Q1 2024 Cincinnati Financial Corporation Earnings Call

April 26, 2024

Operator: Good day, and welcome to the Cincinnati Financial First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode.

Good day and welcome to the Cincinnati Financial first quarter 2024 earnings Conference call.

All participants will be in listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad.

Should you need assistance. Please signal a conference specialist by pressing the star followed by zero.

After todays presentation, there will be an opportunity to ask questions.

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

Operator: To withdraw your question, please press stars 1 and 2. Please note, today's event is being recorded. I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

Withdraw your question. Please press Star then two.

Please note today's event is being recorded.

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

Dennis E. McDaniel: Hello, this is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our first quarter 2024 earnings conference call. Late yesterday, we issued a news release on our results, along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents, please visit our investor website, CENFN.com slash investors. The shortest route to information is the quarterly results link and the navigation menu on the far left.

Hello, This is Dennis Mcdaniel Cincinnati financial.

Dennis E. McDaniel: Thank you for joining us for our first quarter 2024 earnings conference call.

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

Dennis E. McDaniel: To find copies of any of these documents. Please visit our investor website, <unk> Dot com slash investors. The shortest routes of information is the quarterly results link in the navigation menu on the far left.

Dennis E. 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, investors 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, Cincinnati Insurance's Chief Claims Officer Mark Shambo, and Senior Vice President of Corporate Finance Teresa Hopper.

Dennis E. McDaniel: On this call you'll first hear from Chairman and Chief Executive Officer, Steve Johnston, and definitely executive Vice President and Chief Financial Officer, Mike Sewell.

Dennis E. McDaniel: After their prepared remarks investors participating on the call may ask questions.

Dennis E. McDaniel: At that time, some responses, maybe made by others in the room with us, including President Steve Spray Chief Investment Officer, Steve So L'oreal and Cincinnati Insurance's, Chief claims officer, Mark Shambaugh, and senior Vice President of corporate Finance Theresa Hoffer.

Dennis E. McDaniel: First, please note that some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties. With respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the SEC. Also, a reconciliation of non-GAAP measures was provided with the news release. Statutory county data is prepared in accordance with statutory county rules and therefore not reconciled to GAAP.

Dennis E. McDaniel: First please note that some of the matters to be discussed today are forward looking these.

Dennis E. McDaniel: Forward looking statements involve certain risks and uncertainties.

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

Dennis E. McDaniel: Also a reconciliation of non-GAAP measures was provided with the news release statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP now I'll turn over the call to Steve.

Steven Justus Johnston: Now I'll turn the call over to Steve. Good morning, and thank you for joining us today to hear more about our results. In short, we are off to a great start. Our first quarter results reflect the success of our initiatives to continue balancing the profit and growth of our insurance operations, coupled with strong investment. Net income of $755 million for the first quarter of 2024 included recognition of $484 million on an after-tax basis for the increase in fair value of equity securities still held, representing about three quarters of the increase in net income.

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

Steve: We are off to a great start our first quarter results reflect the success of our initiatives to continue balancing the profit and growth of our insurance operations, coupled with strong investment income.

Steve: Net income of $755 million for the first quarter of 2024 included recognition of $484 million on an after tax basis, where the increase in fair value of equity securities still held.

Steve: Representing about three quarters of the increase in net income.

Steven Justus Johnston: Strong operating results generated the rest of the increase. Non-GAAP operating income of $272 million for the first quarter nearly doubled last year's $141 million, including a decrease in catastrophe losses of $93 million on an after-tax basis.

Steve: Strong operating results generated the rest of the increase.

Steve: non-GAAP operating income of $272 million for the first quarter nearly double last year's $141 million, including a decrease in catastrophe losses of $93 million on an after tax basis.

Steven Justus Johnston: The 93.6% first quarter 2024 property cavity combined ratio was 7.1 points, better than the first quarter of last year, including a decrease of 6.9 points for catastrophe losses. While our combined ratio for Accent Year 2024 before catastrophe losses was a percentage point higher than Accent Year 2023 at three months, if we exclude Cincinnati REIT and Cincinnati Global, the ratio improved by one point. Accident year 2024 also improved on a case-incurred basis. However, we increased incurred but not reported or IV&R reserves as we continue to recognize uncertainty regarding ultimate losses and remain prudent in our reserve estimates until longer-term loss cost trends become more clear.

Steve: The 93, 6% first quarter 2024 property casualty combined ratio was seven one points.

Steve: <unk> in the first quarter of last year, including a decrease of six nine points of catastrophe losses.

Steve: While our combined ratio for accident year 2024, before catastrophe losses was a percentage point higher than accident year 2023 to three months, if we exclude Cincinnati re.

Steve: <unk> global the ratio improved by one point.

Steve: Accident year 2024 also improved on a case incurred basis. However, we increased incurred but not reported or <unk> reserves as we continue to recognize uncertainty regarding ultimate losses and remain prudent in our reserve estimates until longer term loss cost trends become more clear.

Steve: We are also pleased with other measures, indicating good momentum in our operating performance.

Steven Justus Johnston: We are also pleased with other measures indicating good momentum in our operating performance. Another quarter of pricing segmentation by risk plus average price increases helped to improve our underlying profitability, combined with careful risk selection and other efforts to address elevated inflation effects on incurred losses. Agencies representing Cincinnati Insurance, supported by our experienced and professional associates, produced another quarter of profitable business for us. Our underwriters continue to emphasize retaining profitable accounts and managing ones that we determine have inadequate pricing based on our risk selection and pricing expertise.

Steve: Another quarter of pricing segmentation by risk plus average price increases helped to improve our underwriting profitability combining with careful risk selection and other efforts to address elevated inflation effects on incurred losses.

Steve: Agencies, representing isn't that insurers supported by our experienced and professional associates produced another quarter of profitable business for us.

Steve: Our underwriters continue to emphasize retaining profitable accounts and managing wounds that we determined.

Steve: Quit pricing based on our risk selection and pricing expertise.

Steve: Estimated average renewal price increases for the first quarter continued at a healthy pace with commercial lines near the low end of the high single digit percentage range excess and surplus lines in the high single digit range.

Steve: Personal auto in the low double digit range and homeowner in the high single digit range.

Steve: Our consolidated property casualty net written premiums grew 11% for the quarter with what we believe was a nice mix of new business and renewals.

Steven Justus Johnston: Estimated average renewal price increases for the first quarter continue at a healthy pace with commercial lines near the low end of the high single-digit percentage range, excess and surplus lines in the high single-digit range, Personal Auto in the low double-digit range, and Homeowner in the high single-digit range.

Steve: I'll briefly review operating performance by insurance segment, highlighting premium growth and improved profitability compared to a year ago.

Steve: Commercial lines grew net written premium was 7% in the first quarter with a 96, 5% combined ratio improved by three nine percentage points, including $4 two points from lower catastrophe losses.

Steven Justus Johnston: Our Consolidated Property Casualty Net Written Premiums grew 11% for the quarter, with what we believe was a nice mix of new business and renewals. I'll briefly review operating performance by insurance segment, highlighting premium growth and improved profitability compared to a year ago. Commercial lines grew net written premiums 7% in the first quarter with a 96.5% combined ratio that improved by 3.9 percentage points, including 4.2 points from lower catastrophe losses. Personal lines grew net written premiums 33%, including growth in middle market accounts in addition to private client business for our agency's high net worth clients.

Steve: Personal lines grew net written premiums, 33%, including growth in middle market accounts. In addition to private client business, where our agencies high net worth clients.

Steve: Its combined ratio was a very profitable 93, 9% 18, six percentage points better than last year, including $15 nine points from lower catastrophe losses.

Steve: Excess and surplus lines also produced a profitable combined ratio of 91, 9% rising two percentage points from the first quarter a year ago, along with net written premium growth of 7%.

Steve: Both Cincinnati re this is.

Steve: Global continued to produce significant underwriting profit, reflecting our efforts to diversify risk and further improve income stability.

Steven Justus Johnston: This combined ratio was a very profitable 93.9 percent, 18.6 percentage points better than last year, including 15.9 points from lower catastrophe losses. Excess and surplus lines also produced a profitable combined ratio of 91.9%, rising two percentage points from the first quarter of the year ago, along with net written premium growth of 7%. Both Cincinnati REIT and Cincinnati Global continue to produce significant underwriting profits, reflecting our efforts to diversify risk and further improve income stability.

Steve: Cincinnati re combined ratio for the first quarter of 2024 was an excellent 78, 6%.

Steve: That includes IBM that we routinely carry for expected losses from reinsurance treaties, we believe our potential exposure for losses from the Baltimore Bridge collapse is immaterial.

Steve: Cincinnati Res net written premiums decreased by 12% overall, driven by shifting casualty portfolio mix in response to changing market conditions property and specialty premiums increase due to attractive opportunities and pricing.

Steve: Cincinnati Global's combined ratio was also excellent at 69, 8% again reported strong growth with net written premiums up 28%.

Steve: Our life insurance subsidiary continued its strong performance, including first quarter 2024, net income of $19 million and operating income growth of 17%.

Steve: Term life insurance earned premiums grew 2% or.

Steven Justus Johnston: Cincinnati REIT's combined ratio for the first quarter of 2024 was an excellent 78.6%, and that includes IBNR that we routinely carry for expected losses from reinsurance treaties. We believe our potential exposure for losses from the Baltimore Bridge collapse is immaterial.

Steve: Ill conclude with our primary measure of long term financial performance the value creation ratio. Our first quarter 2024, ECR was a strong five 9%.

Steve: Net income before investment gains or losses for the quarter contributed two 3%.

Steve: Overall valuation of our investment portfolio and other items contributed three 6% next.

Steve: Our next Chief Financial Officer, Mike Sewell will add comments to highlight other parts of our financial performance.

Steven Justus Johnston: Cincinnati REITs' net written premiums decreased by 12% overall, driven by a shifting casualty portfolio mix in response to changing market conditions, but property and specialty premiums increased due to attractive opportunities and pricing. Cincinnati Global's combined ratio was also excellent at 69.8 percent. They again reported strong growth with net written premiums up 28 percent. Our life insurance subsidiary continued its strong performance, including first quarter 2024 net income of $19 million and operating income growth of 17%, term life insurance or premiums group 2%.

Michael James Sewell: Thank you, Steve and thanks for all of you for joining US today investment income growth continued at a strong pace up 17% for the first quarter of 2024 compared with the first quarter of 2023.

Michael James Sewell: Dividend income was up 9% for the quarter. Despite net equity security sales for the first three months post 2024, but totaled $40 million.

Michael James Sewell: Interest income grew 21% for the first quarter of this year, we continue to add more fixed maturity securities to our investment portfolio.

With net purchases totaling $374 million for the first three months of the year.

Michael James Sewell: The first quarter pretax average yield of 4.65% for the fixed maturity portfolio was up 40 basis points compared with last year.

Steven Justus Johnston: I conclude with our primary measure of long-term financial performance, the value creation ratio. Our first quarter 2024 VCR was a strong 5.9%. Net income before investment gains or losses for the quarter contributed 2.3 percent to the higher overall valuation of our investment portfolio and other items contributed 3.6 percent. Next, Chief Financial Officer Mike Sewell will add comments to highlight other parts of our financial performance. Thank you, Steve. And thanks to all of you for joining us today.

Michael James Sewell: The average pre tax yield for the total of purchase taxable and tax exempt bonds during the first quarter of 2024.

Michael James Sewell: 579%.

Valuation changes in aggregate for the first quarter 2024 were favorable for equity portfolio and unfavorable for our bond portfolio.

Michael James Sewell: Before tax effects, the net gain was $602 million for the equity portfolio, partially offset by a net loss of $65 million for the bond portfolio.

Michael James Sewell: At the end of the quarter total investment portfolio net appreciated value was approximately $6 $6 billion.

Michael James Sewell: Investment income growth continued at a strong pace, up 17% in the first quarter of 2024 compared with the first quarter of 2023; dividend income was up 9% for the quarter. Despite net equity security sales for the first three months of 2024 that totaled $40 million, bond interest income grew 21% for the first quarter of this year. We continue to add more fixed maturity securities to our investment portfolio, with net purchases totaling $374 million for the first three months of the year.

Michael James Sewell: The equity portfolio was in a net gain position of $7 $2 billion, while the fixed maturity portfolio was in a net loss position of $625 million.

Michael James Sewell: Cash flow continues to benefit investment income in addition to higher bond yields.

Michael James Sewell: Cash flow from operating activities for the first three months of 2024 was $353 million up 41% from a year ago.

Michael James Sewell: Our expense management objectives include an appropriate balance between controlling expenses and making strategic investments in our business.

Michael James Sewell: The first quarter pre-tax average yield of 4.65% for the fixed maturity portfolio was up 40 basis points compared with last year. The average pre-tax yield for the total of purchased taxable and tax-exempt bonds during the first quarter of 2024 was $5.79 per year.

Michael James Sewell: The first quarter 2024 property casualty underwriting expense ratio was 0.7 percentage points higher than last year, primarily related to higher levels of profit sharing commissions for agencies.

Michael James Sewell: Regarding loss reserves, our approach remains consistent and aim for net amounts in the upper half of the Actuarially estimated range of net loss and loss expense reserves.

Michael James Sewell: As we do each quarter, we consider new information such as paid losses in case reserves.

Michael James Sewell: Valuation changes in aggregate for the first quarter 2024 were favorable for our equity portfolio and unfavorable for our bond portfolio. Before tax effects, the net gain was $602 million for the equity portfolio, partially offset by a net loss of $65 million for the bond portfolio. At the end of the quarter, the total investment portfolio net appreciated value was approximately $6.6 billion. The equity portfolio was in a net gain position of $7.2 billion, while the fixed maturity portfolio was in a net loss position of $625 million. Cash flow continued to benefit from investment income in addition to higher bond yields. Cash flow from operating activities for the first three months of 2024 was $353 million, up 41% from a year ago.

Michael James Sewell: When we updated estimate estimated ultimate losses and loss expenses by accident year and line of business.

Michael James Sewell: For the first three months of 2024, our net addition to property casualty loss loss expense reserves was $233 million, including $272 million for the <unk> portion.

During the first quarter, we experienced a $100 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 5.0 percentage points.

Michael James Sewell: Almost every line of business had favorable development, except for commercial casualty, which was unfavorable by just $254000.

Michael James Sewell: We added reserves to several older prior accident years and reduced reserves for the three most recent accident years.

Michael James Sewell: On an all lines basis by accident year net reserve development for the first three months of 2024 included favorable $184 million for 2023.

Michael James Sewell: Our expense management objectives include an appropriate balance between controlling expenses and making strategic investments in our business. The first quarter 2024 property capital underwriting expense ratio was 0.7 percentage points higher than last year, primarily related to higher levels of profit sharing commissions for agencies. Regarding loss reserves, our approach remains consistent and aims for net amounts in the upper half of the actuarially estimated range of net loss and loss expense reserves. As we do each quarter, we consider new information, such as paid losses and case reserves.

Michael James Sewell: Favorable $24 million for 2022.

Michael James Sewell: And then unfavorable $108 million in aggregate for accident years prior to 2022.

Michael James Sewell: The unfavorable amount reflects our slowing the release of IV in our reserves for those older accident years.

Michael James Sewell: I'll conclude my comments with capital management highlights another area, where we have a consistent long term approach, we paid $116 million in dividends to shareholders. During the first quarter of 2024.

Michael James Sewell: We also repurchased 680000 shares at an average price per share of a $109 89.

Michael James Sewell: We think our financial flexibility and our financial strength are both in excellent shape.

Michael James Sewell: Then we updated estimated ultimate losses and loss expenses by exit year and line of business. For the first three months of 2024, our net addition to property casualty loss and expense reserves was $233 million, including $272 million for the IB&R portion. During the first quarter, we experienced $100 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 5.0 percentage points. Almost every line of business had favorable development, except for commercial casualty, which was unfavorable by just $254,000.

Michael James Sewell: Parent company cash and marketable securities at quarter end was nearly $5 billion.

Michael James Sewell: Debt to total capital continued to be under 10%.

Michael James Sewell: And our quarter end book value was a record high $80 83 per share with $12 $7 billion of GAAP consolidated shareholders' equity, providing plenty of capacity for profitable growth of our insurance operations.

Michael James Sewell: Now I will turn the call back over to Steve.

Steve: Thank you Mike.

Steve: As we've previously announced this is my last conference call as CEO effective at our annual meeting of shareholders next Saturday President, Steve spray will add the role of Chief Executive Officer.

Steve: As I've mentioned before Steve is the right person to build on our decade of profitable growth.

Steve: Understands the importance of our agency centered strategy and the unique advantages it brings.

Steve: Confident in his abilities to bring innovative ideas together with the hallmarks of Cincinnati insurance to create opportunities for shareholders agents and associates.

Michael James Sewell: We added reserves to several older prior accident years and reduced reserves for the three most recent accident years; on an all lines basis by X year, net reserve development for the first three months of 2024 included favorable $184 million for 2023, favorable $24 million for 2022, and an unfavorable $108 million in aggregate for accident years prior to 2022. The unfavorable amount reflects our slowing the release of IV&R reserves for those older accident years.

Speaker Change: Look forward to continuing to work with him as chairman of the board.

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

Speaker Change: Rocco Please open the call for questions.

Rocco: Yes, Sir Thank you would like to ask a question. Please press Star then the one.

Rocco: To remove yourself from Hugh Please press Star then two.

Rocco: Our first question comes from Charlie or other with Citi. Please go ahead.

Charlie: Hey, Thanks, good morning.

Charlie: Give some helpful color on that.

Charlie: Your loss picks.

Charlie: Curious how should we think about your loss picks in commercial casualty have you have you made any changes to your view of loss trend.

Michael James Sewell: I'll conclude my comments with capital management highlights, another area where we have a consistent long-term approach. We paid $116 million in dividends to shareholders during the first quarter of 2024. We also repurchased 680,000 shares at an average price per share of $109.89.

Charlie: Just given the trajectory of the current accident year loss ratio.

Charlie: Making an additional caution.

Charlie: Should we expect you to hold a bit more of a buffer.

Charlie: Near term given uncertainty.

Speaker Change: Yes, we feel that.

Speaker Change: Confident Charlie with the.

Loss pick that we have we are reflecting uncertainty there is a lot of good going on in the commercial casualty with rates we feel.

Steven Justus Johnston: We think our financial flexibility and our financial strength are both in excellent shape. Parent company cash and marketable securities at quarter end were nearly $5 billion. Debt to total capital continued to be under 10%, and our quarter-end book value was a record high $80.83 per share, with $12.7 billion of gap consolidated shareholders' equity providing plenty of capacity for profitable growth of our insurance operation. Now I'll turn the call back over to Steve. Thank you, Mike. As we've previously announced, this is my last conference call as CEO. Effective at our annual meeting of shareholders next Saturday, President Steve Spray will add the role of Chief Executive Officer.

Speaker Change: <unk> our loss cost trends, however for first quarter.

There is additional uncertainty we are.

Speaker Change: Recognizing that in our loss pick.

Speaker Change: Yeah.

Speaker Change: Got it thank you.

Maybe in workers comp.

Speaker Change: Looks like pricing and incremental step down in your initial loss pick and Airtel.

Speaker Change: Is there anything in that.

Speaker Change: And pricing being down more R. R.

I guess are you seeing anything there.

Speaker Change: So we're just continuing to see the same trends that we have been seen with.

Speaker Change: Rates are under pressure there, but also strong performance.

Speaker Change: Historically from the line.

Speaker Change: Though recognizing the uncertainty.

Speaker Change: Comes with the rate decreases with a little bit higher.

Speaker Change: Loss pick.

Speaker Change: For the current year.

Speaker Change: Okay. Thank you.

Thank you. Thank you.

Microsoft: And our next question comes from Microsoft.

Microsoft: Please go ahead.

Hey, thanks.

Microsoft: Yeah.

Microsoft: Our earnings release, you talked about the underlying loss ratio for commercial improving client, but you said excluding.

Operator: As I've mentioned before, Steve is the right person to build on our decade of profitable growth. He understands the importance of our agency-centered strategy and the unique advantages it brings. I'm confident in his abilities to bring innovative ideas together with the hallmarks of Cincinnati insurance to create opportunities for shareholders, agents, and associates. I look forward to continuing to work with him as chairman of the board. As a reminder, with Mike and me today are Steve Spray, Steve Celoria, Mark Shambo, and Teresa Hoffer. Rocco, please open the call for questions. Yes, sir. If you would like to ask a question, please press star, then 1. To remove yourself from the queue, please press stars and two.

Microsoft: Cynthia Murray and global.

But there are reasons you pointed that out as you know what.

Microsoft: Why did I am not sure I may have missed it why did Dr. Sandy.

Microsoft: <unk> global.

Microsoft: Underlying loss ratio increase so much.

Microsoft: Yes.

Microsoft: The point to point. This out is as we have the three <unk> commercialized personalize and excess and surplus lines.

Microsoft: <unk> is a consolidated you also have to add the other portion which includes Cincinnati re and Cincinnati global So since the first three segments I mentioned had improvements we pointed out those in the other segment.

Microsoft: I will emphasize that things are going great.

Microsoft: Both Cincinnati re and Cincinnati global.

Speaker Change: I think one of the things that.

Speaker Change: As we mentioned, we don't think we had material.

Speaker Change: Exposure to the.

Rich glass in Baltimore, we had been shaping the Cincinnati re book in a very positive manner in terms of de risking.

Operator: Our first question comes from Charlie Lederer with Citi. Please go ahead. Hey, thanks. Good morning.

Speaker Change: And so I think one of the things that caused the attritional to go up if we compare it to the same quarter a year ago.

Speaker Change: Is that the mix has shifted to a little bit more of a pro rata, our proportional reinsurance which would have.

Unknown Executive: You gave some helpful color on your loss picks, but I'm curious, how should we think about your loss picks in commercial casualty? Have you made any changes to your view of the loss trend, just given the trajectory of the current accident year loss ratio? Are you putting in additional caution?

Speaker Change: Less risk margin and it would have a higher attritional tick, but there will be less volatility there and so I think that would be driving what.

Speaker Change: What we're seeing there in Cincinnati re.

Speaker Change: Very strong those zero cats for the quarter.

Unknown Executive: Should we expect you to hold a bit more of a buffer near term, given uncertainty? Yes, we feel confident, Charlie, with the lost pick that we have. We are reflecting uncertainty. There's a lot of good going on in the commercial casualty business, with rates, we feel, you know, exceeding our lost cost trends. However, you know, for the first quarter, where there's additional uncertainty, we are recognizing that in our lost pick

Speaker Change: 10, four points of favorable development versus seven seven of adverse a year ago.

Speaker Change: I think.

Speaker Change: The $14 million in favorable development that we show about $13 million of it came from 2023.

Speaker Change: With the full year.

Speaker Change: Combined ratio of 2023% to 77, 7% in this first quarter and a strong 78 six this hard work and reshaping. The book has really paid off the inception to date.

Speaker Change: Combined ratio at the end of the year of 2022 was 101 point too and with those two strong marks in the full year of 2023 in the first quarter here now.

Unknown Executive: Thank you. Maybe in workers' comp, it looks like pricing took an incremental step down in your initial loss pick there, too. Is there anything in that pick, I guess, beyond pricing being down more or... I forget. Are you seeing anything there?

Speaker Change: In just over a year, our inception to date at $94 five so I think.

Speaker Change: The action is paying off.

Speaker Change: It does show a higher pick in the current accident year, but I think it is.

Unknown Executive: So, we're just continuing to see the same trends that we have been seeing with, you know, rates under pressure there, but also strong performance, you know, historically from the line. We are, though, recognizing the uncertainty that comes with the rate decreases with a little bit higher loss pick for the current year. Okay, thank you.

Speaker Change: It's a less risky portfolio at this point.

Speaker Change: I think the same thing for <unk>.

Speaker Change: But if you want to talk a little bit more about this in aggregate.

Speaker Change: For Cincinnati Global same thing strong 69, eight may have had three consecutive years now as a top quartile Lloyd's underwriter.

Speaker Change: And while they've done that they've been diversifying in terms of their footprint by product line by geography.

Speaker Change: They are also providing an additional avenue for access to Lloyd's for the agents that are appointed by C. CIC. So a lot of.

Speaker Change: A lot of positive <unk>.

Operator: Thank you. Thank you. And our next question comes from Mike Zaremski with BMO. Please go ahead.

Speaker Change: It reflected with strong results and again, it's pretty tough at Lloyd's to be top quartile three years in a row the way they've done also this quarter zero cats.

Unknown Attendee: Hey, thanks. In the earnings release, you talked about the underlying loss ratio for commercial insurance improving by a point, but you said it excluded Cincinnati Re and Global. Was there a reason you pointed that out as, you know, what? Why did you do that? I'm not sure I may have missed it.

Speaker Change: Versus $11, one a year ago, and then the reserve development.

Speaker Change: Favorable by 25 six points this year versus adverse by three two.

Speaker Change: Got it so I think in both of those businesses.

Speaker Change: There's a ton of positive going on and we've only pointed it out.

Speaker Change: Yeah.

Speaker Change: So that the math would be easier as you saw the consolidated.

Unknown Executive: Why did the Cincinnati Re and Global underlying loss ratio increase so much? Yeah, I think the point of pointing this out is that we have the three segments, commercial lines, personal lines, and excess and surplus lines. To get to the consolidated, you also have to add the other portion, which includes Cincinnati REIT and Cincinnati Global. So, since

Speaker Change: <unk>.

Speaker Change: With commercialized department the personal lines.

Speaker Change: The excess and surplus event.

Speaker Change: To add the other portion to get to the consolidated.

Speaker Change: Okay. That's helpful color.

Speaker Change: I guess, what do you say then.

Speaker Change: Because it's on the business mix shift and since a re then we should be thinking about the underlying loss ratio structurally being maybe a little bit higher.

Speaker Change: But then.

Unknown Executive: The 1st, 3 segments I mentioned had improvements. We pointed out those in the other segment. I will emphasize that things are going great for both Cincinnati REIT and Cincinnati Global. I think 1 of the things that, you know, as we mentioned, we don't think we have material exposure to Rich Glass and Baltimore.

But less potential.

Speaker Change: Volatility around the overall combined ratio.

Speaker Change: That's helpful.

Speaker Change: Okay.

Speaker Change: Did I interject, you guys want to say something else, Rob will answer that my follow up.

Rob: No. Please please move also as a follow up.

Speaker Change: Okay. Thanks.

Speaker Change: Yes.

Speaker Change: Thinking about <unk>.

Speaker Change: Commercial lines.

Speaker Change: Reinsurance and global.

Unknown Executive: We have been shaping the Cincinnati REIT book in a very positive manner in terms of de-risking. And so I think one of the things that caused the attritional pick to go up, if we compare it to the same quarter a year ago, is that the mix has shifted to a little bit more of a pro rata or proportional reinsurance, which would have less risk margin in it, it would have a higher attritional pick, but there would be less volatility there.

Speaker Change: Yeah.

Speaker Change: You bet.

Speaker Change: Yes.

Speaker Change: You've been on the longest path.

Speaker Change: Taking <unk>.

Speaker Change: <unk>.

Speaker Change: To add I guess.

Speaker Change: Reserves or just conservatism.

Speaker Change: <unk> picks given the inflationary environment.

Speaker Change: Yes.

Speaker Change: Persisting a bit.

Speaker Change: If I look at like overall top line growth and maybe you could talk about the whole segment, but I'll just focus on commercial casualty because that's been one of the areas where inflation has been Ben.

Unknown Executive: And so I think that would be driving, you know, what we're seeing here in Cincinnati REIT, very strong, those zero cats for the quarter, 10.4 points of favorable development versus 7.7 of adverse a year ago. I think that the 14 million of favorable development that we show, about 13 million of it came from 2023. With the full year, the combined Ratio of 2023 is 77.7, and this first quarter it is a strong 78.6. This hard work in reshaping the book has really paid off.

Speaker Change: Yeah.

Speaker Change: Our higher than expected.

Speaker Change: Look at just overall top line growth net premium written growth now.

Speaker Change: Still not.

Speaker Change: <unk>.

Speaker Change: I think your historical levels relative to the industry, but it has been ticking up a bit.

Speaker Change: Are you so given your scale.

Speaker Change: In an environment, where you seem to be kind of adding more IV or are you getting to a point it is.

Speaker Change: Is pricing at a level or is the environment, there where you want to start playing more offense are we still kind of in the past.

Speaker Change: First to be cautious in terms of your the topline growth.

Unknown Executive: Since inception to date, the combined ratio at the end of the year 2022 is 101.2. With those two strong marks in the full year of 2023 and the first quarter here now, in just over a year, our inception to date is at 94.5, so I think the action is paying off. And it does show a higher pick in the current axed year, but I think it's a less risky portfolio at this point. I think the same thing for, you know, if you want to talk a little bit more about Cincinnati, about Cincinnati Global. Same thing, you know; a strong 69.8.

Speaker Change: So I think that we can we can balance the two I think we feel good about our growth double digit overall at 1%.

Speaker Change: Really strong growth in personal lines excuse me and with each of our lines, we write it on a package basis.

Speaker Change: For commercial lines.

Speaker Change: And so there is going to be a little bit of variance.

Speaker Change: Between the different lines, but we think we are in a good place with our pricing, but we realize that you need to you need to stick to adequate pricing.

Speaker Change: You can't fall into a trap, where if others are.

Speaker Change: Under pricing business that you you follow that path, so we're going to maintain the discipline.

Speaker Change: Charged the adequate rate on it.

Speaker Change: Risk by risk basis, and we think that offers there's plenty of opportunity to grow the company.

Speaker Change: And one quick follow up and I may have asked this in the past but.

Unknown Executive: They have had three consecutive years now as a top quartile Lloyds underwriter. And while they've done that, they've been diversifying in terms of their footprint by product line, by geography, and they're also providing an additional avenue for access to Lloyds for the agents that are appointed by CIC. So a lot of positives at CGU are reflected in strong results. And again, you know, it's pretty tough at Lloyds to be top quartile three years in a row the way they've done. Also this quarter, zero cats versus 11.1 a year ago.

Speaker Change: Within Europe.

Speaker Change: Commercial casualty.

Speaker Change: U S non global and reinsurance portfolio I believe.

Speaker Change: You might think about things between.

Speaker Change: Small very small commercial versus mid versus large.

Speaker Change: Incorrect, but just curious if you're now that you've had more time to reflect on an unresolved.

Speaker Change: Is it getting the inflationary.

Speaker Change: Issues you.

Speaker Change: <unk> brought up.

Speaker Change: Emanating from any.

Speaker Change: Parts of the.

Speaker Change: Business mix.

Speaker Change: Other than just fine.

Speaker Change: Yes, I think we're doing a good job of pricing adequately at all and all of those areas I do think and I pointed out on the calls before you really do have to pay.

Unknown Executive: And then the reserve development is favorable by 25.6 points this year versus adverse by 3.2 a year ago. So I think in both of those businesses, there's a ton of positive stuff going on. And we've only pointed this out, you know, so that the math would be easier as you saw the consolidated CLD. Commercialized Department, the personal lines, and the excess and surplus have been added to add the other portion to get to the consolidated. Okay, that's that's a helpful color.

Speaker Change: Most attention to the higher levels, because theres, a leveraged effect of inflation.

Speaker Change: With every layer that you go up for for a constant ground up inflation rate there'll be more of our <unk>.

Speaker Change: Higher inflation with each layer as you go up because of the layer below inflating into the higher layer, but we've been on this for some time, we've got some really talented actuaries that are working with our larger risks.

Speaker Change: We felt that we were addressing it early on from the beginning is that we're in.

Speaker Change: We're in a good position across the board.

Speaker Change: Thanks for the color.

Speaker Change: Thank you. Thank you.

Speaker Change: Next question comes from Michael Phillips with Oppenheimer. Please go ahead.

Unknown Attendee: And I guess what you then say then, because of some of the business makeshift and since they read, and we should be thinking about the underlying loss ratio structurally being maybe a little bit higher, but then, you know, but less potential volatility around the overall combined ratio. Did I interject?

Michael Wayne Phillips: Thanks, Good morning.

Michael Wayne Phillips: Turning to personal auto you comment Steve at the beginning were pretty similar in terms of pricing from last quarter, we got a bit of an uptick back in the amount of.

Michael Wayne Phillips: The loss ratio there I guess can you remind us where you expect this year to kind of pan out in terms of just the profitability of personal auto.

Michael Wayne Phillips: When you think your pricing model.

Michael Wayne Phillips: Maybe Pete can start to come back down it looks like.

Unknown Attendee: Did you guys want to say something else, or will I move on to my follow-up? Yeah, please, please move on to the follow-up. Okay, thanks. Um, just, you know, thinking about going commercial lines, reinsurance, and global. You know, it's, you know, it's, you know, you've been on along this path of taking action to add, you know, I guess, Reserves, or just conservatism into your picks given the inflationary environment, which you're, you know, clearly is persisting a bit.

Michael Wayne Phillips: But youre, probably still above 100% combined ratio there. So when do you expect kind of profitability in personal auto.

Michael Wayne Phillips: Okay.

Speaker Change: We're in a good position personal lines across the board. It has sold a lot on the package.

Speaker Change: And our package position.

Speaker Change: First quarter was.

Speaker Change: For current accident year was actually down a little bit from first quarter, a year ago and pretty flat with the full year.

Speaker Change: So we feel we feel good about the pricing that we've been able to get in auto.

Speaker Change: And then the other and the other lines in.

Speaker Change: We think it will.

Speaker Change: Benefits I think I think Steve has got a little of add on yes. Thanks for the question, Mike I think one of the.

Unknown Attendee: I think I'll look at like overall top-line growth, and maybe I'll, you know, you can talk about the whole segment, but I'll just focus on commercial casualty because that's been, you know, one of the areas where inflation has been, you know, higher than expected. You know, if I look at just overall top line growth, net premium written growth, it's still not at, you know, I think your historical levels relative to the industry, but it has been picking up a bit.

Steve: One of the strengths that we have going.

Steve: It's been planned and we've been executing well continue to work on for the last several years. So it's nothing new but I think it's adding value to the company into our agents is that we've become a premium or a premier.

Steve: For our agents both in the middle market space and in the high net worth and that gives us both product.

Steve: Diversification as well as geographic diversification of our high network, while we write it everywhere tends to be maybe.

Steve: Maybe a little more focused in certain geographies.

Steve: At work or private client is heavier on the property side.

Unknown Attendee: You know, given you're still, you know, in an environment where you seem to be kind of adding more IBNR, are you getting to a point where pricing is at a level, or is the environment there where you want to start playing more offense, or are we still kind of in the, you know, it's best to be cautious in terms of your top line growth? So, yeah, I think that we can balance the two.

Steve: And then on the middle market, we give to your geographic diversification is that book.

Steve: Primarily I'll call the Midwestern southeastern part of the U S book of business and it is heavier in auto so we're getting.

Steve: One being that much more important each of our agents being able to attract more of their business.

Steve: Same time keep the diversification, both geographically and by line of business.

Steve: I think too just the history of personal lines in general.

The sub 95 combined this year last year, we were just a touch over 100 and then it was what four.

Unknown Attendee: I think we feel good about our growth, you know, double-digit overall at 11%, really strong growth in personal lines, excuse me, and with each of our lines, we write it on a package basis for commercial lines, and so there's going to be a little bit of variance, you know, between the different lines, but we realize that, you know, you need to stick to adequate pricing, and you can't fall into a trap where Charged at the adequate rate on a risk by risk basis, we think that offers us plenty of opportunity to grow the company.

Steve: Sure.

Steve: The four prior years to 2023.

Steve: We're under 100, so we've really.

Steve: I think we've demonstrated a history of being able to.

Steve: Price personal lines.

Steve: Doing well across the spectrum as Steve mentioned.

Steve: And then now I might add we've got our we've got the E&S capability that we can provide solutions for our agents and their clients.

Steve: And that's active in nine states.

Steve: So we just feel really good about all personal lines the growth there the momentum that we have.

Steve: So.

Steve: So very bullish on personal lines.

Speaker Change: Okay. Thank you.

Speaker Change: Next one is just back on the commercial lines and this is kind of a number of specific question. If a question a follow up on epic so but.

Unknown Attendee: And one quick follow-up, and I might have asked this in the past, but within your commercial casualty, you know, that the US non-global and reinsurance portfolio, I believe, you know, you might think about things between, Small, very small commercial versus mid versus large, or maybe I'm incorrect, but just curious if, now that you've had more time to reflect on on results, it isn't the inflation I think we're doing a good job of pricing adequately in all those areas.

Speaker Change: If I look at your claim reported claim counts that you gave in your statutory data for other liability it's down significantly.

Speaker Change: 2023 accident year, I mean, more so than the 2020 accident. Your COVID-19 related so I don't know if there's a data thing there or not but reported claim counts are 12 months or 15% down in other liability I don't know if that's something that you've seen her.

Speaker Change: Expect or can you comment on that.

Speaker Change: Again paid losses arent, but the reported claim counts for GLA other liability are down significantly at eight to 12.

Speaker Change: Yes.

Speaker Change: And I think that's a very helpful. In terms of the way we're underwriting the book it is a severity issue.

Unknown Attendee: I do think, and I've pointed out on the calls before, you really do have to pay close attention to the higher levels because there's a leveraged effect of inflation. With every layer that you go up for a constant ground inflation rate, there'll be more or higher inflation with each layer as you go up because of the layer below inflating into the higher layer.

Speaker Change: <unk> seen there.

Yes.

Speaker Change: So you're you're recognized for frequency is down significantly then for forever.

Speaker Change: Yes, we do.

Speaker Change: Okay.

Speaker Change: Alright, thank you.

Speaker Change: Okay.

Speaker Change: And our next question today comes from Gregory Peters Raymond James. Please go ahead.

Speaker Change: Hi, good morning, everyone.

Gregory Peters: So the first.

Gregory Peters: First question I'll focus.

Unknown Attendee: But we've been on this for some time. We've got some really talented actuaries that are working with our larger risks, and we feel we addressed it early on from the beginning and that we're in a good position across the board. Thanks for the color.

Speaker Change: As just growth.

Speaker Change: In the commercial lines business, because it seems like you're.

Speaker Change: When you look at the stats from a new business production you are having a lot of success there and I was wondering if you could give us some sense on on how youre quote to bind ratio is working or give us some parameters to think about it because.

Operator: Thank you. Thank you. And our next question comes from Michael Phillips with Oppenheimer. Please go ahead.

Unknown Attendee: Thanks, good morning. In terms of personal auto, your comments, Steve, at the beginning were pretty similar in terms of pricing from last quarter. You had a bit of an uptick back in the love for each other. I guess, can you remind us where you expect us to go... This year to kind of pan out in terms of just the profitability of personal auto, and when you think your pricing will maybe peak and start to come back down, it looks like, you know, you don't give it away, but you're probably still above 100% combined ratio there. So when do you expect the profitability of personal auto to kind of pan out? I think we're in a good position personal lines across the board. It is sold a lot as a package.

Speaker Change: I guess given the results we'd expect some increased competition at some point it doesn't seem to necessarily be reflecting in your numbers.

Speaker Change: Yes.

Speaker Change: Thanks for the question, Greg Steve spray, if you recall last year throughout 2023, especially starting the year, our new new commercial lines business was under pressure really for that.

Speaker Change: First six months and we were down quite a bit.

Speaker Change: <unk> saved over 2022.

Speaker Change: We were we were really executing on underwriting.

Speaker Change: Term condition pricing discipline through the first six months.

Speaker Change: Stuck to our guns.

Speaker Change: Some others may be just had a little different view of the risk in our new business is under pressure on the back half of 2023.

Unknown Executive: You know, in a package position, the first quarter was, for a current accident year, actually down a little bit from the first quarter a year ago and pretty, you know, flat with the full year. So we feel, we feel good about the pricing that we've been able to get in auto, home, and in the other lines. And, you know, we think we will reap benefits. And I think I think Steve's got a little of that on.

Speaker Change: We continued to see our new business improved and we stuck to our guns as well, we stayed disciplined and the pricing and underwriting terms conditions back half of 2023, new business really picked up.

Speaker Change: That is obviously that trend is obviously continued into 2024.

Speaker Change: The beauty of it is is that like Steve said, we're a package underwriter we.

Speaker Change: We look at every single risk on its own merits and we have the tools.

Speaker Change: To price the business with predictive analytics.

Speaker Change: For each major line of business look at Vineland business and then for the total account so.

Unknown Executive: Yeah, thanks for the question, Mike. You know, one of the strengths that we have going, and it's been planned, we've been executing on, and we continue to work on for the last several years, so it's nothing new, but I think it's adding value to the company and to our agents, is that we've become a premium or a premier rider for our agents, both in the middle market space and in the high net worth.

Speaker Change: I'd see runway still for new business in commercial lines in 2024, but like Steve said. The key is is that we stay disciplined with our underwriting and our pricing and earn the business.

Got it.

Speaker Change: Yeah that makes sense.

Speaker Change: So another topic that's come up that you guys have talked about is the <unk>.

Speaker Change: On Sept of a multiyear policy that I know you guys use in certain lines of business can you give us an update.

Speaker Change: Where where you are with the three year policies.

Unknown Executive: And that gives us both product diversification as well as geographic diversification. Our high net worth, while we ride it everywhere, tends to be maybe a little more focused in certain geographies. High net worth or private client is heavier on the property side.

Speaker Change: Which lines of business and has it increased as a percentage of your total book et cetera.

Speaker Change: You may have to follow up on that which percentage has increased Greg, but yes. There is the three year policy in general.

Greg Steve: It's a differentiator for us it's something that we have.

Been very committed to for many years and remain committed today I think it's even better that we write career policies today, because we have the sophisticated segmented pricing that we do so.

Unknown Executive: And then on the middle market, we get geographic diversification as that book is primarily, I'll call it, a Midwestern, Southeastern part of the U.S. book of business, and it's heavier in auto. So we're getting One, becoming that much more important to each of our agents, being able to attract more of their business. At the same time, get the diversification both geographically and by line of business. You know, I think, too, just the history of personal lines in general, you know, with, you know, the sub-95 combined this year, last year we were just a touch over 100, and then it was, what, four, the four prior years to 2023, we were under 100.

Greg Steve: Our underwriters.

Greg Steve: When they quota three or whether it be new or renewal.

Speaker Change: Just as a reminder.

Speaker Change: Even though we have a three year package policy about 75% of the premium that.

Speaker Change: We have in commercial lines is adjusted on an annual basis. So it would be those accounts that are coming off of a three year, they're actually renewing our commercial auto or.

Speaker Change: Commercial.

Speaker Change: Barilla and then workers' compensation are all adjusted annually, it's really just the property general liability crime minimum marine where that rate is guaranteed.

Speaker Change: I will tell you this too.

Speaker Change: Our three year policy.

Speaker Change: On a loss ratio standpoint from a loss ratio standpoint, outperforms, our one year policy. So our underwriters are executing with our agents.

<unk> not only the science of underwriting, but the art.

Unknown Attendee: So, we've really, you know, we've, I think we've demonstrated a history of being able to price personal lines pretty darn well across the spectrum, as Steve mentions. And then now, I might add, we have our, you know, we have the ENS capability that we can provide solutions for our agents and their clients, and that's now active in nine states. So we just feel really good about all the first lines, the growth there, the momentum that we have. So, you know, we feel very bullish on Percival. Okay, thank you. Um, the next one is just back on the commercial lines. And this is kind of a number of specific questions.

Speaker Change: Intuitively they are.

Picking our best business, our best price business to put on a three year package and the results show that so we're committed to it our retentions.

Are much better.

Speaker Change: Three year policy in the middle of that three year policy. So I think that helps.

Speaker Change: Agents Retentions it helps ours.

Expense.

Speaker Change: It certainly helps on the expense side, and then I think most importantly, it shows our agents and it shows our policyholders that we're a company that.

Speaker Change: It is looking for long term relationships.

Speaker Change: <unk>.

Speaker Change: We're committed to the three year and we think it gives us an advantage in the marketplace.

Speaker Change: Yes, the percentage of question just I feel like this would be the time to be using more of that in this market, but considering the market conditions and so I was just curious if it's.

Unknown Attendee: So if it requires follow-up, I'll have to do so. But um, if I look at your reported claim counts that you give in your statutory data for other liability, they're down significantly for 2023 acts in a year, I mean, more so than the 2020 acts of your COVID-related, you know, so I don't know if there's a data thing there or not, but reported claim counts at 12 months or, you know, 15% down on other liability.

Speaker Change: From a commercial standpoint, we can take it offline, but that's why I was thinking what I was thinking about when I was asking for percentages.

Speaker Change: Yes, okay.

Speaker Change: That makes total sense, Greg, yes, wherever we feel like we can get the adequate price on an account. We are we are wanting to use our three year package policy.

Speaker Change: Got it thanks for the answers.

Speaker Change: Okay.

Speaker Change: Thank you and our next question comes from Grays Harbor.

Grays Harbor: Please go ahead.

Hi, everyone.

Grays Harbor: Yeah.

Grays Harbor: Looking at the commercial casualty core loss ratio, just given that it's a bit higher than it ran in the latter part of last year as well as on the commentary on increased <unk> I was just curious if that.

Unknown Attendee: I don't know if that's something that you've seen or expected, or can you comment on that? Again, paid losses aren't, but the reported claim counts for GL liability are down significantly at age 12. Yeah, they are.

Grays Harbor: Primarily driven by geo or excess casualty or if it's a mix of both this quarter and I was just curious if you all could comment on how youre thinking about rate adequacy across both of those pieces.

Unknown Executive: And I think that's very helpful in terms of the way we're underwriting the book. It is a severity issue that we're seeing there. So you recognize the frequency is down significantly then for availability? Yes, we do. Okay.

Grays Harbor: Hi.

Speaker Change: It's kind of across the board Grace I do think that that.

Speaker Change: Higher pack is.

Speaker Change: Something that we would do in the first quarter typically we have run in the first quarter, a little bit higher than the full year.

Unknown Executive: All right. Thank you. And our next question today comes from Gregory Peters at Raymond James. Please go ahead. Good morning, everyone.

Speaker Change: Prior just due to the newness of the accident year.

Speaker Change: But we feel very good we feel very good about the way that we are are.

Operator: So the first, First question I'll focus on is just growth in the commercial lines business because it seems like you're, you know, when you look at the stats. I think we're having a lot of success there. Give us some sense on, on how your quote to bind ratio is working or give us some parameters to think about it because you know I guess given the results we'd expect you know some increased competition. Yeah, thanks for the question, Greg. Steve Spray.

Our pricing.

Speaker Change: The GL and really across across the.

Speaker Change: Spectrum, there including umbrella.

Speaker Change: Thank you and I guess on the commercial auto side, it looks like growth picked up a little bit this quarter.

Speaker Change: I was just wondering if that indicates that maybe you all are starting to add some additional units rather than just top line growth.

Speaker Change: Primarily driven by rate and just kind of curious on how you all are thinking about.

Unknown Attendee: If you recall, last year, throughout 2023, especially starting the year, our new commercialized business was under pressure, really, for that first six months, and we were down quite a bit on the same in 2022. We were really executing on underwriting, term condition, and pricing discipline through that first six months. We stuck to our guns.

Speaker Change: Potential growth in that environment, just given that it has been such a challenging line for the industry for so long.

Speaker Change: Yes.

Speaker Change: Thanks for the question Grace again, Steve spray.

Steve: It's a little bit of both candidly, it's we're still getting rig through the commercial book.

Speaker Change: And we are growing the new business again, we're a package writer. So we don't write Monoline auto that auto would come along with.

Speaker Change: The rest of the package.

Unknown Executive: I think some others maybe just had a little different view of the risk, and our new business was under pressure in the back half of 2023. We continue to see our new business improve, and we stuck to our guns as well. We stayed disciplined in the pricing, the underwriting terms, and conditions. In the back half of 2023, new business really picked up. That is obviously, that trend has obviously continued into 2024.

Speaker Change: And.

Speaker Change: Again feel really good about the pricing that we have in commercial auto and our direction. There if you recall back.

Speaker Change: I think it was back to 2016 2017, when we really undertook.

Speaker Change: Some some real tough action on our commercial auto book.

Speaker Change: Both.

Speaker Change: Risk selection.

Speaker Change: Primarily in pricing and really had commercial auto in a good place inflation came along and we had to we obviously had to.

Work with that but feel really good about where that commercial auto book is both from a pricing risk selection and.

Unknown Executive: The beauty of it is that, like Steve said, we're a package underwriter; we look at every single risk on its own merits, and we have the tools to price the business with predictive analytics for each major line of business, look at it by line of business, and then for the total account. So, I see runway for new business and commercial lines in 2024, but like Steve said, the key is that we stay disciplined with our underwriting and our pricing and earn the business, not buy it.

And we're looking to grow that book as well along with our package business again risk.

Speaker Change: A risk by risk.

Speaker Change: Adequate pricing.

Speaker Change: Thank you.

Speaker Change: Thank you Bruce Thank you Chris.

Speaker Change: And gentlemen, as a reminder, if you'd like to ask a question. Please press Star then one.

Speaker Change: Our next question comes from Meyer Shields with VW. Please go ahead.

Meyer Shields: Great. Thanks, a lot.

Meyer Shields: To go back to the Cincinnati Global.

Meyer Shields: And reinsurance side of things I, just I'm not sure I understand when you talk about lower volatility is that.

Unknown Executive: Yeah, that makes sense. So another topic. We have talked about the concept of a multi-year policy that I know you guys use in certain lines of business. Can you give us an update on where you are with?

Meyer Shields: A function of.

Meyer Shields: Seasonality or.

Meyer Shields: Catastrophic exposure.

Meyer Shields: It would be less catastrophic exposure.

Speaker Change: Okay perfect.

Speaker Change: Second question sort of related.

Unknown Executive: [inaudible] which lines of business and whether it has increased as a percentage of your total book, etc. I mean, you may have to follow up on that, which percentage is increased, Greg, but yeah, this is a three-year policy in general. You know, it's a differentiator for us.

Speaker Change: Can you talk about what youre seeing in terms of the year over year.

Speaker Change: I guess trend or the observed.

Speaker Change: Claim inflation rate for commercial property that decelerating at all compared to last year.

Speaker Change: I think we still see inflation.

Speaker Change: We look at so much on a risk by risk basis.

Speaker Change: That I don't know that I have a good number for you across the board on what we are seeing that with inflation.

Unknown Executive: It's something that we have been very committed to for many years and remain committed today. I think it's even better that we write three-year policies today because we have the sophisticated segmented pricing that we do. Our underwriters, when they quote a three-year term, whether it be new or renewal, just as a reminder. Even though we have a three-year package policy, about 75% of the premium that we have in commercial lines is adjusted on an annual basis. So it'd be those accounts that, you know, are coming off of a three-year.

Speaker Change: It's been a sticky thing and the inflation rates on.

Speaker Change: Insurance related.

Speaker Change: Items building materials.

Speaker Change: Wages and so forth have.

Speaker Change: <unk> been higher than the general CPI, So we take a.

Speaker Change: Cautious view.

Speaker Change: But certainly the rate of the increase in the second.

Speaker Change: Has been slowing down.

Speaker Change: Okay, perfect, that's very helpful and Steve Congratulations and thanks for everything.

Steve: Well, thank you <unk>.

Speaker Change: It's been great.

Speaker Change: Thank you. This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.

Speaker Change: Okay. Thank you to everyone for their excellent questions.

Unknown Executive: They're actually renewing our commercial auto. Our commercial umbrella, and then workers compensation are all adjusted annually. It's really just the property, the general liability crime in the marine where that rate is guaranteed.

Speaker Change: Thank you for joining us today, we hope to see some of you at our shareholder meeting next Saturday for Cincinnati financial.

Speaker Change: Headquarters office here Youre welcome to listen to a webcast of the meeting also available at <unk> dot com or slash investors, Steve and Mike.

Unknown Executive: Now, I will tell you this, too. Our three-year policy, from a loss ratio standpoint, outperforms our one-year policy. So our underwriters are executing with our agents on not only the science of underwriting but the art as well. And intuitively, they are picking our best business, our best-priced business to put on a three-year package, and the results show that. So we're committed to it. Our retentions are much better on a three-year policy and in the middle of that three-year policy. So I think that helps.

Speaker Change: Look forward to speaking with you again on our second quarter call.

Speaker Change: Thank you. This concludes today's conference call.

Speaker Change: You all for attending today's presentation.

Speaker Change: Now disconnect your lines and have a wonderful day.

Speaker Change: [music].

Unknown Executive: Agent Retention, it helps ours, it's an expense, it certainly helps on the expense side. And then, I think most importantly, it shows our agents and it shows our policyholders that we're a company that is looking for long-term relationships and that we're committed to the three-year, and we think it gives us an advantage. Yeah, the percentage question just feels like this would be the time. [inaudible] We can take it offline, but that's where I am. Yeah, okay, now I have it.

Unknown Executive: That makes total sense, Greg. Yeah, wherever we feel like we can get the adequate price on account, we are wanting to use our three-year package policy. Got it. Thanks for the answer.

Operator: And our next question comes from Grace Carter at Bank of America. Please go ahead. Hi, everyone. Looking at the commercial casualty core loss ratio, just given that it's a bit higher than it ran in the latter part of last year, as well as the commentary on increased IBNR, I was just curious if that's primarily driven by geo or excess casualty, or if it's a mix of both this quarter, and I was just curious if there's, if y'all could comment on how you're thinking about rate adequacy across both of those, I, you know, I think it's it's a it's kind of across the board grace.

Operator: I do think that, you know, that higher pick is something that we would do in the first quarter. Typically, we run the first quarter a little bit higher than the full year prior, just due to the newness of the accident year. But we feel very good about the way that we are pricing GL, and really across the spectrum there, including Umbrella. And I guess on the commercial auto side, it looks like growth picked up a little bit this quarter.

Operator: I was just wondering if that indicates that maybe you are starting to add some additional units rather than just top line growth being primarily driven by rate, and just kind of curious about how you are thinking about potential growth in that environment, just given that it has been such a challenging line for the industry for so long. Yeah, thanks for the question, Grace. Again, Steve Spray.

Speaker Change: [music].

Unknown Attendee: It's a little bit of both. Candidly, we're still getting ranked through that commercial book, and we are growing the new business. Again, we're a package writer, so we don't write models-on-auto. That car would come along with the rest of the package.

Unknown Executive: And, you know, again, feel really good about the pricing that we have in commercial auto and our direction there. If you recall back to 2016, 2017, when we really took some real tough action on our commercial auto book, both in risk selection and primarily in pricing, and really had commercial auto in a good place. Inflation came along, and we had to, we obviously had to work with that, but we feel really good about where that commercial auto book is both from a pricing risk selection perspective, and we're looking to grow that book as well along with our package business again risk by risk and adequate pricing. Thank you, Grace. Thank you, Grace.

Unknown Executive: And ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star than one. Our next question comes from Meyer Shields with KBW. Please go ahead. Great. Thanks so much.

Operator: To go back to the Cincinnati Global and reinsurance side of things, I'm not sure I understand your point about lower volatility. Is that a function of less seasonality or [inaudible]? It would be less catastrophic exposure. Okay, perfect. Second question, sort of related. Can you talk about what you're seeing in terms of the year-over-year? I guess Trend or The Observer.

Unknown Attendee: You know, I think we still see inflation. We look at so much on a risk by risk basis. I don't know that I have a good number for you across the board on what we're seeing with inflation, and it's been a sticky thing, and the inflation rates on insurance-related items, you know, building materials and wastes and so forth have been higher than the general CPI. So we take a, you know, a cautious view, but certainly, the rate of the increase, or the second derivative, has been slowing down. Okay, perfect.

Unknown Executive: That's very helpful. And Steve, congratulations, and thanks for everything. Well, thank you, Mayor.

Unknown Executive: It's been It's been great. Thank you. This concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.

Unknown Executive: Okay, thank you to everyone for their excellent questions. And thank you for joining us today. We hope to see some of you at our shareholder meeting next Saturday, May 4th at the Cincinnati Financial Headquarters office here. You're welcome to listen to our webcast of the meeting, also available at cinthin.com forward slash investors. Steven, Mike, look forward to speaking with you again on our second quarter call. Thank you.

Operator: This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Good day, and welcome to the Cincinnati Financial First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode.

Operator: To which are your questions, please press stars 1 and 2. Please note, today's event is being recorded. I would now like to turn the conference over to Dennis McDaniel, Investor Relations Officer. Please go ahead.

Dennis E. McDaniel: Hello, this is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our first quarter 2024 earnings conference call. Late yesterday, we issued a news release on our results, along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents, please visit our investor website, CENFN.com slash investors. The shortest route to the information is the quarterly results link in the navigation menu on the far left.

Speaker Change: [music].

Steven Justus Johnston: Now I'll turn the call over to Steve. Good morning, and thank you for joining us today to hear more about our results. In short, we are off to a great start. Our first quarter results reflect the success of our initiatives to continue balancing the profit and growth of our insurance operations, coupled with strong investment income. Net income of $755 million for the first quarter of 2024 included recognition of $484 million on an after-tax basis for the increase in fair value of equity securities still held, representing about three quarters of the increase in net income.

Steven Justus Johnston: The 93.6% first quarter 2024 property cavity combined ratio was 7.1, better than the first quarter of last year, including a decrease of 6.9 points for catastrophe losses. While our combined ratio for Accent Year 2024 before catastrophe losses was a percentage point higher than Accent Year 2023 at three months, if we exclude Cincinnati REIT and Cincinnati Global, the ratio improved by one point. Accident Year 2024 also improved on a case incurred basis. However, we increased incurred but not reported or IV&R reserves as we continue to recognize uncertainty regarding ultimate losses and remain prudent in our reserve estimates until longer-term loss cost trends become more clear.

Speaker Change: [music].

Steven Justus Johnston: Estimated average renewal price increases for the first quarter continue at a healthy pace, with commercial lines near the low end of the high single-digit percentage range, excess and surplus lines in the high single-digit range, Personal Auto in the low double-digit range, and Homeowner in the high single-digit range.

Steven Justus Johnston: Our Consolidated Property Casualty Net Written Premiums grew 11% for the quarter with what we believe was a nice mix of new business and renewals. I'll briefly review operating performance by insurance segment, highlighting premium growth and improved profitability compared to a year ago. Commercial lines grew net written premiums 7% in the first quarter with a 96.5% combined ratio that improved by 3.9 percentage points, including 4.2 points from lower catastrophe losses

Speaker Change: Good day and welcome to the Cincinnati Financial first quarter 2024 earnings Conference call.

Speaker Change: All participants will be in listen only mode.

Steven Justus Johnston: Personalized grew net written premiums 33%, including growth in middle market accounts in addition to private client business for our agency's high net worth clients. This combined ratio was a very profitable 93.9 percent, 18.6 percentage points better than last year, including 15.9 points from lower catastrophe losses. Excess and surplus lines also produced a profitable combined ratio of 91.9%, rising two percentage points from the first quarter of the year ago, along with net written premium growth of 7%.

Speaker Change: Susan.

Speaker Change: So we certainly saw some specialist.

Speaker Change: And as far as you've followed by zero.

Speaker Change: Sure.

Speaker Change: I assume there will be an opportunity to ask questions.

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

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Please note today's event is being recorded.

Speaker Change: 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.

Dennis E. McDaniel: Thank you for joining us for our first quarter 2024 earnings conference call.

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

Steven Justus Johnston: Both Cincinnati REIT and Cincinnati Global continue to produce significant underwriting profit, reflecting our efforts to diversify risk and further improve income stability. Cincinnati REIT's combined ratio for the first quarter of 2024 was an excellent 78.6%, and that includes IBNR that we routinely carry for expected losses from reinsurance treaties. We believe our potential exposure for losses from the Baltimore Bridge collapse is immaterial.

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

Dennis E. McDaniel: Graphic information is the quarterly results link in the navigation menu on the far left.

Dennis E. McDaniel: On this call you'll first hear from Chairman and Chief Executive Officer, Steve Johnson, and definitely executive Vice President and Chief Financial Officer, Mike Sewell.

Dennis E. McDaniel: After their prepared remarks investors participating on the call may ask questions.

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

Michael James Sewell: First please note that some of the matters to be discussed today are forward looking.

Forward looking statements involve certain risks and uncertainties.

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

Also a reconciliation of non-GAAP measures was provided with the news release statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP now I'll turn over the call to Steve.

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

Steve: Net income of $755 million for the first quarter of 2024 included recognition of $484 million on an after tax basis, where the increase in fair value of equity securities still held.

Michael James Sewell: Next, Chief Financial Officer Mike Sewell will add comments to highlight other parts of our financial proposal. Thank you, Steve. And thanks to all of you for joining us today.

Steve: Representing about three quarters of the increase in net income.

Steve: Strong operating results generated the rest of the increase.

Michael James Sewell: Investment income growth continued at a strong pace, up 17% for the first quarter of 2024 compared with the first quarter of 2023, dividend income was up 9% for the quarter, and despite net equity security sales for the first three months of 2024 that totaled $40 million, bond interest income grew 21% for the first quarter of this year. We continue to add more fixed maturity securities to our investment portfolio with net purchases totaling $374 million for the first three months of the year.

Steve: non-GAAP operating income of $272 million for the first quarter nearly double last year's $141 million.

Steve: Including a decrease in catastrophe losses of $93 million on an after tax basis.

The 93, 6% first quarter 2024 property casualty combined ratio was seven one points better than the first quarter of last year, including a decrease of six nine points for catastrophe losses.

Steve: While our combined ratio for accident year 2024, before catastrophe losses was a percentage point higher than accident year 2023 to three months, if we exclude Cincinnati re and Cincinnati global the ratio improved by one point.

Steve: Accident year 2024 also improved on a case incurred basis.

Steve: We increased incurred but not reported or <unk> in our reserves as we continue to recognize uncertainty regarding ultimate losses and remain prudent in our reserve estimates until longer term loss cost trends become more clear.

Steve: We are also pleased with other measures, indicating good momentum in our operating performance and.

Steve: Another quarter of pricing segmentation by risk plus average price increases helped to improve our underwriting profitability.

Steve: Mining with careful risk selection and other efforts to address elevated inflation effects on incurred losses.

Steve: Agencies, representing net insurers supported by our experienced professional associates produced another quarter of profitable business for us.

Steve: Our underwriters continue to emphasize retaining profitable accounts and managing was that we determined have inadequate pricing based on our risk selection and pricing expertise.

Michael James Sewell: The equity portfolio was in a net gain position of $7.2 billion, while the fixed maturity portfolio was in a net loss position of $625 million; cash flow continued to benefit from investment income in addition to higher bond yield. Cash flow from operating activities for the first three months of 2024 was $353 million, up 41% from a year ago. Our expense management objectives include an appropriate balance between controlling expenses and making strategic investments in our business.

Steve: Estimated average renewal price increases for the first quarter continued at a healthy pace with commercial lives near the low end of the high single digit percentage range excess and surplus lines in the high single digit range personal auto in the low double digit range and home.

Steve: On or in the high single digit range.

Steve: Our consolidated property casualty net written premiums grew 11% for the quarter with what we believe was a nice mix of new business and renewals.

Speaker Change: I will briefly review operating performance by insurance segment, highlighting premium growth and improved profitability compared to a year ago.

Michael James Sewell: The first quarter 2024 property capital underwriting expense ratio was 0.7 percentage points higher than last year, primarily related to higher levels of profit sharing commissions for agencies. Regarding loss reserves, our approach remains consistent and aims for net amounts in the upper half of the actuarially estimated range of net loss and loss expense reserves. As we do each quarter, we consider new information, such as paid losses and case reserves. Then we update estimated ultimate losses and loss expenses by exit year and line of business.

Speaker Change: Commercial lines grew net written premium was 7% in the first quarter with a 96, 5% combined ratio has improved by three nine percentage points, including four two points from lower catastrophe losses.

Speaker Change: Personal lines grew net written premiums, 33%, including growth in middle market accounts. In addition to private client business for our agencies high net worth clients.

Speaker Change: Its combined ratio was a very profitable 93, 9% 18, six percentage points better than last year, including $15 nine points from lower catastrophe losses.

Speaker Change: Excess and surplus lines also produced a profitable combined ratio of 91, 9% rising two percentage points from the first quarter a year ago, along with net written premium growth of 7%.

Michael James Sewell: For the first three months of 2024, our net addition to property casualty loss loss expense reserves was $233 million, including $272 million for the IB&R portion. During the first quarter, we experienced $100 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 5.0 percentage points. Almost every line of business had favorable developments, except for commercial casualty, which was unfavorable by just $254,000. We added reserves to several older prior accident years and reduced reserves for the three most recent accident years, on an all lines basis by exiting year. Net reserve development for the first three months of 2024 included favorable $184 million for 2023, favorable $24 million for 2022, and an unfavorable $108 million in aggregate for accident years prior to 2022.

Speaker Change: Both Cincinnati re this is Meg global continue to produce significant underwriting profit, reflecting our efforts to diversify risk and further improve income stability.

Speaker Change: Cincinnati re combined ratio for the first quarter of 2024 was an excellent 78, 6% that includes IBM that we routinely carry for expected losses from reinsurance treaties, we believe our potential exposure for losses from the Baltimore Bridge collapse is immaterial.

Speaker Change: Ariel <unk>.

Cincinnati Res net written premiums decreased by 12% overall, driven by shifting casualty portfolio mix in response to changing market conditions property and specialty premiums increase due to attractive opportunities and pricing.

Speaker Change: Cincinnati Global's combined ratio was also excellent at 69, 8% again reported strong growth with net written premiums up 28%.

Speaker Change: Our life insurance subsidiary continued its strong performance, including first quarter 2024, net income of $19 million and operating income growth of 17%.

Michael James Sewell: The unfavorable amount reflects our slowing the release of IV&R reserves for those older accident years. I'll conclude my comments with capital management highlights, another area where we have a consistent long-term approach. We paid $116 million in dividends to shareholders during the first quarter of 2024. We also repurchased 680,000 shares at an average price per share of $109.89.

Speaker Change: Term life insurance earned premiums grew 2%.

Speaker Change: I'll conclude with our primary measure of long term financial performance the value creation ratio. Our first quarter 2024, ECR was a strong five 9% net.

Net income before investment gains or losses for the quarter contributed two 3% higher overall valuation of our investment portfolio and other items contributed three 6%.

Speaker Change: Our next Chief Financial Officer, Mike Sewell will add comments to highlight other parts of our financial performance.

Michael James Sewell: Thank you, Steve and thanks for all of you for joining US today investment income growth continued at a strong pace up 17% for the first quarter 2024, compared with the first quarter of 2023.

Michael James Sewell: We think our financial flexibility and our financial strength are both in excellent shape; parent company cash and marketable securities at quarter end were nearly $5 billion, debt to total capital continued to be under 10%, and our quarter end book value was a record high $80.83 per share, with $12.7 billion of gap consolidated shareholders' equity providing plenty of capacity for profitable growth of our insurance operation. Now, I'll turn the call back over to Steve. Thank you, Mike. As we've previously announced, this is my last conference call as CEO. Effective at our annual meeting of shareholders next Saturday, President Steve Spray will add the role of Chief Executive Officer.

Michael James Sewell: Dividend income was up 9% for the quarter. Despite net equity security sales for the first three months of 2024 totaled $40 million.

Michael James Sewell: Bond interest income grew 21% for the first quarter of this year, we continue to add more fixed maturity securities to our investment portfolio.

With net purchases totaling $374 million for the first three months of the year.

The first quarter pretax average yield of 465% for the fixed maturity portfolio was up 40 basis points compared with last year.

Michael James Sewell: The average pre tax yield for the total of purchase taxable and tax exempt bonds. During the first quarter of 2024, where slide seven 9%.

Steven Justus Johnston: As I've mentioned before, Steve is the right person to build on our decade of profitable growth. He understands the importance of our agency-centered strategy and the unique advantages it brings. I'm confident in his abilities to bring innovative ideas together with the hallmarks of Cincinnati insurance to create opportunities for shareholders, agents, and associates. I look forward to continuing to work with him as chairman of the board. As a reminder, with Mike and me today are Steve Spray, Steve Celoria, Mark Shambo, and Teresa Hopper. Rocco, please open the call for questions. Yes, sir. If you would like to ask a question, please press star then 1. To remove yourself from the queue, please press star then 2.

Michael James Sewell: Valuation changes in aggregate for the first quarter 2024 were favorable for our equity portfolio and unfavorable for our bond portfolio.

Michael James Sewell: Before tax effects, the net gain was $602 million for the equity portfolio, partially offset by a net loss of $65 million for the bond portfolio.

Michael James Sewell: At the end of the quarter total investment portfolio net appreciated value was approximately $6 $6 billion.

Michael James Sewell: The equity portfolio was in a net gain position of $7 $2 billion, while the fixed maturity portfolio was in a net loss position of $625 million.

Cash flow continues to benefit investment income in addition to higher bond yields.

Michael James Sewell: Cash flow from operating activities for the first three months of 2024 was $353 million.

Operator: Our first question comes from Charlie Lederer with Citi. Please go ahead. Hey, thanks, good morning. You gave some helpful color on your loss picks, but I'm curious, how should we think about your loss picks and commercial casualty? Have you made any changes to your view of the loss trend, just given the trajectory of the current accident year loss ratio? Are you baking in additional caution?

Michael James Sewell: Up 41% from a year ago.

Michael James Sewell: Our expense management objectives include an appropriate balance between controlling expenses and making strategic investments in our business. So.

Unknown Executive: Should we expect you to hold a bit more of a buffer near term given uncertainty? Yes, we feel confident, Charlie, with the lost pick that we have. We are reflecting uncertainty. There's a lot of good going on in the commercial casualty business, with rates, we feel, you know, exceeding our lost cost trends. However, you know, for the first quarter, where there's additional uncertainty, we are recognizing that in our lost pick.

Michael James Sewell: Regarding loss reserves, our approach remains consistent and aim for net amounts in the upper half of the Actuarially estimated range of net loss and loss expense reserves as we do each quarter, we consider new information such as paid losses in case reserves.

Michael James Sewell: When we updated estimate estimated ultimate losses and loss expenses by accident year and line of business.

Michael James Sewell: For the first three months of 2024, our net addition to property casualty loss loss expense reserves was $233 million, including $272 million for the <unk> portion.

Michael James Sewell: During the first quarter, we experienced a $100 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 5.0 percentage points.

Michael James Sewell: Almost every line of business had favorable development, except for commercial casualty, which was unfavorable by just $254000.

Operator: Thank you. Thank you. And our next question comes from Mike Zaremski with VMO. Please go ahead.

Michael James Sewell: We added reserves to several older prior accident years and reduced reserves for the three most recent accident years.

Unknown Attendee: Hey, thanks. In the earnings release, you talked about the underlying loss ratio for commercial, I'm making a point, but you said it excluded Cincinnati REI and global. Was there a reason you pointed that out?

But in an all lines basis by accident year net reserve development for the first three months of 2024 included favorable $184 million for 2023.

Unknown Executive: Is, you know, what, why did you, I'm not sure I may have missed it. Why did the Cincinnati REI and global underlying loss ratio increase so much? Yeah, I think the point of pointing this out is that we have the three segments, commercial lines, personal lines, and excess and surplus lines. To get to the consolidated, you also have to add the other portion, which includes Cincinnati REIT and Cincinnati Global. So, since

Michael James Sewell: Favorable $24 million for 2022.

Michael James Sewell: And then an unfavorable $108 million in <unk>.

Michael James Sewell: Aggregate for accident years prior to 2022.

Michael James Sewell: The unfavorable amount reflects our slowing the release of IV in our reserves for those older accident years.

Michael James Sewell: I'll conclude my comments with capital management highlights another area, where we have a consistent long term approach.

We paid $116 million in dividends to shareholders during the first quarter of 2024.

Unknown Executive: The 1st, 3 segments I mentioned had improvements. We pointed out those in the other segment. I will emphasize that things are going great for both Cincinnati REIT and Cincinnati Global, I think. 1 of the things that, you know, as we mentioned, we don't think we have material exposure to Rich Glass and Baltimore.

Michael James Sewell: We also repurchased 680000 shares at an average price per share of a $109 89.

Michael James Sewell: We think our financial flexibility and our financial strength are both in excellent shape.

Michael James Sewell: Parent company cash and marketable securities at quarter end was nearly $5 billion.

Michael James Sewell: Debt to total capital continued to be under 10%.

Michael James Sewell: And our quarter end book value was a record high.

Michael James Sewell: $80 83 per share with $12 $7 billion of GAAP consolidated shareholders' equity, providing plenty of capacity for profitable growth of our insurance operations.

Michael James Sewell: Now I will turn the call back over to Steve.

Steve: Thank you Mike.

Unknown Executive: And so I think that would be driving, you know, what we're seeing there in Cincinnati REIT. Very strong, those zero cats for the quarter, 10.4 points of favorable development versus 7.7 of adverse a year ago. I think that the 14 million of favorable development that we show, about 13 million of it came from 2023. With the full year... Combined ratio of 2023 is 77.7 in this first quarter, and it's a strong 78.6. This hard work in reshaping the book has really paid off.

As I've mentioned before Steve is the right person to build on our decade of profitable growth.

Steve: Understands the importance of our agency centered strategy and the unique advantages it brings on.

Steve: I am confident in his abilities to bring innovative ideas together with the hallmarks of Cincinnati insurance to create opportunities for shareholders agents and associates.

Speaker Change: I look forward to continuing to work with him as chairman of the board.

Speaker Change: As a reminder, with Mike and me today are Steve spray, Steve's Deloria, Mark Shambaugh and Theresa Hoffer.

Speaker Change: Rocco Please open the call for questions.

Rocco: Yes, Sir Thank you I'd like to ask a question. Please press Star then the one to remove yourself from Hugh Please press Star then two.

Unknown Executive: The inception to date, combined ratio at the end of the year 2022 is 101.2. With those two strong marks in the full year of 2023 and the first quarter here now, in just over a year, our inception today is at 94.5. So I think the action is paying off, and it does show a higher pick in the current action year, but I think it's a less risky portfolio at this point. I think the same thing for, you know, if you want to talk a little bit more about Cincinnati, about Cincinnati Global. Same thing, you know; a strong 69.8.

Our first question comes from Charlie Another with Citi. Please go ahead.

Charlie: Hey, Thanks, good morning.

Speaker Change: You gave some helpful color on that.

Speaker Change: <unk> Tec.

Charlie: Curious how should we think about your loss picks in commercial casualty have you have you made any changes to your view of loss trend.

Charles Lederer: Given the trajectory of the current accident year loss ratio and are you baking in additional caution.

Charles Lederer: Should we expect you to hold a bit more of a buffer.

Charles Lederer: Near term given uncertainty.

Yes, we feel.

Charles Lederer: Im confident Charlie with the.

Charles Lederer: The loss picks that we had we are reflecting uncertainty there is a lot of good going on in the commercial casualty with rates we feel.

Charles Lederer: <unk> our loss cost trends, however for first quarter.

Unknown Executive: They have had three consecutive years now as a top quartile Lloyds underwriter, and while they've done that, they've been diversifying in terms of their footprint by product line and by geography, and they're also providing an additional avenue for access to Lloyds for the agents that are appointed by CIC. So a lot of positives at CGU are reflected in strong results, and again, you know, it's pretty tough at Lloyds to be top quartile three years in a row the way they've done.

Charles Lederer: Theres additional uncertainty we are.

Charles Lederer: Recognizing that in our loss pick.

Charlie: Got it thank you.

Charlie: Maybe in workers comp.

Charlie: Looks like pricing.

Charlie: Incremental step down in your initial loss pick and Airtel.

Charlie: Is there anything in that.

Charlie: And pricing being down more R. R.

Charlie: I guess are you seeing anything there.

Speaker Change: No. We're just continuing to see the same trends that we have been seeing with.

Speaker Change: Rates are under pressure there, but also strong performance.

Unknown Executive: Also this quarter, zero cats versus 11.1 a year ago, and then reserve development is favorable by 25.6 points this year versus adverse by 3.2 a year ago. So I think in both of those businesses, there's a ton of positive stuff going on, and we've only pointed it out, you know, so that the math would be easier as you saw the consolidated CLD. Commercial Lines Department, the personal lines, and the excess and surplus have been added to add the other portion to get to the consolidator. Okay, that's a helpful color.

Speaker Change: Historically from the line.

Speaker Change: Though recognizing the uncertainty that comes with the rate decreases with a little bit higher.

Speaker Change: Loss pick.

Speaker Change: For the current year.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you. Thank you.

Speaker Change: And our next question comes from Mike Zaremski with me.

Michael Zaremski: Please go ahead.

Mike Zaremski: Yes.

Michael Zaremski: Hey, thanks.

Michael Zaremski: And the <unk>.

Michael Zaremski: Our earnings release, you talked about the underlying loss ratio for commercial improving client, but you said excluding.

Michael Zaremski: Cynthia Murray and global.

Michael Zaremski: But there are reasons you pointed that out is what.

Michael Zaremski: What.

Michael Zaremski: Yes.

Speaker Change: I'm not sure I may have missed it why did Dr. Sandy.

<unk> global.

Speaker Change: Underlying loss ratio increase so much.

Unknown Attendee: And I guess what you then say then, because of some of the business makeshifts and since they read them, we should be thinking about the underlying loss ratio structurally being maybe a little bit higher, but then, you know, but less potential volatility around the overall combined ratio. Did I interject?

Speaker Change: Yes.

Speaker Change: The point of pointing this out is as we have the three <unk> commercialized personalize and excess and surplus lines to <unk>.

Speaker Change: Get to the consolidated you also have to add the other portion which includes Cincinnati re and Cincinnati Global So says.

First 30 segments I mentioned had improvements we pointed out those in the other segment.

Speaker Change: I will emphasize that things are going great for both Cincinnati re and Cincinnati Global.

Unknown Attendee: Do you guys want to keep saying something else, or will I move on to my follow-up? Yeah, please, please move on to the follow-up. Okay, thanks. Um, just, you know, thinking about going commercial lines, reinsurance, and global. You know, it's, you know, it's, you know, you've been on along this path of taking action to add, you know, I guess, Reserves, and it urges conservatism into your picks, given the inflationary environment, which you're, you know, clearly is persisting a bit.

Speaker Change: I think one of the things that.

Speaker Change: As we mentioned, we don't think we have material.

Speaker Change: Exposure to the.

Speaker Change: Rich glass in Baltimore, we had been shaping the Cincinnati re book.

Speaker Change: In a very positive manner in terms of de risking.

Speaker Change: And so I think one of the things that cause the attritional to go up if we compared to the same quarter a year ago.

Speaker Change: Is that the mix has shifted to a little bit more of a pro rata or proportional reinsurance, which.

Speaker Change: Would have.

Speaker Change: Less risk margin and it would have a.

Speaker Change: Higher attritional tick, but there will be less volatility there.

Speaker Change: That would be driving.

Speaker Change: What we're seeing there in Cincinnati re.

Unknown Attendee: I think I'll look at like, overall top-line growth, and maybe I'll, you know, you can talk about the whole segment, but I'll just focus on commercial casualty because that's been, you know, one of the areas where inflation has been, you know, higher than expected. You know, if I look at just overall top line growth, net premium written growth, it's still not at, you know, I think your historical levels relative to the industry, but it has been picking up a bit.

Speaker Change: Very strong those zero cats for the quarter.

Speaker Change: 10, four points of favorable development versus seven seven of adverse a year ago.

Speaker Change: I think.

Speaker Change: The $14 million in favorable development that we show about $13 million of that came from 2023.

Speaker Change: With the full year.

Speaker Change: Combined ratio in 2023% to 77, 7% in this first quarter and a strong 78 six this hard work and reshaping. The book has really paid off the inception to date combined.

Speaker Change: Combined ratio at the end of the year 2022 was 101, two and with those two strong marks in the full year of 2023 in the first quarter here now.

Speaker Change: In just over a year, our inception to date at $94 five so I think.

Unknown Attendee: You know, given you're still, you know, in an environment where you seem to be kind of adding more IBNR, are you getting to a point where pricing is at a level or the environment there where you want to start playing more offense, or are we still kind of in the, you know, it's best to be cautious in terms of your top line growth? So, yeah, I think that we can balance the two.

Speaker Change: The action is paying off.

Speaker Change: It does show a higher pick in the current accident year, but I think it is.

Speaker Change: It's a less risky portfolio at this point.

Speaker Change: I think the same thing for Unisys.

Speaker Change: But if you wanted to talk a little bit more vessels negatively.

Speaker Change: For Cincinnati Global same thing strong $69 eight may have had three consecutive years now as a top quartile Lord Lloyd's underwriter.

Speaker Change: And while they've done that they've been diversifying in terms of their footprint by product line by geography is there a date, where they're also providing an additional avenue for access to Lloyd's for the agents that are reported by C. CIC. So a lot of.

Speaker Change: A lot of positive <unk>.

Speaker Change: Reflected with strong results and again, it's pretty tough as voice to be top quartile three years in a relative way also this quarter zero cats.

Unknown Executive: I think we feel good about our growth, you know, double-digit overall at 11%, really strong growth in personal lines, excuse me, and with each of our lines, we write it on a package basis for commercial lines, and so there's going to be a little bit of variance, you know, between the different lines, but we realize that, you know, you need to stick to adequate pricing, and you can't fall into a trap where Charged at the adequate rate on a risk by risk basis, we think that offers us plenty of opportunity to grow the company.

Speaker Change: Versus $11, one a year ago.

Speaker Change: Reserve development.

Speaker Change: Favorable by 25 six points. This this year versus adverse by $3 two a year ago. So I think in both of those businesses.

There is a ton of positive going on and we've only pointed it out.

Speaker Change: Yeah.

Speaker Change: So that the math would be easier as you saw the consolidated.

<unk>.

Speaker Change: With commercialized department, the personalized and meet the excess and surplus event.

Speaker Change: To add the other portion to get to the consolidated.

Okay.

Speaker Change: Helpful color.

Speaker Change: I guess, what do you sense a then.

Speaker Change: It's on the business mix shift and since a re then we should be thinking about the underlying loss ratio structurally being maybe a little bit higher.

Speaker Change: But then you know that.

Speaker Change: But less potential.

Unknown Executive: And one quick follow-up, and I might have asked this in the past, but within your commercial casualty, you know, that the US non-global and reinsurance portfolio, I believe, you know, you might think about things between, Small, very small commercial versus mid versus large, or maybe I'm incorrect, but just curious if, now that you've had more time to reflect on on results, it isn't the inflation I think we're doing a good job of pricing adequately in all those areas.

Speaker Change: Volatility around the overall combined ratio.

That's helpful.

Speaker Change: Okay.

Speaker Change: Did I interject, you guys want to say something else, Rob will answer that my follow up.

Speaker Change: No. Please please move on to the follow up.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Thinking about <unk>.

Rob: Commercial lines Act.

Rob: On reinsurance.

Rob: Reinsurance and global.

Rob: U S.

Got it.

Rob: Yes.

Rob: You've been on the longest path of taking action.

Rob: <unk> to add.

Rob: Yes.

Rob: Reserves or just conservatism into your tax given the inflationary environment sure clearly is persisting a bet.

Unknown Executive: I do think, and I've pointed out on the calls before, you really do have to pay close attention to the higher levels because there's a leveraged effect of inflation. With every layer that you go up for a constant ground-up inflation rate, there'll be more or higher inflation with each layer as you go up because of the layer below inflating into the higher layer.

Rob: If I look at like overall topline growth and maybe you can talk about the whole segment, but I will just focus on commercial casualty because that's been one of the areas where inflation has been Ben.

Rob: Our higher than expected.

Rob: Look at just overall top line growth net premium written growth now.

Rob: Still not.

Rob: <unk>.

Rob: I think your historical levels relative to the industry, but it has been ticking up a bit.

Unknown Executive: But we've been on this for some time. We've got some really talented actuaries that are working with our larger risks, and we feel we addressed it early on from the beginning and that we're in a good position across the board. Thanks for the color.

Rob: Are you so given your scale.

<unk>.

Rob: In an environment, where you seem to be kind of adding more IV or are you getting to a point it is.

Rob: Pricing at a level or is the environment, there where you want to start playing more offense are we still kind of in the.

Operator: Thank you. Thank you. And our next question comes from Michael Phillips with Oppenheimer. Please go ahead. Thanks. Good morning.

Rob: Best to be cautious in terms of your the topline growth.

Rob: So I think that we can we can balance the two I think we feel good about our growth double digit overall, 1%.

Unknown Attendee: In terms of personal auto, your comments, Steve, at the beginning were pretty similar in terms of pricing from last quarter. You've had a bit of an uptick back in the loss ratio there. I guess, can you remind us where you expect...

Rob: Really strong growth in personal lines excuse me and with each of our lines, we write it on a package basis.

Rob: For commercial lines.

And so theres going to be a little bit of variance.

Rob: Between the different lines, but we think we're in a good place with our pricing, but we realize that you need to you need to stick to adequate rate pricing.

Unknown Executive: This year to kind of pan out in terms of just the profitability of personal auto, and when you think your pricing will maybe peak and start to come back down, it looks like, you know, you don't give it away, but you're probably still above 100% combined ratio there. So when do you expect the profitability of personal auto to kind of pan out? I think we're in a good position personalized across the board. It is sold a lot as a package.

Rob: You can't fall into a trap, where if others are under.

Rob: The pricing business that you you followed that path. So we're going to maintain the discipline.

Rob: Charged the adequate rate on a on a.

Rob: A risk by risk basis, and we think that offers there's plenty of opportunity to grow the company.

Speaker Change: And one quick follow up and I may have asked this in the past but.

Speaker Change: Within your <unk>.

Speaker Change: Commercial casualty the U S non global reinsurance portfolio I believe.

Speaker Change: You might think about things between.

Speaker Change: Small very small commercial versus mid versus large maybe I'm incorrect, but just curious if you're now that you've had more time to reflect on.

Speaker Change: On results.

Speaker Change: It is the inflationary.

Speaker Change: Yes.

Speaker Change: <unk>.

Speaker Change: <unk> brought up they've been emanating from any certain parts of the <unk>.

Unknown Executive: Yeah, thanks for the question, Mike. You know, I think one of the strengths that we have going is the plan we've been executing and continuing to work on for the last several years, so it's nothing new. But I think it's adding value to the company and to our agents is that we've become a premium or a premier rider for our agents, both in the middle market space and in the high net worth.

Business mix.

Speaker Change: Other than just.

Speaker Change: Yes, I think we're doing a good job of pricing adequately at all and all of those areas I do think as I pointed out on the calls before you really do have to pay.

Speaker Change: Close attention to the higher levels, because theres, a leveraged effect of inflation.

Speaker Change: With every layer that you go up for a constant ground up inflation rate there'll be more of a higher inflation with each layer as you go up because of the layer below inflating into the higher layer, but we've been on this for some time, we've got some really talented actuaries that are working with our larger risks.

Speaker Change: We felt we were addressing it early on from the beginning is that we're in.

Speaker Change: We're in a good position across the board.

Speaker Change: Thanks for the color.

Speaker Change: Thank you. Thank you and our next question comes from Michael Phillips with Oppenheimer. Please go ahead.

Michael Wayne Phillips: Thanks, Good morning.

Michael Wayne Phillips: First of all auto.

Michael Wayne Phillips: Your comments, Steve at the beginning were pretty similar in terms of pricing from our from last quarter, we got a bit of an uptick back in the loss ratio. There I guess can you remind us where you expect this year to kind of pan out in terms of just the profitability of personal auto.

Unknown Executive: And then on the middle market, we get geographic diversification, as that book is primarily, I'll call it, a Midwestern and Southeastern part of the US book of business, and it's heavier in auto. One, being that much more important to each of our agents, being able to attract more of their business. At the same time, get the diversification both geographically and by line of business. You know, I think, too, just the history of personal lines in general, you know, with, you know, the sub-95 combined this year, last year we were just a touch over 100, and then it was, what, four, the four prior years to 2023, we were under 100.

Michael Wayne Phillips: When you think your pricing model.

Michael Wayne Phillips: Maybe Pete can start to come back down it looks like.

Michael Wayne Phillips: Give it but youre, probably still above 100% combined ratio there. So when do you expect kind of profitability personal auto.

Speaker Change: Okay. Thank you.

Speaker Change: We're in a good position personal lines across the board. It is sold a lot on the package.

Speaker Change: And our package position.

The first quarter was.

Speaker Change: For current accident year was actually down a little bit from first quarter, a year ago and pretty flat with the full year.

Speaker Change: So we feel we feel good about the pricing that we've been able to get in auto.

Speaker Change: And then the other and the other lines.

We think it will.

Speaker Change: Benefits and I think I think Steve has got a little of that yeah. Thanks for the question, Mike I think one of the.

Unknown Attendee: So we've really, you know, we've, I think we've demonstrated a history of being able to price personal lines pretty darn well across the spectrum, as Steve mentions. And then now, I might add, we have our ENS capability that we can provide solutions for our agents and their clients, and that's now active in nine states. So we just feel really good about all the first lines, the growth there, the momentum that we have. So, you know, I feel very bullish on personal. Okay, thank you. Um, the next one is just back on the commercial lines.

One of the strengths that we have going.

Steve: That gives us both product.

Steve: Diversification as well as geographic diversification of our high network, while we write it everywhere tends to be.

Steve: Maybe a little more focused in certain geographies.

Steve: High net worth or private client is heavier on the property side.

Steve: And then on the middle market, we give to your geographic diversification as that book is primarily I'll call. It a midwestern.

Unknown Attendee: And this is kind of a number of specific questions. So if it requires a follow-up, I'll definitely do so. But if I look at your reported claim counts that you give in your statutory data for other liability, they're down significantly for 2023 action a year, I mean, more so than the 2020 action year COVID related, you know, so I don't know if there's a data thing there or not, but reported claim counts at 12 months or, you know, 15% down on other liability.

Steve: At the eastern part of the U S book of business and it is heavier in auto so we're getting.

Steve: One being that much more important each of our agents being able to attract more of their business because at the same time keep the diversification both geographically and by line of business.

Speaker Change: Yes, I think to just the history of personal lines in general.

Speaker Change: The sub 95 combined this year.

Speaker Change: Last year, we were just a touch over 100 and then it was what for the four prior years through 2023.

Speaker Change: We're under 100, so we've really.

Speaker Change: I think we've demonstrated a history of being able to.

Speaker Change: Price personal lines pretty.

Speaker Change: Pretty darn well across the spectrum as Steve mentioned.

Speaker Change: And then now I might add we've got our we've got the E&S capability that we can provide solutions for our agents and their clients.

Speaker Change: And Thats now active in nine states.

So we just feel really good about all personal lines the growth there the momentum that we have.

Speaker Change: So.

Speaker Change: So very bullish on personal lines.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Speaker Change: Next one is just back on the commercial lines and this is kind of a number of specific questions.

Speaker Change: A follow up on that but do so but.

Speaker Change: If I look at your claim reported claim counts that you give in your statutory data for other liability it's down significantly.

Unknown Executive: Thank you. And our next question today comes from Gregory Peters and Raymond James. Please go ahead. Good morning, everyone.

Speaker Change: For 2023 accident year, I mean, more so than the 2020 accident. Your COVID-19 related so I don't know if theres a data thing there or not but reported claim counts at 12 months are 15% down in other liability I don't know if that's something that you've seen her.

Operator: Unknown Speaker, The first question I'll focus on is just growth in the commercial lines business because it seems like you're, you know, when you look at the stats. [inaudible] Give us some sense of how your quote-to-bind ratio is working or give us some parameters to think about it because, you know, given the results, we'd expect, you know, some increased competition. Yeah, thanks for the question, Greg. Steve Spray.

Speaker Change: Expect or can you comment on that.

Speaker Change: Again paid losses arent, but the reported claim counts for GLA other liability are down significantly adding to <unk>.

Speaker Change: Yes, they are and I think thats a very helpful. In terms of the way we're underwriting to book it as a severity issue that we're seeing there.

Sure.

Speaker Change: And so you are you are you recognize where frequency is down significantly then for further level.

Speaker Change: Yes, we did.

Okay Alright.

Speaker Change: Alright, thank you.

Speaker Change: Okay.

Speaker Change: And our next question today comes from Gregory <unk> of Raymond James. Please go ahead.

Hi, good morning, everyone.

Gregory Peters: So for the first.

Gregory Peters: First question I'll focus.

Is just growth.

Gregory Peters: In the commercial lines business because it seems like your when you look at the stats from a new business production you are having a lot of success there and I was wondering if you could give us some sense on on how youre quote to bind ratio was working or give us some parameters to think about it because.

Gregory Peters: I guess given the results we'd expect some increased competition at some point it doesn't seem to necessarily be reflecting in your numbers.

Gregory Peters: Yes.

Speaker Change: Thanks for the question, Greg Steve spray.

Steve: If you recall last year throughout 2023, especially starting the year, our new commercial lines business was under pressure really for the first six months and we were down quite a bit.

Speaker Change: Save over 2022.

Speaker Change: We were we were really executing on underwriting.

Speaker Change: Term condition pricing discipline through the first six months.

We stuck to our guns I think some others, maybe just had a little different view of the risk in our new business is under pressure.

Speaker Change: Back half of 2023.

Speaker Change: We continued to see our new business improve we stuck to our guns as well, we stay disciplined in our pricing and underwriting terms and conditions back half of 2023, new business really picked up.

Speaker Change: <unk> is obviously that trend is obviously continued into 2024.

Unknown Executive: The beauty of it is that, like Steve said, we're a package underwriter; we look at every single risk on its own merits, and we have the tools to price the business with predictive analytics for each major line of business, look at it by line of business, and then for the total account. I see runway for new business and commercial lines in 2024, but like Steve said, the key is that we stay disciplined with our underwriting and our pricing and earn the business, not buy it.

Speaker Change: The beauty of it is Steve.

Speaker Change: Steve said, we're a package underwriter.

Speaker Change: <unk>.

Speaker Change: Look at every single risk on its own merits and we have the tools.

Speaker Change: So price the business with predictive analytics.

Speaker Change: For each major line of business look at it by line of business and then for the total account so.

Speaker Change: I'd see runway still for new business in commercial lines in 2024, but like Steve said. The key is is that we stay disciplined with our underwriting of our pricing and earn the business.

Speaker Change: Got it.

Speaker Change #100: Yeah that makes sense.

Unknown Executive: Yeah, that makes sense. So another topic. The first thing you guys talked about was the concept of a multiyear policy that I know you guys use in certain lines of business. Can you give us an update on that? Where you are with. I mean, you may have to follow up on that which percentage is increased, Greg, but yeah, this is a three-year policy in general. Uh, you know, it's a differentiator for us.

Speaker Change #101: So another topic that's come up that you guys have talked about is the concept of a multiyear policy that I know you guys use in certain lines of business can you give us an update.

Speaker Change #101: Where where you are with the three year policies.

Speaker Change #101: Which lines of business and has it increased as a percentage of your total book et cetera.

Speaker Change #101: You may have to follow up on that which percentage has increased Greg, but yes. There is the three year policy in general.

Speaker Change #101: It's a differentiator for us it's something that we have.

Speaker Change #101: Been very committed to for many years and remain committed today I think it's even better that we write career policies today, because we have the sophisticated segmented pricing that we do so.

Unknown Executive: When they quote a three, whether it be new or renewal, just as a reminder. Even though we have a three-year package policy, about 75% of the premium that we have in commercial lines is adjusted on an annual basis. So it'd be those accounts that, you know, are coming off of a three-year, they're actually renewing, are commercial auto. Our commercial umbrella and then workers compensation are all adjusted annually. It's really just the property, the general liability crime in the marine where that rate is guaranteed.

Speaker Change #101: Our underwriters.

Speaker Change #101: When they quoted three or whether it be new or renewal.

Speaker Change #102: Just as a reminder.

Speaker Change #102: Even though we have a three year package policy about 75% of the premium.

Speaker Change #102: We have in commercial lines.

Speaker Change #102: <unk> on an annual basis, so it would be those accounts that are.

Speaker Change #102: Coming off of a three year, they're actually renewing.

Speaker Change #102: Our commercial auto.

Speaker Change #102: Our commercial.

Speaker Change #102: Barilla and then workers' compensation are all adjusted annually, it's really just the property general liability crime inland marine where that rate is guaranteed.

Unknown Executive: Now, I will tell you this, too. Our three-year policy, from a loss ratio standpoint, outperforms our one-year policy. So our underwriters are executing with our agents on not only the science of underwriting but the art as well. And intuitively, they are picking our best business, our best price business to put on a three-year package, and the results show that. So we're committed to it. Our retentions are much better on a three-year policy and, you know, in the middle of that three-year policy. So I think that helps. Agents Retentions. It helps ours. It's an expense.

Speaker Change #103: I will tell you this too.

Speaker Change #103: Our three year policy.

Speaker Change #103: On a loss ratio standpoint from a loss ratio standpoint, outperforms, our one year policy. So our underwriters are executing with our agents on the not only the science of underwriting, but the art and intuitively they are.

Speaker Change #103: Picking our best business, our best price business to put on a three year package and the results show that so we're committed to it our retentions.

Speaker Change #103: Are much better.

Speaker Change #103: On a three year policy in the middle of that three year policy. So I think that helps.

Speaker Change #103: Agents retention it helps Sars expense.

Unknown Executive: It certainly helps on the expense side. And, then, I think most importantly, it shows our agents and it shows our policyholders that we're a company that is looking for long-term relationships. We're committed to the three-year, and we think it gives us an advantage. Yeah, the percentage question just, I feel like this would be the time for more of that. We can take it offline, but that's where I... Yeah, okay. No, I have got it.

Speaker Change #103:

Speaker Change #103: It certainly helps on the expense side, and then I think most importantly, it shows our agents and it shows our policyholders that we're a company that.

Speaker Change #103: It is looking for long term relationships and.

Speaker Change #103: We're committed to the three year, we think it gives us an advantage in the marketplace.

Speaker Change #103: Yes, the percentage of question just I feel like this would be the time to be using more of that in this market, but considering the market conditions and so I was just curious if it's.

Speaker Change #103: From a commercial standpoint, we can take it offline, but that's why I was thinking what I was thinking about when I was asking for percentages.

Unknown Executive: That makes total sense, Greg. Yeah, wherever we feel like we can get the adequate price on an account, we are wanting to use our three-year package policy. Got it. Thanks for the answer.

Speaker Change #104: Yes, Okay I got it that makes total sense, Greg, yes, wherever we feel like we can get the adequate price on an account. We are we are wanting to use our three year package policy.

Operator: Thank you, and the next question comes from Grace Carter at Bank of America. Please go ahead. Hi, everyone. Looking at the commercial casualty core loss ratio, just given that it's a bit higher than it ran in the latter part of last year, as well as the commentary on increased IBNR, I was just curious if that's primarily driven by geo or excess casualty, or if it's a mix of both this quarter, and I was just curious if you could comment on how you think about rate ade I, you know, I think it's it's kind of across the board. Grace, I do think that, you know, that higher pick is. This is something that we would do in the first quarter.

Got it thanks for the answers.

Speaker Change #105: Thank you and our next question.

Speaker Change #105: Household Grays Harbor.

Please go ahead.

Speaker Change #106: Hi, everyone.

Speaker Change #106: Okay.

Speaker Change #107: Looking at the commercial casualty core loss ratio, just given that it's a bit higher than it ran in the latter part of last year as well as the commentary on increased <unk> I was just curious if that.

Speaker Change #107: Primarily driven by geo or excess casualty or if it's a mix of both this quarter and I was just curious.

Speaker Change #107: Thank you all could comment on how youre thinking about rate adequacy across both of those pieces.

Speaker Change #107: I think it's kind of across the board Grace I do think that that higher pack is.

Speaker Change #107: Something that we would do in the first quarter typically we have run in the first quarter, a little bit higher than the full year.

Unknown Attendee: Typically, we run the first quarter a little bit higher than the full year prior just due to the newness of the accident year. But we feel very good. We feel very good about the way that we are pricing the GL and really across the spectrum there, including umbrella. And I guess on the commercial auto side, it looks like growth picked up a little bit this quarter. I was just wondering if that indicates that maybe you are starting to add some additional units rather than just top line growth being primarily driven by rate.

Speaker Change #107: Prior just due to the newness of the accident year.

Speaker Change #107: But we feel very good we feel very good about the way that we are our pricing.

Speaker Change #107: The GL and really across across the sector.

Speaker Change #107: Spectrum, there including umbrella.

Speaker Change #108: Thank you and I guess on the commercial auto side, it looks like growth picked up a little bit this quarter.

Speaker Change #109: Just wondering if that indicates that maybe you all are starting to add some additional units rather than just top line growth being.

Speaker Change #109: Primarily driven by rate and just kind of curious how you all are thinking about.

Unknown Attendee: And just kind of curious about potential growth in that environment just given that it has been such a challenging line for the industry for so long. Yeah, thanks for the question, Grace. Again, Steve Spray. It's a little bit of both.

Speaker Change #109: Potential growth in that environment, just given that it has been such a challenging line for the industry for so long.

Speaker Change #109: Yes.

Speaker Change #110: Thanks for the question, Greg again, Steve spray.

Steve: It's a little bit of both candidly, it's we're still getting rate through that commercial book.

Unknown Executive: Candidly, we're still getting ranked through that commercial book, and we are growing the new business. Again, we're a package writer, so we don't write models-on-auto. That car would come along with the rest of the package.

Speaker Change #111: And we are growing the new business again, we're a package writer. So we don't write Monoline auto that auto would come along with.

Speaker Change #111: The rest of the package.

Unknown Executive: And, you know, again, I feel really good about the pricing that we have in commercial auto and our direction there. If you recall back to 2016, 2017, when we really undertook some real tough action on our commercial auto book, both in risk selection, working with that, but we feel really good about where that commercial auto book is both from a pricing risk selection and uh, and we're looking to grow that book as well along with our package business again, risk by risk and adequate pricing. Thank you, Grace. Thank you, Grace.

Speaker Change #111: And.

Speaker Change #111: Again feel really good about.

Speaker Change #111: The pricing that we have in commercial auto and our direction. There. If you recall back I think it was back to 2016 2017, when we really undertook.

Speaker Change #111: Some some real tough action on our commercial auto book, both in risk selection.

Speaker Change #111: And then primarily in pricing and really had commercial auto in a good place inflation came along and we had to we obviously head too.

Speaker Change #111: Work with that but feel really good about where that commercial auto book is both from a pricing risk selection.

Speaker Change #111: And.

Speaker Change #111: And we're looking to grow that book as well along with our packaged business again risk.

Speaker Change #111: A risk by risk.

Operator: And ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then 1. Our next question comes from Meyer Shields with KBW. Please go ahead.

Speaker Change #111: Adequate pricing.

Speaker Change #112: Thank you.

Speaker Change #113: Thank you Bruce Thank you Chris.

Speaker Change #114: And gentlemen, as a reminder to ask a question. Please press Star then one.

Speaker Change #114: Our next question comes from Meyer Shields with VW. Please go ahead.

Unknown Attendee: Great, thanks so much. To go back to the Cincinnati Global and reinsurance side of things, I just, I'm not sure I understand what you're saying about lower volatility. Is that... (inaudible) Transcripts provided by Transcription Outsourcing, LLC. It would be less catastrophic exposure.

Meyer Shields: Great. Thanks, a lot.

If you go back to the Cincinnati Global.

Meyer Shields: In reinsurance side of things I, just I'm not sure I understand when you talk about lower volatility is that.

Meyer Shields: Function of.

Meyer Shields: Seasonality or.

Meyer Shields: Yes.

Meyer Shields: Catastrophic exposure.

Meyer Shields: It would be less catastrophic exposure.

Unknown Executive: Okay, perfect. The second question is sort of related. Can you talk about what you're seeing in terms of the year-over-year? I guess trend or the observed, Transcribed by https://otter.ai. You know, it's I think we still see inflation. We look at so much on a risk by risk basis. I don't know that I have a good number for you across the board on what we're seeing with inflation, and it's been a sticky thing, and the inflation rates on insurance-related items, you know, building materials and wages and so forth, have been higher than the general CPI. So we take a, you know, a cautious view. But certainly, the rate of the increase, or the second directed, has been slowing down.

Speaker Change #115: Okay perfect.

Speaker Change #115: Question sort of related.

Speaker Change #115: Can you talk about what youre seeing in terms of the year over year.

Speaker Change #115: I guess trend or the observed.

Speaker Change #115: Claim inflation rate for commercial property is that decelerating at all compared to last year.

Speaker Change #116: I think we still see inflation.

Speaker Change #116: We look at so much on a risk by risk basis.

Speaker Change #116: I don't know that I have a good number for you across the board on what we're seeing with inflation.

Speaker Change #116: It's been a sticky thing and the inflation rates on.

Speaker Change #116: Insurance related.

Items building materials.

Speaker Change #116: Wages and so forth.

Speaker Change #116: It has been higher than the general CPI, So we take a.

Speaker Change #116: Cautious view.

Speaker Change #116: But certainly the rate of increase over the second.

Speaker Change #116: Has been slowing down.

Unknown Executive: Okay, perfect. It's very helpful. And Steve, congratulations. And thanks for. Well, thank you, Mayor. It's been, it's been great.

Speaker Change #116: Okay.

Speaker Change #117: Okay, perfect Thats very helpful and Steve Congratulations and thanks for everything.

Steve: Well, thank you <unk>, it's been great.

Unknown Executive: Thank you. This concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks. Okay, thank you to everyone for their excellent questions. Thank you for joining us today. We hope to see some of you at our shareholder meeting next Saturday, May 4th at the Cincinnati Financial Headquarters office here. You're welcome to listen to our webcast of the meeting, also available at cinthim.com forward slash investors.

Speaker Change #118: Thank you. This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.

Speaker Change #119: Okay. Thank you to everyone for their excellent questions.

Thank you for joining us today, we hope to see some of you at our shareholder meeting next Saturday for Cincinnati financial.

Speaker Change #119: Headquarters office here Youre welcome to listen to a webcast of the meeting also available at <unk> dot com or slash investors, Steve and Mike.

Unknown Executive: Steven, Mike, I look forward to speaking with you again on our second quarter call. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker Change #119: Look forward to speaking with you again on our second quarter call.

Thank you. This concludes today's conference call.

Speaker Change #120: Thank you all for attending today's presentation.

Speaker Change #121: You may now disconnect your lines and have a wonderful day.

Q1 2024 Cincinnati Financial Corporation Earnings Call

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