Cincinnati Financial Corporation (NASDAQ: CINF) Q1 2026 Earnings Call dated Apr. 28, 2026
Corporate Participants:
Dennis McDaniel — Investor Relations
Stephen Spray — Chief Executive Officer
Michael J. Sewell — Chief Financial Officer
Analysts:
Michael Phillips — Analyst
Joshua Shanker — Analyst
Michael Zaremski — Analyst
Jon Paul Newsome — Analyst
Meyer Shields — Analyst
Presentation:
Operator
Good day, ladies and gentlemen, and thank you all for joining us for this Cincinnati Financial Corporation First Quarter 2026 Earnings Conference Call. As a reminder, all phone participants are in a muted or listen-only mode to prevent any potential background noise. Today’s session is also being recorded. It is now my pleasure to turn the floor over to Investor Relations Officer, Mr Dennis McDaniel. Excuse me, Mr Dennis McDaniel, rather. Welcome, Dennis.
Dennis McDaniel — Investor Relations
Hello, this is Dennis McDaniel at Cincinnati Financial. Thank you for joining us for our first-quarter 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.synthen.com. The shortest route to the information is the quarterly results section near the middle of the Investor Review page.
On this call, you’ll first hear from President and Chief Executive Officer, Steve Spray; and Dim from Executive Vice-President and Chief Financial Officer, Mike. 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; and Cincinnati Insurance’s Chief Claims Officer, Mark Shambeau; 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, a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP. Now, I’ll turn-over the call to Steve.
Stephen Spray — Chief Executive Officer
Good morning, and thank you for joining us today to hear more about our results. Performance for the first-quarter of the year was good and included several aspects that demonstrated the success of our proven strategy and our ability to execute it. Both our insurance and investment operations performed quite well.
Net income of $274 million for the first-quarter of 2026 included recognition of $82 million on an after-tax basis for the decrease in fair-value of equity securities still held. Non-GAAP operating income was strong, $330 million for the quarter compared with an operating loss of $37 million a year-ago. The 95.6% first-quarter 2026 property-casualty combined ratio improved by 17.7 percentage points compared with first-quarter last year, including a decrease of 14.2 points for catastrophe losses. We had an excellent 87.5% accident year 2026 combined ratio before catastrophe losses for the first-quarter. Turning to premium growth.
Our consolidated property Casualty net written premiums grew 7% for the quarter, including a favorable 2% effect from net reinstatement premiums recorded in first-quarter 2025. Our strong financial position and sophisticated pricing and segmentation models allowed us to benefit from market disruption over the past few years. We stayed the course, providing a stable market for our agents, in-turn growing at an accelerated pace. In fact, in just the last seven years, we’ve doubled the size of our consolidated property-casualty net written premiums. As those market challenges shift, growth is slowing 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 the first-quarter were lower than the 4th-quarter of 2025, but still at levels we believe were healthy. Commercial lines in total averaged increases near the high-end of the low single-digit percentage range and excess and surplus lines was again in the mid-single-digit range. Our Personal lines segment included personal auto and homeowner in the high single-digit range. Our premium growth objectives are further supported by exceptional claims service and our deep relationships with best-in-class independent insurance agents. Next, I’ll comment on first-quarter performance by insurance segment compared with a year-ago.
As we pursue profitable premium growth, we believe pricing discipline in a challenging market contributed to strong profitability this quarter. Commercial Lines grew net written premiums 3% with a 98.6% combined ratio that increased by 6.7 percentage points, including a 6.0 — including 6.0 points from higher catastrophe losses. Personal lines grew net written premiums 15%, driven by Cincinnati Private Client. The combined ratio for Personal Lines was 96.8%, 54.5 percentage points better than last year, including a decrease of 41.9 points from lower catastrophe losses. Excess and surplus lines grew net written premiums 8% and produced a very good combined ratio of 89.3%.
Cincinnati Re and Cincinnati Global each continue to contribute to profitability and reflect our efforts to diversify risk and further improve income stability. Cincinnati REIT’s first-quarter 2026 net written premiums decreased by less than 1%. Its combined ratio was an outstanding 79.7%. Cincent Global’s combined ratio was also stellar at 78.7%, along with premium growth of 31% as it continues to benefit from product expansion in recent years. Our life insurance subsidiary continued to deliver excellent results, including 24% net income growth. In addition, term life insurance earned premiums grew 7%. I’ll end my commentary with a summary of our primary measure of long-term financial performance, the value-creation ratio. Our VCR was 0.2% for the first-quarter of 2026. Net income before investment gains or losses for the quarter contributed 2.1%. Lower overall valuation of our investment portfolio and other items contributed negative 1.9%. Now, I’ll turn it over to Chief Financial Officer, Mike Suell, for additional insights regarding our financial performance.
Michael J. Sewell — Chief Financial Officer
Thank you, Steve, and thanks to all of you for joining us today. We reported growth of 14% in investment income in the first-quarter of ’26, driven by strong cash-flow from insurance operations. Bond interest income grew 12% and net purchases of fixed maturity securities totaled $624 million for the first three months of the year. The first-quarter pre-tax average yield of 5.02% for the fixed maturity portfolio was up 10 basis-points compared with last year. The average pre-tax yield for the total of purchased taxable and tax-exempt bonds during the first-quarter of this year was 5.37%. Dividend income was up 13%, including a $6 million special dividend received from one of our equity holdings.
Net sales of equity securities totaled $54 million for the quarter. Valuation changes in aggregate for the first-quarter were unfavorable for both our equity portfolio and our bond portfolio. Before-tax effects, the net loss of $71 million for the equity portfolio and $220 million for the bond portfolio. At the end-of-the first-quarter, the total investment portfolio net appreciated value was approximately $7.7 billion. The equity portfolio was in a net gain position of $8.1 billion, while the fixed maturity portfolio was in a net loss position of $401 million. Cash-flow continued to benefit investment income growth. Cash-flow from operating activities for the first three months of 2026 was $656 million, more than double a year-ago.
Regarding expense management, our first-quarter 2026 property Casualty underwriting expense ratio decreased by 0.6 percentage points, reflecting a favorable 0.7 points from the effect of net reinstatement premiums in the first-quarter 2025. Turning to loss reserves, our approach remains consistent. We aim for net amounts in the upper half of the actuarily 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 updated estimated ultimate losses and loss expenses by accident year and line-of-business. For the first three months of 2026, our net addition to property-casualty loss and loss expense reserves was $466 million, including $419 million for the IBNR portion. During the first-quarter, we experienced $81 million of property Casualty net favorable reserve development on prior accident years that benefited the combined ratio by 3.2 percentage points.
On an all-lines basis by accident year, net favorable reserve development for the first three months of 2026 included a favorable $72 million for ’25, favorable $25 million for ’24 and an unfavorable $16 million in aggregate for accident years prior to ’24. I’ll conclude my comments with first-quarter capital management highlights. We paid $133 million in dividends to shareholders. We repurchased approximately 1.1 million shares at an average price per share of $164.93. We believe both our financial flexibility and our financial strength are in great shape. The parent company cash and marketable securities at quarter-end was $5.6 billion. Debt-to-total capital remain under 10%. And our quarter-end book-value was $101.60 per share with nearly $16 billion of GAAP consolidated shareholders’ equity providing plenty of capacity for the profitable growth of our insurance operations. Now, I’ll turn the call-back over to Steve.
Stephen Spray — Chief Executive Officer
Thanks, Mike. I think this quarter’s solid results demonstrate that we have the people and plans in-place to keep building on our success, regardless of market cycles and conditions. Our associates continue to answer the call for our agents and the communities they serve, developing deep relationships and informing smart underwriting decisions. Early in March, AM Best also expressed their confidence in our plans by affirming our A-plus rating, citing our strong balance sheet and operating performance. If you’d like to hear more about how we’ll continue to deliver value for policyholders, agents, associates and shareholders, we invite you to join us for our Annual Meeting of Shareholders this Saturday, May 2, at the Cincinnati Art Museum. You are also welcome to listen to our webcast of the meeting available at investors.synfin.com. As a reminder, with Mike and me today are Steve Johnston, Steve, Mark Shambo and Andy Schnell. Jim, please open the call for questions.
Questions and Answers:
Operator
Gentlemen, thank you for your remarks. And to our phone audience at this time. If you would like to ask a question, simply press star followed by the digit one on your telephone keypad. Pressing star on one will place your line into a queue, and I will open your lines individually and you will be invited to direct your question. We’ll take our first question today from the line of Michael Phillips at Oppenheimer. Please go-ahead
Michael Phillips
Yeah, thank you. Good morning, everybody. Thanks for the time. I guess, Steve, I want to dive a little more into the renewal price change in commercial. It seemed to decelerate a little more than maybe we’ve heard from others, but it’s obviously hard to really accurately say on that. I guess your high-end of low-single digit, obviously, that’s impacted by your commercial property and comp. They’re not a small piece of that segment. So maybe could you provide any comments on the pricing environment in your commercial casualty specifically, what that looks like today and maybe how that compares to what you see as loss trends in commercial casualty? Thanks, Steve.
Stephen Spray
Yeah, thanks. Good morning, Mike. Good to hear from you. Yeah, the high-end of the low single-digit range is so that — that takes — that’s all-in. That takes into account some of the impact that we’ll get from our three-year policies. Specifically to casualty, and not bifurcating it down, but just all-in on casualty, we’re getting mid-single digit increases. I think more importantly, from my perspective, Mike, in shifting market cycles, I think our focus on policy — we’re a package writer focused on policy by policy, you know, risk selection, terms conditions and then using the pricing tools that we have and segmenting the book is where we focus most of our efforts versus any straight average. It just — it just doesn’t — the straight average just doesn’t tell the story through any market cycle. But I think even now, as things are softening, I think it’s even more crucial that our underwriters working with the agents continue to deliver on that segmentation strategy.
Michael J. Sewell
Okay, Steve, thank you. I guess switching over to personal, specifically the umbrella book. You’ve grown that nicely in the last couple of years. I think you’re north of $200 million or so premium. So it’s small base. But can you just talk about your strategy there? How big do you want that to be, say, over the next year or two? Does it get to $0.5 billion in the next two years? And obviously, thoughts on the volatility of that business in terms of losses. So just kind of thinking about how much you want to grow in the near-term on umbrella?
Stephen Spray
Thank you. Yeah. Yes. Thanks, Mike. Yes, no specific guidance on how large or how much we want to grow that umbrella. Again, in personal lines, I think as you know, we’re a package writer. And so in many, many cases that umbrella comes along with that, probably even more so with our focus on private client, you know, those individuals, higher net-worth folks are desiring larger limits. And we’ve got the balance sheet, we’ve got the expertise and that has performed well for us. You know, legal system abuse in commercial lines has been well-documented. And so it’s something we pay attention to certainly in personal lines, especially with umbrella and excess, but we — we feel-good about where we are there and we’ll continue — we will continue to grow it.
Michael Phillips
Okay. Thank you. And then just one quick numbers question if I could. Mike, the $72 million on 2025, I assume that’s homeowners and property lines?,
Michael J. Sewell
Just repeat that again?
Michael Phillips
Yeah. Mike, you mentioned the $72 million of favorable in ’25 accident year. I was just curious to make sure that was that homeowners and commercial property?
Michael J. Sewell
Yes.
Michael Phillips
Okay. Thank you guys. Thank you, Mike.
Operator
Our next question today will come from the line of Josh Shanker at Bank of America.
Joshua Shanker
Yeah, thank you for taking my question. First, I just want to say, Dennis, on Dennis’ retirement, it’s a big deal at Sanity Financial and I wish Dennis the best and he’s just the best-in the business. So I only have great things to say and think about him. So we’re going to miss you, Dennis.
Dennis McDaniel
So thank you, Josh. And the good thing is the team is ready to continue to execute. I’m around for a few more months, but thank you.
Joshua Shanker
Well, so here’s my questions. First of all, when I look at the growth rate of the homeowners business and I compare that to other personal and auto, I kind of think of a high-net worth package as you want everything from the company or maybe I’m wrong — from the customer or maybe I’m wrong about that. You sell a whole package. We want your cars, we want your choice, we want your art. Why is there such a difference in the growth rates? Are you looking for a property only type of high-net worth purchase or what’s — what’s the difference between the growth rates of the subgroups within Personal lines.
Stephen Spray
Yeah. Thanks, Josh. You know, you’re all over it. We are a package writer both in middle-market, personal lines and in private client. We want to be an online solution for the policyholders. But you make a great point. I think it’s one of the advantages that we have by both by being a premier carrier for our agents in middle-market and high-net worth, there’s diversification that naturally comes with that business. High-net worth, you’re right, it is more property driven. Homes are larger, you know, there’s just maybe fewer vehicles, but high-net worth generally is — is property driven less auto. Middle-market is the opposite, lower property, higher auto pricing. And then I’ll take it — you didn’t ask this, but I’ll take it a step further. We’re getting geographic diversification between middle-market and high-net worth as well. Middle-market, in general tends to be more in the center of the country. Private client seems to be — or is that seems to be, but is more Northeast, West Coast, Florida-driven.
Joshua Shanker
Well, so when I look at the numbers, 23% growth in the homeowners segment, but the new business production is down a lot. I assume most of that growth is really coming through rate these past couple of quarters. Can we bifurcate between how much rate you’re asking and how much your appetite for unit growth has changed in the past six months?
Stephen Spray
Yeah. You’re right. There’s a lot of moving parts. You know, the one thing I would say I’d go back to also, Josh, is that last year, we had reinstatement premiums in the homeowner line and that — that’s — that’s making the comps different. So I’d point you to that. With regards to, you know, just the new business, you know, when we — after the loss last year in California, as we — as we’ve discussed, we did an immediate after action lessons learned. And so growth in California new business really slowed last year. It’s kind of picked back up here in the first-quarter, but not enough to maybe overcome the what’s come down there. We’ve still got a lot of rate working into the book. I think the biggest thing though, Josh, to wrap it all-up, again, a lot of moving parts. But if you look at ’24 and ’25 and we’ve talked a lot about this. They were historic hard market years, especially for personal lines. So I think we’re just really returning back to maybe a little bit more of a normal state.
Joshua Shanker
Is there a decline in the amount of new business as measured by number of homes that you’re putting on in 1Q ’26 versus 1Q ’25 and 1Q ’24?
Stephen Spray
Yeah. The — in commercial lines, our policy counts are growing. In personal lines, the exposure units have been down a little bit. So the — I don’t know-how much it would impact that, but to answer your question, yeah, their policy counts are down a bit. And which we think is a good thing.
Joshua Shanker
Oh, yeah. Sorry. And then I know you could continue and I’ll get one-line. You think it’s a good thing you were saying?
Stephen Spray
Yeah. No, we’re just getting — just like it’s just one-on-one, we’re getting more rate for less exposure. So I think that — we think that bodes well.
Joshua Shanker
And then in California, when you are raising price, are you finding that you’re retaining that customer, the customers are happy to stay on that price or is that causing a higher amount of churn?
Stephen Spray
Yeah. Yeah, there is competition of back-in California. Now just as a reminder there as well, Josh, all new homeowner business that we are writing today and have been over the last several years is on an excess and surplus lines basis. So the rates I think over the last several years there have been pretty stable. We feel they’re adequate. We’re comfortable with the pricing there. But we are seeing some additional competition come back into California from new business.
Joshua Shanker
Well, thank you very much for all the clarity. No, great question, Josh.
Operator
Thank you. Next, we’ll hear from Mike at BMO Capital Markets.
Michael Zaremski
Hi, great. Thanks. First question, shifting to capital management. We saw a elevated share repurchase level. I don’t think we’ve seen that in a while. And I can see that the cap currently versus historical, we can see top-line growth is kind of running a bit lower as the market becomes more competitive. Maybe just should we be run rating this level of buybacks unless things change meaningfully on the valuation of the stock?
Michael J. Sewell
Yeah. Yeah, hey, Mike. This is Mike. So that’s a great question and thank you for it. It was probably, I’ll say, a little elevated for the — for Q1 of this year. But is it unusual? No, it’s not. We still have said that we’re doing maintenance, maybe a little bit of maintenance plus. The last year that we did, I’ll say, a little over 1 million shares in Q1 was back-in 2020. So six years ago, we did 2.5 million shares. But if I start to look at full years, we’ve done almost 1.1 million this year. Last year, we did $1.3 million, 1.1 million before that., we did $3.7 million. So I would say this is not unusual. It’s, I would Call-IT maintenance plus and we’ll see how things go the rest of the year and what we determined to do.
Michael Zaremski
Got it. Thanks for the clarification there. And just maybe switching gears to the question. I think we get the most on is, I’m back to the lawsuit social inflation lines of lines of business. You know, we can see from your KPIs that the casualty has been favorable last — for the last five quarters and the underlying is in commercial auto and et-cetera, it seems to be improving a bit. Would you say you guys are kind of getting over the hump of more rearview mirror there? Or is it still kind of TBD and kind of making sure to be very careful on growth using your analytics in those lines of business?
Stephen Spray
Thanks. Yeah. Thanks, Mike. You’re again all over it. And I’d say it’s both. We are confident in the pricing and the risk selection that we’re seeing there. But I’d say we also feel that we’re not out-of-the woods as an industry and specifically us when it comes to social inflation, legal system abuse as we probably prefer to Call-IT. And you’re seeing some tort reform a push around the country and we monitor that. APCIA, I think does an excellent job on behalf of the industry, but I just think that there’s still a tremendous amount of uncertainty around that. And so you can see it — you can see it in our ex-cat accident year picks both in commercial casualty, commercial auto, I think is where you — that’s kind of the epicenter. So just you know, I don’t think we’re over any hump. But I also think we’re prepared for what might come at us, just one based on our picks, but two, like you mentioned, the analytics, the way we’re pricing risk-by-risk and risk selection.
Michael Zaremski
Yeah, got it. That’s helpful. And then just lastly stepping back, when we think about the overall competitive environment in commercial lines and taking into account your risk collection analytics, et-cetera, but is it fair to kind of if we painted a broad-brush to say pricing powers on commercial lines is still biased downwards versus kind of stableish over the coming year despite kind of still on material levels of social inflation impacting the broader industry?
Stephen Spray
Yeah. Mike, I won’t project forward for you, but where we are right now, I would say it is — it is. You can’t paint the whole book with a broad-brush, we’re definitely seeing pressure. The larger the premium, the larger the account, the more pressure there is there. And then kind of peel that back a little bit, it’s even more so on commercial property. We’re still seeing net rate, but as I was mentioning to Mike Phillips earlier, the average just doesn’t — really doesn’t tell the story. It’s look at every single policy on a risk-adjusted basis and make decisions from there and our underwriters, just I can’t speak highly enough of how they’re executing on that through all market cycles. And I think what makes it — what makes it — maybe more efficient, more effective is that they are dealing with the most professional agents in the business that can convey value and that’s what we’re looking for, long-term consistency, stability and predictability. And I just think I’d be remiss if I didn’t mention just how our underwriters and our agents are executing on that.
Michael Zaremski
Yeah. And just lastly, then I know since he has been proactively moving into the I don’t know, larger account is the right word because they don’t want to compare you guys to Chubber and AIG, but kind of bigger premium policy levels over many years now. So does that just mean maybe the hit rate could be a bit lower on the larger premium stuff is if the current competitive environment stacks.
Stephen Spray
Thanks. Yeah, yes, Mike, absolutely. And you’re right, we’ve been — we’ve always written larger accounts for our agents, but we really decided to get deliberate about it and build-out expertise within the last decade. We continue to grow that unit. Our agents are responding well to the expertise that we bring to the table across all kind of all disciplines there. But yes, as we’re growing that, it might be putting a little bit more of an outsized pressure because we’re not only are we not winning on some accounts based on our view of the risk, retention is struggling there a little bit too.
Michael Zaremski
Thank you. Thank you, Mike.
Operator
Paul Newsome at Piper Sandler, you have our next question. Please go-ahead.
Jon Paul Newsome
I was wanting to go back to the reserve issues, the very small change in the past of pre-24. I presume that’s pretty much all casualty at this point. Are we making a little bit of a statement or not? I don’t want to read too much into $60 million, but about what’s going on with casualty reserves there?
Michael J. Sewell
No, Paul, let me — I’m going to state that again. So we in total, obviously, we had 3.2 points of favorable development. It was $81 million. So this is in total, $72 million of that favorable development was for accident year 2025, $25 million was favorable for 2024. And then the remaining $16 million unfavorable was across multiple years prior to that. So it’s really kind of spread across the — across multiple accident years. And I would say nothing is really popping out to me.
Jon Paul Newsome
My follow-up question sort of illustrates I was having troll sleeping last night. There was a statement in your 10-K that was sort of a qualifier for the reiteration of your long-term combined ratio goals. And it’s something along the lines of there’s several reasons why ’26 results might be below the long-term targets. Any color on that thought and what we should be thinking about in terms of what you’re concerned about?
Stephen Spray
Yeah. No, Paul, nothing more read into that, our long-term target is still 92 to 98 will continue underwriting price risk-by-risk and you know with we’re still writing same mix of business, everything there is consistent. But just with a market that might be putting more pressure, downward pressure on rate, I think there’s just an acknowledgement that we’ll be prudent in our picks there.
Jon Paul Newsome
Okay. Makes sense. Thanks guys. Appreciate it.
Stephen Spray
Thank you, Paul.
Dennis McDaniel
Thanks, Paul.
Operator
And a reminder to our phone audience that it is star in one if you have a question or even a follow-up. We’ll hear now from Mayer Shields at KBW.
Meyer Shields
Great. Thanks so much. I guess one question. You talked about the 100, I think, eight agency appointments in the first-quarter. And I know that historically Cincinnati has been very demanding in terms of agency quality. Does that number sort of have to slow-down at any point in time? And maybe more or less big-picture. I was hoping you can talk about which geographic regions are seeing the most appointments right now?
Stephen Spray
Yeah. Yeah. Yeah, thanks,. We — you know the strategy as a company has always been to have as few agents as possible, but as many as necessary. And you look at us on a relative basis to the industry and to our peers, I think we’ve got about — roughly 2,400 agency relationships operating out of 3,500 plus locations, we’ve always had a limited distribution model and even adding 300 or 400 agencies or whatever it might be in a year is still a relatively small number. But I think the most important point and you make it, Mayor, is I feel like in my 35 years, one of the keys to our success is we’ve always done a great job of underwriting agencies. And you point to that with the quality. And that’s a big focus of ours is just making sure that we’re aligned with these agencies that they’re professional, they’re centers of influence in their community. And we think that there are a lot more agencies across the country that meet those — that meet those standards and we’ll continue to appoint. We’ll continue to keep our standards high. And to your question on various states, we feel like we can appoint agencies in any state and do well, but we do prioritize agency appointments in those states where we feel like right now, we have a better-than-average shot at good risk-adjusted returns?
Meyer Shields
Okay, great. That’s very helpful. Another question, does either — do either Cincinnati Global or Cincinnati REI have any exposure to the political violence, marine or energy risk in the Middle-East right now.
Michael J. Sewell
Yeah, to answer that and thanks for the question here. It’s very little that we have. I think there was a little bit more on the reside, but it was — it was $5 million on the — on the Global, it was $1 million and actually it was below $1 million. So very minor in total, but we are — yeah, we’ll be watching that one day at a time.
Meyer Shields
Okay, perfect.
Operator
Thank you so much. And we have no further questions from our audience at this time. MR. Spray, I’m happy to turn the floor back to you, sir, for any additional or closing remarks that you have.
Stephen Spray
Well, thank you, Jim, and thank you all for joining us today. We look-forward to speaking with you again on our second-quarter call. Thank you.
Operator
Ladies and gentlemen, this does conclude today’s meeting, and we thank you all for your participation. You may now disconnect your lines and have a great day