Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (September 2014)
17 slides from Cincinnati Financial's investor presentation, Sep 3, 2014
Slide 1: Investor Handout September 2014
Al CINCINNATI FINANCIAL CORPORATION Investor Handout September 2014, Nasdaq: CINF + This presentation contains forward-looking statements that involve risks and uncertainties. Please refer to our various filings with the U.S. Securities and Exchange Commission for factors that could cause results to
Slide 2: Strategy Overview
Strategy Overview + Competitive advantages: + Relationships leading to agents’ best accounts + Financial strength for stability and confidence + Local decision making and claims excellence * Other distinguishing factors: + 53 years of shareholder dividend increases * Common stocks for roughly 30% of
Slide 3: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Top 25 U.S. P/C insurer A.M. Best rating: A+ Superior $3.9 billion 2013 premiums: 67% commercial 25% personal 5% life 3% excess & surplus Competitive advantages: — Relationships leading to agents’ best accounts — Financial strength for stability and confidence — Loca
Slide 4: Long-Term Value Creation
ong-Term Value Creation Targeting annual rate of growth in book value plus the rate of dividend contribution to average 10% to 13% from 2013 through 2017 — Value creation ratio (VCR) for 2009 through 2013 averaged 13.1% — 6.6% VCR for YTD 6-30-14 was up 0.2 points from YTD 6-30-13 + Realized plus un
Slide 5: Combined Ratio Reflects Improving Underwriting Profitability Trends
Combined Ratio Reflects Improving Underwriting Profitability Trends Combined ratio before catastrophe losses Weather losses other than catastrophes: (non-cat weather) Before catastrophe and weather losses Year 2011 Year2012 Year2013 | YTD6-13YTOE-14 Strategies for Long-Term Success Financial strengt
Slide 6: Improve Profitability
Improve Profitability Enhancing underwriting expertise and knowledge = Ongoing enhancement intatives for predictive modeling tools and analytics to improve pricing precision and segmentation on an individual policy basis. — Property loss mitigation efforts supplement rate increases and gradual geogr
Slide 7: Premium Growth Potential
Premium Growth Potential + Historically, we earn approximately 10% market share in new agencies within 10 years after appointment — demonstrated by: = 1% share on average earned in 2013 for all agencies appointed in 2013, 5% for appointments during 2009-12, 9% for appointments during 2004-08 — $52 m
Slide 8: Income, Dividend & Cash Flow Trends
Income, Dividend & Cash Flow Tends Underwnting & Premium Growth Trends ‘Business Mix & Premism Grovth Potential Reserve Adequacy & Development Trends Investment Porfoto Management & Performance Resnsurance, Raings& Valation Comparison to Peers APPENDIX Income and Shareholder Dividends zo 2013 6mos 1
Slide 9: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio ‘120% Stfong Capital and Cash Flow Support Recent-Year Payout Level {58% average for years 2004 through 2013 100% cone best 80% 20% 0% 2001” 20022003” 2008 2005 2008’ 2007 2008” 2008 2010 2011" 2012” 2013 aDhidend Payot Ratio Wel iame _aDivdend Payot Reto Operaing cone] 20
Slide 10: Operating Cash Flow
Operating Cash Flow First-Half 2014 Rose $100 Million or 40% from1H13 Record-high catastrophe losses in 2011 Jemos 13. 6mos 14] erforming the Industry ‘Statutory combined ratio Industry data excludes mortgage and financial guaranty 2011 21s Cincinnat's historical catastrophe loss annual averages as
Slide 11: Greater Pricing Precision Is Improving Profit Margins
Greater Pricing Precision Is Improving Profit Margins ‘Workers’ compensation first-half 2014 renewal price increase averages and policy retention by modeled pricing segments illustrates pricing precision effects ‘wos adequate afeste pals hal nee os pie eave aes on pig adequcy ee ema pr peng models A
Slide 12: Market for 75% of Agency's Typical Risks
Market for 75% of Agency’s Typical Risks 2013 Net Earned Premiums. Consolidated $3,902Billion —_Commeraat ES Lines % ‘nes 67% Property Casualty $3.713 Billion Packages 4% Commercial Machinery and Casualty 23% Equipment 1% Premium Growth Potential Steadily Increase Our Share Within Cincinnati-Appoint
Slide 13: Property Casualty Reserves
Property Casualty Reserves Favorable De' oment for 25 Consecutive Years Values shown are carried loss and loss expense reserves net of reinsurance Vertical bar represents reasonably likely range ‘Reserverange at 12-31-13 In mitions 1d $3,727 High ena $4,078 Carried at 61" percentile calendar year (5
Slide 14: Investment Income
Investment Income 5% Growth for 1H14, 1.4% CAGR since 200: 2010 2011 2012 2013 After-tax yleld: 3.48% 3.52% 345% 3.39% 3.19% Bonds at emored cor soks atta value) Pretax yield to book as of 12-31-18 for bonds maturing in 2014=4 8%, 2015=4.5%, 2016=4.5% orton of bond portfolio maturing: 6.1% in 2014,
Slide 15: Diversified Equity Portfolio
Diversified Equity Portfolio* a = ore | geese | * Styetnmtey zightings | + 1.0% of total investment portfolio Information technology 19.1% 19.0% |* 16% increase in 1H14 Industrials 14.2 105 dvtend income «of 40 companies incre Hesties, at: 84 portfolio improved their annual Financial 14 16.0 regular
Slide 16: Solid Reinsurance Program
Solid Reinsurance Program With Shareholders’ Equity Protectiot ‘Major Treaties Coverage and Retention Summary at 01-01-14 (cotta SO spe) Property catastrophe ($50 milion) For a single event: ret han oneal oon + Reiain 100% of frst $75 milion in losses [pee eeral ponte + Retain 60.8% for losses at $7
Slide 17: Valuation Comparison to Peers
Valuation Comparison to Peers Ratio of closing price on 08-29-14 to latest reported tangible book value SLOPPIPPE PSE 1 Copyright © 2014 Cincinnati Financial Corporation. All ights reserved, Do not reproduce or post online, in whole or in pat, without written permission. 7
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