Teresa Cracas
CINCINNATI FINANCIALAbout Teresa Cracas
Teresa C. Cracas, Esq., is Executive Vice President and Chief Risk Officer at The Cincinnati Insurance Companies (subsidiaries of Cincinnati Financial), responsible for strategic planning and enterprise risk, including predictive analytics, reserving, pricing, forecasting, ceded reinsurance, innovation, and executive oversight of Cincinnati Re and Cincinnati Global Underwriting Ltd.; she added executive responsibility for Corporate Marketing & Communications, Human Resources, and Policyholder Experience in December 2024, continuing to report to CEO Stephen Spray . She began her career as a multi‑line commercial underwriter, later serving four years as a field representative and then counsel before assuming her risk leadership role in 2011; law degree (J.D., magna cum laude) from NKU Salmon P. Chase College of Law and bachelor’s in business administration from Ohio State University . Under the board’s risk oversight framework, the CRO provides quarterly reporting and twice‑yearly in‑person presentations to the board with direct access to all directors . Company performance underpinning incentive payouts: 2024 Value Creation Ratio (VCR) 19.8%, property‑casualty combined ratio 93.4%, net written premium growth 15%, and three‑year TSR 36.5% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Cincinnati Insurance Companies | Chief Risk Officer (risk leadership role assumed) | 2011–present | Led enterprise risk, analytics, reserving, pricing, forecasting, ceded reinsurance, innovation; executive oversight of Cincinnati Re and Cincinnati Global |
| The Cincinnati Insurance Companies | Executive Vice President & Chief Risk Officer | 2022–present | Elevated scope and seniority; continued oversight of planning, analytics and risk management functions |
| The Cincinnati Insurance Companies | Counsel | Until 2011 | Legal counsel prior to assuming CRO role |
| The Cincinnati Insurance Companies | Field Representative | 4 years | Field leadership with agents in Virginia and Tennessee; deepened distribution relationships |
| The Cincinnati Insurance Companies | Multi‑line Commercial Underwriter | Early career | Underwriting foundation; core pricing and risk selection discipline |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cincinnati Global Underwriting Ltd. (UK) | Director | As of 2021 | Governance oversight of Lloyd’s Syndicate 318 specialty underwriting platform |
| Cincinnati Global Underwriting Agency Ltd. (UK) | Director | As of 2021 | Agency governance for global specialty underwriting operations |
| University of Cincinnati Insurance & Risk Management | Board of Advisors member | Current | Industry advisory; supports academic‑industry engagement in insurance and risk |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 598,825 | 632,059 | 659,192 |
| Perquisites and other ($) | 135,274 | 125,175 | 140,997 |
| 2024 Annual Incentive Mechanics | Value |
|---|---|
| Base annual salary used for incentive calculation ($) | 663,116 |
| Target bonus (% of salary) | 125% (Tier I) |
| Performance factor | 200% (max) |
| Annual incentive paid ($) | 1,657,790 |
Key governance constraints: no employment contracts; no guaranteed bonuses; clawback policy adopted in 2023; no tax gross‑ups except limited nominal cases .
Performance Compensation
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Annual Incentive: VCR vs peer group (primary) plus operating goals | Primary + operating goals | Threshold: >3 peers; Target: ≥5 peers; Max: ≥7 peers | Baseline VCR >6 peers; achieved 15% premium growth and 93.4% combined ratio → +2 placements → >8 of 9 peers | 200% of target (max) | Annual cash; subject to clawback |
| PSUs (2022–2024 performance period) – 3‑yr TSR vs peer group | Long‑term performance equity | Threshold: >3 peers; Target: ≥5 peers; Max: ≥7 peers | Exceeded 3 of 9 peers; 3‑yr TSR 36.5% | 30% of target (threshold) – 1,365 PSUs vested for Cracas | Cliff vest after 3 years; payout in shares |
| RSUs (service‑based) | Retention equity | N/A | Vests ratably over 3 years | N/A | 1/3 per year over 3 years |
2024 stock‑based grants to Cracas: 18,771 options (exercise price $112.36), 5,533 PSUs (target), 1,476 RSUs; PSUs performance period 2024–2026, payable March 1, 2027 if hurdles met .
Equity Ownership & Alignment
| Item | Amount |
|---|---|
| Beneficial ownership (shares) | 171,554 |
| Ownership (% of outstanding) | 0.11% |
| Options exercisable within 60 days (shares) | 126,092 |
| RSUs unvested (Dec 31, 2024) | 1,476 |
| PSUs unearned (Dec 31, 2024) | 5,533 |
| 2024 option grant (unexercisable) | 18,771 @ $112.36; expires 2/19/2034 |
| 2023 option grant | 5,213 exercisable / 10,427 unexercisable @ $125.57; expires 2/20/2033 |
| 2012 option grant | 12,444 exercisable / 6,222 unexercisable @ $123.94; expires 2/21/2032 |
| Hedging policy | Prohibited for officers/directors/associates |
| Pledging policy | Permitted; directors/executives pledged <0.1% of outstanding shares at 2024YE; 25 of 28 had no pledges |
| Pledging by Cracas | No pledges disclosed for Cracas |
| Ownership guideline | 3.5x salary for NEOs; all officers compliant as of Mar 5, 2025 |
Option vesting schedule: one‑third annually over three years; RSUs vest one‑third annually over three years; PSUs cliff vest after three years based on relative TSR .
Employment Terms
| Provision | Detail |
|---|---|
| Employment agreements | None; all NEOs at‑will |
| Severance plan | None; payments governed by plan terms on termination/change‑in‑control |
| Change‑in‑control | Double‑trigger acceleration in stock and incentive plans (requires CIC event + termination) |
| Clawback | Policy For The Recovery of Erroneously Awarded Compensation adopted in 2023; applies to incentive‑based comp |
| Hedging/pledging | Hedging prohibited; pledging permitted under policy |
Potential payments (illustrative, as of Dec 31, 2024):
| Scenario | Top Hat Savings Plan ($) | Retirement Plan ($) | SERP ($) | Stock‑Based Awards ($) | Annual Incentive ($) |
|---|---|---|---|---|---|
| Retirement | 3,032,894 | — | — | 3,549,938 | 1,657,789 |
| Retirement with Disability | — | — | — | 4,118,990 | 1,657,789 |
| Change in Control | — | — | — | 4,118,990 | 1,657,789 |
Performance & Track Record
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| 1‑yr Value Creation Ratio (VCR) | -14.6% | 19.5% | 19.8% |
| Property‑casualty combined ratio | — | — | 93.4% |
| Net written premium growth (PC) | — | — | 15% |
| 3‑year TSR | 5.3% (to 2022) | 27.7% (to 2023) | 36.5% (to 2024) |
Board/say‑on‑pay context: 2024 advisory vote approval >95% . CRO’s risk oversight cadence includes quarterly reporting and semiannual in‑person board presentations .
Compensation Structure Analysis
- Mix skews to performance‑based pay: Cracas’ 2024 compensation comprised salary $659,192, stock awards $718,563, option awards $621,696, and annual incentive $1,657,789, reflecting higher payouts on strong 2024 performance; no discretionary cash bonus .
- Annual incentive formula emphasizes relative VCR with operating goals (premium growth and combined ratio), achieving maximum payout in 2024 via >8/9 peers placement after operating goal adjustments .
- PSUs hinge on 3‑year TSR vs peers; payout at threshold (30%) for 2022–2024 cycle indicates disciplined long‑term calibration even amid strong near‑term operations .
- No repricing/exchange of options, no tax gross‑ups, robust clawbacks, double‑trigger CIC – governance features aligned with shareholder interests .
Multi‑Year Compensation (SCT)
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 598,825 | 632,059 | 659,192 |
| Stock Awards | 784,218 | 960,083 | 718,563 |
| Option Awards | 563,900 | 597,761 | 621,696 |
| Non‑equity incentive plan | 751,900 | 797,014 | 1,657,789 |
| Change in pension/deferred comp | — | — | — |
| All other compensation | 135,274 | 125,175 | 140,997 |
| Total compensation | 2,834,117 | 3,112,092 | 3,798,237 |
Additional Governance & Alignment Notes
- Stock ownership guidelines: CEO 5x salary; other NEOs 3.5x salary; all officers and directors compliant as of Mar 5, 2025 .
- CRO reporting: quarterly ERM reports with board‑approved tolerances/limits, including climate/cat risk; semiannual in‑person presentations .
- Peer group used for relative performance metrics includes Allstate, CNA, Hanover, Hartford, Markel, Selective, Travelers, United Fire, W.R. Berkley .
- 2024 incentive math for Cracas: base $663,116; Tier I 125%; performance factor 200% → $1,657,790 paid .
Investment Implications
- Alignment: Strong pay‑for‑performance design tied to VCR and combined ratio/premium growth, plus long‑term TSR PSUs, suggests incentives aligned to underwriting discipline, book value accretion, and dividend policy; governance features (clawbacks, no gross‑ups, double‑trigger CIC) reduce adverse incentive risk .
- Retention risk: Significant unvested equity (PSUs 5,533 target; RSUs 1,476; multiple option tranches) and ownership guidelines reduce near‑term departure risk; absence of severance plan implies fewer guaranteed payouts, but CIC acceleration is possible under double‑trigger .
- Trading signals: 2024 maximum cash incentive payout and PSUs vesting at threshold indicate operational outperformance vs peers but moderated long‑term TSR relative rank; upcoming vesting cycles (RSUs/PSUs) and option exercise schedules could create periodic selling pressure around vest/exercise windows (e.g., options expiring 2032–2034; PSUs payable March 2027 if targets met) .
- Risk oversight: CRO’s direct, regular board engagement on enterprise risk (including catastrophe/climate) supports risk posture consistency, a positive for underwriting margin sustainability and valuation confidence .