CINCINNATI FINANCIAL CORPCINF
CINCINNATI FINANCIAL CORP Fair Value Disclosure
Fair Value Measurements
Fair Value Hierarchy
The fair value hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest observable input that has a significant impact on fair value measurement is used. Our valuation techniques have not changed from those used at December 31, 2024, and ultimately management determines fair value. Financial instruments reported at fair value in our consolidated financial statements are categorized based upon the following characteristics or inputs to the valuation techniques:
•Level 1 – Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in active markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities.
•Level 2 – Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets and liabilities that are actively traded. This also includes pricing models for which the inputs are corroborated by market data.
The technique used for the Level 2 fixed-maturity securities is the application of market-based modeling. The inputs used for all classes of fixed-maturity securities listed in the table below include relevant market information by asset class, trade activity of like securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates, U.S. Treasury or swap curves, yield to maturity and economic events. Specific to asset-backed securities, key inputs also include prepayment and default projections based on performance of the underlying collateral and current market data. Level 2 fixed-maturity securities are priced by a nationally recognized pricing vendor.
The Level 2 nonredeemable preferred equities technique used is the application of market-based modeling. The inputs used, similar to those used by the pricing vendor for our fixed-maturity securities, include relevant market information, trade activity of like securities, yield to maturity, corporate action notices and economic events. Level 2 nonredeemable preferred equities are priced by a nationally recognized pricing vendor.
•Level 3 – Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include the following:
◦Quotes from brokers or other external sources that are not considered binding;
◦Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price; or
◦Quotes from brokers or other external sources where the inputs are not deemed observable.
The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at December 31, 2025 and 2024. We do not have any liabilities carried at fair value.
| (Dollars in millions) | Level 1 | Level 3 | ||||||||||||||||||||||||
| At December 31, 2025 | Level 2 | Total | ||||||||||||||||||||||||
| Fixed maturities, available for sale: | ||||||||||||||||||||||||||
| Corporate | $ | — | $ | 9,711 | $ | — | $ | 9,711 | ||||||||||||||||||
| States, municipalities and political subdivisions | — | 4,919 | — | 4,919 | ||||||||||||||||||||||
| Government-sponsored enterprises | — | 2,359 | — | 2,359 | ||||||||||||||||||||||
| Asset-backed | — | 797 | — | 797 | ||||||||||||||||||||||
| United States government | 313 | — | — | 313 | ||||||||||||||||||||||
| Foreign government | — | 24 | — | 24 | ||||||||||||||||||||||
| Subtotal | 313 | 17,810 | — | 18,123 | ||||||||||||||||||||||
| Common equities | 12,373 | — | — | 12,373 | ||||||||||||||||||||||
| Nonredeemable preferred equities | — | 321 | — | 321 | ||||||||||||||||||||||
| Separate accounts taxable fixed maturities | 35 | 872 | — | 907 | ||||||||||||||||||||||
| Short-term investments | 148 | — | — | 148 | ||||||||||||||||||||||
| Top Hat savings plan mutual funds and common equity (included in Other assets) | 102 | — | — | 102 | ||||||||||||||||||||||
| Total | $ | 12,971 | $ | 19,003 | $ | — | $ | 31,974 | ||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Fixed maturities, available for sale: | ||||||||||||||||||||||||||
| Corporate | $ | — | $ | 8,380 | $ | — | $ | 8,380 | ||||||||||||||||||
| States, municipalities and political subdivisions | — | 4,721 | — | 4,721 | ||||||||||||||||||||||
| Government-sponsored enterprises | — | 2,274 | — | 2,274 | ||||||||||||||||||||||
| Asset-backed | — | 551 | — | 551 | ||||||||||||||||||||||
| United States government | 226 | — | — | 226 | ||||||||||||||||||||||
| Foreign government | — | 30 | — | 30 | ||||||||||||||||||||||
| Subtotal | 226 | 15,956 | — | 16,182 | ||||||||||||||||||||||
| Common equities | 10,836 | — | — | 10,836 | ||||||||||||||||||||||
| Nonredeemable preferred equities | — | 349 | — | 349 | ||||||||||||||||||||||
| Separate accounts taxable fixed maturities | — | 876 | — | 876 | ||||||||||||||||||||||
| Short-term investments | 298 | — | — | 298 | ||||||||||||||||||||||
| Top Hat savings plan mutual funds and common equity (included in Other assets) | 87 | — | — | 87 | ||||||||||||||||||||||
| Total | $ | 11,447 | $ | 17,181 | $ | — | $ | 28,628 | ||||||||||||||||||
We also held Level 1 cash and cash equivalents of $1.431 billion and $983 million at December 31, 2025 and 2024, respectively. Level 3 assets reported at fair value in our consolidated financial statements are not material, and therefore no further disclosures are provided.
Fair Value Disclosure for Assets and Liabilities Not Carried at Fair Value
The disclosures below are presented to provide information about the effects of current market conditions on financial instruments that are not reported at fair value in our consolidated financial statements.
The following table shows fair values of our note payable and long-term debt:
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Note payable | $ | — | $ | 25 | $ | — | $ | 25 | ||||||||||||||||||
6.900% senior debentures, due 2028 | — | 29 | — | 29 | ||||||||||||||||||||||
6.920% senior debentures, due 2028 | — | 416 | — | 416 | ||||||||||||||||||||||
6.125% senior notes, due 2034 | — | 404 | — | 404 | ||||||||||||||||||||||
| Total | $ | — | $ | 874 | $ | — | $ | 874 | ||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Note payable | $ | — | $ | 25 | $ | — | $ | 25 | ||||||||||||||||||
6.900% senior debentures, due 2028 | — | 29 | — | 29 | ||||||||||||||||||||||
6.920% senior debentures, due 2028 | — | 416 | — | 416 | ||||||||||||||||||||||
6.125% senior notes, due 2034 | — | 390 | — | 390 | ||||||||||||||||||||||
| Total | $ | — | $ | 860 | $ | — | $ | 860 | ||||||||||||||||||
Fair value of the note payable was determined based upon the outstanding balance at December 31, 2025 and 2024, because it is short term and tied to a variable interest rate. Fair value of the long-term debt was determined under the fair value measurements and disclosure accounting rules based on market pricing of similar debt instruments that are actively traded. We determine fair value for our debt the same way that we value corporate fixed maturities in our investment portfolio. Fair value can vary with macroeconomic conditions. Regardless of the fluctuations in fair value, the outstanding principal amount of our long-term debt was $793 million at December 31, 2025 and 2024. None of the long-term debt is encumbered by rating triggers. The note payable and long-term debt were classified as Level 2 as an active market does not exist, but fair value is determined based on observable inputs.
The following table shows the fair value of our life policy loans, included in other invested assets:
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Life policy loans | $ | — | $ | — | $ | 43 | $ | 43 | ||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Life policy loans | $ | — | $ | — | $ | 41 | $ | 41 | ||||||||||||||||||
Outstanding principal and interest for these life policy loans totaled $38 million and $36 million at December 31, 2025 and 2024, respectively. To determine the fair value, we make the following significant assumptions: (1) the discount rates used to calculate the present value of expected payments are the risk-free spot rates, as nonperformance risk is minimal; and (2) the loan repayment rate by which policyholders pay off their loan balances is in line with past experience.
The following table shows fair value of our deferred annuities and structured settlements included in life policy and investment contract reserves:
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Deferred annuities | $ | — | $ | — | $ | 530 | $ | 530 | ||||||||||||||||||
| Structured settlements | — | 123 | — | 123 | ||||||||||||||||||||||
| Total | $ | — | $ | 123 | $ | 530 | $ | 653 | ||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Deferred annuities | $ | — | $ | — | $ | 561 | $ | 561 | ||||||||||||||||||
| Structured settlements | — | 127 | — | 127 | ||||||||||||||||||||||
| Total | $ | — | $ | 127 | $ | 561 | $ | 688 | ||||||||||||||||||
Recorded reserves for the deferred annuities were $554 million and $595 million at December 31, 2025 and 2024, respectively. Recorded reserves for the structured settlements were $111 million and $116 million at December 31, 2025 and 2024, respectively.
Fair values for deferred annuities were calculated based upon internally developed models because active markets and observable inputs do not exist. To determine the fair value, we made the following significant assumptions: (1) the discount rates used to calculate the present value of expected payments are the risk-free spot rates plus an A3 rated bond spread for financial issuers at December 31, 2025 and 2024, to account for nonperformance risk; (2) the rate of interest credited to policyholders is the portfolio net earned interest rate less a spread for expenses and profit; and (3) additional lapses occur when the credited interest rate is exceeded by an assumed competitor credited rate, which is a function of the risk-free rate of the economic scenario being modeled.
Fair values for structured settlements were calculated based on internally developed models which assume the discount rates used to calculate the present value of expected payments are the risk-free spot rates plus an A3 rated bond spread for financial issuers at December 31, 2025 and 2024, to account for nonperformance risk. The structured settlements were classified as Level 2, as an active market does not exist, but fair value is based on observable inputs.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.