Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (August 2015)
16 slides from Cincinnati Financial's investor presentation, Aug 14, 2015
Slide 1: Cincinnati Financial Corporation Investor Handout
Cincinnati Financial Corporation Investor Handou 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 materially differ
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: + 54 years of shareholder dividend increases + Common stocks for more than 30%
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 > $4.2 billion 2014 premiums: 67% Commercial 25% Personal 8% Life 3% Excess & surplus » Competitive advantages: — Relationships leading to agents’ best accounts — Financial strength for stability and confidenc
Slide 4: Long-Term Value Creation
Long-Term Value Creation > Targeting annual rate of growth in book value plus the percentage of dividends to beginning book value to average 10% to 13% from 2013 through 2017 — Value creation ratio (VCR) for 2010 through 2014 averaged 11.7% — 12.6% VCR for 2014 was down 3.5 points from 2013 + Realiz
Slide 5: Outperforming the Industry
Outperforming the Industry Statutory combined ratio Industry data excludes mortgage and financial guaranty Cincinnat’s historical catastrophe loss annual averages as of 12-31-14: S-year = 7.4%, 10-year = 6.0% Strategies for Long-Term Success > Financial strength for consistent support to agencies —
Slide 6: Improve Profitability
Improve Profitability > Enhancing underwriting expertise and knowledge — Ongoing enhancement initiatives for predictive modeling tools and analytics to improve pricing precision and segmentation on an individual policy basis — Data management for better underwriting and more granular pricing decisio
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 eared in 2014 for all agencies appointed in 2014, 5% for appointments during 2010-13, 8% for appointments during 2005-09 > Our ag
Slide 8: Appendix
APPENDIX Income, Dividend & Underwniing Focus & P Business Mix & Premium Ge dequacy & Selected Paid Loss Trends Portfolio Management & Performan Financial Strength Ratings & Valuation Comparison to Peers Income and Shareholder Dividends $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2011 mos 14 __Smos 15
Slide 9: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio Strong Capital and Cash Flow Support Recent Year Payout Level 120% (60% average for years 2005 through 2014 100% (netncare ba) 80% 60% 40% 20% 0% 2001 2002 2003 2004 2005 2008 2007 2008 2009 2010 2011" 2012 2013 2014 [-“mbivisend Payout Ratio—Netincome Dividend Payout Rati
Slide 10: Strong Operating Cash Flow
Strong Operating Cash Flow Contributed to $394M 1H15 Net Purchases in Investment Portfolio (omilions) Record-high catastrophe losses in 2011 2011 2012 2013 2014 mos 14 6 mos 15 Solid Reinsurance Program Balances Costs With Shareholders’ Equity Protection ‘Major Treaties ‘Coverage and Retention Summa
Slide 11: Greater Pricing Precision
Greater Pricing Precision Improving Profit Margins ‘Commercial auto second-half 2014 renewal price increase averages and policy retention by modeled pricing segments illustrates pricing precision effects Most adequate refers fpoices that needless proe nrease based on prong adeqacy exprng premium pe
Slide 12: Market for 75% of Agency's Typical Risks
Market for 75% of Agency's Typical Risks 2014 Net Earned Premiums Consolidated s Commercial Essimes $4,243 Billion Lines 67%, , \ Lite 5. Property Casualty ‘$4,045 Billion Personal ser 5208558 Homeowner nes 25% comet 7m Summ TTI Personal Wore Aso 12% Ccompensston_—7 Other oe Persona 3% commercial ee
Slide 13: Property Casualty Reserves
Property Casualty Reserves Favorable Development for 26 Consecutive Years Values shown are carried loss and loss expense reserves net of reinsurance Vertical bar represents reasonably likely range Reserve range at Low end $3,922 High end $4,296 Carried at 63% percentile | 14 In milions Calendar year
Slide 14: Investment Income
Investment Income 3% Growth in 2Q15: Dividends up 3%, Interest up 3% (pretax) {in milions) 9550 $525 $500 $475 $450 $425 $400 2010 2011 2012 2013 2014 Pretax bond yield: 5.49% 5.31% 515% 4.90% 4.76% (Bonde at amore cost Pretax book yield for bonds acquired in 2014: 3.88% Pretax book yield as of 12-3
Slide 15: Diversified Equity Portfolio
Diversified Equity Portfolio* Balances Income Stability & Capital Appreciation Potential [June 90,2016 PortfolloHighlights at600-15 | + Apple - largest holding sap soo | * 3% of publicly traded common Secor CFE | weightings |. {5s srttrimesoment porto Information technology | 18.6% | 19.6% |* 3% inc
Slide 16: Financial Strength Ratings Comparison
Financial Strength Ratings Comparison Best Fitch Moody's SEP LaLa BB Teas ander eT NT : BR ene RAT z = me Teer MT = =o = oud z Dated FRO a x x of] pala} ‘Tele [Bhs ERT ‘Scuce: SNL Financial as of August 8, 2015 Ratings are under contewous review and subject to change andr afirmaten Valuation Compari
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