Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (November 2010)
16 slides from Cincinnati Financial's investor presentation, Nov 3, 2010
Slide 1: Cincinnati Financial Corporation
Cincinnati Financial Corporation November 2010 NASDAQ: CINF This that price rca Please refer to our various flings US. Securities and Exchange Commission for factors that Could sauce result to rnaterill differ from those discussed. + The forward:-looking information inthis presentation 27,2010, and
Slide 2: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Profile 3Q10 Highlights + Top 25 US, P/C insurer + EPS of 95 cents vs. $1.05 ar ili 2009 premiums primer due to = T2%e0 lower P/C insurance results 7 Bi penona * Book value per shar grow 6% or 2 bei the quarter and 5% since Dec.09. + competitive advantages: Combine r
Slide 3: Increase Value for Shareholders
Increase Value for Shareholders 20% Rolling five-year average as of December 31 VCR for the year 2009 was 19.7% Target forthe period 2010-2014: VER averaging 12% to 15%, Current Valuation Is Attractive SLOLSLEL PE
Slide 4: Strategies for Long-Term Success
Strategies for Long-Term Success * Manage capital effectively + Improve insurance profitability + Drive premium growth + Factors impacting 2010 profit and growth performance: - market 2009 ral beyond ~ Soft 2009 - i it weak ~ Low elds for investment options could continue, imting westment inc Effect
Slide 5: Improve Profitability
Improve Profitability + Predictive modeling tool in use for workers’ compensation pricing precision, enhanced version used for homeowner line of business = Indevelopment all ther major commercial lines + Technology is improving efficiencies, streamlining processing for agencies and the company Rates
Slide 6: Premium Growth Potential
Premium Growth Potential * Historically, we earn approximately 10% market share In within 10 years at + Our agencies currently write significant amounts of business with other carriers, representing potential for us ‘annual premiums with al carters they represent ~ Surplus lines fr all of our agents
Slide 7: Appendix
Appendix Perfomance Measure Trends Investment Quay and Reserve Strength Financial Strength Rating Comparison Income and Shareholder Dividends mos 0s «20072082002 | 9mosoa 9mos 10 mowotigieire —emtatimore “2 Ova Dears
Slide 8: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio Dividend as a Percentage of Net Cash Flow from Operations 0% 50%
Slide 9: Operating Cash Flow
Operating Cash Flow $1,000 2008 2008. -»«2007 «2008-2009 |9mos 09 ames 10 History of Outperforming the Industry Five-year average 95.4% is 3.4 points better than industry’ ‘Statutory combined ratio.
Slide 10: Commercial Lines
Commercial Lines 72% of consolidated earned premiums 20% GAAP combined ratio 2010 trend highlights: 72.5% measured at 1231-09, * Business lines: = Commercial casualty 0% = commercial property = Commercial auto = Workers’ compensation zor” sor ” sm [omacs"omews] ~ Specialty packages recone event E Pe
Slide 11: Economy and Pricing Pressure
Economy and Pricing Pressure Requires disciplined underwriting Property casualty net written premium growth Cincinnati's five-year average of negative 0.6% 180.4% better than the industry average 08 2016 er 2008 209 {SCheinnat Etna instr (AM. Bas Market for 75% of Agency’s Typical Risks’ 2009 net ea
Slide 12: Potential in the Property Casualty Market
Potential in the Property Casualty Market! Cincinnati Direct writen cininnat | TAALE/E (atari miter i zoo)” | Penetration (2009) Ohio $ 581 | $ 12,366) 4.7% Ilinois 262 19,473 | 1.3% Indiana 208 7,193 2.1% Pennsylva 182 | 48,713 | 1.0% Georgia 160 12,922 | 1.2% North Carolina a7 | a4ass | 1.3% All A
Slide 13: Steadily Increase Share of Agency Business
Steadily Increase Share of Agency Business by year 19.5% 20% 2009 2008” 2004-2007 ” 1999-2003” Pre-1999, ‘cng econ enn Investment Portfolio Invest for income and appreciation ‘$11.2 billon fair value at September 30, 2010
Slide 14: Stable Capital
Stable Capital Fixed-maturity portfolio - $8.466 billion at 09-30-10 Diversified Equity Portfolio* Balances income stability and capital appreciation potential Sector [consumer staples aesx[itax | a07% | 102% Heatthoare 54 Fr 402 320 23 Ez 562 78 2s Fr Tr Fe m8 Fr Fr F z 4 6 7 2
Slide 15: Investment Income
Investment Income 1% growth for 3Q10, 5% for nine months (pre-tax) zoe 2007-008 08| mando 9mos 10 Property Casualty Reserves Favorable development for 21 consecutive years Vertical bar represents reasonably likely range Cowend $5.59 High end 83,74 Carried at 6 percentile Development (avert) (de) (16
Slide 16: Stability and Integrity
Stability and Integrity Insurer Financial Strength Ratings Camety | Supe | ‘AM. Best At A A (2 of 16) (Gof 16) (3 of 16) Fiteh At n/a At (Sof 24) (Sof 24) Moody's. AL n/a Ya (Sof 24) SAP A t/a A (6 of 24) (6 of 24) Financial Strength Ratings Comparison Amoost Fiemme
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