Market Overview - The current market environment reflects the excesses of 2021, with volatility returning in early August, prompting considerations for more defensive positioning [2] - Job data indicates a shaky labor market, with only 73,000 jobs added in July and unemployment rising to 4.2% [3] - The Personal Consumption Expenditures (PCE) price index reached 2.6% in June, marking the highest reading since February [3] - Market indices have achieved new all-time highs, driven by strong earnings, particularly from AI hyperscalers [3][4] Company Performance - The market is increasingly concentrated, with the "Magnificent Seven" companies dominating the S&P 500, potentially overshadowing over 400 other companies [4] - Companies that reported less-than-stellar Q2 results faced significant declines in their stock prices, indicating high expectations and stretched valuations in the S&P 500 [4] Dividend Aristocrats - Dividend Aristocrats are companies in the S&P 500 with a minimum of 25 years of consecutive dividend increases, providing stability and predictable profits [6][7] - Johnson & Johnson (JNJ) has a dividend yield of 3.00%, an annual dividend of $5.20, and a 64-year track record of dividend increases, with a payout ratio of 55.61% [9][10] - Cincinnati Financial (CINF) offers a lower dividend yield of 2.32% but has a 65-year history of raising dividends and a payout ratio of 30.18%, indicating strong sustainability [12][13] - T. Rowe Price (TROW) boasts a dividend yield of 4.84% and a 39-year track record of increases, with a manageable payout ratio of 56.76% and a strong cash position [15][16]

Group 1: Barclays - Barclays stock reached a 52-week high of $20 after reporting Q2 EPS of $0.62, exceeding estimates by 24% [2] - Year-over-year, Barclays' Q2 earnings increased by 47% from $0.42, driven by a 20% sales growth to $9.59 billion [2][3] - The bank's valuation remains attractive, trading at 8.9X forward earnings and under 2X forward sales, compared to European peers [3] Group 2: Cincinnati Financial - Cincinnati Financial reported Q2 EPS of $1.97, surpassing estimates by nearly 42% and reflecting a 53% increase from $1.29 in Q2 2024 [4] - The company has a 2.28% annual dividend yield, significantly higher than the S&P 500's average of 1.16% and the industry average of 0.27% [5] - Cincinnati Financial is recognized as a Dividend King, having increased its dividend for over 50 consecutive years with an annualized growth rate of 8.39% [5] Group 3: LendingClub - LendingClub posted Q2 earnings of $0.33, exceeding estimates by 120% and increasing from $0.13 in the prior year [8] - The company achieved Q2 sales of $248.43 million, which was 10% above expectations and a 32% increase from $187.24 million a year ago [8] - LendingClub has consistently surpassed EPS estimates for 10 consecutive quarters, with an average earnings surprise of 53.93% in the last four reports [9]

Core Viewpoint - Cincinnati Financial Corporation (CINF) reported strong second-quarter 2025 results, with operating income of $1.97 per share, exceeding estimates by 41.7% and reflecting a year-over-year increase of 52.7% [1][10] Operational Update - Total operating revenues for the quarter reached $2.8 billion, marking a 15.3% increase year over year, although it slightly missed the consensus estimate by 0.1% [2] - Net written premiums rose 11.1% year over year to $2.7 billion, driven by premium growth initiatives, price increases, and higher insured exposures [3][10] - Investment income, net of expenses, increased 17.8% year over year to $285 million, surpassing estimates due to higher interest income from fixed-maturity securities [4] Expense and Profitability Metrics - Total benefits and expenses increased 10.9% year over year to $2.4 billion, primarily due to higher insurance losses and operating expenses [5] - Underwriting income in the property & casualty (P&C) insurance segment rose significantly by 265.7% year over year to $128 million, with the combined ratio improving by 360 basis points to 94.9 [5][6][10] Segment Performance - **Commercial Lines Insurance**: Revenues of $1.2 billion increased 9.4% year over year, with underwriting income jumping nearly nine-fold [7] - **Personal Lines Insurance**: Revenues of $806 million increased 27.5% year over year, with a narrower underwriting loss of $14 million compared to the previous year [8] - **Excess and Surplus Lines Insurance**: Revenues grew 15% year over year to $175 million, although underwriting profit dropped to $16 million [9] Financial Position - As of June 30, 2025, total assets were $38.8 billion, up 6.4% from the end of 2024, with total debt remaining unchanged at $815 million [12] - The debt-to-capital ratio improved to 5.4%, and book value per share increased by 2.6% to $91.46 [12]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $685 million, more than doubling from the previous year, including a $380 million increase in fair value of equity securities [9] - Non-GAAP operating income for Q2 2025 was $311 million, up 52% year-over-year [9] - The property casualty combined ratio improved to 94.9%, a 3.6 percentage point improvement compared to Q2 2024 [9] - Consolidated property casualty net written premiums grew by 11% for the quarter, with agency renewal premiums increasing by 16% [9] Business Line Data and Key Metrics Changes - Commercial lines grew net written premiums by 9% with a combined ratio of 92.9%, improving by 6.2 percentage points [12] - Personal lines saw a 20% increase in net written premiums, with a combined ratio of 102%, which was 4.9 percentage points better than last year [12] - Excess and surplus lines grew net written premiums by 12% with a combined ratio of 91.1%, improving by 4.3 percentage points [12] - Cincinnati Re's net written premiums decreased by 21%, reflecting pricing discipline, with a combined ratio of 82.8% [13] Market Data and Key Metrics Changes - The average renewal price increases for commercial lines were near the high end of the mid-single digit percentage range, while personal lines saw homeowner rates in the low double digits and personal auto in the high single digits [11] - The company added an additional $300 million layer to its property catastrophe reinsurance program, with 43% of this layer placed with reinsurers [10] Company Strategy and Development Direction - The company continues to focus on an agent-centered strategy, balancing profitability and growth while enhancing its investment portfolio [7] - The management emphasized the importance of superior claim service and strong relationships with independent insurance agents to support profitable premium growth [10] - The company aims to maintain a low expense ratio, targeting below 30% in the long term [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term direction and strategy of the insurance business despite challenges from natural disasters [7] - The second half of the year is typically more profitable for personal lines, with an average improvement of eight points observed over the past five years [8] - Management noted that the competitive landscape in the property market is influenced by significant capital influx, but they remain disciplined in underwriting [87][90] Other Important Information - The company reported a cash flow from operating activities of $1.1 billion for the first half of 2025, down $44 million from the previous year due to increased catastrophe losses [18] - The company paid $133 million in dividends to shareholders during 2025, with no share repurchases [20] - The quarter-end book value reached a record high of $91.46 per share, with total shareholders' equity of $14.3 billion [21] Q&A Session Summary Question: Differences in commercial lines pricing commentary - Management acknowledged a slight shift in commercial rental pricing from high single digits to mid single digits, emphasizing strong net rate changes overall [26][30] Question: Comfort regarding reserve releases in general liability - Management expressed confidence in their reserving process, noting consistent approaches and favorable reserve developments in recent accident years [32][34] Question: Expense ratio guidance - Management indicated that while the expense ratio was better than expected, they aim to maintain it below 30% moving forward [43][45] Question: Changes in commercial lines loss ratios - Management noted that while there are pressures in workers' compensation and commercial auto, they are taking prudent actions to manage these risks [49][50] Question: Personal lines business changes - Management confirmed ongoing support for California agents and policyholders, implementing lessons learned from recent wildfires [56][57] Question: Reinsurance strategy and hurricane season exposure - Management discussed the purchase of additional reinsurance layers for balance sheet protection and confirmed a $300 million retention on property catastrophe risks [60][64]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $685 million, more than double the result from a year ago, including a recognition of $380 million for the increase in fair value of equity securities still held [9] - Non-GAAP operating income for Q2 was $311 million, up 52% year-over-year [9] - The property casualty combined ratio improved by 3.6 percentage points to 94.9% compared to Q2 last year, despite a one-point increase in catastrophe losses [10] Business Line Data and Key Metrics Changes - Commercial lines grew net written premiums by 9% with a combined ratio of 92.9%, improving by 6.2 percentage points [13] - Personal lines grew net written premiums by 20%, with a combined ratio of 102%, which was 4.9 percentage points better than last year [13] - Excess and surplus lines grew net written premiums by 12% with a combined ratio of 91.1%, improving by 4.3 percentage points [13] Market Data and Key Metrics Changes - Consolidated property casualty net written premiums grew by 11% for the quarter, including a 16% growth in agency renewal premiums [10] - The average renewal price increases for most lines of business during Q2 were lower than in 2025 but still healthy, with commercial lines averaging near the high end of the mid-single-digit percentage range [12] Company Strategy and Development Direction - The company continues to focus on an agent-centered strategy, balancing profitability and growth while benefiting from a rebalanced investment portfolio [7] - The company is committed to profitable premium growth objectives supported by superior claim service and strong relationships with independent insurance agents [11] - The company has added an additional layer of $300 million on top of its property catastrophe reinsurance program to enhance coverage [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term direction and strategy of the insurance business, despite challenges from California wildfires [7] - The second half of the year is typically more profitable for the personal lines business, with an average improvement of eight points observed over the past five years [8] - Management noted that the underwriting profitability is expected to improve with average price increases and effective risk segmentation [12] Other Important Information - The company reported an 18% growth in investment income, reflecting efforts to rebalance the investment portfolio [16] - Cash flow from operating activities for the first six months of 2025 was $1.1 billion, down $44 million from a year ago due to increased catastrophe losses [18] - The company paid $133 million in dividends to shareholders during 2025, with no shares repurchased during the quarter [20] Q&A Session Summary Question: Differences in commercial lines pricing commentary - Management clarified that the pricing for commercial lines has moved to the high end of the mid-single digits, indicating a slight decrease from the first quarter [30] Question: Comfort around recent accident year releases for general liability - Management expressed confidence in the reserving process, noting consistent approaches and favorable reserve development for recent accident years [34][36] Question: Expense ratio guidance - Management indicated that while the expense ratio was better than expected, they aim to maintain it below 30% on an ongoing basis [45] Question: Changes in loss trends - Management reported no significant changes in loss trends during the quarter [68] Question: Growth prospects between property and casualty - Management noted that while the property market is softening, their small to middle market commercial package business continues to see healthy rates [70] Question: Competitive pressures in the property market - Management acknowledged increased competition in the property market but emphasized their disciplined underwriting approach [87][90]

Core Insights - Cincinnati Financial reported Q2 2025 earnings that significantly exceeded analysts' expectations, with non-GAAP earnings per share of $1.97 compared to a consensus of $1.41, and GAAP revenue of $3.25 billion versus an estimate of $2.53 billion [1][5][12] Financial Performance - Non-GAAP EPS increased by 52.7% year-over-year from $1.29 in Q2 2024 to $1.97 in Q2 2025 [2] - GAAP revenue rose by 28.0% year-over-year from $2.54 billion in Q2 2024 to $3.25 billion in Q2 2025 [2] - Net income (GAAP) more than doubled, increasing 119.6% year-over-year to $685 million [2][5] - Book value per share reached $91.46, an increase of 11.8% from $81.79 in Q2 2024 [2][11] Insurance Metrics - The combined ratio for property and casualty operations improved to 94.9% from 98.5% year-over-year, indicating better underwriting performance [2][6] - Despite improvements, year-to-date combined ratios remain elevated at 103.8%, reflecting ongoing challenges from weather-related events [6] - The property casualty business experienced 11% growth in net written premiums, driven by new agency appointments [6] Segment Performance - Commercial lines insurance recorded net written premiums of $1.29 billion, up 9% from Q2 2024, with a combined ratio improvement to 92.9% [7] - Personal lines business saw a 20% growth in net written premiums but faced a high combined ratio of 102.0% due to catastrophe losses [7] - Excess and surplus lines insurance achieved 12% premium growth with a combined ratio of 91.1% [9] Strategic Focus - Cincinnati Financial's strategy emphasizes strong relationships with independent agencies, diversification of product lines, careful investment management, and maintaining capital strength [3][4] - The company appointed 258 new agency relationships in the first half of 2025, contributing to premium growth [8] Investment Performance - Pre-tax investment income rose 18% year-over-year, primarily driven by a 24% increase in bond interest [11] - The investment portfolio grew to $29.57 billion, with nearly 40% allocated to stocks, contributing to unrealized gains and increased book value per share [11] Future Outlook - Management did not provide specific numeric guidance for the remainder of fiscal 2025 but emphasized a focus on disciplined pricing and underwriting profitability [12] - Investors are advised to monitor trends in catastrophe losses and their impact on personal insurance profitability [13]

Group 1 - Cincinnati Financial (NASDAQ: CINF) has shown strong performance over the past year, with a 17% increase in share value [1] - The company is actively expanding its personal lines business, with positive progress noted in Q2 results [1] - The analyst has over fifteen years of experience in making contrarian investment bets based on macro views and stock-specific turnaround stories [1]

Core Insights - Cincinnati Financial reported revenue of $2.78 billion for the quarter ended June 2025, reflecting a 15.3% increase year-over-year, with an EPS of $1.97 compared to $1.29 in the same quarter last year [1] - The reported revenue matched the Zacks Consensus Estimate, while the EPS exceeded expectations by 41.73% [1] Financial Performance Metrics - The combined ratio for Commercial Lines Insurance was 92.9%, significantly better than the average estimate of 99.1% from five analysts [4] - The combined ratio for Excess and Surplus Lines Insurance was 91.1%, outperforming the average estimate of 92.7% [4] - The combined ratio for Personal Lines Insurance was 102%, slightly better than the average estimate of 104.1% [4] - Loss and loss expenses for Commercial Lines Insurance were reported at 63.3%, compared to the average estimate of 68% [4] Revenue Breakdown - Earned premiums for Excess and Surplus Lines Insurance were $174 million, exceeding the average estimate of $171.2 million, marking a year-over-year increase of 15.2% [4] - Total revenues for Excess and Surplus Lines Insurance reached $175 million, compared to the average estimate of $172 million, representing a 15.1% year-over-year change [4] - Earned premiums for Property Casualty Insurance were $2.4 billion, matching the average estimate and showing a 15.5% increase year-over-year [4] - Earned premiums for Personal Lines Insurance were $804 million, surpassing the average estimate of $793.28 million, with a year-over-year increase of 27.4% [4] - Earned premiums for the Life Insurance Subsidiary were $83 million, slightly above the average estimate of $82.31 million, reflecting a 2.5% year-over-year change [4] - Earned premiums for Commercial Lines Insurance were $1.21 billion, slightly below the average estimate of $1.22 billion, indicating a 9.5% year-over-year increase [4] - Total earned premiums were reported at $2.48 billion, just below the average estimate of $2.49 billion, with a year-over-year change of 15% [4] - Fee revenues for Property Casualty Insurance were $3 million, slightly below the average estimate of $3.2 million, showing no year-over-year change [4] Stock Performance - Cincinnati Financial's shares returned +2.2% over the past month, while the Zacks S&P 500 composite increased by +4.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Cincinnati Financial (CINF) reported quarterly earnings of $1.97 per share, exceeding the Zacks Consensus Estimate of $1.39 per share, and showing an increase from $1.29 per share a year ago, representing an earnings surprise of +41.73% [1][2] Financial Performance - The company posted revenues of $2.78 billion for the quarter ended June 2025, slightly missing the Zacks Consensus Estimate by 0.14%, compared to $2.41 billion in the same quarter last year [2] - Over the last four quarters, Cincinnati Financial has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Cincinnati Financial shares have increased by approximately 4% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.62 on revenues of $2.84 billion, and for the current fiscal year, it is $5.28 on revenues of $11.14 billion [7] - The outlook for the insurance industry, particularly the Property and Casualty sector, is currently in the top 35% of Zacks industries, suggesting a favorable environment for stock performance [8]

Part I – Financial Information [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Cincinnati Financial Corporation as of June 30, 2025, and for the three and six-month periods then ended, prepared in conformity with U.S. GAAP, including balance sheets, statements of income, comprehensive income, shareholders' equity, cash flows, and accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$38.84 billion** from **$36.50 billion**, driven by investments, while liabilities grew to **$24.54 billion** and shareholders' equity rose to **$14.30 billion** Condensed Consolidated Balance Sheets (June 30, 2025 vs. Dec 31, 2024) | (Dollars in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total investments** | $29,569 | $28,378 | | **Total assets** | $38,842 | $36,501 | | **Total liabilities** | $24,541 | $22,566 | | **Total shareholders' equity** | $14,301 | $13,935 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income surged to **$685 million** in Q2 2025 due to investment gains, but decreased to **$595 million** for H1 2025 compared to the prior year, primarily from lower net investment gains Condensed Consolidated Statements of Income (Q2 & H1 2025 vs 2024) | (Dollars in millions, except per share data) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $3,248 | $2,544 | $5,814 | $5,479 | | Net Income | $685 | $312 | $595 | $1,067 | | Net income — diluted (per share) | $4.34 | $1.98 | $3.77 | $6.77 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$1.05 billion** for H1 2025, with **$614 million** used in investing and **$425 million** in financing, resulting in a **$12 million** increase in cash and equivalents Condensed Consolidated Statements of Cash Flows (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,051 | $1,095 | | Net cash used in investing activities | $(614) | $(740) | | Net cash used in financing activities | $(425) | $(491) | | Net change in cash and cash equivalents | $12 | $(136) | | Cash and cash equivalents at end of period | $995 | $771 | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed disclosures supporting the condensed consolidated financial statements, covering accounting policies, investment portfolio, fair value measurements, loss reserves, and segment information - The company's investment portfolio is primarily composed of fixed-maturity and equity securities, with fair values of **$17.08 billion** and **$11.65 billion**, respectively, at June 30, 2025[15](index=15&type=chunk) - For the six months ended June 30, 2025, the company experienced **$154 million** of favorable development on prior accident year property casualty loss reserves[47](index=47&type=chunk) - The company operates in five reporting segments: Commercial lines insurance, Personal lines insurance, Excess and surplus lines insurance, Life insurance, and Investments[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and operations, covering corporate highlights, segment results, investment performance, liquidity, and the significant impact of catastrophe losses on property and casualty underwriting [Corporate Financial Highlights](index=37&type=section&id=Corporate%20Financial%20Highlights) Net income surged to **$685 million** in Q2 2025 but fell **44%** to **$595 million** for H1 2025 due to lower investment gains and underwriting income, while the value creation ratio decreased to **4.6%** and the quarterly dividend increased to **$0.87** per share Key Financial Highlights (H1 2025 vs H1 2024) | (Dollars in millions, except per share data) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Earned premiums | $4,824 | $4,227 | 14% | | Net income | $595 | $1,067 | (44%) | | Net income per share—diluted | $3.77 | $6.77 | (44%) | - The value creation ratio, a primary performance metric, decreased to **4.6%** for H1 2025 from **8.2%** in H1 2024, primarily due to reduced net gains from the investment portfolio and an underwriting loss in insurance operations[109](index=109&type=chunk) - The board of directors increased the regular quarterly dividend to **$0.87** per share, setting the stage for the 65th consecutive year of increasing cash dividends[107](index=107&type=chunk) [Financial Results](index=41&type=section&id=Financial%20Results) This section details segment operating results, highlighting a **$170 million** consolidated property and casualty underwriting loss in H1 2025 due to increased catastrophe losses, while Commercial lines remained profitable, Life insurance profit declined, and Investments saw income growth offset by lower gains [Consolidated Property Casualty Insurance Highlights](index=41&type=section&id=Consolidated%20Property%20Casualty%20Insurance%20Highlights) P&C operations recorded a **$170 million** underwriting loss in H1 2025, a significant shift from a **$166 million** profit in H1 2024, primarily due to **$904 million** in catastrophe losses, pushing the combined ratio to **103.8%** Consolidated P&C Insurance Results (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Earned premiums | $4,661 | $4,067 | | Underwriting profit (loss) | $(170) | $166 | | Combined ratio | 103.8% | 96.1% | | Catastrophe loss ratio | 18.4% | 8.6% | - The H1 2025 underwriting loss was driven by a **$501 million** increase in current accident year catastrophe losses, mostly from the January 2025 wildfires in southern California[119](index=119&type=chunk) - Net written premiums grew **11%** in H1 2025, driven by a **15%** increase in agency renewal premiums, reflecting continued price increases[128](index=128&type=chunk)[129](index=129&type=chunk) [Commercial Lines Insurance Results](index=47&type=section&id=Commercial%20Lines%20Insurance%20Results) The Commercial Lines segment's underwriting profit grew to **$184 million** in H1 2025, with the combined ratio improving to **92.4%**, driven by premium growth, lower catastrophe losses, and favorable reserve development Commercial Lines Results (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Earned premiums | $2,391 | $2,189 | | Underwriting profit | $184 | $49 | | Combined ratio | 92.4% | 97.9% | - Average renewal price increases in Q2 2025 were in the high-single-digit range for commercial casualty and property, and mid-single-digits for commercial auto[147](index=147&type=chunk) [Personal Lines Insurance Results](index=50&type=section&id=Personal%20Lines%20Insurance%20Results) The Personal Lines segment incurred a **$371 million** underwriting loss in H1 2025, with the combined ratio deteriorating to **124.9%** due to catastrophe losses, despite **17%** growth in net written premiums from rate increases Personal Lines Results (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Earned premiums | $1,502 | $1,219 | | Underwriting loss | $(371) | $(5) | | Combined ratio | 124.9% | 100.6% | | Catastrophe loss ratio | 40.0% | 15.0% | - Reinsurance reinstatement premiums related to the California wildfires negatively impacted the segment by **$64 million** in H1 2025[170](index=170&type=chunk) [Excess and Surplus Lines Insurance Results](index=54&type=section&id=Excess%20and%20Surplus%20Lines%20Insurance%20Results) The E&S segment's underwriting profit increased **80%** to **$36 million** in H1 2025, with the combined ratio improving to **89.8%**, driven by **13%** premium growth and favorable reserve development E&S Lines Results (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Earned premiums | $336 | $290 | | Underwriting profit | $36 | $20 | | Combined ratio | 89.8% | 93.7% | - New business written premiums grew **25%** in H1 2025 compared to H1 2024[182](index=182&type=chunk) [Life Insurance Results](index=57&type=section&id=Life%20Insurance%20Results) The Life Insurance segment's profit decreased to **$28 million** in H1 2025 due to actuarial assumption changes, despite a **2%** increase in earned premiums to **$163 million** and a **1%** rise in net in-force policy face amounts to **$85.5 billion** Life Insurance Results (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Earned premiums | $163 | $160 | | Life insurance segment profit | $28 | $32 | [Investments Results](index=58&type=section&id=Investments%20Results) The Investments segment's pretax profit fell **23%** to **$908 million** in H1 2025, as a **16%** increase in investment income was offset by a **46%** decrease in net investment gains, though new fixed-maturity purchases yielded **5.82%** Investments Results (Six months ended June 30) | (Dollars in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total investment income, net of expenses | $565 | $487 | | Investment gains and losses, net | $406 | $749 | | Investments profit, pretax | $908 | $1,174 | - The average pretax yield on new fixed-maturity securities acquired in H1 2025 was **5.82%**, compared to an average yield of **4.98%** on securities expected to mature through 2027[199](index=199&type=chunk)[201](index=201&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity and capital position with **$14.3 billion** in shareholders' equity and a **5.4%** debt-to-total-capital ratio, supported by positive operating cash flow and ample dividend capacity from its lead insurance subsidiary - The debt-to-total-capital ratio was **5.4%** at June 30, 2025, significantly below the **35%** covenant threshold[225](index=225&type=chunk) - Cash flow from property casualty underwriting was **$506 million** for H1 2025, down from **$723 million** in H1 2024, reflecting higher loss payments[223](index=223&type=chunk) - The company paid **$258 million** in cash dividends to shareholders during the first six months of 2025[234](index=234&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's market risk exposure through its **$28.8 billion** investment portfolio, primarily interest rate risk for fixed maturities and market price risk for equities, with a hypothetical **100 basis point** interest rate increase decreasing fixed-maturity fair value by **5.5%** Investment Portfolio Composition (Fair Value) | (Dollars in millions) | At June 30, 2025 | At December 31, 2024 | | :--- | :--- | :--- | | Taxable fixed maturities | $13,166 | $12,243 | | Tax-exempt fixed maturities | $3,911 | $3,939 | | Common equities | $11,309 | $10,836 | | Nonredeemable preferred equities | $340 | $349 | | Short-term investments | $100 | $298 | | **Total** | **$28,826** | **$27,665** | Interest Rate Sensitivity on Fixed-Maturity Portfolio | (Dollars in millions) | -100 bps | Current Fair Value | +100 bps | | :--- | :--- | :--- | :--- | | At June 30, 2025 | $17,985 | $17,077 | $16,093 | - At June 30, 2025, the fixed-maturity portfolio had net unrealized losses of **$458 million**, an improvement from **$553 million** at year-end 2024, primarily due to a decrease in U.S. Treasury yields[266](index=266&type=chunk)[274](index=274&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[277](index=277&type=chunk) - No changes in internal controls over financial reporting occurred in Q2 2025 that have materially affected, or are reasonably likely to materially affect, these controls[277](index=277&type=chunk) Part II – Other Information [Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that neither it nor any of its subsidiaries are involved in any litigation believed to be material, other than ordinary, routine litigation that is incidental to the nature of its business - The company is not involved in any material litigation outside of ordinary course of business[280](index=280&type=chunk) [Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) The company's risk factors have not materially changed from its 2024 Form 10-K, though recent international trade policy changes and tariffs could impact inflation, supply chains, loss costs, and premiums - Risk factors have not materially changed from the 2024 Form 10-K[281](index=281&type=chunk) - A recent risk consideration is the impact of international trade policy changes and tariffs on inflation and supply chains, which could affect loss costs and premiums[282](index=282&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell unregistered equity securities or repurchase shares in Q2 2025, with **5,314,506** shares remaining available for purchase under existing authorization Share Repurchases in Q2 2025 | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | April 1-30, 2025 | — | $ — | | May 1-31, 2025 | — | $ — | | June 1-30, 2025 | — | $ — | - As of June 30, 2025, **5,314,506** shares may yet be purchased under the company's repurchase programs[283](index=283&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) The company discloses that neither the company nor any of its officers or directors adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the most recent fiscal quarter - No officer or director adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[285](index=285&type=chunk) [Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Amended and Restated Articles of Incorporation, certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002, and Interactive Data Files (XBRL) - Filed exhibits include Amended and Restated Articles of Incorporation, CEO/CFO certifications (SOX 302 and 906), and XBRL data files[287](index=287&type=chunk)