Q2 2026 Cincinnati Financial Corp Earnings Call

July 28, 2026

Speaker #1: Should you need assistance, please signal a conference specialist by pressing the star key followed by 0 on your telephone keypad. After today's presentation, there will be an opportunity to ask questions.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star then 1 on your telephone keypad.

Speaker #1: To ask a question, you may press a star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note that this event is being recorded.

Speaker #1: To withdraw your question, please press star then 2. Please note that this event is being recorded. I would now like to turn the conference over to Greg Barty, Senior Vice President, Investor Relations.

Speaker #1: I would now like to turn the conference over to Greg Barty, Senior Vice President, Investor Relations. Please go ahead, sir.

Speaker #1: Please go ahead, sir.

Speaker #2: Good morning, and thank you for attending today. Joining me on the call are Chris Cartwright, President and Chief Executive Officer, and Todd Sello, Executive Vice President and Chief Financial Officer.

Speaker #2: We posted our earnings release in slides to accompany this call on the TransUnion Investor Relations website this morning, and they can also be found in the current report on Form 8K that we filed this morning.

Speaker #2: Our earnings release and the accompanying slides include various schedules, which contain more detailed information about revenue, operating expenses, and other items, as well as certain non-GAAP disclosures and financial measures, along with the corresponding reconciliation of these non-GAAP financial measures to their most directly affordable GAAP measures.

Speaker #2: Today's call will be recorded and a replay will be available on our website. We will also be making statements during this call that are forward-looking.

Speaker #2: These statements are based on current expectations and assumptions, and are subject to risks and uncertainties. Actual results could differ materially from those described in the forward-looking statements because of factors discussed in today's earnings release, in the comments made during this conference call, and in our most recent Form 10-K, Forms 10-Q, and other reports and filings with SEC.

Speaker #2: We do not undertake any duty to update any forward-looking statement. With that, let me turn it over to Chris.

Speaker #3: Thank you, Greg. And good morning, everyone, and welcome to our Q2 earnings call. Let me outline the agenda for this morning. So first, I'm going to review our second quarter results, and the increase guidance for full year 2026.

Speaker #3: Thank you, Greg. And good morning, everyone, and welcome to.

Speaker #2: Our Q2 earnings call.

Speaker #3: let me outline the agenda for this morning. So first, I'm going to review our second quarter results, and the increase guidance for full year 2026.

Speaker #3: Then we'll get into an example of how we are driving innovation-led diversified and scalable growth across the business using U.S. financial services as an example of this strategy in action.

Speaker #3: then we'll get into an example of how we are driving innovation-led, diversified, and scalable growth across the business using U.S. financial services as an example of this strategy in action.

Speaker #3: Then I'll hand it over to Todd, who will go into the details on Q2, provide the third quarter guide, and also the full year 2026 guide.

Speaker #1: Good day, everyone, and thank you for joining this Cincinnati Financial Corporation second quarter 2026 earnings conference call. As a reminder, all phone participants are in listen-only mode, and today's session is being recorded.

Speaker #3: So turning to the second quarter, again, we delivered strong results, exceeding our guidance for revenue, adjusted EBITDA, and adjusted diluted earnings per share. Our organic constant currency revenue grew 10% above our 8% to 9% guidance, which marks our 10th straight quarter of at least high single-digit growth.

Speaker #3: So turning into the second quarter, again, we delivered strong results, exceeding our guidance for revenue, adjusted EBITDA, and adjusted diluted earnings per share. Our organic constant currency revenue grew 10%, above our 8% to 9% guidance, which marks our 10th straight quarter of at least high single-digit growth.

Speaker #1: It is my pleasure to turn the floor over for opening remarks and introductions to Mr. Dennis McDaniel, Investor Relations. Please go ahead, sir.

Speaker #2: Hello. This is Dennis McDaniel at CINCINNATI Financial. Thank you for joining us for our second quarter 2026 earnings conference call. Late yesterday, we issued a news release on our results.

Speaker #3: And if you exclude FICO mortgage royalties, the organic revenue grew 7%, which is also above our expectations. Now, in U.S. markets, revenue increased 11%.

Speaker #2: 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 at investors.cinfan.com.

Speaker #3: And if you exclude FICO mortgage royalties, the organic revenue grew 7%, which is also above our expectations. Now, in U.S. markets, revenue increased 11%.

Speaker #2: The shortest route to the information is the quarterly results section near the middle of the investor overview page. On this call, you'll first hear from President and Chief Executive Officer Steve Spray, and then from Executive Vice President and Chief Financial Officer Mike Sewell.

Speaker #3: Financial services, again, led the way, up 18%, or 10% excluding FICO mortgage royalties. We delivered broad-based growth across lending types, driven by sales momentum across credit and non-credit solutions, alongside some modest volume growth and pricing actions.

Speaker #2: After their prepared remarks, investors participating on the call may ask questions. At that time, some responses may be made by others in the room with us, including Executive Chairman Steve Johnston, Chief Investment Officer Steve Salloria, Cincinnati Insurance's Chief Claims Officer Mark Shambo, and Senior Vice President of Corporate Finance Andy Schnell.

Speaker #3: Now, emerging verticals grew 9% in the quarter. Led by double-digit growth in insurance, as well as high single-digit growth in technology, retail, and e-commerce.

Speaker #3: International revenues accelerated to 6% organically, driven by our largest markets: Canada again posted strong results at 10%, and India and the U.K. also grew high single digits.

Speaker #3: International revenues accelerated to 6% organically, driven by our largest markets: Canada again posted strong results at 10%, and India and the UK also grew high single digits.

Speaker #2: 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.

Speaker #3: In India, strong new business wins and a gradually improving credit volumes drove a return to growth. And additionally, our recently acquired bureau in Mexico continues to track well ahead of our acquisition case on both revenue and adjusted EBITDA.

Speaker #2: Also, our 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.

Speaker #3: Revenue growth translated into 13% adjusted diluted earnings per share growth, and we increased our share repurchases in the second quarter and through July bringing our year-to-date total to roughly $150 million.

Speaker #2: Now, I'll turn it over to the call to Steve.

Speaker #3: Good morning, and thank you for joining us today to hear more about our results. Our second-quarter and first-half results continue to reflect consistent execution of our strategy, including maintaining pricing discipline in a softening property casualty insurance market.

Speaker #3: We retain ample capacity for additional repurchases in the second half of the year under our billion-dollar authorization. And we also reduced our leverage ratio to 2.6 times in the quarter due to strong adjusted EBITDA growth.

Speaker #3: While catastrophe losses for the quarter were modestly higher than our longer-term average, other metrics for our property casualty operations were generally in line with our expectations.

Speaker #3: Net income of nearly $1.3 billion for the second quarter of 2026 included recognition of $882 million, on an after-tax basis, for the increase in fair value of equity securities still held.

Speaker #3: Now, our strong first half performance has allowed us to raise our full year guidance. We now expect 8% to 9% organic constant currency revenue growth, 10% to 11% adjusted EBITDA growth, and 11% to 12% adjusted diluted earnings per share growth.

Speaker #3: Non-GAAP operating income was $224 million for the quarter, compared with $311 million a year ago. The 100.8% second quarter 2026 property casualty combined ratio increased by 5.9 percentage points compared with the second quarter last year.

Speaker #3: Our 11% to 12% adjusted diluted earnings per share growth, that guide represents an increase from our prior 9% to 11% assumption. So our guidance balances operating over performance in the first half and constructive ongoing trends in the market with appropriate conservatism, given it's still an uncertain macro environment.

Speaker #3: Including an increase of 2.3 points for catastrophe losses. Our current accident-year combined ratio before catastrophe losses for the first six months of 2026 was 87.8%, fairly consistent with the 87.7% reported through the first six months of 2025.

Speaker #3: Across our markets, we continue to experience consumer resilience and broadly stable market volumes. Specific to the U.S., lenders are cautiously optimistic and anticipate modest loan growth, which is supported by strong consumer credit performance.

Speaker #3: Turning to premium growth, our consolidated property casualty net written premiums grew 3% for the quarter. Slowed growth reflects pricing discipline, as our underwriters continue to emphasize pricing and risk segmentation on a policy-by-policy basis in their underwriting decisions.

Speaker #3: Now, we continue to monitor inflation levels and interest rates and their potential impacts on consumer behavior and loan demand. The 10-year Treasury yield is now approaching 4.7%.

Speaker #3: That's up roughly 50 basis points from the start of the year. And while this has modestly pressured mortgage activity, impacts across the remainder of our portfolio have been limited.

Speaker #3: Estimated average renewal price increases for most lines of business during the second quarter were lower than the first quarter of 2026, but still at levels we believe were healthy.

Speaker #3: If the current trends continue, we expect performance to be at or slightly above the high end of our guidance. At the same time, our range is designed to absorb a reasonable level of market softening.

Speaker #3: Commercial lines in excess and surplus lines averaged increases near the high end of the low single-digit percentage range. Our personal line segment included personal auto and homeowner increases in the high single-digit percentage range.

Speaker #3: And Todd's going to provide more details on this in the guidance assumptions later. Our strong results in guidance reflect consistent execution against the growth strategy we outlined in February.

Speaker #3: While market conditions have tempered premium growth, we believe our focus on providing outstanding service and our deep relationships with independent insurance agents keep us positioned well for long-term success.

Speaker #3: Unlocking the full potential of one true platform and accelerating innovation in AI-enabled solutions. And translating these capabilities into commercial momentum across our portfolio. So let me highlight the milestones against each of these priorities.

Speaker #3: Next, I'll comment on second quarter performance by insurance segment compared with a year ago. Commercial lines grew net written premiums 3% with a $104.1% combined ratio that increased by 11.2 percentage points, including 4.9 points from higher catastrophe losses.

Speaker #3: So first, on the platform modernization, we continue to make really good progress. We have materially increased U.S. credit customer migrations to one true during the quarter.

Speaker #3: Personal lines grew net written premiums 1%, impacted by lower new business premiums that reflect softening market conditions. The combined ratio for personal lines was 99.9%, 2.1 percentage points better than last year, including a decrease of 1.6 points from lower catastrophe losses.

Speaker #3: At this point, roughly 60% of our U.S. batch activity and 30% of online customers are now running on one true. That's over 4,000 U.S.

Speaker #3: credit customers now migrated. And we continue to convert the most complex activity first, but maintain an emphasis on minimizing customer disruption. We expect to complete the U.S.

Speaker #3: Excess and surplus lines grew net written premiums by 8% and produced an excellent combined ratio of 90.5%. Cincinnati Re and Cincinnati Global continued to contribute to premium growth, as well as diversifying risk for our insurance operations.

Speaker #3: migrations by the end of this year. Additionally, we continue to extend the one true platform and solutions internationally. We have now deployed one true instances in Canada, the U.K., and India, to support the launch of our true IQ analytics platform.

Speaker #3: Cincinnati Re's second quarter 2026 net written premiums increased by 16%. Its combined ratio was an outstanding 87.6%. Cincinnati Global's combined ratio was 110.8%, along with premium growth of 1%.

Speaker #3: We also launched Truvalidate, our fraud solution, in the U.K. and trusted call solutions in Canada, and India. Creating new local market opportunities for these global products.

Speaker #3: And one true is enabling us to increase our innovation velocity. Across the enterprise, we launched 40 new products with AI-powered enhancements in the first half alone, contributing significantly to our sales pipeline.

Speaker #3: Our life insurance subsidiary had another strong quarter, including 15% net income growth. In addition, term life insurance earned premiums grew 5%. I'll end my commentary with a summary of our primary measure of long-term financial performance, the value creation ratio.

Speaker #3: And beyond this innovation, we're also deploying AI at scale internally to improve our productivity. We are already seeing gains by using these tools across key employee groups, including average gains of over 25% for our software engineers and data scientists, and an early experimentation more than 20% within our consumer support operations.

Speaker #3: Our VCR was 7.9% for the second quarter of 2026. Net income before investment gains or losses for the quarter contributed 1.4%. Higher overall valuation of our investment portfolio and other items contributed 6.5%.

Speaker #3: These successes reinforce our confidence in the broader opportunity to drive AI efficiencies that can enhance our margins and fund future growth investments. Now, these platform and innovation investments are increasing commercial momentum across solutions and within verticals and geographies.

Speaker #3: Now, I'll turn it over to Chief Financial Officer Mike Sewell for additional insights regarding our financial performance.

Speaker #2: Thank you, Steve, and thanks to all of you for joining us today. Investment income continued to grow at a nice pace of 12% in the second quarter of '26, driven by strong cash flow from insurance operations and higher yields on the fixed maturity portfolio.

Speaker #3: In the first half of the year, core credit excluding FICO mortgage royalties and fraud, each grew in the high single digits, driven by traction through IQ alternative data and trusted call solutions.

Speaker #2: Bond interest income grew 14% and net purchases of fixed maturity securities totaled $316 million for the quarter, and $940 million for the first six months of the year.

Speaker #3: Marketing solutions also grew mid single digits, supported by strong identity performance with acceleration expected in the second half. So together, one true and our global solution strategy is increasing our innovation, expanding addressable opportunities, and supporting scalable revenue growth.

Speaker #2: The second-quarter pre-tax average yield of 5.08% for the fixed maturity portfolio was up 15 basis points compared with last year. The average pre-tax yield for the total of purchased taxable and tax-exempt bonds during the second quarter of this year was 5.66%.

Speaker #3: So let's have a case study of this strategy in action, focusing on U.S. financial services where platform modernization product innovation and deeper customer engagement are translating into sustained outperformance.

Speaker #2: Dividend income was up 3% for the quarter. Net sales of equity securities totaled $678 million for the quarter, and $732 million on a year-to-date basis.

Speaker #3: Within U.S. financial services, growth has consistently exceeded underlying market volumes. Excluding mortgage, financial services has grown at 9%, compound annual growth rate, outpacing the roughly 2% average growth in U.S.

Speaker #2: While that portfolio rebalancing activity was higher than a typical quarter, it's similar to our actions during the third quarter of 2024 and does not represent a change in our investment approach.

Speaker #3: consumer credit originations and real GDP growth over the same period. We've sustained this outperformance across multiple operating environments. U.S. financial services excluding mortgage has delivered high single digit or greater growth, except for modest pullbacks during the pandemic and in the 23 and 2024 consumer lending slowdown.

Speaker #2: Valuation changes in aggregate for the second quarter were favorable for both our equity portfolio and our bond portfolio. Before tax effects, the net gain was 1.3 billion dollars for the equity portfolio, and 79 million dollars for the bond portfolio.

Speaker #3: This track record reflects the strength of our U.S. credit data and expanded solution suite, which have enabled outperformance across market cycles. Growth is increasingly driven by share gains, pricing, and innovation, not simply underlying lending activity.

Speaker #2: At the end of the second quarter, the total investment portfolio net appreciated value was approximately $8.6 billion. The equity portfolio was in a net gain position of $8.9 billion, while the fixed-maturity portfolio was in a net loss position of $326 million.

Speaker #3: Now, one reason that we've been able to consistently outgrow the market is the increasing diversification of our financial services business. At almost two-thirds of financial services revenue, core credit remains the foundation of the franchise.

Speaker #2: Cash flow continued to benefit from investment income growth. Cash flow from operating activities for the first six months of 2026 was $1.4 billion, up 29% from a year ago.

Speaker #3: We continue to grow our share on the strength of our leading trended data and attributes, as well as our differentiated and insight-led engagement model.

Speaker #3: Building from that foundation, more than one-third of revenue now comes from solutions outside traditional credit reports and scores. These newer revenue streams represent faster-growing opportunities that are often less directly tied to lending origination volumes.

Speaker #2: Briefly moving to expense management, our second-quarter 2026 property casualty underwriting expense ratio increased by 1.2 percentage points due to an increase in commission expenses and the timing of recognition of certain expenses.

Speaker #3: Roughly 12% of revenue comes from alternative data, like factor trust, as well as our true IQ analytics enablement suite. These solutions serve lenders increasing appetite for alternative data sets and AI-enabled analytic tools to activate our data at scale.

Speaker #2: On a six-month basis, the ratio increased only 0.3 of a percentage point. Next, I'll comment on 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.

Speaker #3: Another 24% of revenue comes from non-credit solutions. Most notably, trusted call solutions and our modernized marketing and fraud solutions. This intentional diversification is expanded our position beyond core credit to make us a broader partner for clients across the customer lifecycle.

Speaker #2: As we do each quarter, we consider new information, such as paid losses and case reserves. Then, we update an estimated ultimate loss and loss expenses by accident year and line of business.

Speaker #3: We help them reach the right consumers improve engagement, mitigate fraud, manage portfolios, and make better decisions. This combination of core credit leadership and complementary adjacent growth opportunities is a real differentiator for TransUnion.

Speaker #2: For the first six months of 2026, our net addition to property casualty loss and loss expense reserves was 981 million dollars, including 845 million dollars for the IBNR portion.

Speaker #3: So the benefits of our diversified growth strategy are evident in our recent performance. Over the last two years, U.S. financial services excluding mortgage has grown at a roughly 10% compound annual growth rate, with contributions from across the product portfolio.

Speaker #2: During the second quarter, we experienced $42 million of property casualty net favorable reserve development on prior accident years that benefited the combined ratio by 1.7 percentage points.

Speaker #3: Core credit is growing low double digits annually. This growth exceeds lending volume growth, reflecting customers' continued preference for our differentiated trended data and analytics.

Speaker #2: On an all-lines basis by accident year, net favorable reserve development for the first six months of 2026 included favorable 127 million dollars for '25, favorable 42 million dollars for '24, and an unfavorable 46 million dollars in aggregate for accident years prior to '24.

Speaker #3: Our alternative data and analytics are growing in the low teens annually, led by factor trust and new wins for our true IQ suite. The maturation of true IQ provides a new opportunity to further increase growth.

Speaker #2: Our commercial casualty line of business experienced $14 million of unfavorable reserve development during the second quarter, which was driven by one older accident year that included updated estimates for ultimate losses for a small number of insureds.

Speaker #3: Non-credit solutions is growing at a high single digit annual rate, with room for further acceleration. Trusted call solutions in particular has been a standout growing over 50% annually within financial services.

Speaker #3: And we see increased revenue and bookings momentum within marketing and fraud. These solutions address a growing set of mission-critical use cases. Now, AI will increase demand for proprietary data analytics and decisioning capabilities.

Speaker #2: I'll conclude my comments with second quarter capital management highlights. We paid 143 million dollars in dividends to shareholders. In addition, we purchased repurchased approximately 1.3 million shares at an average price per share of 161 dollars and 93 cents or 216 million dollars.

Speaker #3: Areas where we are well positioned. Over time, we expect increased AI sophistication to drive higher data consumption, stronger demand for true IQ analytics, and faster adoption of our marketing and fraud tools.

Speaker #2: We believe our balance sheet continues to provide significant flexibility and financial strength. Parent company cash and marketable securities at quarter-end was $5.7 billion.

Speaker #3: Taken together, these trends position us to continue growing above underlying market volumes. Financial services now benefits from multiple growth factors. A broader addressable market and a more diversified revenue base than at any point in our history.

Speaker #2: Debt to total capital remained under 10%. Our quarter end book value was a record high, 108 dollars and 64 cents per share, with nearly 17 billion dollars of gap consolidated shareholders' equity providing ample capacity for the profitable growth of our insurance operations.

Speaker #3: So with that as context of how our strategy is driving commercial success, I'm going to pass it to Todd, who will detail Q2 performance and our refresh guidance.

Speaker #3: Todd?

Speaker #2: Thanks, Chris. And let me add my welcome to everyone. Starting with the quarter, revenue exceeded the high end of guidance by 27 million dollars and adjusted EBITDA exceeded by 11 million dollars, led by stronger-than-expected performance in U.S.

Speaker #2: Now, I'll turn the call back over to Steve.

Speaker #3: Thanks, Mike. We see many positives in our results through the first six months. As we head into the back half of the year, we will continue demonstrating our expertise in underwriting, pricing, and risk selection, and building strong relationships with our appointed independent agents.

Speaker #2: non-mortgage financial services emerging verticals and international. U.S. mortgage was roughly in line with expectations despite rising interest rates throughout the quarter. Total revenue increased 15% on a reported and 10% on an organic constant currency basis, led by U.S.

Speaker #3: I'm confident that we have the people and plans in place to finish the year strong. Before we open the call for questions, I'd like to recognize Dennis McDaniel.

Speaker #2: financial services and emerging verticals. Excluding FICO mortgage royalties, organic growth was 7%. Adjusted EBITDA increased 12%. Adjusted EBITDA margin was 34.8%, slightly better than guidance and down 90 basis points year over year.

Speaker #3: As many of you know, this is Dennis’s final earnings call before retirement. Over the past 17 years, he has been an outstanding ambassador for our company, building strong relationships with the investment community while helping communicate our strategy and performance with transparency and integrity.

Speaker #2: The impact of FICO mortgage royalties accounted for the entirety of the year-over-year decline with underlying margins up modestly. Acquisitions had an immaterial impact on consolidated margins, as Mexico delivered better than anticipated adjusted EBITDA performance.

Speaker #3: We are grateful for his contributions, and we wish him the best in this next chapter of life. As a reminder, with Mike and me today are Steve Johnston, Steve Soloria, Mark Shambo, and Andy Schnell.

Speaker #3: Jim, please open the call for questions.

Speaker #4: And thank you, gentlemen, for your remarks this morning. And now, to our audience: if you would like to ask a question at this time, simply press star followed by the digit 1 on your telephone keypad.

Speaker #2: Adjusted diluted earnings per share was $1.23, up 13% year over year, and 8 cents ahead of the high end of our guidance. In the second quarter, U.S.

Speaker #4: Pressing star and 1 will place your line into the queue, and I will open your lines one at a time. Once again, that is star and 1 for a question, ladies and gentlemen.

Speaker #2: markets revenue grew 11% on an organic constant currency basis versus the prior year. Growth was diversified across our verticals, supported by strong first-half bookings and retention, as well as continued demand for both credit and non-credit solutions.

Speaker #4: We will hear first today from Michael Phillips at Oppenheimer.

Speaker #5: Thank you. Good morning, everybody. And I want to thank Dennis for all the years of great work—one of the best in the business. So all the best to you, Dennis, as you go to the next chapter.

Speaker #5: Appreciate everything. I guess my first question would be on a topic that's not that new; it comes up every now and then. But Steve, I want to hear your thoughts—maybe they might be updated here—on the commercial lines. The current accident year had some spike, it looks like, in large loss activity, $2 million or more.

Speaker #2: Financial services revenue grew 18%, or 10% excluding FICO mortgage royalties. In core, non-mortgage financial services revenue grew 8%, with healthy growth across lending types.

Speaker #2: As Chris discussed, growth reflects a mix of healthy lending activity, y, pricing, new wins, and increasing adoption of our broader solution set. Credit card and banking rose 6% on lending volume growth and new wins from trusted call solutions.

Speaker #5: I think typically when this comes up, it's—well, it's more of a quarterly anomaly, maybe not so much of a trend. But we've seen this now a couple quarters in a row from other companies.

Speaker #5: And I'm wondering, I guess, to the extent you're worried this might be a trend that we need to watch more closely, and to what extent does it impact your comments on commercial lines rates being at a healthy level?

Speaker #2: Newer lending grew 8%, with strong fintech growth and sustained consumer demand. Auto was up 8%, driven by pricing and new wins across our solutions.

Speaker #5: Thanks.

Speaker #3: Yeah, thanks, Mike. You know, Mike Sewell has got the specifics on the large accounts, but yeah, we—you know, Mike, we've talked about this in the past as well.

Speaker #2: Auto growth outpaced declining industry volumes lapping last year's tariff-related pull forward in purchase activity. In mortgage, revenue grew 37%, excluding FICO royalties, mortgage growth was 15% versus inquiries down 7%, without performance due to pricing action and non-tri-bureau revenues.

Speaker #3: Every time we have a large loss in any lines of business, we do a you know, an after-action review on it to see if there's any you know, if there's anything that could go towards a trend.

Speaker #3: I think what you're seeing here, again, is just inherent volatility. It's very few claims; there's variability that goes with it. And so I don't see any trend specifically on those large loss pickups.

Speaker #2: Growth was in line with expectations even as volumes came in modestly lower as rates increased during the quarter. Within mortgage, we recently added new alternative credit attributes from factor trust to our mortgage credit file at no additional cost to customers.

Speaker #3: But Mike, yeah, I would say—and thanks for the questions, Mike Sewell—so you know, on a year-to-date basis, we did have about 30 new current accident year large losses.

Speaker #2: This enhancement reflects our continued focus on helping mortgage lenders develop a more complete and actionable view of borrower behavior. Additionally, Vantage score usage in mortgage was a highlight in the quarter, with a meaningful increase in adoption.

Speaker #3: So that was about $112 million, compared to the prior year, $26 million in new losses. That was about $101 million, and that was through Q2 of 2025.

Speaker #3: You know, I would say with that related to the property, the property was up about $20 million year over year, on large losses.

Speaker #2: At the start of the year, less than 5% of our mortgage credit inquiries included Vantage score, that figure is now closer to 30% across more than 900 lenders and increasing each month.

Speaker #3: And it was really primarily related to one large loss that did reach our working treaty on that. So that was, you know, hitting that for about $15 million.

Speaker #2: Most activity remains dual pulls with Vantage score and FICO, but we are beginning to see increased Vantage score only usage, including certain mortgages requiring mortgage insurance.

Speaker #3: But you know, overall, you know, when you take a look at our current year, you know, greater than 2 million dollars the 112 this year versus 101 last year, you know, compare that with our earned premiums, both years, it was only a 2.2 percent loss ratio.

Speaker #2: Importantly, our 2026 guidance continues to assume no benefit from Vantage score adoption. That said, the momentum we are seeing gives us greater confidence in the long-term opportunity as the market moves through testing, validation, and operational readiness.

Speaker #3: So very consistent, and I would echo what Steve just said, that there's no indication of unexpected concentration of large you know, losses by risk category, region, or what have you.

Speaker #2: Turning to emerging verticals, growth accelerated to 9%, led by our eighth straight quarter of double-digit growth in insurance as well as trusted call solution strength across our verticals.

Speaker #3: And Mike, you mentioned the pricing. I would just add in there, you know, the obviously our actuaries are looking at large loss trends frequency trends, all of it together for pure premium.

Speaker #2: Within insurance, we experienced robust demand across our solution suites. Credit-based marketing continues to strengthen, consumer shopping remains active, and we drove growth across core credit, driving history and trusted call solutions.

Speaker #3: And I would just add that, you know—I'll say specifically in commercial lines, I think that's where you were directing it—the new business pricing metrics that we use, the COPE underwriting that every underwriter does, both new and renewal, is holding up really well too.

Speaker #2: Tech retail and e-commerce were a significant portion of our marketing and fraud revenues reported grew high single-digit, with emerging verticals insurance and tech retail and e-commerce account for over half of the revenue.

Speaker #5: Okay. Yeah, thank you, guys. Next question would be on Mike's comments on expense management. You guys are known as clearly one of the best agency relationships in the business.

Speaker #2: Across our other emerging verticals, public sector and media grew mid single digits, tenant and employment returned the growth, and the telco vertical declined modestly.

Speaker #5: But I guess, how do you think—do you think at all about maybe any changes in strategy on how you approach your agents as we get deeper into what’s self-market, and maybe what that might mean, if anything at all, for pressure on the expense ratio from here?

Speaker #2: Consumer interactive declined 3% in line with our expectations as growth in the indirect channel was offset by declines in the direct channel. In international, all revenue growth comparisons are on an organic constant currency basis.

Speaker #3: Yeah, as far as—are you talking commissions, Mike, for agencies?

Speaker #5: Anything at all. Certainly commissions, yes, but anything else at all. But I guess, yeah, it's more specifically on commissions and is there any pressure to you know, change the commission structure to get more business in the door with rates going the way they are and again, what that means with pricing and expense ratio.

Speaker #2: International revenue accelerated from flat growth in the first quarter to 6% in the second quarter, overall results reflected strength in developed markets and improving trends across emerging markets, including an inflection in India and moderating headwinds in Asia Pacific.

Speaker #3: Yeah, no, okay. Thanks. Mike Sewell and I can bifurcate this because there are efficiencies that we're working on, on the corporate side, to continue to drive down our non-commission expense ratio.

Speaker #2: Starting with India, revenue accelerated to 8% growth, slightly ahead of our expectations. We experienced gradually improving volumes over the course of the quarter, supported in part by the recent government-backed program to support commercial lending.

Speaker #3: But one thing that we're extremely proud of as a company, and we measure ourselves on, is how we compensate the independent agents that represent us.

Speaker #2: We also delivered very strong new wins in the quarter. We continue to monitor the Indian market with cautious optimism about the trajectory. We expect similar growth in the third quarter, with acceleration in the fourth quarter as comparisons ease.

Speaker #3: If you look at our commission schedule—just our primary commission schedule—it's very fair. But I don't think it's going to stand out to you in any one line of business.

Speaker #2: Canada grew 10%, reflecting healthy activity across financial services as well as strong growth in fintechs and insurance. UK grew 9%, outpacing modest market growth driven by share gains and new business wins across banking and fintech.

Speaker #3: It's just fair across the board. By you know, by design and deliberately, we have a very I think very fair above average profit sharing contract with our agents.

Speaker #3: And it is driven off of underwriting profit for profitable business they send our way. We feel that when an agent writes profitable business with us, we’ll share more of that with them than many of our competitors.

Speaker #2: Latin America improved to 5% organic growth, with double-digit growth in Brazil and modest and improving growth in Colombia and other markets. Africa also grew 5%, with broad-based growth across verticals and regions.

Speaker #3: That's again by design. It's our agency focus, and it aligns us with our agencies. So, we feel like our compensation to agents is already the strongest, and we see no need for amending that.

Speaker #2: And Asia Pacific declined 7%, with the rate of decline improving versus the first quarter as we finished lapping prior year one-time contracts. We expect Asia Pacific to return the growth in the second half of the year.

Speaker #2: Within our international business, trans-Union to Mexico continues to strongly outperform our acquisition case in the first few months of ownership. Over the last several years, trans-Union to Mexico has grown at a double-digit compound annual growth rate supported by a growing economy favorable demographics and meaningful room for further formal credit penetration.

Speaker #3: And as far as getting pressure, I think our agents recognize that we're a top payer across the board and so not we don't see you know, a lot of pressure there.

Speaker #2: And I would say, Mike, on the non-commission side, we continue to strive to, you know, be more efficient, watching our costs—you know, costs are going up.

Speaker #2: And I've said it before, is that we're trying to keep the increase of our non-commission costs lower than the growth in premiums. And so you know, I think as you see you know, premiums slowing down, we're going to have to double down our efforts on watching our costs.

Speaker #2: Growth has been stronger than its Latin American peers over the last two years, reflecting not only these credit market fundamentals but also Mexico's fiscal and monetary stability as well as its accelerating near-shoring activity supported by its proximity to the United States.

Speaker #2: But we still need to you know, invest, invest in technology, our people, you know, et cetera, et cetera. So my job might be a little bit harder, but I think we'll be able to do it.

Speaker #2: We are now applying trans-Union's global product, technology, and commercial playbooks to accelerate growth beyond market volumes. Let me detail our early priorities as we integrate Mexico into trans-Union.

Speaker #5: Okay, appreciate the thoughts, guys. Appreciate it.

Speaker #3: Thanks, Mike.

Speaker #5: Our next question will come from Gregory Peters at Raymond James.

Speaker #2: First, we are enhancing our data foundation. Our long-standing relationships with the largest Mexican banks and fintechs have created the market's leading data coverage, quality, and predictive depth.

Speaker #6: Good morning, everyone. In the press release, when you get into the consolidated results, the first bullet point talks about the 3% growth in the second quarter.

Speaker #2: That foundation includes nearly 600 million trade lines with positive and unique data representing 90% of the total. Under Mexico's regulatory framework, those positive data trade lines are not shared with competitors, creating a structural advantage.

Speaker #6: And you call out price increases. I think, you know, that's pretty straightforward where you're getting price, where you're not. You also mention a higher level of insured exposures.

Speaker #6: I wanted you to comment on that. I also you also call out the second quarter growth in Cincinnati Reed and the global underwriting business.

Speaker #2: We are building on this advantage by introducing new trended scores and attributes, expanding alternative data sets, and eventually migrating Mexico to OneTrue to unlock greater scalability.

Speaker #6: And those are two areas that I would think might not be growing considering your comments about you know, rising competition in the marketplace. So that would that's the first area that I wanted to focus on my questions on.

Speaker #2: Second, we are accelerating innovation. We plan to bring our leading global capabilities to Mexico over the course of the next year, including true IQ analytics, true validate, and our credit education tools.

Speaker #3: Sure, Greg. And out of the release, we were talking about the 3% net written premium growth on a consolidated data basis. About two-thirds of that is coming from rate and about a third from exposure.

Speaker #2: Third, we are enhancing client engagement. In core financial services, we are strengthening relationships with leading lenders via deeper analytics, consulting. At the same time, we plan to use our data advantages in faster innovation to win in our already fast-growing fintech and retail verticals.

Speaker #3: So just think, you know, increased sales, payrolls on the casualty side, or, you know, just property values—inflationary property values in general there. On Cincinnati Re and Cincinnati Global, you know, again, Cincinnati Global net written premiums were up 1 percent.

Speaker #2: In summary, Mexico is performing ahead of plan, and we are building on that momentum with multiple opportunities to deploy our global capabilities. We believe this combination positions us on the path to drive sustained and scalable growth.

Speaker #3: So, they are feeling pressure primarily from larger property shared layer direct. In fact, they're showing pricing and underwriting discipline there, so their growth has been under pressure.

Speaker #2: Turning back to the enterprise, operating performance is translating into strong cash generation improved balance sheet flexibility and greater capacity for capital return. At the end of the second quarter, with 5.6 billion dollars of debt, and 839 million dollars of cash, and our leverage ratio decreased to 2.6 times.

Speaker #3: And then Cincinnati Re, you know, that's obviously an assumed reinsurance operation, can be a little more opportunistic. They're a little more nimble and can move in and out of different covers.

Speaker #3: And so their growth can also be a little more seasonal, Greg. So, you know, their 16% growth is strong. We feel good about the underwriting and the pricing.

Speaker #2: During the second quarter and through July, we accelerated our pace of repurchases. Year to date, we have repurchased 2.1 million shares at an average share price of roughly $71.

Speaker #3: There as well.

Speaker #5: Okay, fair enough. Then I'll pivot from my follow-up question to the personal lines business, where, as you know, growth is slowing down and agency new business is down.

Speaker #2: We're a total of roughly 150 million dollars. We continue to view share repurchases as a highly attractive use of capital at current valuation levels.

Speaker #2: For the remainder of 2026, we plan to continue executing on our disciplined capital allocation framework with a current bias toward capital return to shareholders.

Speaker #5: Maybe you know, you can frame how you're thinking about the top line for that business going forward, considering the pressures on pricing. You know, auto looks like it's flat or up a little bit, home up a little bit better.

Speaker #2: Based on current conditions, we expect the pace of second-half repurchases to be at least comparable to the first half. We also remain committed to reducing our leverage ratio toward our long-term target of under 2.5 times.

Speaker #5: Just give us some perspective on how you're thinking about this going forward.

Speaker #3: Yeah, we're thinking on we're thinking long term as we do with everything there. You know, at the end of I'll quote at the end of 2025, Greg, over the last four years, we doubled our personal lines operation in premiums.

Speaker #2: Before getting into guidance details, I want to reiterate our disciplined guidance philosophy. Our increase in full-year guidance reflects strong performance in the first half of the year.

Speaker #3: So with our balance sheet, we're able to take advantage of a really difficult, tough, hard market in personal lines. So the slowing in premiums, both for net written and for new business, has been expected.

Speaker #2: A continuation of those trends would position us to deliver at or slightly above the high end of our range. While the range preserves flexibility, to manage ongoing market uncertainty.

Speaker #2: In the third quarter, we are guiding revenue to be between 1.292 and 1.310 billion dollars up 11 to 12 percent. Growth is comprised of 6 to 8 percent organic constant currency growth and a 4.5 percentage point contribution from acquisitions.

Speaker #3: I think it's still healthy. The pricing there is still healthy. We still have, candidly, we still have room for margin improvement in personal lines.

Speaker #3: We're on a good path. We're still earning rate in. But you know, the volatility of CAT—we all can see it, we all know it.

Speaker #2: We expect 4 to 5.5 percent organic growth excluding FICO mortgage royalties. Importantly, the implied sequential deceleration from 7 percent excluding FICO in the second quarter is entirely related to our non-FICO mortgage revenue, reflecting greater year-over-year declines in inquiry volumes.

Speaker #3: And, you know, we have to underwrite and price for CAT. So, Personal Lines are doing a nice job with rate, with terms and conditions, with risk selection—of driving down.

Speaker #3: They're non-CAT loss ratio, and taking action to curtail that CAT or, you know, manage it as well as possible. So, we still have room for some margin improvement there.

Speaker #2: We expect non-mortgage organic growth to be at or slightly above the 6 percent rate that we delivered in the second quarter. In other words, the deceleration does not reflect a change in core non-mortgage trends.

Speaker #3: But the slowing growth has been—it's been predictable, quite frankly. We're comfortable with it, and it's profit, you know. It's profit first there, so they're going to continue to show underwriting, price, underwriting discipline.

Speaker #2: We are guiding adjusted EBITDA to 455 to 463 million dollars up 7 to 9 percent, implying a margin of 35.2 to 35.4 percent. Underlying margins expand by 20 to 40 basis points offset by an 80 basis point drag from FICO royalties and a 60 basis point impact from acquisitions.

Speaker #3: As well.

Speaker #5: Thanks for the detail, and good luck in your retirement, Dennis. Our next question.

Speaker #3: Got a big smile out of him, Greg.

Speaker #5: Yeah. Our next question will come from Mike Zaremsky at BMO. I believe we— Mr. Zaremsky, please re-signal, sir. We'll move forward to Josh Schenker at Bank of America.

Speaker #2: We expect adjusted diluted earnings per share to be between $1.18 and $1.21 up 7 to 10 percent. For full-year guidance, we expect revenue to be between 5.127 and 5.162 billion dollars up 12 to 13 percent.

Speaker #7: Yeah, good morning, everyone. Thanks for taking my call. As I said on the last call, you know, I'm the president of the Dennis McDaniel fan club.

Speaker #7: So I'm really—I appreciate everything he's done for the company and done for shareholders over the years. Thank you, Dennis. In terms of homeowners, can you talk about the timing a little bit of re-underwriting the book?

Speaker #2: Our raised guidance reflects stronger growth from our Mexico acquisition as well as modestly higher non-mortgage organic growth due to strong first-half performance. Acquisitions now add 4 percent and FX has an immaterial impact on our guidance.

Speaker #7: And, you know, when you sort of take pricing and when you look at the book and how many properties you have that maybe don't fit what you want at the current price, can you go through the quarter and explain when all that came together?

Speaker #2: We expect organic constant currency revenue growth of 8 to 9 percent or 5 to 6 percent excluding FICO mortgage royalties. Our segment-level assumptions are broadly unchanged.

Speaker #3: Well, as far as, say, re-underwriting personal lines or homeowners, Josh, that's just—you know, that's been a— I don't know if there's any moment in time other than most recently post-California wildfire.

Speaker #2: Mortgage revenue growth guidance of 28 percent for the full year or 6 percent excluding FICO is unchanged since February. Mortgage revenue exceeded our expectations in the first half, particularly in the first quarter when mortgage rates briefly dipped below 6 percent.

Speaker #3: You know, we took a hard look at California and just took a different view of the risk for homeowners specifically—aggregations, different terms, conditions, pricing.

Speaker #2: As mortgage rates have moved back above 6.5 percent, we have de-risked our second-half assumptions. Our conservative assumptions provide us flexibility to deliver these growth rates even if rates increase modestly from current levels.

Speaker #3: But beyond that, it's just been an ongoing process of making sure that we're getting the rate that we need, handling Midwest convective storm terms and conditions, and pricing—especially for our middle market homeowner business there.

Speaker #2: We now anticipate mid to high single-digit inquiry declines for the full year including low double-digit declines in the second half of the year. We continue to expect pricing actions and revenue beyond traditional tri-bureau reports to drive outperformance versus underlying volumes.

Speaker #3: So, it's really just been an ongoing process over time, and it continues.

Speaker #2: At the same time, stronger momentum across the remainder of the portfolio helps offset our more conservative second-half mortgage assumptions. We expect adjusted EBITDA to be between 1.807 to 1.827 billion dollars in 2026 up 10 to 11 percent.

Speaker #7: Well, you know, look, if someone asked me, you know, six months ago to identify one of the key growth targets at Cincinnati, it's always appointing new agents and getting a higher share of their business.

Speaker #7: But the high net worth opportunity is obviously a very clear opportunity. And given the slowdown in growth this quarter, does that change the trajectory of how we should be thinking about Cincinnati's growth longer term in the high net worth business?

Speaker #2: That results in a margin of 35.2 to 35.4 percent down 60 to 80 basis points. Underlying margins are expected to expand by 50 to 70 basis points driven by revenue flow-through and remaining transformation savings.

Speaker #3: No, I don't think it should at all. I think more of the pressure we're feeling right now, Josh, is in middle market personal lines, and you know, that's where the market was really hard the last several years, and we're able to take advantage of those growth opportunities.

Speaker #2: This strong underlying expansion is offset by a 90 basis point drag from FICO royalties and a 40 basis point impact from our acquisitions. We anticipate adjusted diluted earnings per share to be $4.75 to $4.83 up 11 to 12 percent.

Speaker #3: But no, you shouldn't think any differently about our growth of high net worth going forward. It's a little over 60 percent of our business today—of our personal lines business.

Speaker #2: This represents an increase from prior guidance of 9 to 11 percent growth. All other guidance items, including depreciation and amortization, net interest expense, adjusted tax rate, and capital expenditures as a present of revenue, are unchanged from April.

Speaker #3: That's grown steadily over time. And I think that will continue to become a bigger and bigger part of our business. It's performing well. You know, where we the one thing that you might see again that would lend you to believe that the trajectory is a little different is just our retrenching a bit in California, post wildfire loss.

Speaker #2: With that context, I will now turn the call back to Chris for a closing remarks.

Speaker #3: But no, our commitment to high net worth, our ability to grow that—I think the agents' response to us and the way we do business in the high net worth space is recognized.

Speaker #1: Thank you, Todd. So recapping, in the second quarter, we beat guidance with double-digit revenue and earnings growth, reflecting the strength we're seeing in the US markets and our improving trends in international.

Speaker #1: We raised the full year 26 guidance, but we maintained prudent assumptions around the macro environment. We now expect 8 to 9 percent organic constant currency revenue growth and 11 to 12 percent adjusted diluted EPS.

Speaker #3: And I think our agents are affording us premier, high-net-worth carrier status in their agencies.

Speaker #7: And if you'll forgive me, one more. If we think about your 60% right now high net worth in that homeowner business, fast-forward maybe a couple of years, you're 70, 75.

Speaker #1: This performance would reflect our third consecutive year of at least high single-digit organic constant currency revenue growth and double-digit adjusted diluted EPS growth. And we executed well against our 2026 strategic priorities, most notably with substantial migrations of our US credit customers to OneTrue, as well as an accelerating pace of product launches and enhancements and international rollout of the OneTrue platform.

Speaker #7: At some point, does Cincinnati become less of a relevant player in the middle market?

Speaker #3: No, I don't I don't think so, Josh. We're a you know, we have an agency strategy. We appoint great agencies and we try to reflect what they do across all lines of business.

Speaker #3: We grew up as a middle-market personal lines underwriting agent, and the communities that they're in—it's important to us. You know, obviously, you have to make sure you've got the pricing right there.

Speaker #1: Our investments in platform modernization, innovation, and our unique data assets are translating into diversified and above-market growth rates. As our business continues to become increasingly driven by scalable innovation, share gains, and diversification, we are growing our free cash flow generation as well as our capacity to return capital to our shareholders.

Speaker #3: That's a more competitive, comparative rater world. But no—as long as it's important to our agents, and they're out conveying the value that they bring, and a carrier like us brings with our broad coverage forms and the way we handle claims, middle-market personal lines—we'll continue to be important and be a big part of what we do.

Speaker #1: With that, it's back to you, Greg.

Speaker #3: That said, Josh—yeah, Josh—that said, I'll go back to what I said earlier: we still feel that there's room for margin improvement in our personal lines.

Speaker #2: That concludes our prepared remarks for the Q&A. We ask that each of you ask only one question so we can include more participants. Operator, we can begin the Q&A.

Speaker #1: Thank you. And ladies and gentlemen, at this time, we will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad.

Speaker #3: And we're focused on that. So, you know, you may see the growth under pressure there. It's going to be profit first. But don't confuse that with a lack of commitment to the line or to the segment.

Speaker #1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star then two.

Speaker #1: Please limit yourself to one question. And at this time, we will pause momentarily for the first question. And that first question today will come from Jeff Mueller with Baird.

Speaker #3: Thank you, Josh.

Speaker #5: And we'll hear next from Mike Zaremsky at BMO. Please go ahead.

Speaker #8: Hey, thanks. Good morning. Just echoing everyone's comments—Dennis, you'll be missed. Have fun in the next chapter. First question on the expense ratio details you provided.

Speaker #1: Please go ahead. Let me see. Mueller, your line is open.

Speaker #8: I don’t think in Q2 last year you quantified anything. So, any quantification you want to offer us, so we can better understand what the reversal was and how to think about the run rate, et cetera?

Speaker #3: Oh, yep. Sorry about that. I guess I'm struggling to understand how the non-mortgage organic upside and momentum gets adjusted in the guidance and if that's just baked in as increased conservatism.

Speaker #3: I ask because the mortgage full-year revenue guidance is unchanged and it looks like most of the revenue guidance range is the upper performance in Mexico and increased help me with that.

Speaker #3: Yeah, this is Mike Sewell. You know, there's probably—when I look at it—you know, the largest primary piece was the commissions, and you do have that from time to time.

Speaker #3: Thank you.

Speaker #3: But when I look at the other non-commission expense, it’s just a little bit all over the board. There might be one or two places where it was a little bit higher for the quarter, but then it evens out for the year.

Speaker #4: Hey, good morning, Jeff, and this is Todd. I'll take that question. For you. So in essence, what we've done with guidance for mortgage, is we've maintained our full-year guide that we came into the year with where we were calling for 28 percent growth all in and 6 percent when we exclude the FICO mortgage royalty.

Speaker #3: So, it's just the timing of, you know, when certain costs are incurred or when you're hiring certain people, et cetera, et cetera. So it's, you know—but we should probably look at it over, you know, multiple quarters, not just one quarter.

Speaker #4: And that contemplates a decline of volume from mid to high single digits. Now, to go back a little bit, the first half of the year in particular in the first quarter, we had outperformance in mortgage.

Speaker #3: And we, you know, we want to keep it under that 30% expense ratio. And I'm going to try to, you know, have my target to keep taking it down further.

Speaker #4: Feels like a long time ago, but mortgage, the 30-year mortgage rate was about 6 percent when you go back up to January and February.

Speaker #8: Got it. And just sticking with the expense ratio, a number of insurance carrier peers have kind of come out with long-term 27, some 28, some even outstanding 30, kind of specific guidance on cost efficiencies due to newer technologies, et cetera.

Speaker #4: And then with geopolitical tensions we saw the 10-year treasury yield rise and as a result of that, the 30-year also went up and that had an impact on our volumes.

Speaker #4: So as far as the way that we're looking at mortgage, we're being conservative with our assumptions. We are looking at where the 30-year is at today and it is at the highest that it's been all year.

Speaker #8: Is that, you know, any comments on if that's something Cincinnati is considering? Do you have enough data and use cases to feel comfortable there?

Speaker #8: Maybe your business model is a bit different than others. Thanks.

Speaker #4: And our guidance for mortgage would contemplate being at that level and perhaps even maybe being a little bit worse. So meaning that rates might be higher than they were in the first half.

Speaker #3: Yeah, you know, good question. We obviously were on items in the past—AI, this and that. So, you know, we are working on that, getting efficiencies, et cetera.

Speaker #4: So in essence, what that's doing is it's providing us with flexibility to deliver these results even if the rates do increase slightly. Now, the other part that I think is important and I think this is your question is specific to the non-mortgage part of our business.

Speaker #3: But we really, in the past, have not given, I'll say, guidance going out into the future on specifics of, you know, calculations or ratios like that.

Speaker #3: But rest assured, we're working extremely hard, and I think Steve has talked about that in the past.

Speaker #4: In the second quarter, we delivered 6 percent growth and what we're contemplating when you look at it on that basis is a similar trajectory for the third quarter.

Speaker #8: Got it. And just lastly, on the share of purchase number, is it fair to say there was a bump in there from the portfolio rebalancing unlocking some equity capital?

Speaker #4: So that you take a look at the performance that we're very pleased with within core financial services, a very strong quarter for us, emerging verticals, coming in at 9 percent, as well as then in our international portfolio when you look at the performance in India returning to growth at 8 percent, Canada at 10, and the UK at 9.

Speaker #8: Or was it just more that the shares were cheaper, or both?

Speaker #3: You know, that you know, we look at it you know, every quarter with what we do. And it was kind of a good timing with the rebalancing and Steve Sewell could talk about that.

Speaker #3: But at any rate, yeah, so on a year-to-date basis, we've done 2.4 million shares. It does feel—you know, maybe that's that, plus, you know, when I've said maintenance plus. But within the last five years, we did have one year where we repurchased 3.7 million shares.

Speaker #4: There's some good tailwinds that we're looking at as we go into the second half of the year. But the market remains uncertain. So we are taking a prudently conservative approach towards our guidance and as we put on as I said in my prepared remarks as well as what we put on the slide, we would orient you to the high end of that guidance and that more than likely if these conditions that were currently living through right now persist, we'll be at a we'll be above the high end of that guidance.

Speaker #3: So it is not outside of anything that we've done in the past. And I would just say it's going to be a quarter-to-quarter type of thing that we look at.

Speaker #8: Thank you.

Speaker #3: Yep, great question. Thank you. Operator, are you still with us? Maybe he's on mute. We're not disconnected. Operator, this is Steve Spray. Are you still with us?

Speaker #1: Yeah. And so just to emphasize a couple of those points, again, we feel like we're well positioned to deliver on this revised raised full-year guide.

Speaker #1: So high end or above. And the conditions that we're experiencing right now across the business and in mortgage clearly support that. We have built in some margin for error, some margin for deceleration in mortgage in the second half of the year because as Todd pointed out, rates are higher than they were by about 50 bips.

Speaker #1: But that said, we are positioned to absorb some deceleration in mortgage volumes that would come with higher rates and still deliver at the high end of the guidance.

Speaker #1: So this is prudently conservative but when you are conservative, you got to park that conservatism somewhere, right? We park it disproportionately in our mortgage because mortgage is the most rate sensitive.

Speaker #1: But to be clear on everybody in the call, we are experiencing consistent trends in July with what we experienced in the second quarter those trends persist we will overperform and we'll be back here in the third quarter making further guidance adjustments upward.

Speaker #2: Very helpful. Thank you.

Speaker #1: And our next question will come from Tony Kaplan with Morgan Stanley. Please go ahead.

Speaker #5: Thanks so much. I was hoping you could expand on if you're seeing demand for your datasets given acceleration in AI agents and which particular areas customers are really ramping up demand in terms of data versus a few quarters ago.

Speaker #3: It sounds like we're having difficulty with the operator connection. I think next in the queue for questions would be Mayor Shields from KBW. Mayor?

Speaker #8: Great. Thanks so much. Am I coming through?

Speaker #5: I expect that's a trend you're seeing. So I wanted to touch on which specific areas. Thanks.

Speaker #3: Yeah, we got you, Mayor. Can you hear us okay?

Speaker #8: Oh, yeah, I can hear you perfectly. Thank you so much. I want to start by again acknowledging Dennis, who's, like, the confident professional; he will certainly be missed.

Speaker #1: Yeah, Tony. Look, it is a trend that we're seeing as we've been saying for some quarters now. And as we emphasized at our investor day in March and had some slides last quarter as well, the AI and legend customers tend to consume more data.

Speaker #8: I apologize if I missed.

Speaker #5: Mayor, thank you for that. And to others who have given me good well wishes in recent weeks, thank you very much. It's been a pleasure working with the investment community.

Speaker #1: The models, the predictiveness all improves with more curated and authoritative data. That we provide. So I think in the big and general generally, we expect to see that accelerate as more lenders experiment and adopt AI modeling techniques across their kind of lending analytics life cycle.

Speaker #8: Yeah, I probably speak for everybody when I say heartfelt in the same direction—in the other direction. I was hoping to get a little commentary on the, I think, your loss ratio in Cincinnati Global and see whether that's related to the Middle East.

Speaker #3: And, see, Mayor, could you repeat that? Just that very ending—if it was related to what?

Speaker #8: To the conflict in the Middle East.

Speaker #1: I think we are well positioned with our product innovation in AI to support more of the work that those clients are doing with our analytics orchestrator agentic framework, which again, we presented we demoed at our investor day.

Speaker #3: Oh, okay. Yep. No, very good. That's a great question. And you noticed that pickup—it was on page 19 of the supplement. There was an increase there for the second quarter.

Speaker #3: And one is that we did have the conflict in the Middle East, Iraq. There was a net charge there of about $10 million, plus we also had one contingency; as you know, there was a heat wave going through Europe.

Speaker #1: And you can see where now using agentic AI on our foundation of data, we're able to automate a lot of the model building and prediction that our lenders typically do on their own or many segments of the market simply don't do.

Speaker #3: And so we did have one reserve in there for about $7.5 million for a contingency event. So between those two, that was the driver.

Speaker #1: So net net, we still believe that AI is going to be a positive growth tailwind. One, it's stimulating greater data consumption as we've talked about.

Speaker #3: Hey, Mayor, just to make sure Mike got that right— the loss was actually in Saudi Arabia, and then the second, the contingency, was in the US. We refer to that as event cancellation as well.

Speaker #1: But two, the agentic layer that we're building on top of our true IQ analytics foundation is going to expand our TAM and let us take over some of the work that's either done by our lending clients, not done currently, or done by other players in this data and analytics ecosystem.

Speaker #8: Right. No, perfect. Understood. Thank you. And second question—I'm not worried about workers' compensation being inadequately reserved, but there was a sequential step-down in the accident loss ratio.

Speaker #8: And I'm wondering if there's anything unusual in that number?

Speaker #5: Thank you.

Speaker #1: And our next question will come from Andrew Steinerman with JP Morgan. Please go ahead.

Speaker #3: Yeah, I would say there really wasn't anything that, you know, I would say stuck out to us on the workers' comp, so there's no surprises in there.

Speaker #6: Hi. Chris, in your prepared remarks, you suggested that marketing solutions that's true audience revenue growth should accelerate in the second half of the year from the mid-single digit revenue growth in the second quarter.

Speaker #6: What's driving that dynamic about the acceleration in the second half?

Speaker #8: Okay, understood. Thank you so much.

Speaker #3: You bet. Thanks, Mayor.

Speaker #1: Yeah. Well, there's some seasonality in the marketing business, Andrew, as you know. In the fourth quarter, a lot of the big players in the publishing universe turned to TransUnion to do market share and marketing effectiveness studies that they then use in their own media sales cycles.

Speaker #1: Your next question comes from the line of Matt Palazzola from Bloomberg Intelligence. Your line is live.

Speaker #2: Thanks for taking my question. The commercial casualty underlying loss ratio deterioration—could you talk about how much of that was maybe unusually large claims versus a different view of loss costs?

Speaker #1: And we're making greater inroads across the publishing ecosystem and being that kind of neutral measurement provider that the industry needs. We're also getting increasingly good traction with true audience, which is the suite of marketing solutions that we've migrated onto OneTrue.

Speaker #2: Thanks.

Speaker #3: I can start, Matt, and then Mike can come in there. If you look at that XCAT accident year casualty loss ratio, we've held that pretty close to the pick we had for 2025.

Speaker #1: We are converting a lot of the legacy customer base from those solutions onto the true audience solutions. It's a more powerful product. It's a streamlined interface.

Speaker #3: And a lot of that is being prudent, due to things that you're hearing from the industry and you're hearing from us—legal system abuse, just pressure on severity on that line.

Speaker #1: It's a broader series of services that have been integrated together, which allows cross-sell and upsell. And so I think the general pipeline build, the level of bookings, particularly in identity where we've got a tremendous data strength, but increasingly in audience, and also in spend planning and measurement, as I mentioned at the outset, which are historic strengths in our marketing portfolio, we just see that momentum building and we expect a better second half of the year.

Speaker #3: And there's a fair amount of inherent uncertainty in casualty. So I think we're holding prudent reserves in that line of business until we have further data.

Speaker #3: As it progresses.

Speaker #2: Okay, thank you.

Speaker #3: Yeah, thank you, Matt.

Speaker #2: And that concludes our Q&A session for today. Mr. Spray, I'm happy to turn it back to you, sir, for any additional or closing remarks.

Speaker #1: Thanks.

Speaker #6: Sounds good. Thanks.

Speaker #3: Well, thank you, Jim. And thank you all for joining us today. We look forward to speaking with you again on our third quarter call.

Speaker #1: And our next question will come from Andrew Nicholas with William Blair. Please go ahead.

Speaker #7: Hi. Good morning. Appreciate you taking my question. I wanted to hone in on India a bit further. A nice sequential uptick there. Can you speak to what you're seeing on the ground from an economic perspective from a commercial perspective and kind of how you're thinking about rest of the year with a nice uptick in the second quarter now and you're about thank you.

Speaker #2: Ladies and gentlemen, this does conclude the Cincinnati Financial Corporation second quarter 2026 earnings call. You may now disconnect your lines, and we hope that you enjoyed the rest of your day.

Speaker #1: Yeah, for sure. Excited to talk about India always. In terms of the volumes that we're seeing on the consumer and the commercial side, things are stabilizing, which is good.

Speaker #1: The macro continues to be attractive. There's GDP growth. There's reasonable levels of inflation. But as we all know, there's been any number of macro shocks that have hit India over recent quarters, which have interrupted our growth.

Speaker #1: That said, the volume of unsecured lending to the consumer space, which is a big driver of credit pulls along with card originations, that seems to be a floor reached and we're now in a more stable environment.

Speaker #1: On the commercial lending side, particularly with smaller to medium-sized businesses, there have been some government support programs that's enabling better activity in those space.

Speaker #1: In that segment of the market. So what I would say from a market volume perspective is that we're now moving sideways, to slightly upwards.

Speaker #1: We're seeing the stability that's going to allow our better products to gain traction and grow. So that's the kind of the market volume backdrop.

Speaker #1: From a competitive perspective, we're doing really well. I mean, the team is double down. We just posted our largest quarter of new sales ever in India, which is super exciting.

Speaker #1: First, the team is innovating on the data layer. We have redeveloped all of our principal consumer and commercial credit scores. They're performing better than ever.

Speaker #1: And that refresh is keeping a relevance in the marketplace. We're expanding the breadth of data contributions from lenders or furnishers as we call them around India.

Speaker #1: We're even starting to expand the type of data that we're getting from the furnisher network, which just drives continued improvement in model predictiveness. And we could consistently show to our lenders that they need to use our data throughout the lending cycle from the beginning where they're evaluating a prospect kind of top of funnel all the way through underwriting using our data because it's broader and it's more predictive leads to better decisions and better capital allocations.

Speaker #1: And we've got a very tight pitch that we deliver along with our data science team that's helping us really sell and win more share in the market.

Speaker #1: On top of that, we have successfully implemented our analytics solution in India. It's called True IQ. And there's a ton of interest. There's a ton of bookings and revenue momentum there.

Speaker #1: We were super excited about. And we're expanding trusted call solutions there as well. We are securing all the relationships we need with all of the right carriers to expand that component of our fraud solution and we're getting good traction there.

Speaker #1: So it's new products driving some revenues in addition to really competing effectively in the core credit market. And our next question will come from Faiza Alway with Deutsche Bank.

Speaker #1: Please go ahead.

Speaker #8: Yes. Hi. Thanks. Good morning. I wanted to ask about consumer lending more specifically within financial services. Growth sort of slowed a little bit this quarter.

Speaker #8: And I'm wondering if that's just a function of just tougher comps as you've had a few quarters of double-digit growth there. And maybe if you could talk more specifically around the fintech environment and maybe how sensitive that business is to rising interest rates and if that was a factor this quarter.

Speaker #1: Yeah. Well, first, it's not particularly sensitive to interest rates. Within a reasonable range of course. Mortgage origination and refinancing far and away is the most interest rate sensitive.

Speaker #1: But the spread on personal lending tends to be high enough that lenders can absorb increases in rates. So I just want to put that to rest at the outset.

Speaker #1: So yeah, growth in consumer lending and even card and auto, they're a tick down from where they were a year ago. That's simply us lapping comps.

Speaker #1: The absolute growth that we're getting each of those segments is very consistent. And healthy, it's just the businesses are getting bigger. And if you look back for two years, you see that particularly on the consumer side, there is just a resurgence in growth as consistent and durable funding has flowed back into the fintechs and they really diversified their funding sources as well.

Speaker #1: And they're meeting a robust market need. So I think pulling back the lens and thinking about the last few years, the outlier for fintechs and consumer lending was during the 22, 23 time period where rates spiked after incredibly hot growth in that segment for a long time.

Speaker #1: And there was simply a retrenchment, right? There wasn't enough funding and the rates were so high, it wasn't really an acquisition-oriented environment. So they pulled back and focused on portfolio management for a while.

Speaker #1: Now we've been out of that environment for a couple of years. And again, the fintech model based on borrowing from the capital markets or getting funding in other ways is a consistent and durable model that's been part of the American lending landscape for decades now.

Speaker #1: So we're confident that we can continue this run of good growth in consumer lending.

Speaker #8: Great. Thank you.

Speaker #1: And our next question will come from Ashish Sabadra with RBC. Please go ahead.

Speaker #9: Thanks for taking my question. I wanted to ask a question on the EBITDA front. The guidance implied step up from Q2 to Q3, but a much more material step up from Q3 to Q4.

Speaker #9: If you can talk about what's driving that improvement in margins going forward. Thanks.

Speaker #10: Thanks, Ashish. I'll take that question. So if you look at our adjusted EBITDA margins, and we'll talk about this and break it out into all the different pieces, but if we start just with our reported margins in the second quarter, we finished with a margin of 34.8%.

Speaker #10: And that was down 90 basis points on a year-over-year basis. In essence, the FICO mortgage royalty was accountable for that entire decline. And if you look further into the details, our underlying margins that exclude that royalty and also exclude M&A expanded by about 10 basis points.

Speaker #10: But M&A specifically, that's Mexico, had a 10-point drag in the quarter. When we look at the guidance for the third quarter, as you've already can see the high end is 35.4%.

Speaker #10: And that's a 100 basis point decline. FICO is about an 80 basis point drag. So kind of consistent with what we saw in the second quarter.

Speaker #10: But M&A becomes a little bit more of a drag on a margin perspective as we focus on integrating the Mexico acquisition. And it's a headwind of about 60 basis points.

Speaker #10: So when you do the net of that, in essence, what you see in the third quarter is a 20 to 40 basis point increase in our underlying margins excluding FICO mortgage royalty and M&A.

Speaker #10: So when you look at then the full year, we've been consistent in our guidance. We're calling for a 35.4% for the full year, which is down 60 basis points.

Speaker #10: But that underlying, when you exclude FICO mortgage royalties and M&A, we're calling for 50 to 70 basis points of underlying margin expansion. So the net of that then is what's implied for the fourth quarter in essence does have a step-up in margin.

Speaker #10: And when we look at where is that coming from, the mix as we get into the fourth quarter, as we already talked about in the first question, mortgage we have a very conservative posture.

Speaker #10: So and as you know, mortgage is a lower margin product for us. So when we have less of that, we end up having higher margins.

Speaker #10: We're also anticipating more growth from our financial services vertical excluding mortgage. What that means is a lot more credit sales with a higher margin flow-through.

Speaker #10: And then also the international business and Chris just went through the details on India. We're expecting that business to continue to accelerate also very good flow-through as we get into the second half of the into the second half of the year.

Speaker #10: And the last point I want to make here is when you look at our expenses, in Q2, Q3, and Q4, and when we take out the FICO mortgage royalty, in essence, that expense base is roughly flat, quarter over quarter.

Speaker #10: So that's really the key point as to why we expect to see the margin improvement accelerate in Q3 and then even more so. In Q4.

Speaker #1: Yeah. And that last point, just about the expense base, is a good one. As all of you know on the call, we recently completed a multi-year tech modernization and cost restructuring.

Speaker #1: We're very happy that we got it done. We got it done on time. We got it done within our initial spending budget. And the fact that we're holding expenses flat when, of course, there is underlying expense growth in a variety of areas, it shows that the program is worked and it's allowed us to take out some material costs and we're just now starting to see that benefit.

Speaker #1: Just switching gears quickly here, I realize that on the India question that was just asked, I forgot to mention one thing. You're going to see a nice increase in the growth rate in India.

Speaker #1: That we're expecting in Q3 and Q4. The good news is, of course, the business is re-accelerating and all the ways in which I described.

Speaker #1: But it's also re-accelerating because of some very soft comps. So the second half of the year, you're going to see nice percentage growth. I just wanted you guys to appreciate that dynamic.

Operator: Good day, everyone, and thank you for joining this Cincinnati Financial Corporation Q2 2026 earnings conference call. As a reminder, all phone participants are in a listen-only mode, and today's session is being recorded. It is my pleasure to turn the floor over for opening remarks and introductions to Mr. Dennis McDaniel, investor relations. Please go ahead, sir.

Speaker #1: And our next question will come from Raina Kumar with Oppenheimer. Please go ahead.

Speaker #8: Good morning. Thanks for taking my question. Just given that your competitor recently announced the acquisition of the second largest credit bureau in Mexico, can you comment on your positioning in the region long-term?

Dennis E. McDaniel: Hello. This is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our Q2 2026 earnings conference call. Late yesterday, we issued a news release on our results along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents, please visit our investor website, investors.cinfin.com. The shortest route to the information is the Quarterly Results section near the middle of the investor overview page. On this call, you'll first hear from President and Chief Executive Officer, Steve Spray, and then from Executive Vice President and Chief Financial Officer, Mike Sewell. After their prepared remarks, investors participating on the call may ask questions. At that time, some responses may be made by others in the room with us, including Executive Chairman, Steve Johnston.

Dennis McDaniel: Hello. This is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our Q2 2026 earnings conference call. Late yesterday, we issued a news release on our results along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents, please visit our investor website, investors.cinfin.com. The shortest route to the information is the Quarterly Results section near the middle of the investor overview page. On this call, you'll first hear from President and Chief Executive Officer, Steve Spray, and then from Executive Vice President and Chief Financial Officer, Mike Sewell. After their prepared remarks, investors participating on the call may ask questions. At that time, some responses may be made by others in the room with us, including Executive Chairman, Steve Johnston.

Speaker #8: Obviously, it was a strong spot for you in the quarter. But just curious on how it could impact your long-term strategy in Mexico. Thanks.

Speaker #1: Yeah. Thanks for the question. Well, look, Mexico is an exciting development within TransUnion. As you guys know from prior calls, we have been a minority investor in a tech provider to the Buro de Mexico for over 25 years.

Speaker #1: And we wanted to acquire controlling interest for 25 years. Fortunately, we were able to complete that transaction and we've got the leading bureau with the leading market position in the broader data archives in the Mexican market.

Speaker #1: Since acquisition and in recent years, the Bureau of Mexico has consistently outperformed growth and profit expectations. It is performing nicely above our deal book and compounding revenue on a much larger revenue base.

Dennis E. McDaniel: Chief Investment Officer Steve Soloria, and Cincinnati Insurance's Chief Claims Officer Marc Schambach, and Senior Vice President of Corporate Finance, Andy Schnell. 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, our 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.

Dennis McDaniel: Chief Investment Officer Steve Soloria, and Cincinnati Insurance's Chief Claims Officer Marc Schambach, and Senior Vice President of Corporate Finance, Andy Schnell. 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, our 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.

Speaker #1: In the low double digits, which is exciting, even though we have guided to less going forward. So look, it's a great entry position. We have terrific market coverage.

Speaker #1: But there's just so much work for us to do in Mexico. And the same is true of our competitor. Mexico today operates with, I would say, a pretty basic level of credit data and analytics.

Stephen M. Spray: Good morning, and thank you for joining us today to hear more about our results. Our Q2 and H1 results continue to reflect consistent execution of our strategy, including maintaining pricing discipline in a softening property casualty insurance market. While catastrophe losses for the quarter were modestly higher than our longer-term average, other metrics for our property casualty operations were generally in line with our expectations. Net income of nearly $1.3 billion for the Q2 2026 included recognition of $882 million on an after-tax basis for the increase in fair value of equity securities still held. Non-GAAP operating income was $224 million for the quarter, compared with $311 million a year ago. The 100.8% Q2 2026 property casualty combined ratio increased by 5.9 percentage points compared with Q2 last year, including an increase of 2.3 points for catastrophe losses.

Steve Spray: Good morning, and thank you for joining us today to hear more about our results. Our Q2 and H1 results continue to reflect consistent execution of our strategy, including maintaining pricing discipline in a softening property casualty insurance market. While catastrophe losses for the quarter were modestly higher than our longer-term average, other metrics for our property casualty operations were generally in line with our expectations. Net income of nearly $1.3 billion for the Q2 2026 included recognition of $882 million on an after-tax basis for the increase in fair value of equity securities still held. Non-GAAP operating income was $224 million for the quarter, compared with $311 million a year ago. The 100.8% Q2 2026 property casualty combined ratio increased by 5.9 percentage points compared with Q2 last year, including an increase of 2.3 points for catastrophe losses.

Speaker #1: And we're positioned to broaden contributions from a wider range of data furnishers to push deeper into the fintech space to bring alternative credit data sets to market.

Speaker #1: And to do it all on the one true platform. Which we will be rolling out into Mexico and to bring just a level of thoughtfulness and forward engagement to the marketplace that has served us so well in the US and across all of our market segments.

Speaker #1: Additionally, right away, we're bringing in the true IQ analytics platform and layering it over the current tech stack in the Mexico bureau that's going to allow us to start to service our clients more deeply as we do in most markets and generate some incremental revenues so look, it's a great market to be in.

Speaker #1: It's a terrific foundational entry point. There's a ton of innovation and value that we can bring. The market is large. Inherently growthful. And And underpinning from these solutions.

Stephen M. Spray: Our current accident year combined ratio before catastrophe losses for H1 2026 was 87.8%, fairly consistent with the 87.7% reported through H1 2025. Turning to premium growth, our consolidated property-casualty net written premiums grew 3% for the quarter. Slow growth reflects pricing discipline as our underwriters continue to emphasize pricing and risk segmentation on a policy-by-policy basis in their underwriting decisions. Estimated average renewal price increases for most lines of business during Q2 were lower than Q1 2026, but still at levels we believe were healthy. Commercial lines and excess and surplus lines averaged increases near the high end of the low single-digit percentage range. Our personal line segment included personal auto and homeowner increases in the high single-digit percentage range.

Steve Spray: Our current accident year combined ratio before catastrophe losses for H1 2026 was 87.8%, fairly consistent with the 87.7% reported through H1 2025. Turning to premium growth, our consolidated property-casualty net written premiums grew 3% for the quarter. Slow growth reflects pricing discipline as our underwriters continue to emphasize pricing and risk segmentation on a policy-by-policy basis in their underwriting decisions. Estimated average renewal price increases for most lines of business during Q2 were lower than Q1 2026, but still at levels we believe were healthy. Commercial lines and excess and surplus lines averaged increases near the high end of the low single-digit percentage range. Our personal line segment included personal auto and homeowner increases in the high single-digit percentage range.

Speaker #1: So I'm confident that we can do well. And look, there's plenty of room and opportunity for multiple players to do well in the Mexico market.

Speaker #1: And our next question will come from Manav Patnik with Barclays. Please go ahead.

Speaker #3: Thank you. Good morning. Thank you for that breakout for the US financial services and your prepared remarks. Just curious, I guess, the non-core credit pieces, how do you think you gave us some growth rates.

Speaker #3: We're just curious on your strategy there in terms of trying to maybe get that to be a much bigger percentage of the business there.

Speaker #2: All data and true IQ. The opportunity.

Speaker #1: Oh, I see. So you're talking about financial services and the diversification for the diversification? Kind of the.

Speaker #3: Yeah. Yeah. The 36% that you called out that was not non-core credit, I guess. Just curious, longer-term, if that's an area for the investment M&A, those kinds of things.

Stephen M. Spray: While market conditions have tempered premium growth, we believe our focus on providing outstanding service and our deep relationships with independent insurance agents keep us positioned well for long-term success. Next, I'll comment on Q2 performance by insurance segment compared with a year ago. Commercial lines grew net written premiums 3% with a 104.1% combined ratio that increased by 11.2 percentage points, including 4.9 points from higher catastrophe losses. Personal lines grew net written premiums 1%, impacted by lower new business premiums that reflect softening market conditions. The combined ratio for personal lines was 99.9%, 2.1 percentage points better than last year, including a decrease of 1.6 points from lower catastrophe losses. Excess and surplus lines grew net written premiums 8% and produced an excellent combined ratio of 90.5%. Cincinnati Re and Cincinnati Global continued to contribute to premium growth, as well as diversifying risk of our insurance operations.

Steve Spray: While market conditions have tempered premium growth, we believe our focus on providing outstanding service and our deep relationships with independent insurance agents keep us positioned well for long-term success. Next, I'll comment on Q2 performance by insurance segment compared with a year ago. Commercial lines grew net written premiums 3% with a 104.1% combined ratio that increased by 11.2 percentage points, including 4.9 points from higher catastrophe losses. Personal lines grew net written premiums 1%, impacted by lower new business premiums that reflect softening market conditions. The combined ratio for personal lines was 99.9%, 2.1 percentage points better than last year, including a decrease of 1.6 points from lower catastrophe losses. Excess and surplus lines grew net written premiums 8% and produced an excellent combined ratio of 90.5%. Cincinnati Re and Cincinnati Global continued to contribute to premium growth, as well as diversifying risk of our insurance operations.

Speaker #1: Yes. Okay. Good. I'm clear on your question, Manav. And thanks for it. Well, look, the first point that we wanted to emphasize is that our growth, which has been above market levels, in financial services, is diversified, right?

Speaker #1: Obviously, we've got leading credit data from a quality perspective in the US. Our trended data, we were the first mover it goes back the furthest.

Speaker #1: It has the most attributes for analytics in the marketplace. Which is kind of foundational to our success. We've also extended down market to payday lending and other unsecured lending types.

Speaker #1: And as you well know, there's kind of an arms race amongst the bureaus to bring other relevant alternative to core credit data sets into the market.

Speaker #1: And we're going to continue to expand organically and inorganically if we get the opportunity. And it makes sense in that space. Additionally, a lot of the solutions that we acquired either from Nusadar, which increased our depth in marketing and fraud, were cross-selling into the financial services space.

Stephen M. Spray: Cincinnati Re's Q2 2026 net written premiums increased by 16%. Its combined ratio was an outstanding 87.6%. Cincinnati Global's combined ratio of 110.8%, along with premium growth of 1%. Our life insurance subsidiary had another strong quarter, including 15% net income growth. In addition, term life insurance earned premiums grew 5%. I'll end my commentary with a summary of our primary measure of long-term financial performance, the value creation ratio. Our VCR was 7.9% for Q2 2026. Net income before investment gains or losses for the quarter contributed 1.4%. Higher overall valuation of our investment portfolio and other items contributed 6.5%. I'll turn it over to Chief Financial Officer Mike Sewell for additional insights regarding our financial performance.

Steve Spray: Cincinnati Re's Q2 2026 net written premiums increased by 16%. Its combined ratio was an outstanding 87.6%. Cincinnati Global's combined ratio of 110.8%, along with premium growth of 1%. Our life insurance subsidiary had another strong quarter, including 15% net income growth. In addition, term life insurance earned premiums grew 5%. I'll end my commentary with a summary of our primary measure of long-term financial performance, the value creation ratio. Our VCR was 7.9% for Q2 2026. Net income before investment gains or losses for the quarter contributed 1.4%. Higher overall valuation of our investment portfolio and other items contributed 6.5%. I'll turn it over to Chief Financial Officer Mike Sewell for additional insights regarding our financial performance.

Speaker #1: There's also further opportunity with our identity solutions to work with some of these lenders and become kind of the system of record underpinning their corporate data hygiene and identity resolution within the banks.

Speaker #1: We see that. And I think it's very important to note that look, if you went back a couple of years, you could criticize TransUnion for not having a top-of-the-market analytics suite, right?

Speaker #1: Other players traditionally led. We closed that gap a couple of years ago when we launched true IQ. We've continued to accelerate innovation and mature the true IQ product.

Speaker #1: It's now doing well in the US market. We've expanded it into India, in Canada, and the UK. And we're fast following in the Mexico.

Speaker #1: And if you think of those core countries, that's like 95% of the revenue of TransUnion globally. So in short, yeah, there's a lot of further growth opportunity and diversifying in and around this core credit position.

Michael J. Sewell: Thank you, Steve, and thanks to all of you for joining us today. Investment income continued to grow at a nice pace of 12% in Q2 2026, driven by strong cash flow from insurance operations and higher yields on the fixed maturity portfolio. Bond interest income grew 14%, and net purchases of fixed maturity securities totaled $316 million for the quarter and $940 million for H1 of the year. The Q2 pre-tax average yield of 5.08% for the fixed maturity portfolio was up 15 basis points compared with last year. The average pretax yield for the total of purchase taxable and tax-exempt bonds during Q2 of this year was 5.66%. Dividend income was up 3% for the quarter. Net sales of equity securities totaled $678 million for the quarter and $732 million on a year-to-date basis.

Mike Sewell: Thank you, Steve, and thanks to all of you for joining us today. Investment income continued to grow at a nice pace of 12% in Q2 2026, driven by strong cash flow from insurance operations and higher yields on the fixed maturity portfolio. Bond interest income grew 14%, and net purchases of fixed maturity securities totaled $316 million for the quarter and $940 million for H1 of the year. The Q2 pre-tax average yield of 5.08% for the fixed maturity portfolio was up 15 basis points compared with last year. The average pretax yield for the total of purchase taxable and tax-exempt bonds during Q2 of this year was 5.66%. Dividend income was up 3% for the quarter. Net sales of equity securities totaled $678 million for the quarter and $732 million on a year-to-date basis.

Speaker #1: And our next question will come from Curtis Nagel with Bank of America. Please go ahead.

Speaker #4: Great. Thanks so much for taking the question. Maybe just pivoting to the vantage score adoption, right? So I think moved from 5 to 30 percent or so.

Speaker #4: Had been kind of dual use. Sounds like it's proving more of a single poll. Just maybe if you could unpack what's driving that acceleration in terms of lending cohorts, lender type stuff like that.

Speaker #4: Just a little more detail would be helpful on what you're seeing.

Speaker #1: Yeah. Sure, Curt. So well, look, in terms of cohorts or more specifics around it, the data that we shared reflects the adoption of Vantage that we're seeing across 900 customers, right?

Speaker #1: So it's a fairly broad-based observation of what's going on in the market. And what I would simply characterize it as this is a period of experimentation, and calibration, by the market broadly by lenders and resellers, even the GSEs, and on into the securitization space and mortgage insurers.

Michael J. Sewell: While that portfolio rebalancing activity was higher than a typical quarter, it's similar to our actions during Q3 2024 and does not represent a change in our investment approach. Valuation changes in aggregate for Q2 were favorable for both our equity portfolio and our bond portfolio. Before tax effects, the net gain was $1.3 billion for the equity portfolio and $79 million for the bond portfolio. At the end of Q2, the total investment portfolio net appreciated value was approximately $8.6 billion. The equity portfolio was in a net gain position of $8.9 billion, while the fixed maturity portfolio was in a net loss position of $326 million. Cash flow continued to benefit investment income growth. Cash flow from operating activities for H1 2026 was $1.4 billion, up 29% from a year ago.

Mike Sewell: While that portfolio rebalancing activity was higher than a typical quarter, it's similar to our actions during Q3 2024 and does not represent a change in our investment approach. Valuation changes in aggregate for Q2 were favorable for both our equity portfolio and our bond portfolio. Before tax effects, the net gain was $1.3 billion for the equity portfolio and $79 million for the bond portfolio. At the end of Q2, the total investment portfolio net appreciated value was approximately $8.6 billion. The equity portfolio was in a net gain position of $8.9 billion, while the fixed maturity portfolio was in a net loss position of $326 million. Cash flow continued to benefit investment income growth. Cash flow from operating activities for H1 2026 was $1.4 billion, up 29% from a year ago.

Speaker #1: At the outset of the year, we were clear that we weren't budgeting or including in our guidance any revenue from selling the Vantage score.

Speaker #1: That's still our posture in this current raised guidance. And as a company, we are just laser-focused on helping the market adopt the Vantage score there's a tremendous opportunity for lenders to get a more predictive score at a substantially lower price and improve their economics and hopefully pass on some of that benefit to consumers, which was the intention behind this government policy change and as we step back from all of the fray and the occasional drama about this, it's clear the market is highly interested in the Vantage score.

Speaker #1: Almost everybody is experimenting with it. The efforts are being led by the largest players in the market that have the most financial benefit and all of the other players that need to calibrate are deeply engaged in doing so, whether that's updating their risk models for a new score or it's altering some fields in their software, so that they can include multiple scores.

Michael J. Sewell: Briefly moving to expense management, our Q2 2026 property casualty underwriting expense ratio increased by 1.2 percentage points due to an increase in commission expenses and timing of recognition of certain expenses. On an H1 basis, the ratio increased only 0.3 percentage points. Next, I'll comment on 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 an estimated ultimate loss and loss expenses by accident year and line of business. For H1 2026, our net addition to property casualty loss and loss expense reserves was $981 million, including $845 million for the IBNR portion.

Mike Sewell: Briefly moving to expense management, our Q2 2026 property casualty underwriting expense ratio increased by 1.2 percentage points due to an increase in commission expenses and timing of recognition of certain expenses. On an H1 basis, the ratio increased only 0.3 percentage points. Next, I'll comment on 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 an estimated ultimate loss and loss expenses by accident year and line of business. For H1 2026, our net addition to property casualty loss and loss expense reserves was $981 million, including $845 million for the IBNR portion.

Speaker #1: But this year of experimentation and preparation for faster and scaled adoption of a competing score is happening. Full stop. And our last question today will come from Kelsey Zhu with Autonomous.

Speaker #1: Please go ahead.

Speaker #5: Hi. Good morning. Thanks for squeezing me in. And Chris, in the prepared remarks, you also mentioned that there are increases in lenders that adopt Vantage score only usage.

Speaker #5: And I was wondering if you can talk a little bit more about that and what you're seeing in terms of score gaming activity for lenders that are currently running both.

Speaker #5: Thanks a lot.

Speaker #1: Yeah. Sure. Yeah. And thanks for the question, Kelsey. Yeah. Well, there are some players in the market that if they're not exclusively using Vantage today and that would be in a minority in our dialogue with them and believe me, our teams are actively engaged across the marketplace.

Speaker #1: They clearly have an intention to move to a single score, Vantage, once they're through this experimentation and calibration phase, right? As you know, because you report on this, the percentage of players that are using only Vantage is increasing.

Michael J. Sewell: During Q2, we experienced $42 million of property casualty net favorable reserve development on prior accident years that benefit the combined ratio by 1.7 percentage points. On an all-lines basis by accident year, net favorable reserve development for H1 2026 included favorable $127 million for 2025, favorable $42 million for 2024, and an unfavorable $46 million in aggregate for accident years prior to 2024. Our commercial casualty line of business experienced $14 million of unfavorable reserve development during Q2, which was driven by one older accident year that included updated estimates for ultimate losses for a small number of insureds. I'll conclude my comments with Q2 capital management highlights. We paid $143 million in dividends to shareholders. In addition, we repurchased approximately 1.3 million shares at an average price per share of $161.93, or $216 million.

Mike Sewell: During Q2, we experienced $42 million of property casualty net favorable reserve development on prior accident years that benefit the combined ratio by 1.7 percentage points. On an all-lines basis by accident year, net favorable reserve development for H1 2026 included favorable $127 million for 2025, favorable $42 million for 2024, and an unfavorable $46 million in aggregate for accident years prior to 2024. Our commercial casualty line of business experienced $14 million of unfavorable reserve development during Q2, which was driven by one older accident year that included updated estimates for ultimate losses for a small number of insureds. I'll conclude my comments with Q2 capital management highlights. We paid $143 million in dividends to shareholders. In addition, we repurchased approximately 1.3 million shares at an average price per share of $161.93, or $216 million.

Speaker #1: And some of these Vantage mortgages or the Vantage-only scores in mortgage are showing up in securitization. Now, it's a relatively small percentage now, but it's growing rapidly.

Speaker #1: And just given the breadth of experimentation and activity that we see, it just speaks to real tailwinds. So I, again, am confident that in the coming quarters, we're going to continue to see greater share adoption that'll flow through all of the metrics around Vantage adoption and utilization in the mortgage origination through securitization process.

Speaker #1: And that Vantage is really well positioned for growth and share gain and subsequent years. All right, Chris. Any final remarks?

Speaker #3: Yeah. Well, look, we talked about the adoption of OneTrue. In the prepared remarks, that is progressing well. We are highly confident we'll have the entirety of the US credit market converted by the end of the year.

Speaker #3: Most of it sooner than that. We're also migrating our marketing and fraud clients from their current legacy applications onto OneTrue. And this is just an enormous proof of concept that we have built this platform and that we can roll it out globally.

Michael J. Sewell: We believe our balance sheet continues to provide significant flexibility and financial strength. Parent company cash and marketable securities at quarter-end was $5.7 billion. Debt to total capital remained under 10%. Our quarter-end book value was a record high $108.64 per share, with nearly $17 billion of GAAP consolidated shareholders' equity, providing ample capacity for the profitable growth of our insurance operations. Now, I'll turn the call back over to Steve. Thanks, Mike. We see many positives in our results through H1. As we head into the back half of the year, we will continue demonstrating our expertise in underwriting, pricing, and risk selection, and building strong relationships with our appointed independent agents. I'm confident that we have the people and plans in place to finish the year strong. Before we open the call for questions, I'd like to recognize Dennis McDaniel.

Mike Sewell: We believe our balance sheet continues to provide significant flexibility and financial strength. Parent company cash and marketable securities at quarter-end was $5.7 billion. Debt to total capital remained under 10%. Our quarter-end book value was a record high $108.64 per share, with nearly $17 billion of GAAP consolidated shareholders' equity, providing ample capacity for the profitable growth of our insurance operations. Now, I'll turn the call back over to Steve. Thanks, Mike. We see many positives in our results through H1. As we head into the back half of the year, we will continue demonstrating our expertise in underwriting, pricing, and risk selection, and building strong relationships with our appointed independent agents. I'm confident that we have the people and plans in place to finish the year strong. Before we open the call for questions, I'd like to recognize Dennis McDaniel.

Speaker #3: Next up are our principal markets in Canada, in India, in the UK, and of course, Mexico, where we want to move quickly there because there's a great opportunity.

Speaker #3: And again, once we complete that, which I would expect roughly to complete within the next two years, we'll have 95% of our business running on a common software platform.

Speaker #3: That's going to generate enormous economies of scale for us that are unique in the industry. And that further assures that we'll have ample capacity to continue to grow our margins while accelerating our investments in innovation.

Speaker #3: So this is a super exciting innovation inflection point that we've been working to for four years now. And net, look, the modernization and the transformation is working.

Speaker #3: We're diversifying the business to drive more sustainable growth. We're gaining share through innovation. Our cash flow metrics are greatly improved. We've got tremendous capacity to return capital to shareholders while continuing to invest in accelerate the top line.

Stephen M. Spray: As many of you know, this is Dennis' final earnings call before retirement. Over the past 17 years, he has been an outstanding ambassador for our company, building strong relationships in the investment community while helping communicate our strategy and performance with transparency and integrity. We are grateful for his contributions, and we wish him the best in this next chapter of life. As a reminder, with Mike and me today are Steve Johnston, Steve Soloria, Marc Schambach, and Andy Schnell. Jim, please open the call for questions.

Steve Spray: As many of you know, this is Dennis' final earnings call before retirement. Over the past 17 years, he has been an outstanding ambassador for our company, building strong relationships in the investment community while helping communicate our strategy and performance with transparency and integrity. We are grateful for his contributions, and we wish him the best in this next chapter of life. As a reminder, with Mike and me today are Steve Johnston, Steve Soloria, Marc Schambach, and Andy Schnell. Jim, please open the call for questions.

Speaker #3: So a lot of good momentum here and we're just going to keep delivering quarter by quarter.

Speaker #1: All right, Chris. I think that's a good place to end. Everyone, thanks for the time today and have a great rest of your day.

Speaker #3: Thank you.

Speaker #1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time. Being a listen-only mode. Should you need assistance, please signal Conference Specialist by pressing the star key, followed by 0 on your telephone keypad.

Operator: Thank you, gentlemen, for your remarks this morning. Now to our audience, if you would like to ask a question at this time, simply press star followed by the digit 1 on your telephone keypad. Pressing star and 1 will place your line into a queue, and I will open your lines one at a time. Once again, that is star and 1 for a question, ladies and gentlemen. We will hear first today from Michael Phillips at Oppenheimer.

Michael Phillips: Thank you. Good morning, everybody, thanks to Dennis for all the years of great work and one of the best in the business. All the best to you, Dennis, as you go to the next chapter. Appreciate everything. I guess first question would be a topic that's not that new. It comes up every now and then. Steve, I want to hear your thoughts that maybe might be updated here on the commercial lines current accident year had some spike, it looks like in large loss activity, $2 million or more. I think typically when this comes up, it's more of a quarterly anomaly, maybe not so much of a trend, but we've seen this now a couple quarters in a row from other companies.

Michael Phillips: I'm wondering, I guess, to the extent you're worried this might be a trend that we need to watch more closely, and to what extent does it impact your comments on commercial lines rates at a healthy level? Thanks.

Stephen M. Spray: Yeah. Thanks, Mike. Mike Sewell has got the specifics on the large accounts. Yeah, Mike, I think we've talked about this in the past as well. Every time we have a large loss in any line of business, we do an after-action review on it to see if there's anything that could go towards a trend. I think what you're seeing here again is just inherent volatility. It's very few claims. There's variability that goes with it. I don't see any trend specifically on those large loss pickup. Mike. Yeah, I would say, and thanks for the questions, Mike Sewell. On a year-to-date basis, we did have about 30 new current accident year losses, large losses. That was about $112 million compared to the prior year, 26 new losses. That was about $101 million, and that was through Q2 of 2025.

Steve Spray: Yeah. Thanks, Mike. Mike Sewell has got the specifics on the large accounts. Yeah, Mike, I think we've talked about this in the past as well. Every time we have a large loss in any line of business, we do an after-action review on it to see if there's anything that could go towards a trend. I think what you're seeing here again is just inherent volatility. It's very few claims. There's variability that goes with it. I don't see any trend specifically on those large loss pickup. Mike. Yeah, I would say, and thanks for the questions, Mike Sewell. On a year-to-date basis, we did have about 30 new current accident year losses, large losses. That was about $112 million compared to the prior year, 26 new losses. That was about $101 million, and that was through Q2 of 2025.

Michael J. Sewell: I would say with that related to the property, the property was up about $20 million year over year on large losses, and it was really primarily related to one large loss that did reach our working treaty on that. That was hitting that for about $15 million. Overall, when you take a look at our current year greater than $2 million, the $112 this year versus $101 last year, you compare that with our earned premiums, both years, it was only a 2.2% loss ratio. Very consistent, and I would echo what Steve Spray just said, that there's no indication of unexpected concentration of large losses by risk category, region or what have you. Mike, you mentioned the pricing. I would just add in there, obviously our actuaries are looking at large loss trends, frequency trends, all of it together for pure premium.

Mike Sewell: I would say with that related to the property, the property was up about $20 million year over year on large losses, and it was really primarily related to one large loss that did reach our working treaty on that. That was hitting that for about $15 million. Overall, when you take a look at our current year greater than $2 million, the $112 this year versus $101 last year, you compare that with our earned premiums, both years, it was only a 2.2% loss ratio. Very consistent, and I would echo what Steve Spray just said, that there's no indication of unexpected concentration of large losses by risk category, region or what have you. Mike, you mentioned the pricing. I would just add in there, obviously our actuaries are looking at large loss trends, frequency trends, all of it together for pure premium.

Stephen M. Spray: I would just add that the, I'll say specifically in commercial lines, I think that's where you were directing it, the new business pricing metrics that we use, the COPE underwriting that every underwriter does, both new and renewal is holding up really well, too.

Steve Spray: I would just add that the, I'll say specifically in commercial lines, I think that's where you were directing it, the new business pricing metrics that we use, the COPE underwriting that every underwriter does, both new and renewal is holding up really well, too.

Michael Phillips: Okay. Yeah. Thank you, guys. Next question would be on Mike Sewell's comments on the expense management. You guys are known as clearly one of the best agency relationships in business. I guess, do you think at all about maybe any changes in strategy on how you approach your agents as we get deeper into a soft market and maybe what that might mean, if anything at all, for pressure on the expense ratio from there?

Stephen M. Spray: Yeah. As far as, are you talking commissions, Mike, for agencies?

Steve Spray: Yeah. As far as, are you talking commissions, Mike, for agencies?

Michael Phillips: Anything at all. Certainly commissions, yes, but anything else at all. I guess, yeah, it's more specific on commissions and is there any pressure to change the commission structure to get more business in the door with rates going the way they are, and again, what that means with pricing and expense ratio.

Stephen M. Spray: Yeah. No, okay, thanks. Mike Sewell and I can bifurcate this because there's efficiencies that we're working on the corporate side to continue to drive down our non-commission expense ratio. One thing that we're, I think, extremely proud of as a company, and we measure ourselves on, is how we compensate the independent agents that represent us. If you look at our commission schedule, just our primary commission schedule, it's very fair, but I don't think it's going to stand out to you in any one line of business. It's just fair across the board. By design and deliberately, we have a, I think, very fair, above average profit-sharing contract with our agents, and it is driven off of underwriting profit for profitable business they send our way.

Steve Spray: Yeah. No, okay, thanks. Mike Sewell and I can bifurcate this because there's efficiencies that we're working on the corporate side to continue to drive down our non-commission expense ratio. One thing that we're, I think, extremely proud of as a company, and we measure ourselves on, is how we compensate the independent agents that represent us. If you look at our commission schedule, just our primary commission schedule, it's very fair, but I don't think it's going to stand out to you in any one line of business. It's just fair across the board. By design and deliberately, we have a, I think, very fair, above average profit-sharing contract with our agents, and it is driven off of underwriting profit for profitable business they send our way.

Stephen M. Spray: We feel that when an agent writes profitable business with us, that we'll share more of that with them than many of our competitors. That's again, by design, it's our agency focus and aligns us with our agencies. We feel like our compensation to agents is already the strongest, and we see no need for amending that. As far as getting pressure, I think our agents recognize that we're a top payer across the board. We don't see a lot of pressure there.

Steve Spray: We feel that when an agent writes profitable business with us, that we'll share more of that with them than many of our competitors. That's again, by design, it's our agency focus and aligns us with our agencies. We feel like our compensation to agents is already the strongest, and we see no need for amending that. As far as getting pressure, I think our agents recognize that we're a top payer across the board. We don't see a lot of pressure there.

Michael J. Sewell: I would say, Mike, on the non-commission side, we continue to strive of being more efficient, watching our costs. Costs are going up, I've said it before, is that we're trying to keep the increase of our non-commission costs lower than the growth in premiums. I think as you see premiums slowing down, we're going to have to double down our efforts on watching our costs. We still need to invest in technology, our people, et cetera. My job might be a little bit harder, but I think we'll be able to do it.

Mike Sewell: I would say, Mike, on the non-commission side, we continue to strive of being more efficient, watching our costs. Costs are going up, I've said it before, is that we're trying to keep the increase of our non-commission costs lower than the growth in premiums. I think as you see premiums slowing down, we're going to have to double down our efforts on watching our costs. We still need to invest in technology, our people, et cetera. My job might be a little bit harder, but I think we'll be able to do it.

Speaker #3: Now, our strong first-half performance has allowed us to raise our full-year guidance. We now expect 8% to 9% organic constant currency revenue growth, 10% to 11% adjusted EBITDA growth, and 11% to 12% adjusted diluted earnings per share growth.

Speaker #3: Our 11% to 12% adjusted diluted earnings per share growth, that guide represents an increase from our prior 9% to 11% assumption. So our guidance balances operating over performance in the first half and constructive ongoing trends in the market, with appropriate conservatism, given it's still an uncertain macro environment.

Michael Phillips: Okay. Appreciate the thoughts, guys. Appreciate it.

Stephen M. Spray: Thanks, Mike.

Steve Spray: Thanks, Mike.

Operator: Our next question will come from Gregory Peters at Raymond James.

Gregory Peters: Good morning, everyone. In the press release, when you get into the consolidated results, the first bullet point talks about the 3% growth in Q2, and you call out price increases. I think that's pretty straightforward where you're getting price, where you're not. You also say a higher level of insured exposures. I wanted you to comment on that. You also call out the Q2 growth in Cincinnati Re and the global underwriting business, and those are two areas that I would think might not be growing, considering your comments about rising competition in the marketplace. That's the first area that I wanted to focus my questions on.

Speaker #3: Across our markets, we continue to experience consumer resilience, and broadly stable market volumes. Specific to the U.S., lenders are cautiously optimistic, and anticipate modest loan growth, which is supported by strong consumer credit performance.

Speaker #3: Now, we continue to monitor inflation levels and interest rates, and their potential impacts on consumer behavior and loan demand. The 10-year Treasury yield is now approaching 4.7%.

Speaker #3: That's up roughly 50 basis points from the start of the year. And while this has modestly pressured mortgage activity, impacts across the remainder of our portfolio have been limited.

Stephen M. Spray: Sure, Greg. Out of the release, we were talking about 3% net written premium growth on a consolidated basis. About two-thirds of that is coming from rate and about a third from exposure. Just think increased sales payrolls on the casualty side or just property values, inflationary property values in general there. On Cincinnati Re and Cincinnati Global, again, Cincinnati Global net written premiums were up 1%. They are feeling pressure primarily from larger properties, shared and layered direct and facultative. They're showing pricing and underwriting discipline there. Their growth has been under pressure. Cincinnati Re, that's obviously an assumed reinsurance operation. It can be a little more opportunistic. They're a little more nimble, can move in and out of different covers. Their growth can also be a little more seasonal, Greg. Their 16% growth is strong.

Steve Spray: Sure, Greg. Out of the release, we were talking about 3% net written premium growth on a consolidated basis. About two-thirds of that is coming from rate and about a third from exposure. Just think increased sales payrolls on the casualty side or just property values, inflationary property values in general there. On Cincinnati Re and Cincinnati Global, again, Cincinnati Global net written premiums were up 1%. They are feeling pressure primarily from larger properties, shared and layered direct and facultative. They're showing pricing and underwriting discipline there. Their growth has been under pressure. Cincinnati Re, that's obviously an assumed reinsurance operation. It can be a little more opportunistic. They're a little more nimble, can move in and out of different covers. Their growth can also be a little more seasonal, Greg. Their 16% growth is strong.

Speaker #3: If the current cr if the current trends continue, we expect performance to be at or slightly above the high end of our guidance. At the same time, our range is designed to absorb a reasonable level of market softening.

Speaker #3: Unlocking the full potential of one true platform and accelerating innovation and AI-enabled solutions. And translating these capabilities into commercial momentum across our portfolio. So let me highlight the milestones, against each of these priorities.

Speaker #3: So first, on the platform modernization, we continue to make really good progress. We have materially increased U.S. credit customer migrations to one true during the quarter.

Speaker #3: At this point, roughly 60% of our U.S. batch activity and 30% of online customers are now running on one true. that's over 4,000 U.S.

Speaker #3: credit customers now migrated. And we continue to convert the most complex activity first, but maintain an emphasis on minimizing customer disruption. We expect to complete the U.S.

Stephen M. Spray: We feel good about the underwriting and the pricing there as well.

Steve Spray: We feel good about the underwriting and the pricing there as well.

Gregory Peters: Okay. Fair enough. I'll pivot for my follow-up question to the personal lines business, where the growth is slowing down and new business agency, new business is down. Maybe you can frame how you're thinking about the top line for that business going forward, considering the pressures on pricing. Auto looks like it's flat or up a little bit. Home up a little bit better. Just give us some perspective of how you're thinking about this going forward.

Speaker #3: migrations by the end of this year. Additionally, we continue to extend the one true platform and solutions internationally. We have now deployed one true instances in Canada, the UK, and India, to support the launch of our true IQ analytics platform.

Speaker #3: We also launched True Validate, our fraud solution, in the UK and trusted call solutions in Canada, and India. Creating new local market opportunities for these global products.

Speaker #3: And one true is enabling us to increase our innovation velocity. Across the enterprise, we launched 40 new products and AI-powered enhancements in the first half alone, contributing significantly to our sales pipeline.

Stephen M. Spray: Yeah, we're thinking long term as we do with everything there. At the end of 2025, Greg, over the last 4 years, we doubled our personal lines operation in premiums. With our balance sheet, able to take advantage of a really difficult, tough, hard market in personal lines. The slowing in premiums both for net written in or for new business has been expected. I think it's still healthy. The pricing there is still healthy. Candidly, we still have room for margin improvement in personal lines. We're on a good path. We're still earning rate in. The volatility of CAT, we all can see it, we all know it, and we have to underwrite and price for CAT.

Steve Spray: Yeah, we're thinking long term as we do with everything there. At the end of 2025, Greg, over the last 4 years, we doubled our personal lines operation in premiums. With our balance sheet, able to take advantage of a really difficult, tough, hard market in personal lines. The slowing in premiums both for net written in or for new business has been expected. I think it's still healthy. The pricing there is still healthy. Candidly, we still have room for margin improvement in personal lines. We're on a good path. We're still earning rate in. The volatility of CAT, we all can see it, we all know it, and we have to underwrite and price for CAT.

Speaker #3: And beyond this innovation, we're also deploying AI at scale internally to improve our productivity. We are already seeing gains by using these tools across key employee groups, including average gains of over 25% for our software engineers and data scientists, and, an early experimentation more than 20% within our consumer support operations.

Speaker #3: In the first half of the year, core credit excluding FICO mortgage royalties and fraud, each grew in the high single digits, driven by traction in true IQ altern true IQ alternative data, and trusted call solutions.

Stephen M. Spray: Personal lines is doing a nice job with rate, with terms, conditions, with risk selection of driving down their non-CAT loss ratio and taking action to curtail that CAT or manage it as well as possible. We still have room for some margin improvement there, but the slowing growth, it's been predictable, quite frankly. We're comfortable with it. It's profit first there. They're going to continue to show underwriting discipline as well.

Steve Spray: Personal lines is doing a nice job with rate, with terms, conditions, with risk selection of driving down their non-CAT loss ratio and taking action to curtail that CAT or manage it as well as possible. We still have room for some margin improvement there, but the slowing growth, it's been predictable, quite frankly. We're comfortable with it. It's profit first there. They're going to continue to show underwriting discipline as well.

Speaker #3: Marketing solutions also grew mid single digits, supported by strong identity performance, with acceleration expected in the second half. So together, one true and our global solution strategy is increasing our innovation expanding addressable opportunities, and supporting scalable revenue growth.

Gregory Peters: Thanks for the detail and good luck in your retirement, Dennis.

Operator: Our next question will come from.

Stephen M. Spray: Got a big smile out of him, Greg.

Steve Spray: Got a big smile out of him, Greg.

Gregory Peters: Yeah.

Operator: Our next question will come from Mike Zaremski at BMO. I believe Mr. Zaremski, please re-signal, sir. We'll move forward to Josh Shanker at Bank of America.

Josh Shanker: Yeah. Good morning, everyone. Thanks for taking my call. As I said on the last call, I'm the president of the Dennis McDaniel Fan Club, so I appreciate everything you've done for the company and done for shareholders over the years. Thank you, Dennis. In terms of homeowners, can you talk about the timing a little bit of re-underwriting the book? When you sort of take pricing and when you look at the book and how many properties you have that maybe don't fit what you want at the current pricing, can you go through the quarter and when all that came together?

Stephen M. Spray: Well, as far as, say, re-underwriting personal lines or homeowner, Josh, I don't know if there's any moment in time other than most recently post-California wildfire. We took a hard look at California and just took a different view of the risk for homeowners, specifically aggregations, different terms, conditions, pricing. Beyond that, it's just been an ongoing process of making sure that we're getting the rate that we need, handling Midwest convective storm terms, conditions, pricing, more on our middle market homeowner business there. It's really just been an ongoing process over time, and continues.

Steve Spray: Well, as far as, say, re-underwriting personal lines or homeowner, Josh, I don't know if there's any moment in time other than most recently post-California wildfire. We took a hard look at California and just took a different view of the risk for homeowners, specifically aggregations, different terms, conditions, pricing. Beyond that, it's just been an ongoing process of making sure that we're getting the rate that we need, handling Midwest convective storm terms, conditions, pricing, more on our middle market homeowner business there. It's really just been an ongoing process over time, and continues.

Speaker #3: We continue to grow our share on the strength of our leading trended data and attributes, as well as our differentiated and insight-led engagement model.

Speaker #3: Roughly 12% of revenue comes from alternative data, like factor trust, as well as our true IQ analytics, enablement suite. These solutions serve lenders increasing appetite for alternative datasets and AI-enabled analytic tools to activate our data at scale.

Josh Shanker: Well, look, if someone asked me six months ago to identify one of the key growth targets at Cincinnati, it is always appointing new agents and getting a higher share of their business. The high net worth opportunity is obviously a very clear opportunity. Given the slowdown in growth this quarter, does that change the trajectory of how we should be thinking about Cincinnati growth longer term in the high net worth business?

Stephen M. Spray: No, I do not think it should at all. I think more of the pressure we are feeling right now, Josh, is in middle market personal lines, and that is where the market was really hard the last several years, and we were able to take advantage of those growth opportunities. No, you should not think any differently about our growth of high net worth going forward. It is a little over 60% of our business today, of our personal lines business. That has grown steadily over time, and I think that will continue to become a bigger and bigger part of our business. It is performing well. The one thing that you might see, again, that would lend you to believe that the trajectory is a little different is just our retrenching a bit in California post-wildfire loss.

Steve Spray: No, I do not think it should at all. I think more of the pressure we are feeling right now, Josh, is in middle market personal lines, and that is where the market was really hard the last several years, and we were able to take advantage of those growth opportunities. No, you should not think any differently about our growth of high net worth going forward. It is a little over 60% of our business today, of our personal lines business. That has grown steadily over time, and I think that will continue to become a bigger and bigger part of our business. It is performing well. The one thing that you might see, again, that would lend you to believe that the trajectory is a little different is just our retrenching a bit in California post-wildfire loss.

Speaker #3: Core credit is growing low double digits annually. this growth exceeds lending volume growth, reflecting customers' continued preference for our differentiated trended data and analytics.

Stephen M. Spray: No, our commitment to high net worth, our ability to grow that, I think the agents' response to us and the way we do business in the high net worth space is recognized, and I think our agents are affording us premier high net worth carrier status in their agencies.

Steve Spray: No, our commitment to high net worth, our ability to grow that, I think the agents' response to us and the way we do business in the high net worth space is recognized, and I think our agents are affording us premier high net worth carrier status in their agencies.

Speaker #3: Non-credit solutions is growing at a high single digit annual rate, with room for further acceleration. Trusted call solutions, in particular, has been a standout growing over 50% annually within financial services.

Josh Shanker: If you will forgive me one more. If we think about your 60% right now, high net worth in that homeowner business, fast-forward maybe a couple of years, you are 70%, 75%. At some point, does Cincinnati become less of a relevant player in the middle market?

Speaker #3: Over time, we expect increased AI sophistication to drive higher data consumption, stronger demand for true IQ analytics, and faster adoption of our marketing and fraud tools.

Stephen M. Spray: No, I don't think so, Josh. We have an agency strategy. We appoint great agencies, and we try to reflect what they do across all lines of business. We grew up as a middle market personal lines underwriting company. It's important to our agents in the communities that they're in. It's important to us. Obviously, you have to make sure you've got the pricing right there. It's a more competitive, comparative rater world. No, as long as it's important to our agents, and they're out conveying the value that they bring, and a carrier like us brings with our broad coverage forms and the way we handle claims, middle market personal lines will continue to be important and be a big part of what we do. Yeah, Josh, that said, I'll go back to what I said earlier.

Steve Spray: No, I don't think so, Josh. We have an agency strategy. We appoint great agencies, and we try to reflect what they do across all lines of business. We grew up as a middle market personal lines underwriting company. It's important to our agents in the communities that they're in. It's important to us. Obviously, you have to make sure you've got the pricing right there. It's a more competitive, comparative rater world. No, as long as it's important to our agents, and they're out conveying the value that they bring, and a carrier like us brings with our broad coverage forms and the way we handle claims, middle market personal lines will continue to be important and be a big part of what we do. Yeah, Josh, that said, I'll go back to what I said earlier.

Speaker #3: So with that as context of how our strategy is driving commercial success, I'm going to pass it to Todd, who will detail Q2 performance and our refresh guidance.

Speaker #3: Todd?

Stephen M. Spray: We still feel that there's room for margin improvement in our personal lines, and we're focused on that. You may see the growth under pressure there. It's going to be profit first. Don't confuse that, though, with lack of commitment to the line or to the segment.

Steve Spray: We still feel that there's room for margin improvement in our personal lines, and we're focused on that. You may see the growth under pressure there. It's going to be profit first. Don't confuse that, though, with lack of commitment to the line or to the segment.

Josh Shanker: Thank you.

Stephen M. Spray: Thank you, Josh.

Steve Spray: Thank you, Josh.

Operator: We'll hear next from Mike Zaremski at BMO. Please go ahead.

Mike Zaremski: Hey, thanks. Good morning. Just echoing everyone's comments. Dennis, you'll be missed. Have fun in the next chapter. First question on the expense ratio details you provided. I don't think in Q2 last year you quantified anything. Any quantification you want to offer us so we can better understand what the reversal was and how to think about the run rate, et cetera?

Speaker #2: Adjusted diluted earnings per share was $1.23, up 13% year over year, and 8 cents ahead of the high end of our guidance. In the second quarter, U.S.

Stephen M. Spray: Yeah. This is Mike Sewell. There's probably, when I look at it, the largest primary piece was the commissions, and you do have that from time to time. When I look at really the other non-commission expense, it's just a little bit all over the board. There might be one or two places

Mike Sewell: Yeah. This is Mike Sewell. There's probably, when I look at it, the largest primary piece was the commissions, and you do have that from time to time. When I look at really the other non-commission expense, it's just a little bit all over the board. There might be one or two places

Michael J. Sewell: That it was a little bit higher for the quarter, but then it evens out for the year. It's just the timing of when certain costs are incurred or when you're hiring certain people, et cetera. We should probably look at it over multiple quarters, not just one quarter. We want to keep it under that 30 expense ratio, and I'm going to try to have my target to keep taking it down further.

Mike Sewell: That it was a little bit higher for the quarter, but then it evens out for the year. It's just the timing of when certain costs are incurred or when you're hiring certain people, et cetera. We should probably look at it over multiple quarters, not just one quarter. We want to keep it under that 30 expense ratio, and I'm going to try to have my target to keep taking it down further.

Speaker #2: Financial services revenue grew 18%, or 10% excluding FICO mortgage royalties. In core, non-mortgage financial services revenue grew 8%, with healthy growth across lending types.

Speaker #2: As Chris discussed, growth reflects a mix of healthy lending activity, pricing, new wins, and increasing adoption of our broader solution set. Credit card and banking rose 6% on lending volume growth and new wins from trusted call solutions.

Mike Zaremski: Got it. Just sticking with the expense ratio, a number of insurance carriers, peers have kind of come out with long-term, 27, some 28, some even out to 30 kind of specific guidance on cost efficiencies due to newer technologies, et cetera. Any comments on if that's something Cincinnati is considering? Do you have enough data and use cases to feel comfortable there? Maybe your business model is a bit different than others. Thanks.

Speaker #2: Consumer lending grew 8%, with strong fintech growth and sustained consumer demand. Auto was up 8%, driven by pricing and new wins across our solutions.

Speaker #2: Auto growth outpaced declining industry volumes lapping last year's tariff-related pull-forward in purchase activity. In mortgage, revenue grew 37%, excluding FICO royalties, mortgage growth was 15% versus inquiries down 7%, without performance due to pricing actions and non-tri-bureau revenues.

Speaker #2: Growth was in line with expectations, even as volumes came in modestly lower as rates increased during the quarter. Within mortgage, we recently added new alternative credit attributes from factor trust to our mortgage credit file at no additional cost to customers.

Michael J. Sewell: Yeah. Good question. Obviously, we're doing those things, and I think we've talked about some technology items in the past, AI, this and that. We are working on that, getting efficiencies, et cetera, but we really, in the past, have not given, I'll say, guidance going out into the future on specifics of calculations or ratios like that. Rest assured, we're working extremely hard, and I think Steve has talked about that in the past.

Mike Sewell: Yeah. Good question. Obviously, we're doing those things, and I think we've talked about some technology items in the past, AI, this and that. We are working on that, getting efficiencies, et cetera, but we really, in the past, have not given, I'll say, guidance going out into the future on specifics of calculations or ratios like that. Rest assured, we're working extremely hard, and I think Steve has talked about that in the past.

Speaker #2: This enhancement reflects our continued focus on helping mortgage lenders develop a more complete, and actionable view of borrower behavior. Additionally, Vantage score usage in mortgage was a highlight in the quarter, with a meaningful increase in adoption.

Mike Zaremski: Got it. Just lastly on the share purchase number, is it fair to say there was a bump in there from the portfolio rebalancing, unlocking some equity capital, or is it just more the shares were cheaper, or both?

Speaker #2: Most activity remains dual pulls with Vantage score and FICO, but we are beginning to see increased Vantage score only usage, including certain mortgages requiring mortgage insurance.

Michael J. Sewell: We look at it every quarter with what we do, and it was kind of a good timing with the rebalancing and Steve Soloria could talk about that. At any rate, yeah, on a year-to-date basis, we've done 2.4 million shares. It does feel maybe that's that plus, when I've said maintenance plus. Within the last five years, we did have one year where we repurchased 3.7 million shares. It is not outsize of anything that we've done in the past, and I would just say it's going to be a quarter-to-quarter type of a thing that we look at.

Mike Sewell: We look at it every quarter with what we do, and it was kind of a good timing with the rebalancing and Steve Soloria could talk about that. At any rate, yeah, on a year-to-date basis, we've done 2.4 million shares. It does feel maybe that's that plus, when I've said maintenance plus. Within the last five years, we did have one year where we repurchased 3.7 million shares. It is not outsize of anything that we've done in the past, and I would just say it's going to be a quarter-to-quarter type of a thing that we look at.

Speaker #2: Turning to emerging verticals, growth accelerated to 9%, led by our eighth straight quarter of double-digit growth in insurance, as well as trusted call solutions strength across our verticals.

Mike Zaremski: Thank you.

Stephen M. Spray: Yep. Great question. Thank you. Operator, are you still with us? Maybe he's on mute. Or not disconnect. Operator, this is Steve Spray. Are you still with us? It sounds like we're having difficulty with the operator connection. I think next in the queue for question would be Meyer Shields from KBW. Meyer?

Steve Spray: Yep. Great question. Thank you. Operator, are you still with us? Maybe he's on mute. Or not disconnect. Operator, this is Steve Spray. Are you still with us? It sounds like we're having difficulty with the operator connection. I think next in the queue for question would be Meyer Shields from KBW. Meyer?

Speaker #2: Tech retail and e-commerce, where a significant portion of our marketing and fraud revenue is reported, grew high single-digit, with emerging verticals insurance and tech retail and e-commerce account for over half of the revenue.

Speaker #2: Across our other emerging verticals, public sector and media grew mid single digits, tenant and employment returned the growth, and the telco vertical declined modestly.

Speaker #2: Consumer interactive declined 3%, in line with our expectations, as growth in the indirect channel was offset by declines in the direct channel. In international, all revenue growth comparisons are on an organic constant currency basis.

Speaker #2: We also delivered very strong new wins in the quarter. We continue to monitor the Indian market with cautious optimism about the trajectory, we expect similar growth in the third quarter with acceleration in the fourth quarter, as comparisons ease.

Meyer Shields: Great. Thanks so much. Am I coming through?

Michael J. Sewell: Yeah. We got you, Meyer. Can you hear us okay?

Mike Sewell: Yeah. We got you, Meyer. Can you hear us okay?

Meyer Shields: Oh. Yeah, I can hear you perfectly. Thank you so much.

Stephen M. Spray: Great.

Steve Spray: Great.

Stephen M. Spray: I want to start by, again, acknowledging Dennis, who's like the confident professional, will certainly be missed. I apologize if I missed.

Steve Spray: I want to start by, again, acknowledging Dennis, who's like the confident professional, will certainly be missed. I apologize if I missed.

Dennis E. McDaniel: Meir, thank you for that.

Dennis McDaniel: Meir, thank you for that.

Speaker #2: Latin America improved to 5% organic growth, with double-digit growth in Brazil and modest and improving growth in Colombia, and other markets. Africa also grew 5%, with broad-based growth across verticals and regions.

Dennis E. McDaniel: Please go ahead.

Dennis McDaniel: Please go ahead.

Dennis E. McDaniel: Others who have given me good well wishes in recent weeks. Thank you very much. It's been a pleasure working with the investment community.

Dennis McDaniel: Others who have given me good well wishes in recent weeks. Thank you very much. It's been a pleasure working with the investment community.

Meyer Shields: Yeah. I probably speak for everybody when I say heartfelt in the other direction. I was hoping to get a little commentary on the accident year loss ratio in Cincinnati Global and see whether that's related to the Middle East.

Stephen M. Spray: Meir, could you repeat that? Just that very ending. If it was related to what?

Steve Spray: Meir, could you repeat that? Just that very ending. If it was related to what?

Speaker #2: Within our international business, trans-Union to Mexico continues to strongly outperform our acquisition case, in the first few months of ownership. Over the last several years, trans-Union to Mexico has grown at a double-digit compound annual growth rate supported by a growing economy, favorable demographics, and meaningful room for further formal credit penetration.

Meyer Shields: To the conflict in the Middle East.

Michael J. Sewell: Oh, okay. Yep. No, very good. That's a great question, and you noticed that pickup. It was on page 19 of the supplement. There was an increase there for the Q2, one is we did have the conflict in the Middle East, Iraq. There was a net charge there of about $10 million. Plus, we also had one contingency. As you know, there was a heat wave going through Europe

Mike Sewell: Oh, okay. Yep. No, very good. That's a great question, and you noticed that pickup. It was on page 19 of the supplement. There was an increase there for the Q2, one is we did have the conflict in the Middle East, Iraq. There was a net charge there of about $10 million. Plus, we also had one contingency. As you know, there was a heat wave going through Europe

Speaker #2: Growth has been stronger than its Latin American peers over the last two years, reflecting not only these credit market fundamentals, but also Mexico's fiscal and monetary stability, as well as its accelerating near-shoring activity supported by its proximity to the United States.

Stephen M. Spray: We did have one reserve in there for about seven and a half million for a contingency event. Between those two, that was the driver. Hey, Meir, Mike got that right. The loss was actually in Saudi Arabia, the second, the contingency in the US, we refer to that as event cancellation as well.

Steve Spray: We did have one reserve in there for about seven and a half million for a contingency event. Between those two, that was the driver. Hey, Meir, Mike got that right. The loss was actually in Saudi Arabia, the second, the contingency in the US, we refer to that as event cancellation as well.

Meyer Shields: Right. No, perfect. Understood. Thank you. Second question, and I'm not worried about workers' compensation being inadequately reserved, but there was a sequential step down in the accident loss ratio. I'm wondering if there's anything unusual in that number.

Michael J. Sewell: Yeah, I would say there really wasn't anything that I would say stuck out to us on the workers' comp. There's no surprises in there.

Mike Sewell: Yeah, I would say there really wasn't anything that I would say stuck out to us on the workers' comp. There's no surprises in there.

Speaker #2: We are building on this advantage by introducing new trended scores and attributes. Expanding alternative data sets and eventually migrating Mexico to OneTrue, to unlock greater scalability.

Meyer Shields: Okay, understood. Thank you so much.

Stephen M. Spray: You bet. Thanks, Meir.

Steve Spray: You bet. Thanks, Meir.

Operator: Your next question comes from the line of Matt Palazzolo from Bloomberg Intelligence. Your line is live.

Matt Palazzolo: Thanks for taking my question. The commercial casualty underlying loss ratio deterioration, could you talk about how much of that was maybe unusually large claims versus a different view of loss costs? Thanks.

Speaker #2: Third, we are enhancing client engagement, in core financial services we are strengthening relationships with leading lenders via deeper analytics, consulting. At the same time, we plan to use our data advantages in faster innovation to win in our already fast-growing fintech and retail verticals.

Stephen M. Spray: I can start, Matt, and then Mike can come in there. If you look at that Ex Cat accident year casualty loss ratio, we've held that pretty close to the pick we had at the end of the year 2025. A lot of that is being prudent due to things that you're hearing from the industry and you're hearing from us, legal system abuse, just pressure on severity on that line. There's a fair amount of inherent uncertainty in casualty. So I think we're holding prudent reserves in that line of business until we have further data as it progresses.

Steve Spray: I can start, Matt, and then Mike can come in there. If you look at that Ex Cat accident year casualty loss ratio, we've held that pretty close to the pick we had at the end of the year 2025. A lot of that is being prudent due to things that you're hearing from the industry and you're hearing from us, legal system abuse, just pressure on severity on that line. There's a fair amount of inherent uncertainty in casualty. So I think we're holding prudent reserves in that line of business until we have further data as it progresses.

Matt Palazzolo: Okay. Thank you.

Stephen M. Spray: Yeah. Thank you, Matt.

Steve Spray: Yeah. Thank you, Matt.

Speaker #2: During the second quarter and through July, we accelerated our pace of repurchases. Year to date, we have repurchased 2.1 million shares at an average share price of roughly $71.

Operator: That concludes our Q&A session for today. Mr. Spray, I'm happy to turn it back to you, sir, for any additional or closing remarks.

Stephen M. Spray: Well, thank you, Jim, and thank you all for joining us today. We look forward to speaking with you again on our Q3 call.

Steve Spray: Well, thank you, Jim, and thank you all for joining us today. We look forward to speaking with you again on our Q3 call.

Speaker #2: For a total of roughly 150 million dollars. We continue to view share repurchases as a highly attractive use of capital at current valuation levels.

Operator: Ladies and gentlemen, this does conclude the Cincinnati Financial Corporation Q2 2026 earnings call. You may now disconnect your lines, we hope that you enjoy the rest of your day.

Speaker #2: For the remainder of 2026, we plan to continue executing on our disciplined capital allocation framework, with a current bias toward capital return to shareholders.

Speaker #2: In the third quarter, we are guiding revenue to be between 1.292 and 1.310 billion dollars, up 11 to 12 percent. Growth is comprised of 6 to 8 percent organic constant currency growth, and a 4.5 percentage point contribution from acquisitions.

Speaker #2: We are guiding adjusted EBITDA to 455 to 463 million dollars, up 7 to 9 percent, implying a margin of 35.2 to 35.4 percent. Underlying margins expand by 20 to 40 basis points, offset by an 80 basis point drag from FICO royalties and a 60 basis point impact from acquisitions.

Speaker #2: We expect adjusted diluted earnings per share to be between $1.18 and $1.21, up 7 to 10 percent. For full-year guidance, we expect revenue to be between 5.127 and 5.162 billion dollars, up 12 to 13 percent.

Speaker #2: Our raised guidance reflects stronger growth from our Mexico acquisition, as well as modestly higher non-mortgage organic growth due to strong first-half performance. Acquisitions now add 4 percent, and FX has an immaterial impact on our guidance.

Speaker #2: We expect organic constant currency revenue growth of 8 to 9 percent, or 5 to 6 percent excluding FICO mortgage royalties. Our segment-level assumptions are broadly unchanged.

Speaker #2: Mortgage revenue growth guidance of 28 percent for the full year, or 6 percent excluding FICO, is unchanged since February. Mortgage revenue exceeded our expectations in the first half, particularly in the first quarter when mortgage rates briefly dipped below 6 percent.

Speaker #2: As mortgage rates have moved back above 6.5 percent, we have de-risked our second half assumptions. Our conservative assumptions provide us flexibility to deliver these growth rates even if rates increase modestly from current levels.

Speaker #2: We now anticipate mid to high single-digit inquiry declines for the full year, including low double-digit declines in the second half of the year. We continue to expect pricing actions and revenue beyond traditional Tri-Bureau reports to drive outperformance versus underlying volumes.

Speaker #2: That results in a margin of 35.2 to 35.4 percent, down 60 to 80 basis points. Underlying margins are expected to expand by 50 to 70 basis points, driven by revenue flow-through and remaining transformation savings.

Speaker #2: With that context, I will now turn the call back to Chris for a closing remarks.

Speaker #1: With that, it's back to you, Greg.

Speaker #2: That concludes our prepared remarks for the Q&A. We ask that each of you ask only one question so we can include more participants. Operator, we can begin the Q&A.

Speaker #1: Thank you. And ladies and gentlemen, at this time, we will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad.

Speaker #1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star then 2.

Speaker #1: Please limit yourself to one question. And at this time, we will pause momentarily for the first question. And that first question today will come from Jeff Mueller with Baird.

Speaker #1: Please go ahead. Let me see. Mueller, your line is open.

Speaker #3: So if you could just help me with that. Thank you.

Speaker #4: Hey, good morning, Jeff. And this is Todd. I'll take that question. You know, for you. So in essence, you know, what we've done with guidance, you know, for mortgage, is we've maintained our full-year guide that we, you know, came into the year with, where we were calling for 28 percent growth all in and 6 percent when we exclude the FICO mortgage royalty.

Speaker #4: And, you know, that contemplates, you know, a decline of volume from mid to high single digits. Not that, you know, go back a little bit.

Speaker #4: The first half of the year, in particular in the first quarter, we had outperformance in mortgage. Feels like a long time ago, but, you know, mortgage, the 30-year mortgage rate was about 6 percent when you go back up to January and February.

Speaker #4: And then, you know, with geopolitical tensions, we saw the 10-year Treasury yield rise and as a result of that, the 30-year also went up and that had an impact on our volumes.

Speaker #4: So as far as the way that we're looking at mortgage, you know, we're being, we're being conservative with our assumptions. We are looking at where the 30-year is at today, and it is at the highest that it's been all year.

Speaker #4: And our guidance for mortgage would contemplate being at that level and perhaps even maybe being a little bit worse. So meaning that, you know, rates might be higher than they were in the first half.

Speaker #4: So in essence, what that's doing is it's providing us with flexibility to deliver these results even if the rates do increase. You know, slightly.

Speaker #4: Now, you know, the other part that I think is, you know, is important that I think this is your question is specific to the non-mortgage part of our business.

Speaker #4: In the second quarter, you know, we delivered a 6 percent growth and what we're contemplating when you look at it on that basis is a similar trajectory for the third quarter.

Speaker #4: So, you know, that you take a look at the performance that we're very pleased with within core financial services, a very strong quarter for us, emerging verticals, coming in at 9 percent, as well as then in our international portfolio, when you look at the performance in India returning to growth at 8 percent, Canada at 10, and the UK at 9, there's some good tailwinds that we're looking at as we go into the into the second half of the year.

Speaker #4: But, you know, the market remains uncertain. So we are taking a prudently conservative approach towards our guidance and as we've put on, as I said in my prepared remarks, as well as what we've put on the slide, we would orient you to the high end of that guidance.

Speaker #4: And that, you know, more than likely, if these conditions that were currently living through right now persist, we'll be at a, we'll be above the high end of that guidance.

Speaker #5: Yeah. And so just to emphasize a couple of those points, again, we feel like we're well-positioned to deliver on this revised raised full-year guide.

Speaker #5: So high end or above. And the conditions that we're experiencing right now across the business and in mortgage clearly support that. We have built in some margin for error, some margin for deceleration in mortgage.

Speaker #5: In the second half of the year, because as Todd pointed out, you know, rates are higher than they were by about 50 bips. But that said, we are positioned to absorb some deceleration in mortgage volumes that would come with higher rates and still deliver at the high end of the guidance.

Speaker #5: So this is prudently conservative, but when you are conservative, you've got to park that conservatism somewhere, right? We park it disproportionately in our mortgage because mortgage is the most rate-sensitive.

Speaker #5: But to be clear on everybody in the call, we are experiencing consistent trends in July with what we experienced in the second quarter. Those trends persist; we will overperform and we'll be back here in the third quarter making further guidance adjustments upward.

Speaker #2: Very helpful. Thank you.

Speaker #1: And our next question will come from Tony Kaplan with Morgan Stanley. Please go ahead.

Speaker #6: Thanks so much. I was hoping you could expand on if you're seeing demand for your datasets given acceleration in AI agents and, you know, which particular areas customers are really ramping up demand in terms of data versus, you know, a few quarters ago.

Speaker #6: I expect that's a trend you're seeing. So I wanted to touch on which specific areas. Thanks.

Speaker #5: Yeah, Tony. Look, it is a trend that we're seeing as we've been seeing for some quarters now. And as we emphasized at our investor day in March and had some slides last quarter as well, the AI and legend customers tend to consume more data.

Speaker #5: The models, the predictiveness all, you know, improves. With more curated and authoritative data, that we provide. So I think in the big and general generally, we expect to see that accelerate as more lenders experiment and adopt AI modeling techniques across their kind of lending analytics lifecycle.

Speaker #5: You know, I think we are well-positioned with our product innovation in AI to support more of the work that those clients are doing with our analytics orchestrator agentic framework, which again, we presented and we demoed at our investor day.

Speaker #5: And you can see where now using agentic AI on our foundation of data, we're able to automate a lot of the model building and prediction that our lenders typically do, you know, on their own, or many segments of the market simply don't do.

Speaker #5: So you know, net net, we still believe that AI is going to be a positive growth tailwind. One, it's stimulating greater data consumption as we've talked about.

Speaker #5: But two, the agentic layer that we're building on top of our true IQ analytics foundation is going to expand our TAM and let us take over some of the work that's either done by our lending clients, not done currently, or done by other players in this data and analytics ecosystem.

Speaker #6: Thank you.

Speaker #1: And our next question will come from Andrew Steinerman with JP Morgan. Please go ahead.

Speaker #2: Hi, Chris. In your prepared remarks, you suggested that marketing solutions as, you know, true audience revenue growth should accelerate in the second half of the year from the mid-single-digit revenue growth in the second quarter.

Speaker #2: You know, what's driving that dynamic about the acceleration in the second half?

Speaker #5: Yeah. Well, there's some seasonality in the marketing business, Andrew, as you know. In the fourth quarter, a lot of the big players in the publishing universe turned to TransUnion to do market share and marketing effectiveness studies that they then use in their own media sales cycles.

Speaker #5: And we're making greater inroads across the publishing ecosystem and being that kind of neutral measurement provider that the industry needs. We're also getting, you know, increasingly good traction with true audience, which is the suite of marketing solutions that we've migrated onto OneTrue.

Speaker #5: We are converting a lot of the legacy customer base from those solutions onto the true audience solutions. It's a more powerful product. It's a streamlined interface.

Speaker #5: It's a broader series of services that have been integrated together, which allows cross-sell and upsell. And so I think the general pipeline build, you know, the level of bookings, particularly in identity, where we've got a tremendous data strength, but increasingly in audience, and also in spend planning and measurement, as I mentioned at the outset, which are historic strengths in our marketing portfolio, you know, we just see that momentum building and we expect a better second half of the year.

Speaker #5: Thanks.

Speaker #2: Sounds good. Thanks.

Speaker #1: And our next question will come from Andrew Nicholas with William Blair. Please go ahead.

Speaker #4: Hi, good morning. Appreciate you taking my question. I wanted to hone in on India a bit further. A nice sequential uptick there. Can you speak to what you're seeing on the ground from an economic perspective, from a commercial perspective, and kind of how you're thinking about the rest of the year with a nice uptick in the second quarter now into your about?

Speaker #4: Thank you.

Speaker #5: Yeah, for sure. Excited to talk about India always. In terms of the volumes that we're seeing on the consumer and the commercial side, you know, things are stabilizing, which is good.

Speaker #5: You know, the macro continues to be attractive. There's GDP growth. There's reasonable levels of inflation. But as we all know, there's been any number of macro shocks that have hit India, you know, over recent quarters, which have interrupted our growth.

Speaker #5: That said, the volume of unsecured lending to the consumer space, which is a big driver of credit pulls, along with card originations, that seems to be a floor reached and we're now in a more stable environment.

Speaker #5: On the commercial lending side, particularly with smaller to medium-sized businesses, there have been some government support programs that's enabling better activity in those space.

Speaker #5: In that segment of the market. So what I would say from a market volume perspective is that we're now moving sideways, to slightly upwards.

Speaker #5: We're seeing the stability that's going to allow our better products to gain traction and grow. So that's the kind of the market volume backdrop.

Speaker #5: From a competitive perspective, we're doing really well. I mean, the team has doubled down. We just posted our largest quarter of new sales ever in India, which is super exciting.

Speaker #5: You know, first, the team is innovating on the data layer. We have redeveloped all of our principal consumer and commercial credit scores. They're performing better than ever.

Speaker #5: And that refresh is, you know, keeping a relevance in the marketplace. We're expanding the breadth of data contributions from lenders or furnishers, as we call them, around India.

Speaker #5: We're even starting to expand the type of data that we're getting from the furnisher network, which just drives continued improvement in model predictiveness. And, you know, we could consistently show to our lenders that they need to use our data throughout the lending cycle, from the beginning where they're evaluating a prospect, kind of top of funnel, all the way through underwriting, you know, using our data because it's broader and it's more predictive leads to better decisions and better capital allocations.

Speaker #5: And we've got a very tight pitch that we deliver along with our data science team that's helping us, you know, really sell and win more share in the market.

Speaker #5: On top of that, we have successfully implemented our analytics solution in India. It's called True IQ. And there's a ton of interest. There's a ton of bookings and revenue momentum there.

Speaker #5: We're super excited about. And we're expanding trusted call solutions there as well. We are securing all the relationships we need with all of the right carriers to expand that component of our fraud solution and we're getting good traction there.

Speaker #5: So you know, it's new products driving some revenues in addition to really competing effectively in the core credit market.

Speaker #1: And our next question will come from Faiza Alway with Deutsche Bank. Please go ahead.

Speaker #6: Yes, hi. Thanks. Good morning. I wanted to ask about consumer lending more specifically within financial services. Growth sort of slowed a little bit this quarter, and I'm wondering if that's just a function of, you know, just tougher comps as you've had a few quarters of, you know, double-digit growth there.

Speaker #6: And maybe if you could talk more specifically around the fintech environment and maybe how sensitive that business is to, you know, rising interest rates and if that was a factor this quarter.

Speaker #5: Yeah. Well, first, it's not particularly sensitive to interest rates. Within a reasonable range of course. Mortgage origination and refinancing far and away is the most interest rate sensitive.

Speaker #5: But the spread on personal lending tends to be, you know, high enough that lenders can absorb increases in rates. So I just want to put that to rest.

Speaker #5: You know, at the outset. So yeah, growth in consumer lending and even card and auto, they're a tick down from where they were a year ago.

Speaker #5: That's simply us lapping comps. You know, the absolute growth that we're getting each of those segments is very consistent. And healthy it's just the businesses are getting bigger.

Speaker #5: And if you look back for two years, you see that particularly on the consumer side, there's just a resurgence in growth as consistent and durable funding has flowed back into the fintechs.

Speaker #5: And they really diversified their funding sources as well. And they're meeting a robust market need. So you know, I think, you know, pulling back the lens and thinking about the last few years, the outlier for fintechs and consumer lending was during the '22, '23 time period where rates spiked after incredibly hot growth in that segment for a long time.

Speaker #5: And there was simply a retrenchment, right? There wasn't enough funding and the rates were so high, it wasn't really an acquisition-oriented environment. So they pulled back and focused on portfolio management for a while.

Speaker #5: Now we've been out of that environment for a couple of years. And again, you know, the fintech model based on borrowing from the capital markets or getting funding in other ways is a consistent and durable model that's been part of the American lending landscape for decades now.

Speaker #5: So we're confident that we can continue this run of good growth in consumer lending.

Speaker #6: Great. Thank you.

Speaker #1: And our next question will come from Ashish Sabadra with RBC. Please go ahead.

Speaker #3: Thanks for taking my question. I wanted to ask a question on the EBITDA front. The guidance implied step up from Q2 to Q3, but a much more material step up from Q3 to Q4.

Speaker #3: If you can talk about what's driving that improvement in margins going forward. Thanks.

Speaker #4: Thanks, Ashish. I'll take that question. So if you look at our adjusted EBITDA margins, and you know, we'll talk about this and break it out into all the different pieces.

Speaker #4: But if we start just with our reported margins in the second quarter, we finished with a margin of 34.8%. And that was down 90 basis points on a year-over-year basis.

Speaker #4: In essence, the FICO mortgage royalty was accountable for that entire decline. And if you look further into the details, our underlying margins that exclude that royalty and also exclude points.

Speaker #4: But M&A specifically, that's Mexico had a 10-point drag in the quarter. When we look at the guidance for the third quarter, as you already can see, the high end is 35.4%.

Speaker #4: And that's a 100 basis point decline. FICO is about an 80 basis point drag. So kind of consistent with what we saw in the second quarter.

Speaker #4: But M&A becomes a little bit more of a drag on a margin perspective as we focus on integrating the Mexico acquisition. And it's a, you know, it's a headwind of about 60 basis points.

Speaker #4: So when you do the net of that, in essence, what you see in the third quarter is a 20 to 40 basis point increase in our underlying margins excluding FICO mortgage royalty and M&A.

Speaker #4: So when you look at then, you know, the full year, we've been consistent in our guidance. We're calling for a 35.4% for the full year, which is down 60 basis points.

Speaker #4: But that underlying, when you exclude FICO mortgage royalties and M&A, we're calling for 50 to 70 basis points of underlying margin expansion. So the net of that then is what's implied for the fourth quarter in essence does have a step-up in margin.

Speaker #4: And when we look at where is that coming from, the mix as we get into the fourth quarter, as we already talked about in the first question, mortgage we have a very conservative posture.

Speaker #4: So and as you know, mortgage is a lower margin product for us. So when we have less of that, we end up having higher margins.

Speaker #4: We're also anticipating more growth from our financial services vertical, excluding mortgage. What that means is a lot more credit sales with a higher margin flow-through.

Speaker #4: And then also the international business. And Chris just went through the details on India. We're expecting that business to continue to accelerate. Also very good flow-through as we get into the second half of the into the second half of the year.

Speaker #4: And the last point I want to make here is when you look at our expenses, in Q2, Q3, and Q4, and when we take out the FICO mortgage royalty, in essence, that expense basis roughly flat quarter over quarter.

Speaker #4: So that's really the key point as to why we expect to see the margin improvement accelerate in Q3 and then even more so in Q4.

Speaker #5: Yeah. And that last point, just just about the expense base, is a good one. As all of you know on the call, we recently completed a multi-year tech modernization and cost restructuring.

Speaker #5: We're very happy that we got it done. We got it done on time. We got it done within our initial spending budget. And the fact that we're holding expenses flat when, of course, there is underlying expense growth in a variety of areas, it shows that the program has worked and it's allowed us to take out some material costs and we're just now starting to see that benefit.

Speaker #5: Just switching gears quickly here, I realize that on the India question that was just asked, I forgot to mention one thing. You're going to see a nice increase in the growth rate in India that we're expecting.

Speaker #5: In Q3 and Q4, the good news is, of course, the business is re-accelerating in all the ways in which I described. But it's also re-accelerating because of some very soft comps.

Speaker #5: So the second half of the year, you're going to see nice percentage growth. I just wanted you guys to appreciate that dynamic.

Speaker #1: And our next question will come from Raina Kumar with Oppenheimer. Please go ahead.

Speaker #6: Good morning. Thanks for taking my question. Just given that your competitor recently announced the acquisition of the second largest credit bureau in Mexico, can you comment on your positioning in the region long term?

Speaker #6: Obviously, it was a strong spot for you in the quarter. But just curious on how it could impact your long-term strategy in Mexico. Thanks.

Speaker #5: Yeah. Thanks for the question. Well, look, Mexico is an exciting development within TransUnion. As you guys know from prior calls, we have been a minority investor in a tech provider to the border to Mexico for over 25 years.

Speaker #5: And we wanted to acquire controlling interest for 25 years. Fortunately, we were able to complete that transaction and we've got the leading bureau with the leading market position in the broader data archives in the Mexican market.

Speaker #5: Since acquisition and in recent years, the Bureau of Mexico has consistently outperformed growth and profit expectations. It is performing nicely above our deal book and compounding revenue on a much larger revenue base.

Speaker #5: In the low double digits, which is exciting, even though we have guided to less going forward. So look, it's a great entry position. We have terrific market coverage.

Speaker #5: But there's just so much work for us to do in Mexico. And the same is true of our competitor. Mexico today operates with, I would say, a pretty basic level of credit data and analytics.

Speaker #5: And we're positioned to broaden contributions from a wider range of data furnishers to push deeper into the fintech space to bring alternative credit data sets to market.

Speaker #5: And to do it all on the one true platform, which we will be rolling out into Mexico and to bring just a level of thoughtfulness and forward engagement to the marketplace that has served us so well in the US and across all of our market segments.

Speaker #5: Additionally, right away, we're bringing in the true IQ analytics platform and layering it over the current tech stack in the Mexico bureau. That's going to allow us to start to service our clients more deeply as we do in most markets and generate some incremental revenues.

Speaker #5: So look, it's a great market to be in. It's a terrific foundational entry point. There's a ton of innovation and value that we can bring.

Speaker #5: The market is large. Inherently, growthful. And underpinning from these solutions. So I'm confident that we can do well. And look, there's plenty of room and opportunity for multiple players to do well in the Mexico market.

Speaker #1: And our next question will come from Manav Patnik with Barclays. Please go ahead.

Speaker #3: We're just curious on your strategy there in terms of trying to maybe get that to be a much bigger percentage of the business there.

Speaker #4: All data and true IQ. The opportunity.

Speaker #5: Oh, I see. So you're talking about financial services and the diversification for the diversification? That kind of the.

Speaker #3: Yeah. Yeah. The 36% that you called out that was not non-core credit, I guess. Just curious, longer term, if that's an area for the investment, M&A, those kinds of things.

Speaker #5: Yes. Okay. Good. I'm clear on your question, Manav. And thanks for it. Well, look, the first point that we wanted to emphasize is that our growth, which has been above market levels, in financial services, is diversified, right?

Speaker #5: Obviously, we've got leading credit data from a quality perspective in the US. Our trended data, we were the first mover; it goes back the furthest.

Speaker #5: It has the most attributes for analytics in the marketplace. Which is kind of foundational to our success. We've also extended down market to payday lending and other unsecured lending types.

Speaker #5: And as you well know, there's kind of an arms race amongst the bureaus to bring other relevant alternative to core credit data sets into the market.

Speaker #5: And we're going to continue to expand organically and inorganically if we get the opportunity. And it makes sense in that space. Additionally, a lot of the solutions that we acquired either from Nusadar, which increased our depth in marketing and fraud, were cross-selling into the financial services space.

Speaker #5: There's also further opportunity with our identity solutions, to work with some of these lenders and become kind of the system of record underpinning their corporate data hygiene and identity resolution within the banks.

Speaker #5: We see that. And I think it's very important to note that, look, if you went back a couple of years, you could criticize TransUnion for not having a top-of-the-market analytics suite, right?

Speaker #5: Other players traditionally led. We closed that gap a couple of years ago when we launched true IQ. We've continued to accelerate innovation and mature the true IQ product.

Speaker #5: It's now doing well in the US market. We've expanded it into India, in Canada, and the UK. And we're fast following in the Mexico.

Speaker #5: And if you think of those core countries, that's like 95% of the revenue of TransUnion globally. So in short, yeah, there's a lot of further growth opportunity in diversifying in and around this core credit position.

Speaker #1: And our next question will come from Curtis Nagel with Bank of America. Please go ahead.

Speaker #2: Great. Thanks so much for taking the question. Maybe just pivoting to the vantage score option, right? So I think move from 5 to 30 percent or so.

Speaker #2: Have been kind of dual use. Sounds like it's proving more of a single poll. Just maybe if you could unpack what's driving that acceleration in terms of lending cohorts, lender types, stuff like that.

Speaker #2: Just a little more detail would be helpful on what you're seeing.

Speaker #5: Yeah. Sure, Curt. So well, look, in terms of cohorts or more specifics around it, the data that we shared reflects the adoption of Vantage that we're seeing across 900 customers, right?

Speaker #5: So it's a fairly broad-based observation of what's going on in the market. And what I would simply characterize it as, this is a period of experimentation, and calibration, by the market broadly, by lenders and resellers, even the GSEs, and on into the securitization space and mortgage insurers.

Speaker #5: At the outset of the year, we were clear that we weren't budgeting or including in our guidance any revenue from selling the Vantage score.

Speaker #5: That's still our posture in this current raised guidance. And as a company, we are just laser-focused on helping the market adopt the Vantage score.

Speaker #5: There's a tremendous opportunity for lenders to get a more predictive score at a substantially lower price and improve their economics. And hopefully, pass on some of that benefit to consumers, which was the intention behind this government policy change and as we step back from all of the fray and the occasional drama about this, it's clear the market is highly interested in the Vantage score.

Speaker #5: Almost everybody is experimenting with it. The efforts are being led by the largest players in the market that have the most financial benefit. And all of the other players that need to calibrate are deeply engaged in doing so, whether that's updating their risk models for a new score or it's altering some fields in their software, so that they can include multiple scores.

Speaker #5: But this year of experimentation and preparation for faster and scaled adoption of a competing score is happening. Full stop.

Speaker #1: And our last question today will come from Kelsey Zhu with Autonomous. Please go ahead.

Speaker #6: Hi. Good morning. Thanks for squeezing me in. And Chris, in the prepared remarks, you also mentioned that there are increases in lenders that adopt Vantage score only usage.

Speaker #6: And that was wondering if you can talk a little bit more about that and what you're seeing in terms of score gaming activity for lenders that are currently running both.

Speaker #6: Thanks a lot.

Speaker #5: Yeah. Sure. Yeah. And thanks for the question, Kelsey. Yeah. Well, there are some players in the market that if they're not exclusively using Vantage today, and that would be in a minority in our dialogue with them and believe me, our teams are actively engaged across the marketplace, they clearly have an intention to move to a single score, Vantage, once they're through this experimentation and calibration phase, right?

Speaker #5: As you know, because you report on this, the percentage of players that are using only Vantage is increasing. And some of these Vantage mortgages or the Vantage-only scores in mortgage are showing up in securitization.

Speaker #5: Now, it's a relatively small percentage now, but it's growing rapidly. And just given the breadth of experimentation and activity that we see, it just speaks to real tailwinds.

Speaker #5: So I, again, am confident that in the coming quarters, we're going to continue to see greater share adoption that'll flow through all of the metrics around Vantage adoption and utilization in the mortgage origination through securitization process.

Speaker #5: And that Vantage is really well positioned for growth in share gain and subsequent years.

Speaker #1: All right, Chris. Any final remarks?

Speaker #5: Yeah. Well, look, we talked about the adoption of OneTrue. In the prepared remarks, that is progressing well. We are highly confident we'll have the entirety of the US credit market converted by the end of the year, most of it sooner than that.

Speaker #5: We're also migrating our marketing and fraud clients from their current legacy applications onto OneTrue. And this is just an enormous proof of concept that we have built this platform and that we can roll it out globally.

Speaker #5: Next up are our principal markets in Canada, in India, in the UK, and of course, Mexico, where we want to move quickly there because there's a great opportunity.

Speaker #5: And again, once we complete that, which I would expect roughly to complete within the next two years, we'll have 95% of our business running on a common software platform.

Speaker #5: That's going to generate enormous economies of scale for us that are unique in the industry. And that further assures that we'll have ample capacity to continue to grow our margins while accelerating our investments and innovation.

Speaker #5: So this is a super exciting innovation inflection point that we've been working to for four years now. And look, the modernization and the transformation is working.

Speaker #5: We're diversifying the business to drive more sustainable growth. We're gaining share through innovation. Our cash flow metrics are greatly improved. We've got tremendous capacity to return capital to shareholders while continuing to invest in accelerate the top line.

Speaker #5: So a lot of good momentum here. And we're just going to keep delivering quarter by quarter.

Speaker #1: All right, Chris. I think that's a good place to end. Everyone, thanks for the time today, and have a great rest of your day.

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