurred but not reported or IBNR component of the ratio by 3.0 points as we continue to recognize uncertainty regarding ultimate losses, remain improved in our reserve estimates until longer term lost cost trends become more clear. The planning service to agents and their clients are underwriters are working diligently to retain profitable accounts while managing ones that we determine have inadequate pricing. They are also careful in selecting risks and pricing new business policies.

While our VCR on a nine month basis is four 4% our third quarter 2023 V. C. R was negative two 6%.

Net income before investment gains or losses for the quarter contribute contributed positive two 4%.

Lower valuation of our investment portfolio and the other items contributed negative 5.0%.

Speaker 4: Next, Chief Financial Officer Mike Sewell will add his commentary about our financial performance.

Next Chief Financial Officer, Mike Sewell will add his commentary about our financial performance.

Speaker 5: Thank you, Steve, and thanks to all of you for joining us today. Investment income again contributed nicely to improved operating results, growing 17 percent for the third quarter 2023 compared with the third quarter of 2022.

Thank you, Steve and thanks to all of you for joining us today.

Investment income again contributed nicely to improved operating results growing 17% for the third quarter 2023, compared with the third quarter of 2022.

Steven Johnston: Estimated average renewal price increases for the third quarter continued at a healthy pace. Our commercial line segment again average near the low end of the high single digit percentage range while our excess and surplus lines insurance segment continued in the high single digit range. Personal lines for the third quarter included auto rising to the low double digit range in no manner rising to the low end of the high single digit range.

Speaker 5: Dividend income was up 5% for the quarter, in part, due to net equity security purchases for the first nine months of 2023 that totaled $89 million.

Dividend income was up 5% for the quarter in part due to net equity security purchases for the first nine months of 2023, but totaled $89 million.

Speaker 5: On Interesting come continue to show strong growth of 19% for the third quarter of this year. We added more fixed materials to our investment portfolio with net purchases for the first nine months of the year.

Non interest income continued to show strong growth up 19% for the third quarter of this year we.

We added more fixed maturity securities to our investment portfolio with nut purchases totaling just over $1 billion for the first nine months of the year.

Steven Johnston: We reported 12% growth in consolidated property casualty net rhythm premiums for the quarter that included an 11% increase in third quarter renewal written premiums reflecting higher levels of insured exposures in addition to price increases. Considering operating performance by insurance segment upcoming on premium growth and how profitability is improving compared to a year ago commercial lines grew net rhythm premiums 5% in the third quarter reflecting pricing discipline. For example, lower written premiums this year for workers compensation and commercial umbrella together reduced the third quarter 2023 growth rate for total commercial lines by two percentage points.

Speaker 5: The third quarter pre-tax average yield of 4.44% for the Fixed Maturity Portfolio rose 36 basis points compared with last year.

The third quarter pretax average yield of four point.

Or the fixed maturity portfolio rose 36 basis points compared with last year.

Speaker 5: the average pre-tax yield for the total of purchased taxable and tax exempt bonds during the third quarter of 2023 was 6.4%.

The average pre tax yield for the total of purchase taxable and tax exempt bonds. During the third quarter of 2023 was six 4%.

Speaker 5: Baluation changes in aggregate for the third quarter, 2023 were unfavorable. For both our equity and bond portfolio.

Valuation changes in aggregate for the third quarter of 2023 were unfavorable for both our equity and bond portfolios.

Speaker 5: Before tax effects, the net loss was $463 million for the equity portfolio and $369 million for the bond portfolio.

Before tax effects. The net loss was six $463 million for the equity portfolio.

$369 million for the bond portfolio.

Steven Johnston: The commercial lines combined ratio improved by 3.8 percentage points despite an increase of 2.2 points from higher catastrophe losses. Personal lines grew net written premiums 29% with growth in middle market accounts in addition to Cincinnati private client business for our agencies high net worth clients. The combined ratio was 4.6 percentage points better than last year including 2.0 points for lower catastrophe losses. Access and surplus lines improved its combined ratio by 3.4 percentage points and continued to grow profitably with net written premiums up 6%.

At the end of the quarter.

Speaker 5: Total investment portfolio net appreciated value for approximately $4.4 billion.

Total investment portfolio net appreciated value was approximately $4 $4 billion.

Speaker 5: The equity portfolio was in a net gain position of $5.6 billion.

The equity portfolio was in a net gain position of $5 $6 billion, while the fixed maturity portfolio was in a net loss position of one two.

Speaker 5: while the fixed maturity portfolio was in a net loss position of 1.2 billion.

Speaker 5: Cash flow continued to boost investment income, adding to the benefit of rising bond yields.

Cash flow continued to boost investment income.

Adding to the benefit of rising bond yields cash flow from operating activities for the first nine months of 2023 was nearly $1 $5 billion.

Speaker 5: Cash flow from operating activities for the first nine months of 2023 was nearly $1.5 billion, up $54 million from a year ago.

Up $54 million from a year ago.

Steven Johnston: Both Cincinnati Re and Cincinnati Global again enhanced our overall combined ratio and continued to demonstrate risk diversification benefits. Cincinnati Re's combined ratio for the third quarter of 2023 was an excellent 81.0% with net written premiums essentially matching last year's third quarter. Casually premiums again decreased as we saw fewer attractive opportunities in certain segments of the market. Property premiums increased 24% largely due to higher pricing, while specialty premiums increased 31% due to attractive opportunities in pricing.

Speaker 5: We always strive for our expense management efforts to strengthen appropriate balance between controlling expenses and making strategic investments in our business.

We always strive for expense management efforts to strike, an appropriate balance between controlling expenses and making strategic investments in our business.

Speaker 5: The third quarter 2023 property casualty underwriting expense ratio was 0.6 percentage points higher than last year, primarily due to an increase in associate and travel related expenses.

The third quarter 2023 property casualty underwriting expense ratio was 0.6 percentage points higher than last year.

Primarily due to an increase in associate and travel related expenses.

Speaker 5: on a nine month basis, it was 0.4 points lower.

On a nine month basis, it was 0.4 points lower.

Speaker 5: Moving on to loss reserves, our approach consistently aims for net amounts in the upper half of the actually estimator range of net loss and loss expense reserves.

Moving on to loss reserves, our approach consistently aim for net amounts in the upper half of the Actuarially estimated range of net loss and loss expense reserves.

Steven Johnston: Cincinnati Global's combined ratio was an excellent 79.5% while reporting strong growth with net-ridden premiums up 21%. Our life insurance subsidiary, again, performed well with third quarter 2023 net income up 9% in term life insurance arm premiums growing 2%.

Speaker 5: As we do each quarter, we consider new information, such as paid losses and case reserves, and then updated estimated ultimate losses and losses expenses by accident year and line of business.

As we do each quarter we.

Certain information such as paid losses in case reserves, and then updated estimated ultimate losses and losses expenses.

Excellent year kind of line of business.

Speaker 5: For the first three quarters of 2023, our net addition to property casualty loss and loss expense reserves was $655 million, including $539 million for the IV&R portion.

For the first three quarters of 2023, our net addition to property casualty loss and loss expense reserves was $655 million, including $539 million for the IV in our portion.

Steven Johnston: I conclude with our primary measure of long-term financial performance, the value creation ratio. While our VCR on the nine month basis is 4.4%, our third quarter 2023 VCR was negative 2.6%. Net income before investment gains are losses for the quarter contributed positive 2.4%. Lower evaluation of our investment portfolio and other items contributed negative 5.0%.

Speaker 5: During the third quarter, we experienced $53 million of property casually net favorable reserve development on prior I think years that benefited the combined ratio by 2.7 percentage points.

During the third quarter, we experienced $53 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by two seven percentage points.

Speaker 5: on an online basis by accident year, net reserve development for the first nine months of 2023 included, favorable $123 million for 2022, $7 million for 2021, $72 million for 2020, and $11 million in aggregate for accident years prior to 2020.

On an all lines basis by accident year.

Michael Sewell: Next, Chief Financial Officer Mike Sewell will add his commentary about our financial performance.

Net reserve development for the first nine months of 2023 included favorable $123 million for 2022 7 million for 2021 $72 million for 2020 and $11 million in aggregate for accident years prior.

Michael Sewell: Thank you, Steve, and thanks to all of you for joining us today. Investment income again contributed nicely to improved operating results, growing 17% for the third quarter 2023 compared with the third quarter of 2022. Given an income was up 5% for the quarter, in part due to net equity security purchases for the first nine months of 2023 that totaled $89 million. On interest income continued to show strong growth of 19% for the third quarter of this year.

To 2020.

Speaker 5: In terms of capital management, we also have a consistent long-term approach.

In terms of capital management, we also have a consistent long term approach during.

Speaker 5: During the third quarter of 2023, we paid $115 million in dividends to shareholders. We did not repurchase any shares.

During the third quarter of 2023, we paid a $115 million in dividends to shareholders, we did not repurchase any shares.

Speaker 5: Our assessment of our financial flexibility and our financial strength is that both are in excellent condition.

Our assessment of our financial flexibility and our financial strength.

Michael Sewell: We added more fixed-metry securities to our investment portfolio with net purchases totaling just over $1 billion for the first nine months of the year. The third quarter pre-tax average yield of 4.44% for the fixed-metry portfolio rose 36 basis points compared with last year. The average pre-tax yield for the total of purchased taxable and tax exempt bonds during the third quarter of 2023 was 6.4%. Baluation changes in aggregate for the third quarter 2023 were unfavorable for both our equity and bond portfolios.

Is that both are in excellent condition.

Speaker 5: As usual, I'll conclude with a summary of third quarter contributions to book value per share. They represent the main drivers of our wide variation ratio.

As usual I'll conclude with a summary of third quarter contributions to book value per share.

They represent the main drivers of our value creation ratio.

Speaker 5: Property Cardsley underwriting increased book value by 56 cents. Flight insurance operations increased book value is 73 cents.

Property casualty underwriting increased book value by <unk> 56 cents life insurance operations increased book value was 73.

Speaker 5: Investment income, other than life insurance and net of non-insurance items, is $1.04.

Investment income other than life insurance and net of non insurance items.

One dollar enforced.

Net investment gains and losses for the fixed income portfolio decreased book value by $1 86.

Speaker 5: Net investment gains and losses for the fixed income portfolio decreased increased book value by $1.86 cents.

Michael Sewell: Before tax effects the net loss was $6463 million for the equity portfolio and $369 million for the bond portfolio. At the end of the quarter total investment portfolio net appreciated value was approximately $4.4 billion. The equity portfolio was in a net game position of $5.6 billion while the fixed-metry portfolio was in a net loss position of $1.2 billion. Cash flow continued to boost investment income adding to the benefit of rising bond yields.

Speaker 5: And that investment gains the losses for the equity portfolio, decreased cost value by $2.33. And we declared 75 cents per share in dividends to share.

Net investment gains and losses for the equity portfolio decreased book value by $2 33, and we declared a <unk> 75 per share in dividends to shareholders.

Speaker 5: The net effect was a book value decrease of $2.61 per share during the third quarter to $67.72 per share. Now I'll turn the call back.

The net effect was a book value decrease of $2 61 per share during the third quarter to $67 72 per share.

Now I'll turn the call back over to Steve. Thanks.

Speaker 4: Thanks, Mike. I'm proud of the way our associates continue to help the independent agents who represent Cincinnati insurance navigate this challenging market. We're sticking to our fundamentals, listening, offering solutions, and building strong relationships.

Thanks, Mike I'm proud of the way our associates continue to help the independent agents, who represent Cincinnati insurance navigate this challenging market.

Sticking to our fundamentals listening offering solutions and building strong relationships.

Michael Sewell: Cash flow from operating activities for the first nine months of 2023 was nearly $1.5 billion, up 54 million dollars from a year ago. We always try for our expense management efforts to strike an appropriate balance between controlling expenses and making strategic investments in our business. The third quarter, 2023 property casually under rain expense ratio was 0.6% points higher than last year, primarily due to an increase in associate and travel related expenses. On a nine month basis, it was 0.4 points lower.

Speaker 4: Because our field associates live in the communities our agents serve, we see and respond quickly to market pressures most impacting them. We are then able to find solutions that contribute to our agent's success, leading to long-term shareholder value.

Because of our field associates live in the communities our agent surge we.

We see and respond quickly to market pressures most impacting the <unk>.

Are they able to find solutions that contribute to our agent success, leading to long term shareholder value.

Speaker 4: As a reminder, with Mike and me today are Steve Spray, Steve Saloria, Mark Shambo, and Teresa Hopper. Gary, please open the call for questions. We will now begin.

As a reminder, with Mike and me today are Steve spray, Steve So lauria, Mark Shambaugh and Theresa Hoffer.

Gary Please open the call for questions.

We will now begin the question and answer session.

Speaker 1: To ask a question, you may press star then 1 on your telephone keypad.

To ask a question you May press Star then one on your telephone keypad.

Speaker 1: If you are using a speaker phone, please pick up your handset before pressing the key.

If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Speaker 1: Would you draw your question? Please press it star to then two.

Michael Sewell: Moving on to loss reserves, our approach consistently aims for net amounts in the upper half of the actually estimator range of net loss and loss expense reserves. As we do each quarter, we consider new information such as paid losses and case reserves and then updated estimated ultimate losses and losses expenses by accident year and line of business. For the first three quarters of 2023, our net addition to property casually loss and loss expense reserves was $655 million, including $539 million for the IV&R portion.

Speaker 1: At this time we will pause momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Speaker 1: Our first question is from Greg Peters with Raymond James. Please go ahead.

Our first question is from Greg Peters with Raymond James. Please go ahead.

Well good morning, everyone.

Good morning, Greg.

Speaker 1: Can we start off with, in your press release, you've talked about the 193 new agent appointments this year.

Can we start off with.

In your press release, you've talked about the 193, new agent appointments this year.

Speaker 4: How long does it take them once they've been pointed to get up to some minimum levels of premium on a per agent basis? Or put it another way, you know, what's sort of the production targets you have in mind when you appoint a new agency? Can you just clarify the comments of the agents that are just doing personal lines only?

How long does it take them once they've been pointed to get up to some minimum levels. So premium on a per agent basis or put it another way.

Michael Sewell: During the third quarter, we experienced $53 million of property casually net favorable reserve development on prior vaccine years that benefited the combined ratio by 2.7 percentage points. On an online basis by accident year, net reserve development for the first nine months of 2023 included, favorable $123 million for 2022, $7 million for 2021, $72 million for 2020 and $11 million in aggregate for accident years prior to 2020.

What's sort of the production targets you have in mind when you appoint the new agency can you just clarify the comments.

The agents that are just doing personal lines only.

Speaker 5: Greg, this is Steve Sprague. It really depends agency by agency. One thing I think as a company we've always prided ourselves on is we do business with the best independent agents out there.

Sure Greg This is Steve spray.

It really depends agency by agency.

One thing I think as a company we've always prided ourselves on is we do business with the best independent agents out there and we are very deliberate about the agencies we appoint.

Speaker 5: And we are very deliberate about the agencies we appoint. We spend a lot of time kind of making sure that it's a fit for both us and the agency. So when we go into a relationship, we feel pretty confident that we're aligned and

Spend a lot of time.

Kind of making sure that it's a fit for both us and the agency. So when we when we go into a relationship.

Michael Sewell: In terms of capital management, we also have a consistent long-term approach. During the third quarter, 2023, we paid $115 million in dividends to shareholders. We did not repurchase any shares. Our assessment of our financial flexibility and our financial strength is that both are in excellent condition.

We feel pretty confident.

We're aligned.

Uh huh.

Speaker 4: that the future will bear fruit. It just depends on the size of the agency, maybe the state and community, but over time, we're the number one or number two carrier as measured by premium.

The future will bear fruit it just depends on the size of the agency may be the state and community.

But over time, we are the number one or number two.

Carrier as measured by premium volume.

Speaker 5: in the majority of the agencies we do business with for at least five years or more. So that gives you a little, you know, just a little flavor of the trajectory that we have. And so, you know, it just depends, but, you know, we don't want to be just a consequential, inconsequential player in any agency.

In the majority of the agencies, we do business with for at least five years or more so that gives you a little.

Michael Sewell: As usual, I'll conclude with a summary of third quarter contributions to book value per share. They represent the main drivers of our valuation ratio. A pretty casually underwriting increased book value by 56 cents. Light insurance operations increased book value 73 cents. Investment income other than light insurance and net of non-insurance items added $1.04. Net investment gains and losses for the fixed income portfolio decreased book value by $1.86. Net investment gains and losses for the equity portfolio decreased book value by $2.33. Paying in, we declared $0.75 per share in dividends to shareholders. Members. The net effect was a book value decrease of $2.61 per share during the third quarter to $67.72 per share.

Just a little flavor of.

Is the trajectory that we have.

No.

It just depends.

We don't want to be just a consequential inconsequential player in any agency.

Speaker 1: And the percentage of, I think you called out in the press release a chunk of those were personal lines only. Was that geographically focused or can you add some color on that?

And the percentage of.

I think you called out in the press release.

Because those were personal lines only was that geographically focused or can you add some color on that.

Speaker 4: Yeah, sure, Greg. Sorry you asked that. Typically, personalized only agencies will be private client or high net worth.

Yes, sure Greg Sorry, do you guys typically personal lines only agencies will be private client or high net worth.

Speaker 5: you know, focused agencies to where maybe as an example, let's say in the state of California, we're not active there for commercial lines right now. So if we make an agency appointment in California, it would be personalized only, and it would be high network or private client focused.

Focused agencies to where maybe maybe as an example, let's say in the state of California, We're not active there for commercial lines right now so if we make an agency appointment in California would be personal lines only and it would be high net worth private client focus.

Okay.

Speaker 6: Got it. All right. I guess pivoting to the commercial lines side of the business. If we look at new business trends in your commercial to kind of flatish, the last couple of quarters.

Got it alright.

I guess pivoting to the commercial lines side.

Steven Johnston: Now, I'll turn the call back over to Steve. Thanks, Mike. I'm proud of the way our associates continue to help the independent agents who represent Cincinnati Insurance navigate this challenging market. We're sticking to our fundamentals, listening, offering solutions and building strong relationships. Because our field associates live in the communities our agents serve, we see and respond quickly to market pressures most impacting them. We are then able to find solutions that contribute to our agent success, leading to long-term shareholder value.

The business.

If we look at new business trends in your commercial its kind of flattish the last couple of quarters.

Speaker 6: And by the way, we've heard some other carriers talk about pockets of increased competition. Maybe you can give us some perspective inside your book of commercial where you're seeing some headwinds from competition and where you're seeing some upwards.

And by the way we've heard some other carriers talk about pockets of increased competition, maybe you could give us some perspective.

Inside your book of commercial where where you're seeing some headwinds from competition and where youre seeing some opportunities.

Speaker 4: Yeah, again, Steve Sprague, Greg. That new business that you're pointing to is all around underwriting discipline and pricing segmentation and just discipline from our field underwriters on the pricing.

Yes, again, Steve spray Greg.

Is that new business.

Unknown Executive: As a reminder, with Mike and me today, our Steve Spray, Steve Celoria, Mark Shambo, and Teresa Hafer.

You're indicating that you're pointing to is all around us.

Underwriting discipline.

Pricing segmentation just discipline from our field underwriters.

Gary: Gary, please open the call for questions. We will now begin the question and answer session. To ask a question, you may press a star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press a star then two.

On the pricing front.

Speaker 5: So, you know, it's a very competitive, you know, it's always a competitive market and it varies by state, it varies by territory on who we're competing with. But we have just, you know, over the years, our proven model of appointing the best agents.

So it's a very competitive it's always a competitive market and it varies by state it varies by territory on who we're competing with but we have just over the years our proven model.

Appointing the best agents.

Speaker 4: Signing field associates to those agencies, making decisions locally that has served us.

Signing field associates to those agencies, making decisions locally.

Gary: At this time, we will pause momentarily to assemble our roster.

Has served us.

Really well over the long pool.

In the last 10 years.

Greg Peters: Our first question is from Greg Peters with Raymond James. Please go ahead. Well, good morning, everyone. Good morning, Dave. Can we start off with, in your press release, you've talked about the 193 new agent appointments this year. How long does it take them once they've been pointed to get up to some minimum levels of premium on a per-agent basis? Or put it another way, what sort of the production targets you have in mind when you appoint a new agency? Can you just clarify the comments of the agents that are just doing personal lines only?

Pricing precision the pricing segmentation and the tools that we have.

<unk> have really been what's driving.

Speaker 4: quite frankly, the profitability that you see that we're producing, and our new business underwriters working with our agents out in the field.

Quite frankly, the profitability that you would see that we're producing at our new business underwriters working with our agents out in the field.

Speaker 4: are executing on that discipline strategy. And it's a put pressure candidly. It's put some pressure on the new business this year, but I can tell you each quarter of this year, as that commercial market, he's gotten a little more disrupted. We're seeing more and more opportunities at the underwriting terms, conditions, quality, and pricing that we feel are adequate.

Are executing well.

On that disciplined strategy and it's put pressure candidly, it's put some pressure on the new business.

This year, but I can tell you each quarter of this year is that commercial market has gotten a little more disrupted we are seeing more and more opportunities at the underwriting terms conditions quality and pricing that we feel are adequate.

Okay.

Speaker 6: Okay, and then I guess the final question would be on personalized because, you know, if we look at your results for.

Okay.

And then I guess the final question would.

Steve Spray: Greg, this is Steve Spray. It really depends agency by agency. One thing I think as a company, we've always prided ourselves on as we do business with the best independent agents out there. We are very deliberate about the agencies we appoint. We spend a lot of time making sure that it's a fit for both us and the agency. When we go into a relationship, we feel pretty confident that we're aligned and that the future will bear fruit.

It would be on personal lines because.

If we look at your results for.

Speaker 6: for the quarter actually, you know, you're doing pretty well as in the context of how the rest of the market's performing. And you're also reporting some substantial growth and new business written. So maybe give us sort of an updated view on the trends you're seeing inside your personal lines business. And I'm thinking about auto and property clearly. So if you could separate the two, that'd be great.

For the quarter actually Youre doing.

Pretty well.

In the context of how the rest of the markets performing.

And Youre also reporting some substantial growth in new business written so.

Maybe give us sort of an updated view on the trends youre seeing inside your personal lines business and I'm thinking about auto and property clearly so.

Could separate the two that'd be great.

Steve Spray: It just depends on the size of the agency, maybe the state and community, but over time, we're the number one or number two carrier as measured by premium volume. In the majority of the agencies, we do business lift for least five years or more. So that gives you a little flavor of the trajectory that we have. It just depends, but we don't want to be just a consequential, inconsequential player in any University.

Speaker 5: Sure. First of all, I might, I might comment just, uh, we're, we're pleased and encouraged by the improvement at X cat actually, or that core loss ratio that we're seeing in purse lines as well. Certainly had some pressure with inflation and with increased cat levels, but feel like we are, I shouldn't say feel like we're, we're confident that we're getting the rate on prospective go forward basis. That's adequate.

Sure first of all I might I might comment.

We're pleased and encouraged by the improvement in ex cat accident year that core loss ratio that we're seeing in personal lines as well certainly had some pressure with inflation and with increased cat levels, but feel like we are I shouldn't say it feels like we're confident that we're getting the rate prospective go forward.

Basis, that's adequate.

Speaker 4: The fact that, you know, about 55% of our personal lines today would be what we call private client. 45% roughly, middle market. We think that is a key for us with our agency model in the marketplace.

The fact that about 55% of our personal lines today would be what we call private client, 45% roughly middle market. We think that is a key for us with our agency model in the marketplace.

Steve Spray: And the percentage of, I think you called out the press release of a chunk of those were personal lines only, was that geographically focused or can you add some color on that? Yeah, sure, great. Sorry. You have to typically personal lines only agencies will be private client or high net worth, you know, focused agencies to where maybe, maybe as an example, let's say in the state of California, you were not active there for commercial lines right now. So if we make an agency appointment in California, it would be personal lines only and it would be high net worth of private client focus. Got it.

Speaker 5: that we can be a go-to care for our agents on regardless of the size of the home. And the way we handle claims locally, fast-fair, with empathy, we think puts us in a really good position going forward on all persons.

That we can be a go to care for our agents on regardless of the size of the home.

And the way, we handle claims locally fast there.

Empathy, we think puts us in a really good position going forward on all personal lines.

Speaker 7: Yeah, the loss ratio has certainly been under pressure with inflation and the increased activity, but we're confident in where it's heading going forward. We've seen a lot of opportunity out there, a lot of disruption in that personal lines market.

Yes, it's the loss ratio has been.

<unk> been under pressure with inflation.

The increased due to increased cat activity, but we're confident in and where it's headed going forward. We've seen a lot of opportunity out there a lot of disruption in that personal lines market.

Greg Peters: All right, I guess pivoting to the commercial lines side of the business. If we look at new business trends in your commercial to kind of flash the last couple of quarters. And by the way, we've heard some other carriers talk about pockets of increased competition.

Speaker 7: Candidly, I've never seen a harder market than the personalized market we're seeing today. And we think with our balance sheet and our agency strategy, the way we're approaching at the expertise, the pricing precision, we think it's gonna blow well for us in the future to grow that personalized book.

Candidly I've never seen a 100 markets in the personal lines market, we're seeing today, and we think with our balance sheet.

Our agency strategy the way, we're approaching it the expertise the pricing precision, we think it's going to bode well for us in the future to grow that personal lines book.

Steve Spray: Maybe you can give us some perspective inside your book of commercial where where you're seeing some headwinds from competition where you're seeing some opportunities. Yeah, against East Bregg Greg, it's that new business that you're pointing to is all around underwriting discipline and pricing segmentation and just discipline from from our field underwriters on the pricing front. So, you know, it's a very competitive, you know, it's always a competitive market and it varies by state and varies by territory on who we're competing with.

Great. Thanks for the detail.

Yeah, absolutely. Thank you Greg.

Speaker 1: The next question is from Mike Zaremski with BMO. Please go ahead.

The next question is from Mike Zaremski with BMO. Please go ahead.

Hey, Thanks, good morning I.

Speaker 8: Thanks good morning. I guess maybe going back to kind of the topic of growth and risk selection, maybe just sticking with commercial lines. So if I kind of just step back.

I guess, maybe maybe going back to kind of the topic of growth in <unk>.

Selection.

And maybe just sticking with commercial lines. So if I kind of just step back.

Cincinnati financials pricing power levels are fairly similar to the number of your peers.

Speaker 8: Since any financials pricing power levels, you know, are fairly similar to a number of your peers, yet your growth rate, just overall growth rate, is much lower than your historical growth relative to the industry, which you know, you've been talking about this, you know, about changing your appetite a bit, and you know, every quarter, this isn't like a surprise.

Yet your growth rate.

Steve Spray: But we have just, you know, over the years, our proven model, the pointing to best agents, assigning field associates to those agencies, making decisions locally, that has served us really well over the long pull. In the last 10 years, the pricing precision, the pricing segmentation, the tools that we have have really been much driving quite frankly, the profitability that you see that we're producing and our new business underwriters working with our agents out in the field are executing on that discipline strategy.

Just overall growth rate is much lower than your historical growth rate relative to the industry, which you've been talking about this you know about.

Your appetite a bit.

And every quarter this isn't like a surprise.

Speaker 8: that just kind of curious like our

But just just.

Curious like are.

Our.

Speaker 8: I would have thought, you know, it doesn't seem like you're losing business because of pricing if I'm because your pricing levels are similar to peers. So is it

I would've thought it doesn't seem like youre, losing business because of pricing.

Because your pricing levels are similar to peers. So is it.

Speaker 8: Or maybe I'm wrong and it's just certain lines actually, you know, you're actually you're, you know, we're looking at all in rate and certain lines you actually are, you know, casualty raising a lot more than the average. Or is the, has your fundamental like risk selection process changed?

Or maybe I'm wrong, and just certain lines actually youre actually here, we're looking at all in rate in certain lines, you've actually our casualty raising a lot more than the average or is that has your fundamental like risk selection process.

Steve Spray: And it's put pressure candidly, it's put some pressure on the new business this year, but I can tell you each quarter of this year, because that commercial market has gotten a little more disrupted. We're seeing more and more opportunities at the underwriting terms, conditions, quality, and pricing that we feel are adequate.

Should that you or youre, just not willing to take on certain risks or youre trying to shed certain risk kind of just kind of see where we are in this journey.

Speaker 8: you're just not willing to take on certain risks or you're trying to shed certain risks and trying to just kind of see where we are in this kind of journey to whether the historical growth rate will get back to what it used to be historical growth of the industry if your appetite decides to change.

Whether the your historical growth rate.

Get back to what it used to be historically relative to the industry.

Your appetite decides to go to.

Steve Spray: Okay. And then I guess the final question would be on personal lines, because, you know, if we look at your results for, for the quarter, actually, you know, you're doing, you know, pretty well as a person, you know, in the context of how the rest of the market performing. And you're also reporting some substantial growth and new business written. So maybe give us sort of an updated view on the trends you're seeing inside your personal lines business, and I'm thinking about auto and property clearly.

<unk>.

Yes, Mike.

Speaker 7: Steve Sprague again, you know, Steve Johnson commented in his opening remarks on the net written premium piece of commercialized, I might start there in that, we've got a two full point drag on commercialized from workers' compensation and umbrella or excess you could call it, both for different reasons. Work comp about a point drag that has been going on now for several years, just simply.

Steve spray again, Steve Johnston commented in his opening remarks on the net written premium.

Piece of commercialized I might start there and that we've got a two four point drag on commercial lines from workers' compensation and umbrella.

Excess you could call it both for different reasons work comp about a point drag.

That has been going on now for several years just simply.

Speaker 7: The rate decreases that are being pushed through, really, for the industry. On Umbrella, that is deliberate. It started probably a little over a year ago here in commercial lines.

The pricing or the rate decreases that are being pushed through.

Steve Spray: So if you could separate the two, that'd be great. Sure. First of all, I might come and just we're pleased and encouraged by the improvement that X-Cat actually or that core loss ratio that we're seeing in postlines as well. Certainly had some pressure with inflation and with increased cat levels, but feel like we are, I shouldn't say feel like we're confident that we're getting the rate of prospective go-forward basis that's adequate.

Really for the industry on umbrella.

Is deliberate it started probably a little over a year ago, your commercial and commercial lines in.

Speaker 7: Certain jurisdictions, certain states, we really took aggressive, appropriate, underwriting action on our umbrella book. Reducing limits, maybe shedding some of that business. So that's putting a weight on the commercial.

Certain jurisdictions.

Certain states, we really took.

Aggressive appropriate underwriting actions on our umbrella book, reducing limits, maybe shedding some of that business. So that's that's putting away.

On the commercial lines growth as well.

Steve Spray: The fact that, you know, about 55% of our personal lines today would be what we call private client, 45% roughly, middle market. We think that is a key for us with our agency model and the marketplace that we can be a go-to care for our agents on regardless of the size of the home and the way we handle claims locally, fast fair, with empathy, we think puts us in a really good position going forward on all personal lines.

Speaker 7: So you're coming of returning to historical levels or walking away from other business.

To your comment of returning to historical levels.

Walking away from.

Other business.

Speaker 7: You know, like I was saying before, I think we've got a winning strategy. We've got a winning model doing business locally with the best agents in the business.

Like I was saying before I think we've got a winning strategy. We've got a winning model doing business locally with the best agents in the business.

Face to face that has served us well for many many years and our risk selection our claims handling our loss control those things have all improved on a linear basis since I've been here I think 32 years ago.

Speaker 7: face-to-face that has served us well for many, many years. And our risk selection, our claims handling, our loss control, those things have all improved on a linear basis since I've been here, I think, 32 years ago.

Steve Spray: Yeah, the loss ratio has been, has certainly been under pressure with inflation and the increased cat activity, but we're confident in where it's heading going forward. We've seen a lot of opportunity out there, a lot of disruption in that personal lines market candidly. I've never seen a harder market than the personal lines market we're seeing today and we think with our balance sheet and our agency strategy, the way we're approaching at the expertise, the pricing precision, we think it's going to build well for us in the future to grow that personal lines.

Speaker 7: are pricing precision, segmentation.

Our pricing precision segmentation.

Has.

Speaker 7: has improved exponentially over the last 10 years.

Has improved.

Exponentially over the last 10 years.

Speaker 7: So where we just didn't have those tools, say when I was a field rep, you know, 15 years ago, and the look into each individual account that we do and price them on their own merits. So yes, our field underwriters and our renewals.

So where we just didn't have those tools. So when I was a field rep.

Unknown Executive: Great, thanks for the detail. Yeah, absolutely.

15 years ago.

And the look into each individual account that we do and price them on their own merits. So yes, our field underwriters and our renewal underwriters have those pricing precision tools that they use to where if we don't feel like we can get an adequate rate on a risk adjusted basis.

Unknown Executive: Thank you very.

Speaker 5: Have those pricing precision tools that they use.

Speaker 5: to where if we don't feel like we can get an adequate rate on a brisk adjusted basis.

Speaker 5: we'll walk away from an account and we'll wait it out. First and foremost is we need an underwriting profit. We've got 11 and a half years in a row now, 11 years and nine months of underwriting profit, and we want to keep that rolling. I don't worry about growth over the long pole at Cincinnati Insurance Company.

Yes, we will walk away from an account and we'll wait it out first and foremost is we need an underwriting profit, we've got 11 and a half years in a row now.

Mike Zaremski: The next question is from Mike Zaremsky with BMO. Please go ahead. Thanks, good morning. I guess maybe going back to kind of the topic of growth and risk selection and maybe just sticking with commercial lines. So if I kind of just step back, since any financials, pricing, power levels are fairly similar to a number of your peers, yet your growth rate, just overall growth rate, is much lower than your historical growth rate relative to the industry, which you've been talking about this, about changing your appetite a bit in every quarter. This isn't like a surprise, but just kind of then curious, I would have thought it doesn't seem like you're losing business because your pricing levels are similar to peers.

11 years, and nine months of underwriting profit and we want to keep that Roland I don't worry about growth over the long pole of Cincinnati Insurance company. We are talking about agency appointments, we have plenty of runway to continue to do that we're growing our E&S company.

Steve Spray: So is it, or maybe I'm wrong, and just certain lines, you're looking at all in rate and certain lines, you actually are casualty raising a lot more than the average, or is your fundamental risk selection process change in that you're just not willing to take on certain risks, or you're trying to shed certain risks, and trying to just kind of see where we are in this kind of journey to whether your historical growth rate will get back to what it used to be, the historical growth of the industry, if your appetite decides to change. Yeah, Mike, Steve Spray again, you know, Steve Johnston commented in his opening remarks on the net written premium piece of commercial lines.

Speaker 5: We were talking about agency appointments. We have plenty of runway to continue to do that. We're growing our E&S company. You see what's going on in person, why not?

You see what's going on in personal lines.

Speaker 5: Well, I'm not, I don't worry about growth prospects for the future.

Well I'm not I'm not.

I don't worry about growth prospects for the future.

Speaker 8: Okay, that's thorough and helpful answer. And... Okay.

Okay, that's thorough and helpful answer.

Speaker 8: My follow-up is, you know, you've been deliberate in your actions to kind of increase IBNR. And, you know, you've talked about uncertainty in terms of, you know, more uncertainty in terms of the lost cost trend environment, you know, growth is obviously, you just talked about maybe a little bit slower too, so would it be fair to characterize that

My follow up is.

You've been deliberate and interactions to kind of include increase.

Ivy NR.

He talked about uncertainty.

More uncertainty in terms of the loss cost trend environment.

Growth is obviously you just talked about maybe a.

A little bit slower two so would it be fair to characterize that.

Speaker 8: Cincinnati is taking a view that lost cost trend is a bit higher on a go for basis, you know

And he is taking a view that loss cost trend is a bit higher on a go forward basis.

You know.

Speaker 8: you know, then it has been a year or two ago. Is that a fair characterization?

And it has been.

And at year or two ago is that a fair characterization.

Speaker 4: Greg, this is Steve Justin. And I think what we've seen, it was kind of a rapid acceleration of inflation starting at the beginning of 2021. It is now in the last several months.

Greg This is Steve Justin and I think what we've seen it was kind of a rapid acceleration of <unk>.

Inflation, starting at the beginning of 2021.

It is now in the last several months.

Speaker 4: Moderated, still going up, but moderated.

Moderated still going up but moderating.

Speaker 4: I think just with the way that we time our rate increases.

I think just with the way that we time.

Our rate increases.

Speaker 4: and rolling onto the book, it takes a little while for them to actually reach all the policy holders.

Rolling onto the book it takes a little while for them to actually reach all the policyholders.

Steve Spray: I might start there in that we've got a two full point drag on commercial lines from workers compensation and umbrella or access, you could call it both for different reasons work on about a point drag that has been going on now for several years just simply the price and the rate decreases that are being pushed through really for the industry on umbrella that is deliberate it started probably a little over a year ago here commercial and commercial lines in certain jurisdictions certain states we really took aggressive appropriate underwriting action on our umbrella book reducing limits maybe shedding some of that business. So that's that's putting the weight on the commercial lines growth as well to your comment of returning to historical levels are walking away from other business.

Speaker 4: But the key point I think is that we are very perspective in terms of the way we look at inflation.

But the key point I think is that we are very perspective in terms of the way we look at inflation.

Speaker 4: The most important thing we can do is to look out into the perspective policy periods that we're pricing for right now, do our best to estimate the lost cost and the inflation impact on that perspective period and set the pricing right and do it on an individual policy by policy basis the best we can. I think we're in a good position to continue doing that.

The most important thing we can do is to look out into the prospective policy periods that were pricing floor right now.

Do our best to estimate the loss costs and the inflation impact on that perspective period and set the pricing right and do.

Okay.

Individual policy by policy basis, the best we can I think we're in a good position to continue doing that.

Speaker 8: Okay, so you clearly feel it sounds like pricing is an axis of loss trend, knock on wood, if everything plays out.

Okay.

Certainly feel it sounds like pricing is.

Speaker 9: Yeah, agree with that. Yeah. I would agree with that. OK.

Speaker 1: The next question is from Grace Carter with Bank of America. Please go ahead.

The next question is from Grace Carter with Bank of America. Please go ahead.

Steve Spray: You know, like I was saying before, I think we've got a winning strategy, we've got a winning model doing business locally with the best agents in the business. Face to face that has served us well for many, many years and our wrist selection, our claims handling, our loss control those things have all improved on a linear basis since I've been here I think 32 years ago, our pricing precision, segmentation has has improved exponentially over the last 10 years to where we just didn't have those tools say when I was a field rep, you know 15 years ago and the look into each individual account that we do and price them on on their own merits.

Yeah.

Hi, everyone.

Good morning Grace.

Speaker 10: Looking at results line by line in the commercial segment, it seemed like quite a few saw your over your improvement. But the workers compensation line sticks out a little bit, kind of the second quarter in a row where we've seen a decent bit of pressure on the underlying loss ratio. I was just curious if we could get more color on what's going on there. I mean obviously you'll have referenced the pricing pressure for that book.

Good morning.

That kind of results line by line in the commercial segment it seemed like quite a few so.

Year over year improvement.

Gross compensation line sticks out a little kind of the second quarter in a row, where we've seen it.

Decent bit of pressure on the underlying loss ratio.

Curious if we could get more color on what's going on there I mean, obviously you've referenced.

Pricing pressure for that book.

Speaker 10: We've also heard some other peers talk about concerns regarding medical inflation, and if y'all could just give us some more color on what's happening there.

We've also heard some other peers talk about concerns regarding medical inflation or if you all could just give us some more color on what's happening there.

Speaker 7: Yeah, Grace Deepzbray, thanks for the question. The accident here.

Yes, great Steve spray thanks for the question.

And at year.

Steve Spray: So yes, our field underwriters and our renewal underwriters have those pricing precision tools that they use to where if we don't feel like we can get an adequate rate on a risk adjusted basis We're yeah, we'll walk away from the count and we'll wait it out. First and foremost is we need an underwriting profit. You know, we've got 11 and a half years and around now 11 years and nine months of underwriting profit and we want to keep that rolling.

Speaker 7: Combined racial, Torres Strait Show for work comp is, yes, it's under pressure. Counteryear is still performing quite well.

Combined ratio loss ratio for work comp is yes. It is it's under pressure calendar year.

Is still performing quite well.

<unk>.

Speaker 5: You know the it is I hate to keep saying the same story, but it really is simply just pressure downward pressure on the rates that are put out by the rating bureaus and, you know, fortunately.

It is I hate to keep saying the same story, but it really is simply just pressure downward pressure on the rates that are put out by the rating bureaus.

Fortunately.

Speaker 7: I think for Cincinnati insurance company, we've always been conservative on the workers compensation line. We've got tremendous expertise. We're ready to grow that business when we think that the pricing is not an attractive level. But right now it's,

I think for Cincinnati insurance company.

We've always been conservative longer workers' compensation line, we've got tremendous expertise, we are ready to grow that business. When we think that the pricing is that at an attractive level.

Steve Spray: I don't worry about growth over the long poll since an adding insurance company. We're talking about agency appointments. We have plenty of runway to continue to do that. We're growing our ENS company. You see what's going on in person lines. Well, I'm not I'm not I don't worry about growth prospects for the future. Okay, that thorough and helpful answer and my follow up is, you know, you've been deliberate and in your actions to kind of increase.

But right now it's.

Speaker 5: You know, again, we're doing it risk by risk and we are running new workers compensation business. But just it's a line that, as you, as you mentioned, medical inflation can, can impact it over time.

Again, we're doing at risk by risk and we are running.

Workers' compensation business, but just it's a line that as you as you mentioned medical inflation can can impacted over time.

Speaker 5: I can't see that we're seeing anything out of your area with the medical inflation at this point.

I can't say that we're seeing anything out of the ordinary with the medical inflation at this point.

Speaker 5: But that that that line of business is definitely under pressure on action in your basis and primarily from just repression.

But that.

Steve Spray: I mean, I talked about uncertainty in terms of more uncertainty in terms of the lost cost trend environment. You know, growth is obviously you just talked about it maybe a little bit slower too. So would it be fair to characterize that Cincinnati is taking a view that lost cost trend is a bit higher on a go for basis. You know, then it has been a year or two ago.

That line of businesses is definitely under pressure on an accident year basis, primarily from rate pressure.

Greg: Is that a fair characterization?

Thank you.

Speaker 10: And I guess on Cincinnati re y'all have mentioned kind of reducing casualty premiums in that book for a couple of quarters now. And we've also heard some more players in the market start talking about.

And I guess.

You mentioned kind of reducing casualty premiums in that book.

Couple of quarters now and we've also heard some more players on the market start talking about.

Speaker 10: concerns over casualty loss costs trend here lately. I was just curious if you think that there's anything particularly new going on in casualty reinsurance or

Turns out for casualty loss cost trends here lately I was just curious if you think that there's anything, particularly new going on in casualty reinsurance.

Speaker 10: If the recent comments are surprising to y'all at all, or I guess next year, just if you think opportunities from property, specialty, et cetera, will outweigh any sort of ongoing pressure on the casualty piece of that book to allow it to reflect back to growth.

Yes.

Greg: Greg, this is Steve Justin. And I think what we've seen was kind of a rapid acceleration of inflation starting at the beginning of 2021. It is now in the last several months moderated, still going up, but moderated. I think just with the way that we time our rating increases and rolling on to the book, it takes a little while for them to actually reach all the policy holders. But the key point I think is that we are very prospective in terms of the way we look at inflation.

Comments are surprising you all at all of our.

Next Dr. Jeff If you think opportunities from property specialty et cetera will outweigh any sort of ongoing pressure on the.

The casualty piece of that book to allow us to inflect back to growth.

Speaker 4: Thank you, Grace. Really good question. And I think it boils down to our model at Cincinnati degree and that we didn't really actually form a company at Cincinnati. It writes on Cincinnati insurance paper. So there's the eight A plus quality there. And then it's an allocated capital model. So what we've tried to do is just look at every contract as it comes up. We don't.

Okay. Thank you.

Really good question and I think it boils down to our model at Cincinnati re and that we we.

We didn't really actually form a company Cincinnati re writes on Cincinnati insurance paper, So theres eight eight plus quality there and then it's an allocated capital model. So what we tried to do is just look at every contract as it comes up.

Greg: The most important thing we can do is to look out into the prospective policy periods that we're pricing for right now. Do our best to estimate the lost cost and the inflation impact on that prospective period and set the pricing right and do it on an individual policy by policy basis the best we can. I think we're in a good position to continue doing that. Okay, so you clearly feel it sounds like pricing is an access of loss trend, not going with everything plays out if you don't agree with that. I would agree with that.

We don't.

Speaker 7: try to do things this much in property, this much in casualty, this much in specialty. Just look at each contract that becomes available to us on its own merits. And if we can get the target hurdle rate that we're looking for and feel good about how it fits into our overall risk model, we'll go ahead and write that. So I would think that we will see movements

Try to do things this much in property this much and casually this much in specialty just look at each contract that becomes available to us.

Greg: Okay, thank you very much.

On its own merits.

And if we can get the target hurdle rate that we're looking for.

And feel good about how it fits into our overall risk model. We will go ahead and write that so.

Grace Carter: Thank you, Greg.

I would think that we will see movements.

In the various business lines.

Speaker 4: in the various business lines that reflect that. I think right now, just what we're seeing is certain lines like professional liability, transactional liability, and so forth are areas where we felt that the pricing and sometimes the opportunity are not as

<unk> I think right now just what we're seeing is certain lines like professional liability transactional.

Liability and so forth are areas, where we felt that the pricing and sometimes the opportunity are not as good as they've been in the past where we are seeing.

Grace Carter: The next question is from Grace Carter with Bank of America. Please go ahead. Hi everyone. Good morning. Looking at kind of results line by line in the commercial segment, it seemed like quite a few saw your over your improvement. But the workers compensation line sticks out a little bit kind of the second quarter in a row where we've seen a decent bit of pressure on the underlying loss ratio. I was just curious if we could get more color on what's going on there.

Speaker 4: as good as they've been in the past where we are seeing really good opportunity in the property and specialty line. So we'll just go at that contract by contracting.

Really good opportunity.

In the property and specialty lines. So we will just go out that contract by contract.

Speaker 4: you know, very bullish with everything that Cincinnati Reef is bringing to us in terms of profitability and diversification.

Very bullish with everything that Cincinnati re is bringing to us in terms of profitability and diversification.

Thank you.

Speaker 1: Again, if you have a question, please press star then one.

Again, if you have a question. Please press Star then one.

Grace Carter: I mean, obviously, you'll have a reference via the pricing pressure for that book. But we've also heard some other peers talk about concerns regarding medical inflation. If y'all could just give us some more color on what's happening there.

Speaker 11: The next question is from Mayor Shields with KBW. Please go ahead. Thank you so much. Great. Thanks, and good morning all. You. You're welcome.

The next question is from Meyer Shields with <unk>. Please go ahead.

Great. Thanks, and good morning all.

Good morning Nathan.

Hello, Hi.

Speaker 11: Two quick questions on personal lines. First, is there any appreciable difference in the profitability of private client and middle market?

Grace Carter: Yeah, Grace Deepzbray. Thanks for the question. The accident year combined ratio, loss ratio for work comp is, yes, it is, it's under pressure. Calendar year is still performing quite well. The, you know, the, it is, I hate to keep saying the same story, but it really is simply just pressure downward pressure on the rates that are put out by the rating bureaus. And, you know, fortunately, I think for Cincinnati insurance company, we've always been conservative on the workers compensation line.

Two quick questions on personal lines first is there any appreciable difference in the profitability of product lines in middle market.

Speaker 5: You know, mayor Steve Sprite, you know, we don't, right now we are disclosing the difference in loss ratios for our specific book between middle market and high net worth of private client, but I can't tell you over the long pull, the industry, private client has out before middle market by a pretty good margin. And we feel like we can create those same results over

Steve spray we don't.

Right now we are disclosing the difference in loss ratios.

For our specific book between Middle market and high net worth private clients, but I can tell you over the long pole the industry.

Private client.

Before middle market by a pretty good margin and.

We feel like.

We can create those same results over time as well.

Grace Carter: We've got tremendous expertise. We're ready to grow that business when we think that the pricing is at an attractive level. But right now, it's, you know, again, we're doing it risk by risk and we are running new workers compensation business. But just, it's a line that, as you, as you mentioned, medical inflation can, can impact it all the time. I can't see that we're seeing anything out of your ordinary with the medical inflation at this point. But that that that line of business is definitely under pressure on action in your basis and primarily from just read pressure.

Speaker 5: Not that we want to subsidize a little market. And a little market book needs to stand on its own. We've got the pricing precision there. Again, we've got the agency force. So we expect both segments to be profitable.

Not that we wanted to subsidize the middle market and middle market book needs to stand on its own we got the pricing precision there again.

We've got the agency force.

So we expect both.

Segments to be profitable.

But we do think over the long pole the high net worth private client.

Speaker 5: But we do think over the long pull, the high net worth of private quiet block performance.

We'll outperform.

Speaker 11: Okay, that's very helpful. I completely understood. The second question, a couple of companies have talked about moderating trend cost inflation, specifically for auto-sysical damage. I was wondering whether you're seeing that in the third quarter as well.

Okay, that's very helpful I completely understood.

Second question on a couple of companies have talked about moderating claim cost inflation, specifically for auto physical damage and I was wondering whether youre seeing that in the third quarter as well.

Speaker 4: We have seen it in just certain areas within physical dimension. As we look at replacement vehicles, rental cars, that sort of thing. But again, we're still kind of looking at inflation on a...

We have seen it in just certain areas within physical damage as we look at replacement vehicles rental cars that sort of thing.

Grace Carter: Thank you and I guess on Cincinnati re y'all have mentioned kind of reducing casualty premiums in that book for a couple of quarters now and we've also heard some more players in the market start talking about concerns over casualty lost cost trends here lately. I mean, I was just curious if you think that there's anything particularly new going on in casualty reinsurance or if the recent comments are surprising to y'all at all, or I guess next year, just if you think opportunities from property specialty, et cetera, will outweigh any sort of ongoing pressure on the casualty piece of that book to allow it to reflect back to growth.

But again, we're still kind of looking at inflation Nana.

Yes.

How it's been.

Speaker 4: Roy would two, relatively, since twenty- hai-hi 21, as'll we use that data to forecast Plan B.

<unk> since 2021 this week.

Grace Carter: Thanks. Thank you, Grace. Really good question. And I think it boils down to our model at Cincinnati degree and that we we didn't really actually form a company Cincinnati degree. It writes on Cincinnati insurance paper. So there's the a plus quality there. And then it's an allocated capital model. So what we tried to do is just look at every contract as it comes up. We don't try to do things this much in property, this much in casually, this much in specialty.

Use that data to forecast the loss cost in the premium needed in the prospective periods. So we're being cautious I think in terms of.

Speaker 4: in the premium needed in the prospective periods, and so we're being cautious, I think, in terms of where we are with our inflation rates, but we do feel that we're getting ahead of our lost cost trends. We are ahead of our lost cost trends with our pricing, and I think we benefited that while we had a stay-at-home credit during 2020, we did not actually – we ran that through the expense ratio. We did not actually decrease.

Where we are with our inflation rates, but we do feel that.

We're getting ahead of our loss cost trends. We are ahead of our loss cost trends with our pricing and I think we benefited that while we had a stay at home credit.

During 2020, we did not actually.

We ran that through the expense ratio, we did not actually decrease the auto rates and I think.

Speaker 4: the auto rates and I think that's helping this now as we contemplate inflation in our pricing.

It is helping us now as we.

Contemplate inflation and our pricing.

Yes, absolutely.

Very helpful. Thank you so much.

Thank you Amir.

Speaker 1: The next question is from Fred Nelson, a private investor. Please go ahead.

The next question is from Fred Nelson, a private Investor. Please go ahead.

Grace Carter: Just look at each contract. It becomes available to us on its own merits. And if we can get the target hurdle rate that we're looking for and feel good about how it fits into our overall risk model, we'll go ahead and write that. So I would think that we will see movements. In the various business lines that reflect that I think right now, just what we're seeing is certain lines like professional liability, transactional liability and so forth are areas where, you know, we've felt that the pricing and sometimes the opportunity or not is as good as they've been in the past, where we are seeing really good opportunity in the property and specialty lines. So we'll just go out that contract by contract and, you know, very bullish with everything that Cincinnati is bringing to us in terms of profitability and diversification.

I got a call last night.

Unknown Executive: Again, if you have a question, please press star then one.

Larry do you pushing 90, thank Amy for Cincinnati financial natural owner.

Speaker 12: that's older than I would repair that today on the phone on the conference college. He didn't even know you had one, but the question is battery-operated vehicles of all types. Has that changed the price?

Repair that today on the phone or on the conference call and say I didn't even know you had one.

Question is battery operated vehicles of all types.

Does that change the pricing of insurance.

Speaker 12: Replacement costs and accidents as you have any comments you can share

Placement cost and accidents do you have.

Any comments you can share.

Speaker 4: Yeah, friend, this is Steve Johnson. I think what we just have to do is make sure that we contemplate the cost involved, you know, as we go to having more electronic vehicles in the plea.

Yes. This is Steve Johnston I think what we just have to do is make sure that we.

Contemplate the cost involved you know as we go to having more.

Tronic vehicles in the fleet.

Speaker 4: There will be more of that cost in the battery. That they are less complex, I believe in terms of all the different parts that are involved. So, you know, it is different. It will create a challenge to stay on top of as we contemplate those costs in price. But we feel that we're up to the task and please thank your friend to call us. We appreciate your comments.

There'll be more of that cost in the battery.

They are less complex I believe in terms of all the different parts that are involved so.

It is different.

Will create.

<unk> to stay on top of.

As we contemplate those costs and price.

We feel that we're up to the task.

Please thank you for the call this.

We appreciate your comments.

Speaker 12: Well, thank you. The battery-operated calls, I have people in the farming business with pick-up trucks and other machinery, and they say it's not an easy thing to work with. And therefore, we'll ask the question about insurance. So thank you for...

Thank you the battery operated.

People in the farming business with pickup trucks and other machinery.

Meyer Shields: The next question is from Mayor Shields with KBW. Please go ahead. Great. Thanks and good morning all. Hello.

It's not an easy thing to work with.

Okay.

Ask the question about insurance.

Thank you for the best you could do I really appreciate it.

Steve Spray: Is there any appreciable difference in the profitability of product clients and middle market? You know, Mayor Steve Sprite, you know, we don't, right now we are disclosing the difference in loss ratios for our specific book between middle market and high net worth or private client, but I can't tell you over the long poll, the industry, we try the core has out the poor middle market by a pretty good margin and we feel like we can create those same results over time as well.

Well. Thank you Fred it's always good to hear from you.

Yes.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to Steve Johnston for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Steve Johnston for any closing remarks.

Speaker 4: Thank you, Gary, and thank you to all for joining us today. We look forward to speaking with you again on our fourth quarter call.

Thank you Gary and thank you to all for joining US today, we look forward to speaking with you again on our fourth quarter call.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Yeah.

Okay.

[music].

Speaker 2: Not.

Steve Spray: Not that we want to subsidize the middle market and the middle market, but we stand on its own. We've got the pricing precision there. Again, we've got the agency force. So we expect both segments to be profitable. But we do think over the long pull the kind of worth of private client.

Steve Spray: Okay, that's very helpful. Completely understood.

Steve Spray: The second question, a couple of companies have talked about moderating trend cost inflation specifically for auto physical damage. You know, it's wondering whether you're seeing that in third quarter as well. We have seen it in just certain areas within physical damage, you know, as we look at replacement vehicles, rental cars, that sort of thing. But again, we're still kind of looking at inflation on how it's been cumulatively since 2021. We use that data to forecast the lost cost in the premium needed in the prospective periods.

Speaker 2: St.

Speaker 2: No.

Steve Spray: And so we're being poshers, I think, in terms of where we are with our inflation rates, but we do feel that we're getting ahead of our lost cross trends. We are ahead of our lost cost trends with our pricing. And I think we benefited that while we had a stay-at-home credit during 2020, we did not actually, we ran that through the expense ratio. We did not actually decrease the auto rates. And I think that's helping us now as we contemplate inflation in our pricing.

Speaker 2: I.

Speaker 2: I.

Meyer Shields: Yet, to log in, that's very helpful. Thank you so much. Thank you, Mayor.

Fred Nelson: The next question is from Fred Nelson, a private investor.

Fred Nelson: Please go ahead. I got a call last night from a lady pushing 90, thanking me for sending an anti-financial natural that I would repair that today on the phone on the conference call and she didn't even know you had one. But the question is battery-operated vehicles of all types. Have that changed the pricing of insurance, replacement costs and accidents? Have any comments you can share?

Steven Johnston: Fred, this is Steve Johnson. I think what we just have to do is make sure that we contemplate the cost involved. You know, as we go to having more electronic vehicles in the fleet, there will be more of that cost in the battery. That they are less complex, I believe, in terms of all the different parts that are involved. So, you know, it is different. It will create a challenge to stay on top of as we contemplate those costs in price. But we feel that we're up to the task and please thank your friend that called us. We appreciate your comments.

Fred Nelson: Well, thank you. The battery-operated cars I have people in the farming business would pick up trucks and other machine rain. And they say it's not an easy thing to work with. And they ask the question about insurance. And thank you for the best you do. I really appreciate it. Thank you, Fred.

Yes.

Yes.

Yes.

Yes.

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Yes.

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Yes.

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Speaker 2: Really.

Speaker 1: Good morning and welcome to the Cincinnati Financial Corporation, third quarter 2023 earnings conference call. All, participants will

Good morning, and welcome to the Cincinnati Financial Corporation third quarter 2023 earnings Conference call all.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Speaker 1: need assistance, please signal a conference specialist by pressing the star key followed by

Speaker 1: After today's presentation, there will be an opportunity to ask questions.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.

Speaker 1: To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

To withdraw your question. Please press Star then two.

Please note this event is being recorded.

Speaker 1: I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

I would now like to turn the conference over to Dennis Mcdaniel Investor Relations Officer. Please go ahead.

Hello, This is Dennis Mcdaniel Cincinnati financial.

Speaker 3: Thank you for joining us for a third quarter, 2023, running conference call.

Thank you for joining us for our third quarter 2023 earnings conference call.

Speaker 3: Like yesterday, we issued a news release on our results, along with a supplemental financial package, including a quarter and investment portfolio.

Late yesterday, we issued a news release on our results along with our supplemental financial package, including our quarter end investment portfolio.

Speaker 3: To find copies of any of these documents, please visit our investor website, centthin.com slash investors.

To find copies of any of these documents. Please visit our investor website, <unk> Dot com slash investors.

Speaker 3: The shortest route to the information is the quarterly results link in the navigation menu on the far left.

The shortest route to the information is the quarterly results link in the navigation menu on the far left.

Speaker 3: On this call, you'll first hear from Chairman and Chief Executive Officer Steve Johnston, and then from Executive Vice President and Chief Financial Officer Mike Sewell.

On this call you'll first hear from Chairman and Chief Executive Officer, Steve Johnston, and Dan from Executive Vice President and Chief Financial Officer, Microsoft.

Speaker 3: After their prepared remarks, investors participating on the call may ask questions.

After their prepared remarks investors participating on the call may ask questions.

Speaker 3: At that time, some responses may be made by others in the room with us, including President Steve Sprague, Chief Investment Officer Steve Saloria, and Cincinnati Insurance's Chief Claims Officer Mark Schambeau, and Senior Vice President of Corporate Finance Teresa Hopper.

At that time, some responses may be made by others in the room with us, including President Steve spray Chief Investment Officer, Steve So lauria and Cincinnati Insurance's, Chief claims officer, Mark Shambaugh, and senior Vice President of corporate Finance Theresa Hoffer.

Speaker 3: First, please note that some of the matters we discussed today are forward-looking.

First please note that some of the matters discussed today are forward looking.

Speaker 3: These forward-looking statements involve certain arrests and assurances.

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.

Speaker 3: With the respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the FCC.

Speaker 3: Also, a reconciliation of non-GAAP measures was provided with the news release.

Also a reconciliation of non-GAAP measures was provided with the news release.

Speaker 3: 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.

Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP.

Now I'll turn it over the call to Steve.

Speaker 4: Good morning, and thank you for joining us today to hear more about our results.

Good morning, and thank you for joining us today to hear more about our results.

Speaker 4: We are pleased with our operating performance in the third quarter, as we again saw improved underwriting ratios for almost every major line of business, compared with the first half of this year.

We are pleased with our operating performance in the third quarter as we again saw improved underwriting ratios for almost every major line of business compared with the first half of this year.

Speaker 4: The net loss of $99 million for the third quarter of 2023 included recognition of $362 million on an after-tax basis for the reduction of fair value of equity securities still held.

The net loss of $99 million for the third quarter of 2023 included recognition of $362 million on an after tax basis for the reduction of fair value of equity Securities still held.

Speaker 3: We continue to believe the value of our equity portfolio will increase over the long term. As of September 30th, it had $5.6 billion in appreciated value.

We continue to believe the value of our equity portfolio will increase over the long term as of September 30th It had five $6 billion and appreciated value.

Speaker 4: It decreased 8% during the third quarter, but has increased 2% since the end of last year.

It decreased 8% during the third quarter, but has increased 2% since the end of last year.

Speaker 7: non-gap operating income of $261 million for the third quarter more than double last year's $116 million including a decrease of catastrophe losses of $58 million on an after-tax basis.

non-GAAP operating income of $261 million for the third quarter more than double last year's $116 million, including a decrease of catastrophe losses of $58 million on an after tax basis.

Speaker 4: The 94.4% third quarter 2023 property casualty combined ratio was 9.5 percentage points better than the third quarter of last year, including a decrease of 4.8 points per catastrophe loss.

The 94, 4% third quarter 2023 property casualty combined ratio was nine five percentage points better than the third quarter of last year, including a decrease of four eight points for catastrophe losses.

Speaker 4: Our 2023 XCAT accent year combined ratios are also better than 22, improving 3.4 percentage points for the third quarter and 1.7 points on a nine-month basis.

Our 2023 ex cat accident year combined ratios are also better than 'twenty, two improving three four percentage points for the third quarter and one seven points on a nine month basis.

Speaker 3: Similar to last quarter, we also see signs of positive momentum in operating performance.

Similar to last quarter, we also see signs of positive momentum and operating performance.

Speaker 7: Prices segmentation by risk and significant average price increases contributed to the increase in our underwriting profit, combining with risk selection and other efforts to address elevated inflation effects on incurred losses.

Pricing segmentation by risk significant average price increases contributed to the increase in our underwriting profit combined with risk selection and other efforts to address elevated inflation effects on incurred losses.

Speaker 7: On a current accident year basis measured at September 30th before catastrophe losses, our 2023 consolidated property casualty loss and loss expense ratio improved from 2022 by 4.3 percentage points on a case incurred basis.

On a current accident year basis.

At September 30th before catastrophe losses, our 2023 consolidated property casualty loss and loss expense ratio improved from 2022 by four three percentage points on a case incurred basis.

Speaker 4: For the same time period, we increase the incurred but not reported or IVNR component of the ratio by 3.0 points as we continue to recognize uncertainty regarding ultimate losses, remaining prudent in our reserve estimates until longer term loss cost trends become more clear.

For the same time period, we increased the incurred but not reported or <unk> component of the ratio by 3.0 points as we continue to recognize uncertainty regarding ultimate losses remain prudent in our reserve estimates until longer term loss cost trends become more clear.

Unknown Executive: It's always good to hear from you.

Gary: This concludes our question and answer session.

Speaker 3: agencies appointed by Cincinnati Insurance are producing profitable business for us, working with associates who provide outstanding service to agents in their clients.

Agencies appointed by Cincinnati insurance are producing profitable business for us working with associates, who provide outstanding service to agents and their clients are.

Speaker 3: Our underwriters are working diligently to retain profitable accounts while managing ones that we determine have inadequate pricing. They are also careful in selecting risks and pricing new business policies.

Our underwriters are working diligently to retain profitable accounts, while managing moments that we determined have inadequate pricing. They're also careful in selecting risks and pricing new business policies.

Steven Johnston: I would like to turn the conference back over to Steve Johnston for any closing remarks. Thank you, Gary, and thank you all for joining us today. We look forward to speaking with you again on our fourth quarter call.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you. . [inaudible] . . Andrew.

Speaker 4: Estimated average renewal price increases for the third quarter continued at a healthy pace. Our commercial line segment, again, averaged near the low end of the high single-digit percentage range, while our excess and surplus lines insurance segment continued in the high single-digit range.

Estimated average renewal price increases for the third quarter continued at a healthy pace our commercial line segment.

Unknown Executive: Please note, this event is being recorded.

Again averaged near the low end of the high single digit percentage range, while our excess and surplus lines insurance segment continued in the high single digit range.

Dennis Mcdaniel: I would now like to turn the conference over to Dennis McDaniel Investor Relations Officer. Please go ahead. Hello, this is Dennis McDaniel at Cincinnati Financial.

Speaker 4: Personal lines for the third quarter included auto rising to the low double-digit range and homeowner rising to the low end of the high single-digit range.

Personal lines for the third quarter included auto rising to the low double digit range and homeowner rising to the low end of the high single digit range.

Speaker 7: We reported 12% growth in consolidated property casualty net written premiums for the quarter. That included an 11% increase in third quarter renewal written premiums, reflecting higher levels of insured exposures in addition to price increases.

We reported 12% growth in consolidated property casualty net written premiums for the quarter that included an 11% increase in third quarter renewal written premiums, reflecting higher levels of insured exposures. In addition to price increases.

Speaker 7: Considering operating performance by insurance segment, I'll comment on premium growth and how profitability is improving compared to a year ago.

Okay.

Considering operating performance by insurance segment.

Dennis Mcdaniel: Thank you for joining us for a third quarter 2023 learning conference call. Like yesterday, we issued a news release on our results, along with a supplemental financial package, including a quarter and investment portfolio. To find copies of any of these documents, please visit our investor website, sendthens.com slash investors. The shortest route to the information is a quarterly results link and a navigation menu on the far left.

Comment on premium growth and how profitability is improving compared to a year ago.

Dennis Mcdaniel: On this call, you'll first hear from Chairman and Chief Executive Officer Steve Johnston, and then from Executive Vice President and Chief Financial Officer Mike Sewell. After their prepared remarks and lectures participating on the call, I may ask questions. At that time, some responses may be made by others in the room with us, including President Steve Spray, Chief Investment Officer Steve Celoria, Inc. Cincinnati Insuranceist Chief Plains Officer Mark Shambo, and Senior Vice President of Corporate Finance Theresa Hopper.

Speaker 3: Commercial lines grew net written premiums 5% in the third quarter, reflecting pricing discipline.

Commercial lines grew net written premiums, 5% in the third quarter, reflecting pricing discipline.

Speaker 3: For example, lower written premiums this year for workers' compensation and commercial umbrella together reduce the third quarter 2023 growth rate for total commercial lines by two percentage points.

For example, lower written premiums this year for workers' compensation and commercial umbrella together reduced the third quarter 2023 growth rate for total commercial lines by two percentage points.

Dennis Mcdaniel: First, please note that some of the matters we 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 SECs. Also, our reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared and affordance with statutory accounting rules and therefore is not reconciled to GAAP.

Speaker 7: The commercialized combined ratio improved by 3.8 percentage points, despite an increase of 2.2 points from higher catastrophe loss.

The commercial lines combined ratio improved by three eight percentage points. Despite an increase of 2.2 points from higher catastrophe losses.

Steven Johnston: Now, I'll turn over the call to Steve.

Speaker 4: Personalized Green Net Written Premium's 29% with growth in middle market accounts, in addition to Cincinnati private client business for our agency's high net worth clients.

Personal lines grew net written premiums, 29% with growth in middle market accounts. In addition to Cincinnati private client business for our agencies high net worth clients.

Speaker 7: The combined ratio was 4.6 percentage points better than last year, including 2.0 points for lower catastrophe losses.

The combined ratio was four six percentage points better than last year, including 2.0 points from lower catastrophe losses.

Speaker 4: Excess and surplus lines improved its combined ratio by 3.4 percentage points and continue to grow profitably with net written premiums up 6%.

Excess and surplus lines improved its combined ratio by three four percentage points and continue to grow profitably with net written premiums up 6%.

Speaker 7: Both Cincinnati Read and Cincinnati Global again, enhanced our overall combined ratio and continue to demonstrate risk diversification benefits.

Both Cincinnati re and Cincinnati Global again enhanced our overall combined ratio and continue to demonstrate risk diversification benefits.

Speaker 7: Cincinnati REITs combined ratio for the third quarter of 2023 was an excellent 81.0% with net written premiums essentially matching last year's third quarter. Casualty premiums again decreased as we saw fewer attractive opportunities in certain segments of the market.

Cincinnati Res combined ratio for the third quarter of 2023 was an excellent 81.0% with net written premiums essentially matching last year's third quarter.

<unk> premiums again decreased as we saw fewer attractive opportunities in certain segments of the market.

Steven Johnston: Good morning, and thank you for joining us today to hear more about our results. We are pleased with our operating performance in the third quarter, as we again saw improved underwriting ratios for almost every major line of business, compared with the first half of this year. Then that loss of $99 million for the third quarter of 2023 included recognition of $362 million on an after-tax basis for the reduction of fair value of equity securities still held.

Speaker 7: Property premiums increase 24% largely due to higher pricing, while specialty premiums increased 31% due to attractive opportunities in price.

Property premiums increased 24% largely due to higher pricing, while specialty premiums increased 31% due to attractive opportunities and pricing.

Steven Johnston: We continue to believe the value of our equity portfolio will increase over the long term. As of September 30, it had $5.6 billion in appreciated value. It decreased 8% during the third quarter, but it increased 2% since the end of last year. Non-GAAP operating income of $261 million for the third quarter more than double last year's $116 million, including a decrease of catastrophe losses of $58 million on an after-tax basis. The 94.4% third quarter 2023 property casualty combined ratio was 9.5 percentage points better than the third quarter of last year, including a decrease of 4.8 points for catastrophe losses. 2023 XCAT-AXA gear combined ratios are also better than 22, improving 3.4 percentage points for the third quarter and 1.7 points on an eye month-based.

Speaker 4: Cincinnati Global's combined ratio was an excellent 79.5% while reporting strong growth with net written premiums up 21%.

Cincinnati Global's combined ratio was an excellent 79, 5% while reporting strong growth with net written premiums up 21%.

Speaker 4: Our life insurance subsidiary again performed well with third quarter 2023 net income up 9% and term life insurance earned premiums growing 2%.

Our life insurance subsidiary again performed well with third quarter 2023, net income at 9% and term life insurance earned premiums growing 2%.

Speaker 4: I'll conclude with our primary measure of long-term financial performance, the value creation ratio. While our VCR on a nine-month basis is 4.4%, our third quarter 2023 VCR was negative 2.6%. Net income before investment gains or losses for the quarter contributed positive 2.4%. Lower valuation of our investment portfolio and other items contributed negative 5.0%.

I'll conclude with our primary measure of long term financial performance the value creation ratio.

While our VCR on a nine month basis is four 4% our third quarter 2023, VCR was negative two 6% net income before investment gains or losses for the quarter contributed.

<unk> contributed positive two 4%.

Our valuation of our investment portfolio and the other items contributed negative 5.0%.

Speaker 4: Next, Chief Financial Officer Mike Sewell will add his commentary about our financial performance.

Next Chief Financial Officer, Mike Sewell will add his commentary about our financial performance.

Speaker 5: Thank you, Steve, and thanks to all of you for joining us today. Investment income again contributed nicely to improved operating results, growing 17% for the third quarter, 2023, compared with the third quarter of 2022.

Thank you, Steve and thanks to all of you for joining us today.

<unk> income again contributed nicely to improved operating results growing 17% for the third quarter 2023, compared with the third quarter of 2022.

Speaker 5: Dividend income was up 5% for the quarter in part due to net equity security purchases for the first nine months of 2023 that totaled $89 million.

Dividend income was up 5% for the quarter in part due to net equity security purchases for the first nine months of 2023 that totaled $89 million.

Speaker 7: On Interesting, I'm continued to show a strong growth of 19% for the third quarter of this year. We added more fixed-metry securities to our investment portfolio, but net purchases told me just over $1 billion for the first nine months of the year.

Non interest income continued to show strong growth up 19% for the third quarter of this year we.

We added more fixed maturity securities to our investment portfolio with net purchases totaling just over $1 billion for.

For the first nine months of the year.

Speaker 5: The third quarter pre-tax average yield of 4.44% for the Fixed Maturity Portfolio rose 36 basis points compared with last year.

The third quarter pretax average yield of four 4% for the fixed maturity portfolio rose 36 basis points compared with last year.

Speaker 5: the average pre-tax yield for the total of purchased taxable and tax exempt bonds during the third quarter of 2023 was 6.4%.

The average pre tax yield for the total of purchase taxable and tax exempt bonds. During the third quarter of 2023 was six 4%.

Speaker 3: Baluation changes in aggregate for the third quarter, 2023 were unfavorable. For both our equity and bond portfolio.

Valuation changes in aggregate for the third quarter of 2023 were unfavorable for both our equity and bond portfolios.

Speaker 5: Before tax effects, the net loss was $463 million for the equity portfolio and $369 million for the bond portfolio.

For tax effects. The net loss was six $463 million for the equity portfolio and $369 million for the bond portfolio.

At the end of the quarter.

Speaker 5: total investment portfolio net appreciated value was approximately $4.4 billion.

Total investment portfolio net appreciated value was approximately $4 4 billion.

Speaker 5: The equity portfolio was in a net gain position of $5.6 billion.

The equity portfolio was in a net gain position of $5 6 billion.

Speaker 5: while the fixed maturity portfolio was in a net loss position of 1.2.

While the fixed maturity portfolio was in a net loss position of $1 2 billion.

Speaker 7: Cash flow continued to boost investment income, adding to the benefit of rising bond yields.

Cash flow continued to boost investment income, adding to the benefit of rising bond yields and cash flow from operating activities for the first nine months of 2023 was nearly one $5 billion up $54 million.

Steven Johnston: Services. Similar to last quarter, we also see signs of positive momentum in operating performance. Price and segmentation by risk, the significant average price increases contributed to the increase in our underlying profit, combining with risk selection and other efforts to address elevated inflation effects on incurred losses. On a current accident your basis measured at September 30th before catastrophe losses are 2023 consolidated property casually lost and lost expense ratio improved from 2022 by 4.3 percentage points on a case incurred basis.

Steven Johnston: For the same time period, we increase the incurred but not reported or IVNR component of the ratio by 3.0 points as we continue to recognize uncertainty regarding ultimate losses remaining prudent in our reserve estimates until longer term lost cost trends become more clear. Agencies appointed by Cincinnati Insurance are producing profitable business for us working with associates who provide outstanding service to agents in their clients. Our underwriters are working diligently to retain profitable accounts while managing ones that we determined have inadequate pricing.

Speaker 5: Cashflow from operating activities for the first nine months of 2023 was nearly 1.5 billion dollars, up 54 million dollars from a year ago.

Steven Johnston: They are also careful in selecting risks and pricing new business policies. Estimated average renewal price increases for the third quarter continued at a healthy pace. Our commercial line segment again averaged near the low end of the high single-digit percentage range. While our excess and surplus lines insurance segment continued in the high single-digit range. Personal lines for the third quarter included auto rising to the low double-digit range and no motor rising to the low end of the high single-digit range. We reported 12% growth in consolidated property casualty net rhythm premiums for the quarter. That included an 11% increase in third quarter renewal written premiums reflecting higher levels of insured exposures in addition to price increases.

A year ago.

Speaker 5: We always strive for our expense management efforts to strike an appropriate balance between controlling expenses and making strategic investments in our business.

We always strive for expense management efforts to strike, an appropriate balance between controlling expenses and making strategic investments in our business.

Steven Johnston: Considering operating performance by insurance segment, I'll comment on premium growth and how profitability is improving compared to a year ago. Commercial lines grew net rhythm premiums 5% in the third quarter, reflecting pricing discipline. For example, lower written premiums this year for workers compensation and commercial umbrella together reduced the third quarter 2023 growth rate for total commercial lines by 2 percentage points. The commercial lines combined ratio improved by 3.8 percentage points despite an increase of 2.2 points from higher catastrophe losses.

Speaker 5: The third quarter 2023 property casualty underwriting expense ratio was 0.6 percentage points higher than last year, primarily due to an increase in associate and travel related expenses.

The third quarter 2023 property casualty underwriting expense ratio was 0.6 percentage points higher.

Last year <unk>.

Similarly, due to an increase in associate and travel related expenses on.

Speaker 5: on a nine month basis, it was 0.4 points lower.

Steven Johnston: Personal lines grew net written premiums 29% with growth in middle market accounts in addition to Cincinnati private client business for our agency's high net worth clients. The combined ratio was 4.6 percentage points better than last year, including 2.0 points for lower catastrophe losses.

On a nine month basis, it was 0.4 points lower.

Speaker 5: Moving on to loss reserves, our approach consistently aims for net amounts in the upper half of the actually estimator range of net loss and loss expense reserves.

Moving on to loss reserves, our approach consistently aim for net amounts in the upper half of the Actuarially estimated range of net loss and loss expense reserves as.

Steven Johnston: Services. Access and surplus lines improved its combined ratio by 3.4 percentage points and continue to grow possibly with net written premiums up 6%. Both Cincinnati Re and Cincinnati Global, again, enhanced our overall combined ratio and continued to demonstrate risk diversification benefits. Cincinnati Re's combined ratio for the third quarter of 2023 was an excellent 81.0% with net written premiums essentially matching last year's third quarter. Casually premiums again decreased as we saw fewer attractive opportunities in certain segments of the market.

Speaker 5: As we do each quarter, we consider new information such as paid losses and case reserves, and then updated estimated ultimate losses and losses expenses by accident year, in line of business.

As we do each quarter, we considered new information such as paid losses in case reserves, and then updated estimated ultimate losses and losses expenses.

Steven Johnston: Property premiums increased 24% largely due to higher pricing, while specialty premiums increased 31% due to attractive opportunities in pricing. Cincinnati Global's combined ratio was an excellent 79.5% while reporting strong growth with net written premiums up 21%. Our life insurance subsidiary, again, performed well with third quarter 2023 net income up 9%. In-term life insurance, our premiums growing 2%.

And at year end of line of business.

Speaker 5: For the first three quarters of 2023, our net addition to property casually lost and lost expense reserves was $655 million, including $539 million for the IB&R portion.

For the first three quarters of 2023, our net addition to property casualty loss and loss expense reserves was $655 million.

Steven Johnston: I conclude with our primary measure of long term financial performance, the value creation ratio. While our VCR on the nine month basis is 4.4%, our third quarter 2023 VCR was negative 2.6%. Net income before investment gains are losses for the quarter contributed positive 2.4%. Lower evaluation of our investment portfolio and other items contributed negative 5.0%.

Including $539 million for the IV in our portion.

Speaker 5: During the third quarter, we experienced $53 million of property casualty net favorable reserve development on prior acting years that benefited the combined ratio by 2.7 percentage points.

During the third quarter, we experienced $53 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by two seven percentage points.

Speaker 5: on an all lines basis by accident year, net reserve development for the first nine months of 2023 included favorable $123 million for 2022, $7 million for 2021, $72 million for 2020, and $11 million in aggregate for accident years prior to 2020.

On an all lines basis by accident year net reserve development for the first nine months of 2023 included favorable $123 million for 2022.

Michael Sewell: Next, Chief Financial Officer Mike Soule will add his commentary about our financial performance.

Michael Sewell: Thank you, Steve, and thanks to all of you for joining us today. Investment income again contributed nicely to improved operating results, growing 17% for the third quarter 2023 compared with the third quarter of 2022. Given an income was up 5% for the quarter, in part due to net equity security purchases for the first nine months of 2023 by totaled $89 million. On interesting income continued to show strong growth of 19% for the third quarter of this year.

$7 million for 2021 $72 million for 2020 and $11 million in aggregate for accident years prior to 2020.

Speaker 5: In terms of capital management, we also have a consistent long-term approach.

In terms of capital management, we also have a consistent long term approach.

Speaker 5: During the third quarter of 2023, we paid $115 million in dividends to shareholders. We did not repurchase any shares.

During the third quarter of 2023, we paid a $115 million in dividends to shareholders, we did not repurchase any shares.

Speaker 5: Our assessment of our financial flexibility and our financial strength is that both are in excellent condition.

While our assessment of our financial flexibility and our financial strength.

Michael Sewell: We added more fixed-metry securities to our investment portfolio with net purchases totally just over $1 billion for the first nine months of the year. The third quarter pre-tax average yield of 4.44% for the fixed-metry portfolio rose 36 basis points compared with last year. The average pre-tax yield for the total of purchased taxable and tax exempt bonds during the third quarter for 2023 was 6.4%. Baluation changes in aggregate for the third quarter 2023 were unfavorable for both our equity and bond portfolios. Before tax effects, the net loss was $6463 million for the equity portfolio and $369 million for the bond portfolios.

Is that both are in excellent condition.

Speaker 5: As usual, I'll conclude with a summary of third quarter contributions to book value per share. They represent the main drivers of our value creation ratio.

As usual I'll conclude with a summary of third quarter contributions to book value per share.

They represent the main drivers of our value creation ratio.

Speaker 5: Property Cately Underwriting increased book value by 56 cents. Flight Insurance Operations increased book value is 73 cents.

Property casualty underwriting increased book value by <unk> 56.

Life insurance operations increased book value 73.

Speaker 5: investment income other than life insurance and net of non insurance items added $1.4.

Investment income other than life insurance and net of non insurance items and a one dollar enforced.

Speaker 5: net investment gains and losses for the fixed income portfolio decreased book value by $1.86.

Net investment gains and losses for the fixed income portfolio decreased book value by $1 86.

Speaker 5: And that investment gains losses for the equity portfolio, decreased growth value by $2.33. And we declared 75 cents per share in dividends to share.

Net investment gains and losses for the equity portfolio decreased book value by $2 33.

Michael Sewell: Review. At the end of the quarter, total investment portfolio net appreciated value was approximately $4.4 billion. The equity portfolio was in a net game position of $5.6 billion while the fixed maturity portfolio was in a net loss position of $1.2 billion. Cash flow continued to boost investment income, adding to the benefit of rising by yields. Cash flow from operating activities for the first nine months of 2023 was nearly $1.5 billion, up $54 million from a year ago.

And we declared a <unk> 75 per share in dividends to shareholders.

Speaker 5: The net effect was a book value decrease of $2.61 per share during the third quarter to $67.72 per share. Now, I'll turn the call back.

Net effect was a book value decrease of $2 61 per share during the third quarter to $67 72 per share.

Now I'll turn the call back over to Steve.

Speaker 4: Thanks, Mike. I'm proud of the way our associates continue to help the independent agents who represent Cincinnati Insurance navigate this challenging market. We're sticking to our fundamentals, listening, offering solutions, and building strong relationships.

Thanks, Mike I'm proud of the way our associates continue to help the independent agents, who represent Cincinnati insurance navigate this challenging market. We are sticking to our fundamentals listening offering solutions and building strong relationships.

Speaker 6: Because our field associates live in the communities our agents serve, we see and respond quickly to market pressures most impacting them. We are then able to buy solutions that contribute to our agent success, leading to long-term shareholder value.

Because of our field associates live in the communities our agents serve we.

We see and respond quickly to market pressures most impacting the <unk>.

Michael Sewell: We always try for our expense management efforts to strike an appropriate balance between controlling expenses and making strategic investments in our business. The third quarter, 2023 property casualty underlying expense ratio was 0.6% points higher than last year, primarily due to an increase in associate and travel related expenses. On a nine month basis, it was 0.4 points lower.

Are they able to find solutions that contribute to our agent success, leading to long term shareholder value.

Speaker 11: As a reminder, with Mike and me today are Steve Spray, Steve Saloria, Mark Shambo, and Teresa Hopper. Gary, please open the call for questions. We will now begin.

As a reminder, with Mike and me today are Steve spray, Steve So lauria, Mark Shambaugh and Theresa Hoffer.

Gary Please open the call for questions.

We will now begin the question and answer session.

Speaker 1: To ask a question, you may press star then one on your telephone keypad.

To ask a question you May press Star then one on your telephone keypad.

Speaker 1: If you are using a speakerphone, please pick up your handset before pressing the key.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Speaker 1: To withdraw your question, please press star to then two. At this time, we will pause momentarily to assemble our Russ.

Michael Sewell: Moving on to loss reserves, our approach consistently aimed for amounts in the upper half of the actually estimator range of net loss and loss expense reserves. As we do each quarter, we consider new information such as paid losses and case reserves, and then updated estimated ultimate losses and losses expenses by accident year and line of business. For the first three quarters of 2023, our net addition to property casualty loss and loss expense reserves was $655 million, including $539 million for the IV&R portion.

At this time, we will pause momentarily to assemble our roster.

Speaker 1: Our first question is from Greg Peters with Raymond James. Please go ahead.

Our first question is from Greg Peters with Raymond James. Please go ahead.

Well good morning, everyone.

Good morning, Greg.

Speaker 6: Can we start off with, in your press release, you've talked about the 193 new agent appointments this year.

Can we start off with.

In your press release, you've talked about the 193, new agent appointments this year.

Speaker 6: How long does it take them once they've been pointed to get up to some minimum levels of premium on a per-agent basis, or put it another way, you know, what's sort of the production targets you have in mind when you appoint a new agency? Can you just clarify the comments of the agents that are just doing personal lines only?

How long does it take down once they've been pointed to get up to some minimum levels. So premium on a per agent basis or put it another way.

Michael Sewell: During the third quarter, we experienced $53 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 2.7% points. On an online basis by accident year, net reserve development for the first nine months of 2023 included, favorable $123 million for 2022, $7 million for 2021, $72 million for 2020, and $11 million in aggregate for accident years prior to 2020.

What's sort of the production targets you have in mind when you appoint the new agency can you just clarify the comments.

The agents that are just doing personal lines only.

Speaker 5: Greg this is Steve Sprague. You know it really depends agency by agency. You know one thing I think as a company we've always prided ourselves on is we do business with the best independent agents out there.

Sure Yes, Greg this is Steve spray it really depends agency by agency.

One thing I think as a company we've always prided ourselves on is we do business with the best independent agents out there.

Speaker 5: And we are very deliberate about the agencies we appoint. We spend a lot of time kind of making sure that it's a fit for both us and the agency. So when we go into a relationship, we feel pretty confident that we're aligned. And.

And we are very deliberate about the agencies we appoint.

We spend a lot of time.

Kind of making sure that it's a fit for both us and the agency. So when we when we go into a relationship we feel pretty confident that we're aligned and.

Michael Sewell: In terms of capital management, we also have a consistent long-term approach. During the third quarter of 2023, we paid $115 million in dividends to shareholders. We did not repurchase any shares. Our assessment of our financial flexibility and our financial strength is that both are in excellent condition.

Speaker 5: that the future will bear fruit. It just depends on the size of the agency, maybe the state, community, but over time, we're the number one or number two carrier as measured by premium.

That the future will bear fruit it just depends on the size of the agency may be the state and community.

But over time, we are the number one or number two.

Carrier as measured by premium volume.

Speaker 5: in the majority of the agencies we do business with for at least five years or more. So that gives you a little, you know, just a little flavor of the trajectory that we have. And so, you know, it just depends, but, you know, we don't want to be just a consequential, inconsequential player in any agency.

In the majority of the agencies, we do business with for at least five years or more so that gives you a little.

Michael Sewell: As usual, I'll conclude with a summary of third quarter contributions to both value per share. They represent the main drivers of our Credit. A pretty casually underwriting increased book value by 56 cents. Life insurance operations increased book value 73 cents. Investment income, other than life insurance and net of non-insurance items, added $1.04. Net investment gains and losses for the fixed income portfolio decreased book value by $1.86. Net investment gains and losses for the equity portfolio decreased book value by $2.33. A&N, we declared 75 cents per share in dividends to shareholders. The net effect was a book value decrease of $2.61 per share during the third quarter to $67.72 per share.

A little flavor of.

The trajectory that we have.

<unk>.

It just depends but.

We don't want to be just a consequential inconsequential player in any agency.

Speaker 6: And the percentage of, I think you called out for press release, Chunk of those were personal lines only, was that geographically focused or can you add some color on that?

And the percentage of.

I think you called out in the press release.

Because those were personal lines only was that geographically focused or can you add some color on that.

Speaker 7: Yeah, sure, Greg. Sorry, you got stuck. Typically, personalized only agencies will be private client or high net worth.

Yes, sure Greg sorry can you guys typically personal lines only agencies will be private client or high net worth.

Speaker 5: you know, focused agencies to where maybe maybe as an example, let's say in the state of California, we're not active there for commercial lines right now so if we make an agency appointment in California, it would be personalized only and it would be hindered or private client folks.

Focused agencies to where maybe maybe as an example, let's say in the state of California, We're not active there for commercial lines right now so if we make an agency appointment in California would be personal lines only and it would be high network of private client focus.

Okay.

Speaker 6: Got it. All right. I guess pivoting to the commercial lines side of the business. If we look at new business trends in your commercial, it's kind of flatish, the last couple of quarters.

Got it alright.

I guess pivoting to the commercial lines side.

Steven Johnston: Now I'll turn the call back over to Steve. Thanks, Mike. I'm proud of the way our associates continue to help the independent agents who represent Cincinnati insurance navigate this challenging market. We're sticking to our fundamentals, listening, offering solutions, and building strong relationships.

Of the business.

If we look at new business trends in your commercial its kind of flattish the last couple of quarters.

Speaker 6: And by the way, we've heard some other carriers talk about pockets of increased competition. Maybe you can give us some perspective inside your book of commercial where you're seeing some headwinds from competition and where you're seeing some opportunities.

And by the way we've heard some other carriers talk about pockets of increased competition, maybe you could give us some perspective.

Inside your book of commercial where where you're seeing some headwinds from competition and where youre seeing some opportunities.

Steven Johnston: Because our community and respond quickly to market pressures most impacting them. We are then able to buy solutions that contribute to our agent success, leading to long-term shareholder value.

Speaker 7: Yeah, again, Steve Sprague, Greg, it's that new business that you're pointing to is all around underwriting discipline and pricing segmentation and just discipline from our field underwriters on the pricing.

Yes, again, Steve spray Greg.

That new business.

Gary: As a reminder, with Mike and me today, our Steve Spray, Steve Celoria, Mark Shambo, and Teresa Hopper, Gary, please open the call for questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two.

That you're indicating that you're pointing to is all around underwriting discipline.

And pricing segmentation, just discipline from our field underwriters on the pricing front.

Speaker 5: So, you know, it's a very competitive, you know, it's always a competitive market. And it varies by state, it varies by territory, on who we're competing with. But we have just, you know, over the years, our proven model, the pointing to best agents.

So it's a very competitive it's always a competitive market and it varies by state it varies by territory on who we're competing with but we have just.

Over the years, our proven model.

Appointing the best ages.

Speaker 7: signing field associates to those agencies, making decisions locally. That has served us.

Assigning field associates to those agencies, making decisions locally.

Gary: At this time, we will pause momentarily to assemble our roster.

It has served us.

Speaker 7: really well over the long pull. In the last 10 years, the pricing precision, the pricing segmentation, the tools that we have, have really been what's driving

Really well over the long pole.

In the last 10 years, the pricing precision the pricing segmentation and the tools that we have.

Greg Peters: Our first question is from Greg Peters with Raymond James. Please go ahead. Well, good morning, everyone. Good morning, Greg. Can we start off with, in your press release, you've talked about the 193 new agent appointments this year. How long does it take them once they've been pointed to get up to some minimum levels premium on a per-agent basis, or put it another way, what sort of the production targets you have in mind when you point the new agency?

Have really been what's driving.

Speaker 5: quite frankly, the profitability that you see that we're producing, and our new business underwriters working with our agents out in the field.

Quite frankly, the profitability that you see that we're producing at our new business underwriters working with our agents out in the field.

Speaker 7: are executing on that discipline strategy. And it's put pressure, candidly, it's put some pressure on the new business this year. But I can tell you, each quarter of this year, as that commercial market has gotten a little more disrupted, we are seeing more and more opportunities at the underwriting terms, conditions, quality, and pricing that we feel are adequate.

Our executing on that disciplined strategy and it's put pressure.

Candidly, it's put some pressure on the new business.

This year, but I can tell you each quarter of this year is that commercial market has gotten a little more disrupted we are seeing more and more opportunities at the underwriting terms conditions quality and pricing that we feel are adequate.

Greg Peters: Can you just clarify the comments of the agents that are just doing personal lines only? Greg, this is Steve Spray. It really depends agency by agency. One thing I think, as a company, we've always brought ourselves on as we do business with the best independent agents out there. And we are very deliberate about the agencies we appoint. We spend a lot of time kind of making sure that it's a fit for both us and the agency.

Okay.

Speaker 6: Okay. And then I guess the final question would be on personal lines because if we look at your results for...

Okay.

And then I guess the final question.

Be on personal lines because.

We look at your results for.

Speaker 6: For the quarter, actually, you're doing pretty well in the context of how the rest of the market's performing. And you're also reporting some substantial growth and new business written. So maybe give us sort of an updated view on the trends you're seeing inside your personal lines business. And I'm thinking about auto and property, clearly. So if you could separate the two, that'd be great.

For the quarter actually Youre doing.

Pretty well.

In the context of how.

The rest of the markets performing.

And Youre also reporting some substantial growth.

New business written so.

Maybe give us sort of an updated view on the trends youre seeing inside your personal lines business and I'm thinking about auto and property clearly so if you could separate the two that'd be great.

Greg Peters: So when we go into a relationship, we feel pretty confident that we're aligned. That the future will bear fruit. It just depends on the size of the agency, maybe the state and community. But, you know, over time, we're the number one or number two carrier as measured by premium body in the majority of the agencies business lift for at least five years or more. So that gives you a little, you know, just a little flavor of the trajectory that we have.

Speaker 7: Sure, first of all, I might come and just, we're pleased and encouraged by the improvement that X-CAT actually or that core loss ratio that we're seeing in postlines as well. Certainly had some pressure with inflation and with increased cat levels, but feel like we are, I shouldn't say feel like we're confident that we're getting the rate of a prospect to go forward basis that's adequate.

Sure first of all I might I might comment.

We're pleased and encouraged by the improvement in ex cat accident year that core loss ratio that we're seeing in personal lines as well.

Certainly had some pressure with inflation and with increased cat levels, but feel like we are I shouldn't say feel like we're confident that we're getting the rate prospective go forward basis.

Greg Peters: And so, you know, it just depends. But, you know, we don't want to be just a consequential, inconsequential player in any agency. And the percentage of, I think you called out the press release of a chunk of those were personal lines only was that geographically focused or can you add some color or not? Yeah, sure, great. Sorry. You have to typically, personal lines only agencies will be private client or high net worth, you know, focused agencies to where maybe, maybe as an example, let's say in the state of California, we're not active there for commercial lines right now. So if we make an agency appointment in California, it would be personal lines only and it would be high net worth of private client focused. Got it. All right.

Adequate.

Speaker 7: The fact that, you know, about 55% of our purse lines today would be what we call private client, 45% roughly middle market. We think that is a key for us with our agency model in the marketplace.

Fact that about 55% of our personal lines today would be what we call private client, 45% roughly middle market. We think that is a key for us with our agency model in the marketplace.

Speaker 5: that we can be a go-to care for our agents on regardless of the size of the home. And the way we handle claims locally, fast-fair, with empathy, we think puts us in a really good position going forward on all persons.

That we can be a go to care for our agents on.

Regardless of the size of the home and the way we handle claims locally fast square with.

With empathy, we think puts us in a really good position going forward.

All personal lines.

Speaker 5: Yeah, the loss ratio has certainly been under pressure with inflation and the increased cat activity, but we're confident in where it's headed going forward. We're seeing a lot of opportunity out there, a lot of disruption in that personalized market.

Yes, it's the loss ratio has been.

Certainly been under pressure with inflation and the increased due to increased cat activity, but we're confident in where it is headed going forward. We've seen a lot of opportunity out there lot of disruption in that personal lines market.

Steve Spray: I guess pivoting to the commercial lines side of the business. If we look at new business trends in your commercial to kind of flatish the last couple of quarters. And by the way, we've heard some other carriers talk about pockets of increased competition. Maybe you can give us some perspective inside your book of commercial where, where you're seeing some headwinds from competition where you're seeing some opportunities. Yeah. Again, Steve, Greg, it's that new business that you're that you're pointing to is all around underwriting discipline and pricing segmentation and just discipline from from our field underwriters on the pricing front.

Speaker 7: Candidly, I've never seen a harder market than the pursed-lines market we're seeing today. And we think with our balance sheet and, again, our agency strategy, the way we're approaching it, the expertise, the pricing precision, we think it's going to bode well for us in the future to grow that pursed-lines book.

Candidly I have never seen a 100 market and the personal lines market, we're seeing today, and we think with our balance sheet.

Our agency strategy the way, we're approaching it the expertise the pricing precision, we think it's going to bode well for us in the future to grow that personal lines book.

Great. Thanks for the detail.

Yeah, absolutely. Thank you Greg.

Speaker 1: The next question is from Mike Zuremsky with BMO. Please go ahead.

The next question is from Mike Zaremski with BMO. Please go ahead.

Yeah.

Speaker 8: Hey, thanks. Good morning. I guess maybe going back to the topic of growth and risk selection, and maybe just sticking with commercial lines. So if I kind of just step back,

Hey, Thanks, Good morning, I guess, maybe maybe going back to kind of the topic of growth.

Risk selection.

Maybe just sticking with commercial lines, so if I kind of just step back.

Since any financials pricing power levels are.

Speaker 8: Cincinnati Financial's pricing power levels are fairly similar to a number of your peers, yet your growth rate, just overall growth rate, is much lower than your historical growth rate relative to the industry, which you've been talking about this, about changing your appetite a bit, and every quarter this isn't like a surprise.

Steve Spray: So, you know, it's a very competitive, you know, it's always a competitive market and it varies by state, it varies by territory on who we're competing with. But we have just, you know, over the years, our proven model, the pointing to best agents, assigning field associates to those agencies, making decisions locally that has served us really well over the long pull. In the last 10 years, the pricing precision, the pricing segmentation, the tools that we have, have really been much driving quite frankly, the profitability that you see that we're producing and our new business underwriters working with our agents out in the field are executing on that discipline strategy.

Similar to the number of your peers.

Yet your growth rate.

Just overall growth rate.

Is much lower than your historical growth rate relative to the industry, which you've been talking about this you know about.

Your appetite a bit.

And every quarter this isn't like a surprise.

Speaker 8: But just kind of curious, like, are...

But just just.

Curious like are.

Our.

Speaker 8: I would have thought, it doesn't seem like you're losing business because your pricing levels are similar to peers. Or maybe I'm wrong and in just certain lines, we're looking at all-in rate and certain lines you actually are casualty raising a lot more than the average, or is your fundamental risk selection process...

I would've thought it doesn't seem like your youre, losing business because of pricing.

Because your pricing levels are similar to peers. So is it.

Or maybe I'm wrong, just certain lines actually youre actually here, we're looking at all in rate in certain lines, you've actually our casualty raising a lot more than the average or is that has your fundamental like risk selection process.

Steve Spray: And it's a put pressure candidly, it's put some pressure on the new business this year, but I can tell you each quarter of this year, because that commercial market has gotten a little more disrupted. We're seeing more and more opportunities at the underwriting terms, conditions, quality and pricing that we feel are adequate. Okay.

Speaker 8: change that you're just not willing to take on certain risks or you're trying to shed certain risks. And trying to just see where we are in this journey to whether your historical growth rate will get back to what it used to be, historical growth of the industry, if your appetite decides to change.

Should that you're you're just not willing to take on certain risks or youre trying to shed certain risks kind of just kind of see where we are in this journey.

Whether the your historical growth rate.

Get back to what it used to be historically relative to the industry is if your appetite decides to.

Steve Spray: And then I guess the final question would be on personal lines because, you know, if we look at your results for, for the quarter, actually, you know, you're doing, you know, pretty well as a person, you know, in the context of how the rest of the market performing, and you're also reporting some substantial growth and, and, and new business written. So, maybe give us a sort of an updated view on the trends you're seeing inside your personal lines business.

<unk>.

Yes, Mike.

Speaker 5: Steve Sprague again, you know, Steve Johnson commented in his opening remarks on the net written premium piece of commercialized. I might start there in that, we've got a two full point drag on commercialized from workers' compensation and umbrella or excess you could call it. Both for different reasons. Work comp about a point drag that has been going on now for several years, just simply.

But Steve spray again, Steve Johnston commented in his opening remarks on the net written premium.

Peace of commercialize that might start there and that we've got a two four point drag on commercial lines from workers' compensation and umbrella or excess you could call. It both for different reasons work comp about a point drag.

That has been going on now for several years just simply.

Steve Spray: And I'm thinking about auto and property clearly. So, if you could separate the two, that'd be great. Sure. First of all, I might, I might come and just we're pleased and encouraged by the improvement that X cat actually or that core loss ratio that we're saying in personal lines as well. Certainly had some pressure with inflation and with increased cat levels, but feel like we are, I shouldn't say feel like we're confident that we're getting the rate of perspective go forward basis that's adequate.

Speaker 5: The rate decreases that are being pushed through really for the industry. On umbrella, that is deliberate. It started probably a little over a year ago in commercial lines. And...

The primarily the rate decreases that are being pushed through.

Really for the industry on umbrella that is deliberate it started probably a little over a year ago, your commercial and commercial lines.

Speaker 7: certain jurisdictions, certain states, we really took aggressive, appropriate, underwriting action on our umbrella book, reducing limits, maybe shedding some of that business. So that's putting the weight on the commercial.

In <unk>.

Certain jurisdictions.

Certain states, we really took.

Aggressive appropriate underwriting actions on our umbrella book, reducing limits, maybe shedding some of that business. So that's that's putting away.

On the commercial lines growth as well.

Steve Spray: The fact that, you know, about 55% of our personal lines today would be what we call private client 45% roughly, middle market. We think that is a key for us with our agency model in the marketplace. That we can be a go to care for our agents on regardless of the size of the home and the way we handle claims locally fast fair with empathy. We think puts us in a really good position going forward on all personal lines.

Speaker 5: to your comment of returning to historical levels or walking away from other business.

To your comment of returning to historical levels or walking away from.

Other business.

Speaker 5: You know, like I was saying before, I think we've got a winning strategy. We've got a winning model doing business locally with the best agents in the business.

Like I was saying before I think we've got a winning strategy. We've got a winning model doing business locally with the best agents in the business.

Speaker 5: face-to-face that has served us well for many, many years. And our risk selection, our claims handling, our loss control, those things have all improved on a linear basis since I've been here, I think 32 years ago.

Face to face that has served us well for many many years and our risk selection.

Claims handling our loss control those things have all improved on a linear basis since I've been here I think 32 years ago.

Steve Spray: Yeah, it's the loss ratio has been has certainly been under pressure with inflation and the increased the increased cat activity, but we're confident in where it's head going forward. We've seen a lot of opportunity out there, a lot of disruption in that personal lines market. Candidly, I've never seen a harder market than the personal lines market we're seeing today and we think with our balance sheet and our agency strategy, the way we're approaching at the expertise, the pricing precision. We think it's going to both well for us in the future to grow that personal lines. Great. Thanks for the detail. Absolutely. Thank you, Greg.

Speaker 7: our pricing precision, segmentation.

Our pricing precision segmentation.

Has.

Speaker 5: has improved exponentially over the last 10 years.

Has improved.

Exponentially over the last 10 years.

Speaker 5: So where we just didn't have those tools, say when I was a field rep, you know, 15 years ago, and the look into each individual account that we do and price them on their own merits. So yes, our field underwriters and our renewing.

So where we just didn't have those tools. So when I was a field rep.

15 years ago.

And the look into each individual account that we do and price them on their own merits. So yes, our field underwriters and our renewal underwriters have those pricing precision tools that they use to where if we don't feel like we can get an adequate rate on a risk adjusted basis.

Speaker 5: Have those pricing precision tools that they use.

Speaker 5: to where if we don't feel like we can get an adequate rate on a risk-adjusted basis.

Speaker 5: We'll walk away from the account and we'll wait it out. First and foremost is we need an underwriting profit. We've got 11 and a half years in our own now, 11 years and nine months of underwriting profit, and we want to keep that rolling. I don't worry about growth over the long pull at Cincinnati Insurance Company.

Yes, we will walk away from an account and we'll wait it out first and foremost is we need an underwriting profit, we've got 11 and a half years in a row now.

Mike Zaremski: The next question is from Mike Zaremsky with BMO. Please go ahead. Hey, thanks. Good morning. I guess maybe maybe going back to kind of the topic of growth and risk selection and maybe just sticking with commercial lines. If I kind of just step back, since any financials pricing power levels are fairly similar to a number of your peers, yet your growth rate, just overall growth rate, is much lower than your historical growth rate relative to the industry.

11 years and nine months.

Underwriting profit and we want to keep that Roland I don't worry about growth over the long pole of Cincinnati Insurance company. We are talking about agency appointments, we have plenty of runway to continue to do that we're growing our E&S company.

Speaker 5: We were talking about agency appointments. We have plenty of runway to continue to do that, but growing our E&S company, you see what's going on in person, why not?

You see what's going on in personal lines.

Speaker 5: I don't worry about growth prospects for the sheep.

Well I'm not I'm not.

I don't worry about growth prospects for the future.

Speaker 8: Okay, that's a thorough and helpful answer.

Okay, that's thorough and helpful answer.

Speaker 8: My follow-up is, you know, you've been deliberate in your actions to kind of increase IB&R. And you've talked about uncertainty in terms of, you know, more uncertainty in terms of the lost-cross trend environment. You know, growth is obviously, you just talked about it, maybe it's a little bit slower too. So would it be fair to characterize that?

Mike Zaremski: You've been talking about this, about changing your appetite a bit and every quarter, this isn't like a surprise. Just kind of curious, I would have thought it doesn't seem like you're losing business because your pricing levels are similar to peers. Or maybe I'm wrong and just certain lines, you're actually looking at all in rate and certain lines who actually are casualty raising a lot more than the average or is your fundamental risk selection process change in that you're just not willing to take on certain risks or you're trying to shed certain risks.

And my follow up is.

You've been deliberate and interactions to kind of include increase.

<unk>.

He talked about uncertainty.

More uncertainty in terms of the loss cost trend environment.

Growth is obviously you just talked about maybe it was low.

A little bit slower two so would it be fair to characterize that.

Speaker 8: Cincinnati is taking a view that lost cost trend is a bit higher on a go for basis, you know

Danny is taking a view that loss cost trend is a bit higher on a go forward basis.

Okay.

Speaker 8: than it has been a year or two ago. Is that a fair characterization?

Yes.

And it has been.

And at year or two ago is that a fair characterization.

Speaker 4: Greg, this is Steve Jostin. And I think what we've seen was kind of a rapid acceleration of inflation starting at the beginning of 2021. It has now in the last several months.

Greg This is Steve Justin and I think what we've seen was kind of a rapid acceleration of.

Mike Zaremski: And just kind of see where we are in this kind of journey to whether your historical growth rate will get back to what it used to be. The historical growth of the industry is if your appetite decides to change. Yeah, Mike, Steve Spray again, Steve Johnston commented in his opening remarks on the net written premium piece of commercialize. I might start there in that we've got a two full point drag on commercialize from workers compensation and umbrella or access you could call it.

Inflation, starting at the beginning of 2021.

It is now in the last several months.

Speaker 4: moderated still going up but moderated

Moderated still going up but moderated.

Speaker 4: I think just with the way that we time our rating increases.

I think just with the way that we time.

Our rate increases.

Speaker 4: And rolling onto the book, it takes a little while for them to actually reach all the policyholders.

The rolling onto the book it takes a little while for them to actually reach all the policyholders.

Speaker 4: But the key point I think is that we are very perspective in terms of the way we look at inflation.

But the key point I think is that we are very perspective in terms of the way we look at inflation.

Mike Zaremski: Both for different reasons, work comp about a point drag that has been going on now for several years. Just simply, the price and the rate decreases that are being pushed through really for the industry on umbrella. That is deliberate. It started probably a little over a year ago here in commercial in commercial lines in certain jurisdictions, certain states. We really took aggressive appropriate underwriting action on our umbrella book, reducing limits. It's maybe shedding some of that business.

Speaker 4: The most important thing we can do is to look out into the perspective policy periods that we're pricing for right now, do our best to estimate the lost costs and the inflation impact on that perspective period, and set the pricing right, and do it on an individual policy by policy basis the best we can. I think we're in a good position to continue doing that.

The most important thing we can do is to look out into the prospective policy periods that were pricing floor right now.

Do our best to estimate the loss costs and the inflation impact on that perspective period and set the pricing right and do it.

A.

Individual policy by policy basis, the best we can and I think we're in a good position to continue doing that.

Speaker 8: So you clearly feel the conflict pricing is an access of lost trend, not going to what if everything plays out.

Okay.

And clearly feel it sounds like pricing is.

Excess of loss trend knock on wood, if everything plays plays out.

Mike Zaremski: So that's that's putting the weight on the commercialize growth as well. So your comment of returning to historical levels or walking away from other business. You know, like I was saying before, I think we've got a winning strategy. We've got a winning model doing business locally with the best agents in the business face to face that has served us well for many, many years and our risk selection, our claims handling, our loss control, those things have all improved on a linear basis.

Speaker 9: if you don't agree with that. I would agree with that. OK.

I agree with that.

I would agree with that.

Okay. Thank you very much.

Thank you Greg.

Speaker 1: The next question is from Grace Carter with Bank of America. Please go ahead.

The next question is from Grace Carter with Bank of America. Please go ahead.

Yeah.

Hi, everyone.

Good morning Grace.

Speaker 10: Looking at results line by line in the commercial segment, it seemed like quite a few saw your over your improvement. But the workers compensation line sticks out a little bit kind of the second quarter in a row where we've seen a decent bit of pressure on the underlying loss ratio. I was just curious if we could get more color and what's going on there. I mean, obviously you'll reference the pricing pressure for that book.

Good morning.

What kind of results line by line in the commercial segment it seemed like quite a few saw.

Year over year improvement.

Gross compensation line sticks out a little bit kind of the second quarter in a row, where we've seen it.

Mike Zaremski: Since I've been here, I think 32 years ago, our pricing precision segmentation has has improved exponentially over the last 10 years to where we just didn't have those tools say when I was a field rep, you know, 15 years ago. In the look into each individual account that we do and price them on their own merits. So yes, our field underwriters and our renewal underwriters have those pricing precision tools that they use to where if we don't feel like we can get an adequate rate on a risk adjusted basis.

Decent bit of pressure on the underlying loss ratio.

Curious if we could get more color on what's going on there I mean, obviously you've referenced the.

Pricing pressure for that book.

Speaker 10: We've also heard some other peers talk about concerns regarding medical inflation, and if y'all could just give us some more color on what's happening there.

We've also heard some other peers talk about concerns regarding medical inflation. If you all could just give us some more color on what's happening there.

Speaker 5: Yeah, great Steve Spray. Thanks for the question. The accident here.

Yes, great Steve spray thanks for the question.

Second year.

Speaker 5: Combined racial, ostracio, forward comp is, yes, it's under pressure. Calendar year is still performing quite well. The

Combined ratio loss ratio for work comp is yes. It is it's under pressure calendar year.

Is still performing quite well.

<unk>.

Speaker 5: You know, the it is I hate to keep saying the same story, but it really is simply just pressure downward pressure on the rates that are put out by the rating bureaus. And you know, fortunately,

Yes.

It is I hate to keep saying the same story, but it really is simply just pressure downward pressure on the rates that are put out by the rating bureaus.

Mike Zaremski: Yeah, we'll walk away from an account and we'll wait it out. First and foremost is we need an underwriting profit. You know, we've got 11 and a half years in a row now of 11 years and nine months of underwriting profit and we want to keep that rolling. I don't worry about growth over the long poll as Cincinnati insurance company. We were talking about agency appointments. We have plenty of runway to continue to do that or growing our ENS company.

Unfortunately.

Speaker 5: I think for Cincinnati Insurance Company, we've always been conservative on the workers' compensation line. We've got tremendous expertise. We're ready to grow that business when we think that the pricing is at an attractive level. But right now, it's

I think for Cincinnati insurance company.

We've always been conservative on our workers compensation line, we've got tremendous expertise, we're ready to grow that business when we think that the.

<unk> is that an attractive level.

But right now it's.

Mike Zaremski: You see what's going on in personal lines. Well, I'm not I don't worry about growth prospects for the future. Okay, that's thorough and helpful answer. And my follow up is, you know, you've been deliberate and in your actions to kind of increase. I mean, I've talked about uncertainty in terms of more uncertainty in terms of the loss cost trend environment. You know, growth is obviously you just talked about it, maybe a little bit slower too.

Speaker 5: You know, again, we're doing it risk by risk and we are running new workers compensation business, but just it's a line that, as you, as you mentioned, medical inflation can can impact it over time.

Again, we're doing at risk by risk and we are running.

New workers compensation business, but just it's aligned that.

As you mentioned medical inflation can can impacted over time.

Speaker 5: I can't see that we're seeing anything out of the ordinary with the medical inflation at this point.

I can't say that.

We're seeing anything out of the ordinary with the medical inflation at this point.

Speaker 5: But that that that line of business is definitely under pressure on action in your basis and primarily from just repression.

<unk>.

But.

That line of businesses is definitely under pressure on an accident year basis, primarily from rate pressure.

Thank you.

Speaker 10: And I guess on Cincinnati re, Y'all have mentioned kind of reducing casualty premiums in that book for a couple of quarters now. And we've also heard some more players in the market start talking about.

And I guess.

Matti re mentioned kind of reducing casualty premiums in that book for a couple of quarters now and we've also heard some more players on the market start talking about.

Mike Zaremski: So would it be fair to characterize that Cincinnati is taking a view that loss cost trend is a bit higher on a go-for basis. You know, then it has been a year or two ago, is that a fair characterization? Greg, this is Steve Justin, and I think what we've seen was kind of a rapid acceleration of inflation starting at the beginning of 2021, it is now in the last several months of this moderated, still going up, but moderated, I think just with the way that we time our rate increases and rolling on to the book, it takes a little while for them to actually reach all the policyholders, but the key point I think is that we are very prospective in terms of the way we look at inflation, the most important thing we can do is to look out into the prospective policy periods that we're pricing for right now, do our best to estimate the lost cost and the inflation impact on that prospective period, and set the pricing right and do it on an individual policy by policy basis the best we can.

Speaker 10: concerns over casualty loss costs trend here lately. I was just curious if you think that there's anything particularly new going on in casualty reinsurance or

Oh for casualty loss cost trends here lately I was just curious if you think that there's anything, particularly new going on in casualty reinsurance.

Speaker 10: uh... if uh... recent comments are surprising to y'all at all or um... i and i guess next year just if you think opportunities from property specialty et cetera will outweigh any sort of ongoing pressure on the uh... the casualty piece of that book to allow it to inflect back to growth

If the recent comments are surprising you all at all or.

Mike Zaremski: And I think we're in a good position to continue doing that. Okay, so you clearly feel it sounds like pricing is an access of loss trend, not going with everything plays out if you don't agree with that. I would agree with that. Okay, thank you very much. Thank you, Greg.

Next Dr. Jeff If you think opportunities from property specialty et cetera will outweigh any sort of ongoing pressure on.

The casualty piece of that book to allow it to inflect back to growth. Thanks.

Speaker 4: Thank you, Grace. Really good question. And I think it blew down to our model at Cincinnati degree and that we didn't really actually form a company at Cincinnati degree. It writes on Cincinnati insurance paper. So there's the A plus quality there. And then it's an allocated capital model. So what we've tried to do is just look at every contract as it comes up. We don't.

Okay. Thank you great.

Really good question and I.

I think it boils down to our model with Cincinnati re and that we we didn't really actually form a company Cincinnati re writes on Cincinnati insurance paper, So theres eight a plus quality there and then it's an allocated capital model. So what we tried to do is just look at every contract as it comes up.

We don't.

Speaker 7: try to do things this much in property, this much in casualty, this much in specialty. Just look at each contract that becomes available to us on its own merits. And if we can get the target hurdle rate that we're looking for and feel good about how it fits into our overall risk model, we'll go ahead and write that. So I would think that we will see movements

Try to do things this much in property. This much in casualty. This much in specialty just look at each contract that becomes available to us.

On its own merits.

And if we can get the target hurdle rate that we're looking for.

And feel good about how it fits into our overall risk model. We will go ahead and write that so.

I would think that we will see movements.

Speaker 4: in the various business lines that reflect that. I think right now, just what we're seeing is certain lines like professional liability, transactional liability, and so forth are areas where we felt that the pricing and sometimes the opportunity are not as

In the various business lines.

<unk> I think right now just what we're seeing is certain lines like professional liability transactional.

Liability and so forth are areas, where we felt that the pricing and sometimes the opportunity are not as good as they've been in the past where we are seeing.

Greg: The next question is from Grace Carter with Bank of America, please go ahead. Hi, everyone. Good morning. Looking at kind of results line by line in the commercial segment, it seemed like quite a few saw your over your improvement, but the workers compensation line sticks out a little bit kind of the second quarter in a row where we've seen a decent bit of pressure on the underlying loss ratio. I was just curious if we could get more color on what's going on there, I mean obviously you'll have a reference the pricing pressure for that book, but we've also heard some other peers talk about concerns regarding medical inflation, and if y'all could just give us some more color on what's happening there.

Speaker 4: As good as they've been in the past where we are seeing a really good opportunity in the property and specialty line. So we'll just go out that contract by contract and.

Really good opportunity.

In the property and specialty lines. So we will just go at that contract by contract.

Speaker 4: You know, very bullish with everything that Cincinnati is bringing to us in terms of profitability and diversification.

Very bullish with everything that Cincinnati re is bringing to us in terms of profitability and diversification.

Thank you.

Yeah.

Speaker 1: Again, if you have a question, please press star then 1.

Again, if you have a question. Please press Star then one.

Speaker 11: The next question is from Mayor Shields with KBW. Please go ahead. Great, thanks and good morning all.

The next question is from Meyer Shields with <unk>. Please go ahead. Please go ahead.

Great. Thanks, and good morning all.

Good morning Nathan.

Hello, Hi.

Speaker 11: Two quick questions on personal lines. First, is there any appreciable difference in the profitability of private clients and middle market?

Greg: Yeah, Grace deep spray, thanks for the question. The accident year combined ratio, loss ratio for work comp is yes, it's under pressure. The calendar year is still performing quite well, the, you know, the, it is, I hate to keep saying the same story, but it really is simply just pressure downward pressure on the rates that are put out by the rating bureaus. And you know, fortunately, I think for Cincinnati insurance company is that we've always been conservative on the workers compensation line.

Two quick questions on personal lines. Firstly is there any appreciable difference in the profitability of product lines and middle market.

Speaker 5: You know, mayor, Steve Sprite, you know, we don't, right now we are disclosing the difference in loss ratios for our specific book between middle market and high net worth of private client, but I can't tell you over the long pull the industry private client has out before a middle market by a pretty good margin and we feel like we can create those same results over.

Steve spray we don't.

Right now we are disclosing the difference in loss ratios.

There are specific both between middle market and high net worth private clients, but I can tell you over the long for the industry.

Private client.

Before middle market by a pretty good margin and.

We feel like.

We can create those same results over time as well.

Greg: We've got tremendous expertise. We're ready to grow that business when we think that the pricing is not an attractive level, but right now it's, you know, again, we're doing it risk by risk and we are running new workers compensation business, but just it's a line that, as you, as you mentioned, medical inflation can impact it all the time. I can't see that we're seeing anything out of the ordinary with the medical inflation at this point.

Speaker 5: Not that we want to subsidize middle market, a middle market, but we need to stand on its own. We've got the pricing precision there. Again, we've got the agency force. So we expect both segments to be profitable.

Not that we wanted to subsidize the middle market and middle market book needs to stand on its own we got the pricing precision there again, we've got the agency force.

So we expect both.

Segments to be profitable.

Speaker 5: But we do think over the long pull, the high net worth of private quiet will happen.

But we do think over the long pole the high net worth private client.

We'll outperform.

Speaker 11: Okay, that's very helpful. I completely understood. The second question, a couple of companies that talked about moderating frame cost inflation, specifically for auto-sysical damage. You know, it's wondering whether you're seeing that in the third quarter as well.

Okay, that's very helpful I completely understood.

Second question on a couple of companies have talked about moderating claim cost inflation, specifically for auto physical damage and I was wondering whether youre seeing that in the third quarter as well.

Greg: But that that that line of business is definitely under pressure on action in your basis and primarily from just read pressure. Thank you, and I guess on Cincinnati re y'all have mentioned kind of reducing casualty premiums in that book for a couple of quarters now, and we've also heard some more players in the market start talking about concerns over casualty lost cost trends here lately. I mean, I was just curious if you think that there's anything particularly new going on in casualty reinsurance or if the recent comments are surprising to y'all at all, or I guess next year, just if you think opportunities from property specialty, etc, will outweigh any sort of ongoing pressure on the casualty piece of that book to allow it to reflect back to growth.

Speaker 4: We have seen it in just certain areas within physical damage, you know, as we look at replacement vehicles, rental cars, that sort of thing. But again, we're still kind of looking at inflation on a...

We have seen it in just certain areas within physical damage you know as we look at replacement vehicles rental cars that sort of thing.

But again, we're still kind of looking at inflation Nana.

How it's been.

Speaker 4: cumulatively since 2021 as we use that data to forecast.

Cumulatively since 2021 this week.

Use that data to forecast the loss cost in the premium needed in the perspective periods. So.

Speaker 4: in the premium needed in the prospective periods, and so we're being cautious, I think, in terms of where we are with our inflation rates, but we do feel that we're getting ahead of our lost cost trends. We are ahead of our lost cost trends with our pricing, and I think we benefited that while we had a stay-at-home credit during 2020, we did not actually – we ran that through the expense ratio. We did not actually decrease.

We're being cautious I think in terms of.

Where we are with our inflation rates, but we do feel that.

We're getting ahead of our loss cost trends. We are ahead of our loss cost trends with our pricing and I think we benefited that while we had a stay at home credit.

Greg: Thanks. Thank you, Grace. Really good question. And I think it boils down to our model at Cincinnati degree and that we we didn't really actually form a company Cincinnati re it writes on Cincinnati insurance paper. So there's the eight a plus quality there. And then it's an allocated capital model. So what we tried to do is just look at every contract is it comes up. We don't try to do things this much in property, this much in casualty, this much in specialty.

During 2020, we did not actually.

Ran that through the expense ratio, we did not actually decrease the order rates and I think.

Speaker 4: the auto rates, and I think that's helping us now as we contemplate inflation in our pricing.

That's helping us now as we go.

Contemplate inflation and our pricing.

Greg: Just look at each contract. It becomes available to us on its own merits. And if we can get the target hurdle rate that we're looking for and feel good about how it fits into our overall risk model, we'll go ahead and write that. So I would think that we will see movements. In the various business lines that reflect that I think right now, just what we're seeing is certain lives like professional liability, transactional liability and so forth are areas where, you know, we've felt that the pricing and sometimes the opportunity or not is as good as they've been in the past where we are seeing really good opportunity in the property and specialty lines.

Yes, absolutely and Thats very helpful. Thank you so much.

Thank you Amir.

Speaker 1: The next question is from Fred Nelson, a private investor. Please go ahead.

The next question is from Fred Nelson, a private Investor. Please go ahead.

I had a call last night.

Pushing 90, thank Amy for Cincinnati financial natural owner.

Speaker 12: that's older than I would repair that today on the phone on the conference call. And she didn't even know you had one. But the question is, battery-operated vehicles of all types. Have that changed the price?

Repair that today on the phone or on the conference call and say I didn't even know you had one.

Question is battery operated vehicles of all types.

Does that change the pricing of insurance replacement cost of the accidents.

Speaker 12: Replacement costs and accidents as you have any comments you can share

Any comments you can share.

Speaker 4: Yeah, friend, this is Steve Johnson. And I think what we just have to do is make sure that we contemplate the cost involved, you know, as we go to having more electronic vehicles in the fleet.

Yes, Brad this is Steve Johnston I think what we just have to do is make sure that we can.

Contemplate the costs involved you know as we go to having more electronic vehicles in the fleet.

Speaker 4: there will be more of that cost in the battery. They are less complex, I believe, in terms of all the different parts that are involved. It is different. It will create a challenge to stay on top of as we contemplate those costs and price. But we feel that we're up to the task. Please thank your friend that called us. We appreciate your comments.

There'll be more of that cost in the battery.

They are less complex I believe in terms of all the different parts that are involved so.

Greg: So we'll just go at that contract by contract and, you know, very bullish with everything that Cincinnati is bringing to us in terms of profitability and diversification. Again, if you have a question, please press star then one.

It is different it will create a challenge to stay on top of.

As we contemplate those costs and price.

But we feel that we're up to the task in please thank you for the call. This.

We appreciate your comments.

Speaker 12: Well, thank you. The battery operator calls I have people in the farming business with pickup truck that has a machine rain and they say it's not an easy thing to work with. And they're asking the question about insurance. And so thank you for, you know.

Well. Thank you for the battery operated calls I have people in the farming business with pickup trucks and other machinery.

Grace Carter: The next question is from Mayor Shields with KBW. Please go ahead. Great. Thanks, and good morning, all. Hello, hello. I'm sorry.

It's not an easy thing to do.

Okay.

Quick question about insurance.

Thank you for being the best you could do I really appreciate it.

Grace Carter: It's two questions on personal lines. First, is there any appreciable difference in the profitability of private clients and middle market? You know, Mayor Steve Sprite, you know, we don't right now we are disclosing the difference in loss ratios for our specific book between middle market. I can't tell you, over the long pull, the industry has out the poor middle market by a pretty good margin and we feel like we can create those same results over time as well.

Well. Thank you Fred it's always good to hear from you.

Uh-huh.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to Steve Johnston for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Steve Johnston for any closing remarks.

Speaker 4: Thank you, Gary, and thank you to all for joining us today. We look forward to speaking with you again on our fourth quarter call.

Thank you Gary and thank you to all for joining US today, we look forward to speaking with you again on our fourth quarter call.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Grace Carter: Not that we want to subsidize a little market, a little market, but we stand on its own. We've got the pricing precision there. Again, we've got the agency force. So we expect both segments to be profitable. But we do think over the long pull, the kind of worth of private client. We have seen it in just certain areas within physical damage. You know, as we look at replacement vehicles, rental cars, that sort of thing.

Grace Carter: But, again, we're still kind of looking at inflation on how it's been. We've been keen, relatively since 2021 is we use that data to forecast the lost cost in the premium needed in the prospective periods. And so we're being cautious, I think in terms of where we are with our inflation rates, but we do feel that we're getting ahead of our lost cost trends. We are ahead of our lost cost trends with our pricing.

Grace Carter: And I think we benefited that while we had a stay at home credit during 2020, we did not actually, we ran that through the expense ratio. We did not actually decrease the auto rates. And I think that's helping us now as we contemplate inflation and our pricing.

Meyer Shields: Thank you. Thank you so much.

Meyer Shields: Thank you, Mayor.

Fred Nelson: The next question is from Fred Nelson, a private investor. Please go ahead. I've got a call last night from a lady pushing 90, thanking me for sending an anti-financial natural that I would repair that today on the phone on the conference call and she didn't even know you had one.

Steven Johnston: But the question is battery operated vehicles of all types. Has that changed the pricing of insurance, replacement costs and accidents? Do you have any comments you can share? Fred, this is Steve Johnson. And I think what we just have to do is make sure that we contemplate the cost involved. You know, as we go to having more electronic vehicles in the fleet, there will be more of that cost in the battery that they are less complex.

Steven Johnston: I believe in terms of all the different parts that are involved. So, you know, it is different. It will create a challenge to stay on top of as we contemplate those costs in price. But we feel that we're up to the task and please thank your friend that called us. We appreciate your comments.

Fred Nelson: Well, thank you. The battery operated calls. Well, I have people in the farming business with pickup trucks and other machine rain. And they say it's not an easy thing to work with. And they ask the question about insurance. And I feel thank you for the best you do. I really appreciate it. Thank you, Fred.

Unknown Executive: It's always good to hear from you.

Steven Johnston: This concludes our question and answer session. I would like to turn to the conference back over to Steve Johnston for any closing remarks. Thank you, Gary, and thank you all for joining us today. We look forward to speaking with you again on our fourth quarter call.

Unknown Executive: The conference is now concluded.

Unknown Executive: Thank you for attending today's presentation.

Unknown Executive: You may now disconnect.