Cincinnati buys additional $300m of property cat reinsurance at July renewal

Cincinnati Financial Corporation has announced that it purchased an additional layer on its property catastrophe reinsurance treaty with a limit of $300 million, effective July 1st, increasing the total limit from $1.5 billion to $1.8 billion.

According to the company’s quarterly report, Cincinnati retains 57.2% of losses between $1.5 billion and $1.8 billion.

The provisions of this additional layer are similar to those of the existing layers. Annual ceded premiums for the new coverage are estimated to be less than $5 million.

As of May 2025, so before the insurer purchased the additional $300 million of property cat limit, Cincinnati’s property cat reinsurance program saw the firm retain 100% of the first $200 million in losses for a single event, although the max exposure has now increased to $1.8 billion from $1.5 billion.

The company also renewed its reinsurance program for Cincinnati Re, effective June 1st, 2025. This program provides retrocession coverage with a variety of triggers, exclusions, and unique features.

The program includes property catastrophe excess-of-loss coverage for losses in excess of $90 million per occurrence, with a total available limit of $73 million per occurrence. Ceded premiums for this one-year renewal are estimated at approximately $16 million.

Additionally, the firm has reported that there were no material changes during Q2’25 to the estimated $38 million recovery, as of March 31st, related to the California wildfires under the Cincinnati Re only program, effective June 1st, 2024, which expired during Q2.

Cincinnati stated, “Other written premiums include premiums ceded to reinsurers as part of our reinsurance ceded program. A decrease in ceded premiums increased net written premiums by $4 million for the second quarter and an increase in ceded premiums decreased net written premiums by $76 million for the first six months of 2025, compared with the same periods of 2024.

“Other written premiums for the first six months of 2025 included a net unfavourable amount of $52 million for reinsurance treaty reinstatement premiums related to the California wildfires, including a favourable $12 million for Cincinnati Re and an unfavourable $64 million for our personal lines insurance segment.”

Cincinnati added that catastrophe losses contributed 12.2 and 18.4 percentage points to the combined ratio for the second quarter and first half of 2025, respectively, compared with 11.2 and 8.6 points in the same periods of 2024.

There were no material changes in Q2’25 to the company’s estimated ultimate losses related to the California wildfires.

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