Cincinnati Financial (CINF) Q3 2026 Earnings Call: Combined Ratio von 90,9 % bei verlangsamtem Prämienwachstum

Die Cincinnati Financial Corporation (NASDAQ: CINF) berichtete für das dritte Quartal 2026 trotz wesentlich höherer Katastrophenschäden von einer starken versicherungstechnischen Profitabilität. Das Prämienwachstum verlangsamte sich, da der Versicherer seine Preisdisziplin und selektive Risikozeichnung beibehielt.

Wichtigste Erkenntnisse

• Der Nettogewinn im dritten Quartal belief sich auf 459 Millionen US-Dollar, während der Non-GAAP-Betriebsgewinn im Jahresvergleich um 6 Millionen US-Dollar auf 443 Millionen US-Dollar sank, trotz eines Anstiegs der Katastrophenschäden um 146 Millionen US-Dollar nach Steuern.
• Die Combined Ratio der Schaden- und Unfallversicherung lag bei 90,9 %, ein Anstieg um 2,7 Prozentpunkte. Katastrophenschäden trugen 7,0 Punkte mehr bei als im Vorjahresquartal.
• Die konsolidierten gebuchten Nettoprämien in der Schaden- und Unfallversicherung stiegen um 2 %. Das Management bezeichnete die Verlangsamung eher als Normalisierung nach einem ungewöhnlich starken Wachstum und nicht als Trendwende.
• Die Kapitalanlageerträge stiegen um 10 %, unterstützt durch den operativen Cashflow und höhere Anleiheerträge. Die Zinserträge aus Anleihen legten um 11 % zu.
• Steigende Zinsen führten zu einem Bewertungsverlust von rund 1,2 Milliarden US-Dollar vor Steuern im Anleiheportfolio, was zu einer negativen vierteljährlichen Wertschöpfungsquote von 2,1 % beitrug.
• Cincinnati Financial gab bekannt, dass die KI-gestützte Bearbeitung die Zustellung per E-Mail eingereichter Neugeschäftsanträge in den Sparten Commercial Lines und Excess and Surplus Lines um mehr als 30 % beschleunigt hat.

Wichtigste Finanzdaten

Geschäfts- und operative Entwicklung

Das Segment Commercial Lines verzeichnete eine Combined Ratio von 92,8 %, 1,7 Punkte höher im Jahresvergleich, wovon 4,3 Punkte auf gestiegene Katastrophenschäden entfielen. Die gebuchten Nettoprämien wuchsen um weniger als 1 %. Laut Management war der Wettbewerb bei Großkunden am intensivsten, während das kleine und mittlere Gewerbegeschäft weiterhin wettbewerbsintensiv, aber allgemein rational blieb.

Die gebuchten Nettoprämien im Segment Personal Lines stiegen um 1 %, wobei niedrigere Neugeschäftsprämien die schwächere Marktlage widerspiegeln. Die Combined Ratio lag bei 90,3 %, ein Anstieg um 2,1 Punkte trotz eines Anstiegs um 12,1 Punkte durch Katastrophenschäden. Etwa 60 % des Personal-Lines-Portfolios entfallen inzwischen auf vermögende Kunden (High-Net-Worth), und das Management erwartet, dass das Privatkundengeschäft im Laufe der Zeit einen größeren Anteil einnehmen wird.

Excess and Surplus Lines steigerte die gebuchten Nettoprämien um 5 % und erzielte eine Combined Ratio von 89,4 %. Die Prämien von Cincinnati Re stiegen um 34 % bei einer Combined Ratio von 94,8 %. Cincinnati Global wuchs um 13 % und erzielte eine Combined Ratio von 70,7 %.

Die Lebensversicherungstochter meldete ein Nettogewinnwachstum von 11 %, während die verdienten Prämien in der Risiko-Lebensversicherung um 2 % stiegen.

Die durchschnittlichen Preiserhöhungen bei Verlängerungen blieben positiv, verlangsamten sich jedoch gegenüber dem zweiten Quartal. Commercial Lines und Excess and Surplus Lines verzeichneten Zuwächse im niedrigen einstelligen Bereich. Die Preise im Bereich Wohngebäudeversicherung stiegen um einen hohen einstelligen Prozentbereich, während die KFZ-Versicherung im mittleren einstelligen Prozentbereich zulegte.

Mehr als die Hälfte der Kombinationspolicen im Bereich Commercial Lines wird auf dreijähriger Basis abgeschlossen. Laut Cincinnati Financial haben diese Policen historisch bessere versicherungstechnische Ergebnisse erzielt als Einjahresverträge und können Schutz vor Abwärtsrisiken in einem Markt mit nachgebenden Preisen bieten.

Prognose des Managements

Das Management gab keine zahlenmäßige Prognose für das Prämienwachstum ab. Das Unternehmen erklärte, dass Profitabilität Vorrang vor Wachstum habe und dass es Policen weiterhin individuell zeichnen und bepreisen werde.

Cincinnati Financial beabsichtigt, darauf hinzuarbeiten, die versicherungstechnische Kostenquote unter 30 % zu halten und gleichzeitig weiterhin in Technologie und andere geschäftliche Kapazitäten zu investieren. Die versicherungstechnische Kostenquote der Schaden- und Unfallversicherung im dritten Quartal stieg um 0,4 Punkte, hauptsächlich aufgrund des zeitlichen Anfalls bestimmter Aufwendungen.

Das Management gab an, dass die Preisgestaltung in den meisten Hauptsparten den Schadentrends entsprach oder diese übertraf, mit Ausnahme der Unfallversicherung für Arbeitnehmer, während auch die Preise in der allgemeinen Haftpflichtversicherung unter Druck standen.

Risiken und zu beobachtende Bereiche

• Die Katastrophenschäden fielen wesentlich höher aus und erhöhten die vierteljährliche Combined Ratio im Vergleich zum Vorjahr um 7,0 Punkte.
• Das Management nannte den Missbrauch des Rechtssystems, Prozesskostenfinanzierung durch Dritte und erhöhte Unsicherheiten im Haftpflichtbereich als Gründe für die Beibehaltung vorsichtiger Annahmen bei den Rückstellungen.
• Der Wettbewerb intensiviert sich bei Großkunden im Bereich Commercial Lines und im mittelständischen Segment von Personal Lines.
• Die Unfallversicherung für Arbeitnehmer bleibt unter Preisdruck. Die Schadenquote für das laufende Schadensjahr lag bei 95,8 %, und das Management erklärte, dass dies keine Sparte sei, die das Unternehmen auf diesem Profitabilitätsniveau für weiteres Wachstum anstreben würde.
• Steigende Zinsen verringerten die Bewertung des Anleiheportfolios vor Steuern im Laufe des Quartals um rund 1,2 Milliarden US-Dollar. Zum Quartalsende wiesen festverzinsliche Wertpapiere einen nicht realisierten Nettoverlust von 1,5 Milliarden US-Dollar auf.

Höhepunkte der Analysten-Fragerunde

Das Management wies die Darstellung zurück, dass die Haftpflichtrückstellungen übermäßig konservativ seien, und beschrieb seinen Ansatz als umsichtig und konsequent. Das Unternehmen strebt an, die Nettorückstellungen für Schäden und Schadenregulierungskosten in der oberen Hälfte der aktuarisch geschätzten Spanne zu halten. Die gewerbliche Haftpflicht wies im Quartal keine wesentliche Reserveentwicklung für Vorjahre auf.

Cincinnati Financial erklärte zudem, dass Entscheidungen über Rückstellungen unabhängig von seinem Ziel für die Wertschöpfungsquote sind. In den ersten neun Monaten stockte das Unternehmen die Schaden- und Schadenregulierungskostenrückstellungen in der Schaden- und Unfallversicherung um 1,26 Milliarden US-Dollar auf, einschließlich 997 Millionen US-Dollar an IBNR-Rückstellungen.

Bezüglich des Wachstums im Bereich Commercial Lines bezeichnete das Management die aktuellen Trends als Normalisierung nach einer außergewöhnlich starken Expansion. Die unternehmensweiten gebuchten Nettoprämien verdoppelten sich von Ende 2018 bis Ende 2025, während die durchschnittliche jährliche Wachstumsrate über fünf Jahre bei 10,4 % lag.

Hinsichtlich der Kapitalallokation erklärte das Management, dass höhere Zinsen die Möglichkeit boten, langfristig höhere Renditen bei festverzinslichen Wertpapieren zu sichern. Das Unternehmen reduzierte zudem nach einer starken Wertentwicklung ausgewählte Aktienpositionen und legte einen Teil der Erlöse wieder in Anleihen an. Die Nettokäufe festverzinslicher Wertpapiere beliefen sich im dritten Quartal auf 1,1 Milliarden US-Dollar und in den ersten neun Monaten des Jahres 2026 auf 2 Milliarden US-Dollar.

Vollständiges Transkript der Telefonkonferenz

Vollständiges Transkript der Telefonkonferenz

Ausführungen des Managements

Operator

Good morning, and welcome to the Cincinnati Financial Corporation Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

As a reminder, this conference call is being recorded. I would now like to turn the call over to Andy Gosses, Investor Relations Officer.

Thank you. Please go ahead.

Unknown Executive

Good morning, and thank you for joining us for our third quarter 2026 earnings conference call. Late yesterday, we issued the 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.Cincinnati.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; Chief Investment Officer, Steve Saloria; and Cincinnati Insurance's Chief Claims Officer, Marc Schambow;, 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 the call over to Steve.

Stephen Spray

Good morning, and thank you for joining us today to hear more about our results. We had another quarter of strong operating performance that reinforces our confidence in the long-term direction of our business. Our insurance operations produced excellent underwriting results even as the property casualty combined ratio increased from last year's exceptional level. Net income of $459 million for the third quarter of 2026, included recognition of less than $1 million on an after-tax basis for the increase in fair value of equity securities still held. Non-GAAP operating income was $443 million for the quarter, down only $6 million from a year ago despite catastrophe losses that were $146 million higher on an after-tax basis.

The 90.9% third quarter 2026 property casualty combined ratio increased by 2.7 percentage points compared with third quarter last year, including an increase of 7.0 points for catastrophe losses. Our current accident year combined ratio before catastrophe losses for the first 9 months of 2026 was 86.5%, improving slightly compared with the 86.7% reported through the first 9 months of 2025.

Moving to premium growth. Our consolidated property casualty net written premiums grew 2% for the quarter. Premium growth moderated as expected, reflecting our commitment to pricing discipline, careful risk selection and segmentation on a policy-by-policy basis.

Estimated average renewal price increases for most lines of business during the third quarter were lower than the second quarter of 2026, but still at levels we believe were healthy. Commercial Lines and excess and surplus lines averaged increases in the low single-digit percentage range. Our Personal Lines segment included homeowner increases in the high single-digit percentage range and personal auto increases in the mid-single-digit range.

Although market conditions continue to be challenging, we remain confident that our diverse product portfolio, exceptional service and strong relationships with independent insurance agents provide a solid foundation for long-term success. Next, I'll highlight third quarter performance by Insurance segment compared with a year ago.

The Commercial Lines combined ratio was 92.8%, an increase of 1.7 percentage points, including 4.3 points from higher catastrophe losses. Net written premiums grew less than 1%. Personal Lines grew net written premiums 1%, impacted by lower new business premiums that reflect continued softening market conditions. The combined ratio for personal lines was 90.3%, just 2.1 percentage points higher than last year despite an increase of 12.1 points from higher catastrophe losses.

Excess and surplus lines grew net written premiums 5% and produced another excellent combined ratio of 89.4%. Cincinnati Re and Cincinnati Global, both contributed meaningfully to premium growth and continue to provide diversification benefits for our insurance operations. Cincinnati Re's third quarter 2026 net written premiums increased by 34%. Its combined ratio was 94.8%. Cincinnati Global, grew 13% while maintaining an impressive 70.7% combined ratio.

Our life insurance subsidiary had another solid quarter, including 11% net income growth. In addition, term life insurance earned premiums grew 2%. Now I'll give a summary of our primary measure of long-term financial performance, the value creation ratio. Our VCR was negative 2.1% for the third quarter of 2026. Net income before investment gains or losses for the quarter contributed 2.7%. Overall valuation of our investment portfolio and other items contributed negative 4.8%.

Before I hand the call to Mike, I wanted to give you an update on our ongoing investments in data, technology and artificial intelligence. We continue to prioritize applications of generative and agentic AI that can improve the efficiency and effectiveness of our associates. We want to optimize their efforts, allowing them to add more value to our business. deepening relationships, sharing expertise and focusing their energy on the most complex insurance and technology decisions.

I'll give you 2 examples of the AI applications that are in production today that we believe have already and will continue to produce meaningful benefits across the organization. Many other use cases exist in varying stages of development from design all the way through production. First, our AI Center of Excellence is harnessing cloud provider large language models to create reusable internal capabilities that can be adapted for additional business areas where the use case and supporting evidence are strong.

So far, we've developed 7 priority -- excuse me, 7 proprietary intelligent assistance for associates to use in areas such as underwriting, claims and loss control. These assistance along with other tools we've deployed, reduced the time spent on information-intensive tasks such as summarizing underwriting and claims files and understanding internal appetite and risk guidance. Second, we are applying automation and AI-enabled capabilities within selected new business and commercial service workflows.

More specifically, we are using these capabilities to process new business submissions received by e-mail, enabling us to accelerate delivery by more than 30% across our Commercial Lines and Excess and Surplus Lines businesses. Our approach is disciplined. We establish a baseline, evaluate the operating results, ensure we have strong governance and controls and an expanded capability only where the evidence supports it. Because our agents tell us that speed to quote is a key variable as we compete for business, we believe reducing the average time to quote will positively support our continued profitable growth.

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

Michael J. Sewell

Thank you, Steve, and thanks to all of you for joining us today. Investment income growth of 10% in the third quarter of '26 contributed nicely to our operating results, driven by strong cash flow and insurance operations -- from insurance operations. .

Bond interest income grew 11%, and the net purchases of fixed maturity securities totaled $1.1 billion for the quarter and $2 billion for the first 9 months of the year. The third quarter pretax average yield of 5.04% for the fixed maturity portfolio was down 6 basis points compared with last year. The average pretax yield for the total of purchased taxable and tax-exempt bonds during the third quarter of this year was 5.93%.

Dividend income was down 4% for the quarter. Net sales of equity securities totaled $52 million for the quarter and $784 million on a year-to-date basis. Valuation changes in aggregate for the third quarter were slightly favorable for our equity portfolio and unfavorable due to rising interest rates for our bond portfolio. Before tax effects, the net gain was $6 million for the equity portfolio, while the net loss was approximately $1.2 billion for the bond portfolio.

At the end of the third quarter, the total investment portfolio net appreciated value was approximately $7.4 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 $1.5 billion.

Cash flow continued to benefit investment income growth. Cash flow from operating activities for the first 9 months of 2026 was $2.1 billion, a decrease of less than 1% from a year ago. Moving to expense management. Our goal is to balance making strategic investments in our business while also controlling expenses. The third quarter 2026 property casualty underwriting expense ratio increased by 0.4 percentage points due primarily to timing of recognition of certain expenses.

Regarding loss reserves, our approach remains consistent and aims in 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 updated estimated ultimate losses and loss expenses by accident year and line of business.

For the first 9 months of 2026, our net addition to property casualty loss, loss expense reserves was $1.26 billion, including $997 million for the IBNR portion. During the third quarter, we experienced $94 million of property casualty net favorable reserve development on prior accident years have benefited the combined ratio by 3.6 percentage points.

For the commercial casualty line of business, there was no material reserve development for any prior accident year during the quarter. On an outline basis by accident year, net favorable reserve development for the first 9 months of 2026 included favorable $203 million for '25, favorable $70 million for '24 and an unfavorable $56 million in aggregate for accident years prior to '24.

I'll conclude my comments with third quarter capital management highlights. We paid $142 million in dividends to shareholders. During the quarter, we repurchased an immaterial number of shares. We believe our strong balance sheet continues to provide substantial flexibility and supports our financial strength. Parent company cash and marketable securities at quarter end was $6.1 billion. Debt to total capital remained under 10%.

And year-to-date, VCR was 5.8%. And our quarter end book value was $105.42 per share, with $16 billion of GAAP consolidated shareholders' equity, providing plenty of capacity for the profitability growth of our insurance operations. Now I'll turn the call back over to Steve.

Stephen Spray

Thanks, Mike. Before we open the call for questions, I'd like to take a moment to thank and recognize Chief Claims Officer, Marc Schambow, for his nearly 40 years of dedication to Cincinnati Insurance, our agents and our policyholders. As most of you know, this is Mark's final earnings call before his January retirement. Since Mark took the reins of our claims operations, we faced some of the worst catastrophe events in our company's history, including Winter Storm Elliott, Hurricane Helene and the California wildfires.

Mark has handled it all with unshakable confidence. He has continued to lead with empathy nurturing our belief in responding person to person as we've made bad days better for countless families and businesses in their time of crisis. We are grateful for his contributions, and we wish him the best in this next chapter of life.

As a reminder, with Mark, Mike and me today are Steve Johnston, Steve Solaria and Andy Schnell. Julianne, please open the call for questions.

Operator

[Operator Instructions] Our first question today comes from Michael Phillips from Oppenheimer.

Fragen und Antworten

Michael Phillips

Let me start with the commercial casualty again for the first question. Your loss pick is kind of in line with the first half of the year and maybe kind of where you thought it would be at the end of 2025. I guess I just want to see and you talked about conservative prudence for potential severity rises. Have you seen anything in claims activity that would support that yet? Or is there -- are you still keeping elevated just in case of and maybe just being conservative?

Stephen Spray

Well, I wouldn't call it conservative, Mike, I'd call it prudent. We take a consistent -- we talked about this a lot. We took -- take a consistent process. We've got a consistent group, and it is management's best estimate of ultimate losses, obviously. I think I have not seen -- I don't think we've seen anything out there on the casualty front that would be a reversal from a lot of the legal system abuse, the challenges that we faced, third-party litigation funding, just increased activity there.

I think there's enough uncertainty enough variability. We're just being prudent. And as you've noticed that accident year pick through 9 months has stayed pretty consistent throughout the year and is right there with the PIC that we had at the end of 2025.

Michael Phillips

Okay, Steve. And maybe staying with Commercial Lines for a second on the expense ratio side. You've talked about investments and like we're going to continue, I guess, with all your AI enhancements and Mike gave some examples in commercial lines in his opening comments. I guess, given top line pressure is probably going to last through at least the next year, is there a ceiling you think we could expect on the expense ratio in commercial lines? Or just how do you think about the pressure there?

Michael J. Sewell

We've worked extremely hard -- great question. We've worked extremely hard to get the expense ratio under 30%. And I think we're going to continue to do that. That's a great observation as -- the top line is going to be growing. We're still going to do everything we can to control expenses. We've got to invest in the business, et cetera. And we will be working very diligently to keep it under the 30%.

Operator

Our next question comes from Gregory Peters from Raymond James.

Charles Peters

So I'm going to focus on the -- just the outlook for growth, lasering in or focusing on the Commercial Lines piece.

So just trying to see when we look forward, where you think the growth is going to come from, is it exposure growth with existing clients? Is it -- do you think new business is going to accelerate? Or maybe you can also come at it from just where are you seeing the most competition in commercial lines and where are the areas that you might be concerned about?

Michael J. Sewell

Yes. Thanks, Greg. We're still seeing the most pressure, I'd say, in commercial lines, the larger the premium, okay? So small to -- I'd say, small to midsize, the way we would define it business. It's competitive out there, but it still seems rational, where we're seeing the most aggressive or the most difficulty on the growth side would be in the larger account space. No real guidance going forward for you, Greg.

One thing I would -- maybe if you wouldn't mind, if I could just maybe expand on it a little bit. it's obvious the industry, they're slowing growth for us as well. But I'd like to kind of put it in context. The new business dollars on an absolute basis for us still remain very strong. I think what we're seeing, I would characterize as more of a normalization from really exceptionally strong growth. So not a reversal.

We're coming off a very, very hard market over the last few years, especially in personal lines. Just as a reminder, over the last 4 years, we've doubled our Personal Lines net written premiums. We've tripled it over the last 10 years. More broadly, since the end of 2018 to 2025, we doubled the company's net written premium. Our compounded annual growth rate over the last 5 years has been at 10.4%. So that's for the entire company. It's been 8.6% over the last 10 years.

And our combined ratio over that entire time has been in the mid-90s. We've not had 1 year in excess of 100. So I know there's a lot of talk about growth. We're focused on it. I think we've got a great business model. We've got great agents. We've got a great team. We've got a proven track record over a long period of time. So we're just going to keep, I hate to use the cliche, but just the blocking and tackling to get out in front of our agents, keep listening, keep servicing them, keep broadening our product portfolio and that would probably be my guidance for you on growth in the future. The one thing I can tell you is it is profit first. We're not going to just grow for the sake of growing. But over time, kind of from the -- what I shared, I think we've proven that we can grow through all market cycles.

Charles Peters

Yes. One of the things that I thought was pretty unique relative to a number of other companies over the last couple of years is your usage of multiyear policies. Can you give us an update on where you are, how that looks inside the book -- the total book of business where it's helping where maybe it's becoming less of an emphasis?

Michael J. Sewell

Yes, I think it's -- I think we've had the 3-year policy since I've been with the company for 35 years. I'm a huge fan of it on -- if you look at the -- if you look at our underwriting results, our underwriting performance, our 3-year policies outperform the 1 year from an underwriting. So our underwriters are the terms, conditions, the pricing, the intuition that they place on that 3-year policy, our results are better.

I think if you -- if I step up a little higher level, I've always looked at the 3-year policy. It's consistent with Cincinnati's long-term approach to everything. We want to make a commitment long term to our agents. We make long-term commitments to the great policyholders that we have. It -- if you look at the 3-year -- we write package business. And what we do is we're guaranteeing that the rate won't change on the property, the GL, the crime and the [ inland marine ]. Now the auto, the work comp, the umbrella, those are all subject to anniversary rate change.

But we're giving a 3-year commitment to that policyholder. It's on -- right now, it's over 50% or it's the majority of our policies in commercial lines. Package policies are on a 3-year basis, and we're committed to it. it will go up and down, I guess, as in policy count or package account based on market conditions. And if our underwriters feel like the pricing is getting a little too thin, they can't get the tighter terms and conditions as they feel like they need. That's when you might see a policy on a 1 year or if we've had some loss issues but we'll believe in the account, we may go year-to-year on that one just to get it through that period and then hopefully get them back on a 3-year contract.

Stephen Spray

You know what, Greg, I might just -- I might add 1 more thing that came into my mind is -- that's locked in, in a down market. It can protect us on the downside, too.

Charles Peters

That's what I was thinking, though.

Operator

Our next question comes from Mike Zaremski from BMO Capital Markets.

Michael Zaremski

Okay. I guess the first question is just kind of looking at the reserve release trend line and looking also at IBNR levels, which remain very high by one of recent historical standards, if you agree with that, maybe they should stay high for reasons you might want elaborate on. But is lowering IBNR levels a tool to help achieve kind of the value creation ratio goal going forward? I mean, said another way, have you guys been a bit too conservative on on reserves you feel?

Michael J. Sewell

Mike, that's a good question. And I would say, absolutely, we do not release reserves, set up reserves based on VCR or where that might end up. So it's an actuarial process. We follow actuarial methods, it's consistent, it's with the same actuary folks that are doing the work. So that is totally independent. So you kind of mentioned 2 things in there with the reserve development, IBNR. I would say for the reserve development for the quarter, 3.6 points. That was probably -- and it was just a little higher than our 5-year average which was 3.1 points of favorable development on average.

But when you look at it on a full year basis, we're at 2.8 points on a year-to-date basis so far through the 3 quarters. And if I look back at the last 5 years, that range has really been kind of in a 2% to 3% range. So year-to-date, we are within that average. I'd say for IBNR related to that. We still have uncertainty out there. You've got legal things going on, this and that. So we did add most of our IBNR is in the commercial casualty, which is not a surprise to you, as you've looked at our materials, but we will stay prudent.

We want to be in the upper half of the actuarial range. And you look back at the consistency for 30 years, we have been extremely consistent with how we reserve, what the process is, and we're very proud of that. It's a great question. I appreciate it, Mike.

Michael Zaremski

That's helpful. Maybe pivoting to some of the market dynamics on pricing power versus loss trend, I believe in the remarks earlier, you said that there's more pressure on kind of the larger account business. You guys have been through lots of cycles. But I think that over the last 10 years, you guys have grown into large account whereas you didn't have a lot of large account in the past. So just trying to tease out what percentage of the book is kind of what you define as larger and just -- in terms of the competitive environment, given the industry's very healthy profitability level, does it -- does this level of competition kind of make sense for pricing to start falling below loss trend from a kind of industry perspective?

Michael J. Sewell

Yes. Mike, no, as far as pricing on falling below loss trends. We've been pretty consistent there in that other than workers' compensation, we think -- and then I think general liability would be under pressure there, too, time will tell. But we think that on the other major lines of business, rate is meeting or exceeding loss trend. We're a package writer. As you know, we underwrite policy by policy, we price policy by policy.

So it -- I was just making a general statement as far as where we're just seeing a little more intense competition, other carriers. And all carriers, I think, really, when you get these larger accounts, they just get under more premium pressure. But I wouldn't think about a segment or at an account level that the pricing would fall below loss costs. We're underwriting and pricing policy by policy.

Michael Zaremski

Okay. Yes. Understood. I think I was multitasking. It was Hartford that just said that GL pricing was a bit below loss trends. So apologies.

Michael J. Sewell

No, yes, we're seeing -- like I said, we're not saying that. It's just -- it's under pressure.

Operator

Our next question comes from Josh Shanker from Bank of America.

Joshua Shanker

On that Hartford call, they talked a little bit about workers' comp margins changing. I realize you're not a big comp player. But I was looking at your comp numbers, and it reminded me that it seems there's been a change in how you are reserving for comp. Once upon time, you used to have an accident year loss ratio in the '70s, and there was less favorable development. Now it's being booked up in the mid-90s with lots of favorable development. Can you talk a little bit about the transition about what that accounting means and how we should understand it in terms of where we are in workers' comp and whatnot.

Stephen Spray

Josh, yes, no, there's not been any change in the consistency of the process there. I know what you're saying. It's just I think we look at frequency and severity, pure premium on every major line of business. And I think we just probably along with the rest of the industry just been a bit surprised in the -- the frequency and the severity over time. As you know, it's a long tail line. It can -- as you've seen in prior cycles, it can turn on you pretty quick.

So just maintain a consistent prudent process in the way we reserve. Workers' compensation, Josh, 15 years ago kind of happened to us. We're grew up in a monopolistic state here in Ohio. We don't -- obviously we don't write work comp in Ohio. We don't write work comp in California. We do not write workers' compensation in Florida. About 15 years ago, we got very deliberate about managing workers' compensation on all underwriting, pricing sophistication, loss control, claims management, and we're confident in our ability to write work comp business for our agents as part of the package. It's just that, that rate environment has been difficult over the last few years, and that's just put pressure on our ability to grow it.

And you mentioned, Josh, workers' compensation is now -- it's a little less than 5% of our total net written premiums in commercial lines.

Joshua Shanker

[indiscernible], but it does give me some insight on how you think about the reserves. I imagine that if you really thought the business had a loss ratio in the 90s, you wouldn't want to write it? Or am I thinking about this incorrectly?

Stephen Spray

No. I would -- I mean, if we really thought that the -- well, the loss ratio, yes, is in 90s that's correct. That wouldn't be something that we would be targeting to grow.

Joshua Shanker

And that's where your loss ratio is right now, no?

Stephen Spray

Yes. The accident year -- yes, our accident year right now is at 95.8%.

Joshua Shanker

And then that's your best estimate of where you think the market is right now, yes.

Michael J. Sewell

That is, Josh, where we think we are. But we follow a consistent process. Again, it's our reserving methodology. There's nothing that you're reading into that. It's a smaller line, it's $1 billion of reserves out of our $12.3 billion total reserves. So yes, it's something that we'll continue to look at when we allocate our capital to the various lines of business. .

Joshua Shanker

And if you indulge me with one unrelated question to that, you're appointing a lot of new agents that slowing, is there any indication that the agent appointments you're making today are the same more or less efficient than in the past of getting the agents to give you the proportion of their books that you're looking for?

Stephen Spray

Yes. Thanks, Josh. Yes, that's something we -- that's something we monitor very closely. As a matter of fact, we're just having a discussion on that this morning, and we're seeing a consistent approach over the long term, including the more recent years when we've picked up the pace of adding agencies. Now we add -- we're looking for in any communities, we're looking for a professional agency, an agency that is kind of a pillar in the community, does things the right way. They're seen as centers of influence, and that's what we're looking at are looking for, regardless of the size of the agency. So we'll appoint agencies, in some cases that are startups, they are smaller agencies, and we're obviously doing business with the largest brokers in the world as well.

So I think if anything, Josh, maybe that's what the dynamic that's moved around a little bit over the last several years is just the M&A activity on the agency front. But we're -- we underwrite each and every agency on its own merits, and we want every agency. I think another key point there is we want every agency that we appoint to get what we call the Cincinnati experience. So we get the entire field team they get the same -- they just get the same care, services and relationship building that we've provided to our agencies for years.

Operator

Our next question comes from Mike Zaremski from BMO Capital Markets.

Michael Zaremski

Great. I guess my follow-up, I don't think this was fully covered. It was kind of the personal lines competitive environment. Obviously, on a multiyear basis, you all have grown meaningfully. In the more recent quarters, we can see the trend. Just kind of wanted to further unpack kind of what the competitive environment looks here so we can better understand how to think about going forward.

Stephen Spray

Yes. Thanks, Mike. And you already mentioned it, and I talked about it earlier, just coming off an unprecedented hard market. I think new business and just net written premium growth has normalized from exceptionally high levels versus kind of a reversal. The middle-market personal line space, think replacement cost of the home, let's just call it, under $1 million and all that goes with that, that marketplace really plays out in the independent agency model too, through real-time raters or comparative raters. So it's a really competitive marketplace.

I think the key in the middle market space is that you have got to have sophisticated, segmented pricing algorithms really using the data and the analytics that you have that we have here in Cincinnati and other carriers do too. That's the key in that market through all market cycles. And then about 60% of our personal lines business now is high net worth and high net worth is certainly competitive. There are fewer participants there. I think entry is a little more difficult.

We got to really be able to provide the services and the things that, that segment needs. And we've proven that I think we -- if you asked our agents, we would be considered one of the premier private client underwriters in the business. And we're capable of writing some of the largest accounts in the United States in that ultra-high net worth space, too. So I think you've seen our book move more towards that ultra-high net worth. It doesn't take away one bit our commitment in the middle market space, but I think you can -- you'll continue to see that private client or high net worth will become a bigger and bigger portion of what we do.

Operator

Our next question comes from Meyer Shields from KBW.

Meyer Shields

I guess, first on commercial auto. So we've seen progress in the underlying loss ratio pretty much every quarter this year. And I'm wondering, is that a recalibration of earlier part... .

Stephen Spray

You broke up there on us, Meyer, it was commercial auto. And I think you said we're seeing good results there throughout the year. And I think you mentioned something about a recalibration. It's not a recalibration. Again, I think one of the keys for us is that we're a package and commercial lines were a package writer. The majority of what we do is small-to-midsized package business. I think our fleet that we ensure is a little more predictable, a little more consistent.

It's -- we're not into writing large trucking or transportation risks, we've been working hard on auto going back to probably 2016, 2017. I think we were early to the game there and seeing some trends and managed through all of that including a higher inflationary environment. The book was in a really good spot. And we felt a little pain from inflation, but I think we were able to act upon it pretty quickly, too. And just it's a challenging line that follows legal system abuse as well to an extent. So it's something we need to continue to watch, be prudent on. Obviously, it's shorter tail, but we feel good about where that auto book is. And it's just -- we'll stay prudent with it and hopefully keep getting the results we're getting.

Operator

Our last question will come from Fred Nelson a private investor.

Unknown Analyst

Everything I usually see has inflation to it. And if we particularly regarding health care, automobile. And I'm just curious on your investment portfolio, you seem to be exercising fixed income over the equity, the dividend and rising dividends. Maybe you could make a comment, it would be helpful.

Unknown Executive

Yes, Fred, this is Steve. We continue to play both sides of the marketplace, but there's no doubt with interest rates higher than they've been in the last 15, 16, 17 years. We're trying to take a little bit advantage of that and lock in some longer-term rates some of the equity markets, it's traded very well over the last few years, and we've trimmed around some really well-performing stocks and redeployed some of that into the fixed income market. So we're trying to take advantage where we can, take some profits where we can, but continue to kind of build a cash flow-driven machine moving forward.

Operator

We have no further questions. I would like to turn the call back over to the company's CEO, Steve Spray for any closing remarks.

Stephen Spray

Okay. Thank you, Julianne, and thank you all for joining us today. We look forward to speaking with all of you again on our fourth quarter call.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.