Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (May 2019)
18 slides from Cincinnati Financial's investor presentation, May 13, 2019
Slide 1: Cincinnati Financial Corporation Investor Handbook May 2019
CINCINNATI FINANCIAL CORPORATION INVESTOR HAND! May 2019 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 di
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: + 58 years of shareholder dividend increases * Common stocks are approximately
Slide 3: Long-Term Value Creation
LONG-TERM VALUE CREATION * Targeting average Value Creation Ratio of 10% to 13% over the next five-year period + Value creation ratio (VCR) = annual rate of growth in book value plus the percentage of dividends to beginning book value + VCR for 2014 through 2018 averaged 10.7% * (0.1)% VCR for 2018
Slide 4: Performance Targets & Trends
PERFORMANCE TARGETS & TRENDS 11.1% VCR for 1Q19 was within target: 10% to 13% annual average over the next five-year period * 2.2% contribution from non-GAAP operating income, 9.1% contribution from investment portfolio net gains and losses (negative 0.2% net points contributed from other items) Rel
Slide 5: Manage Insurance Profitability
MANAGE INSURANCE PROFITABILITY + Ongoing underwriting expertise enhancement + Predictive modeling tools and analytics to improve property casualty pricing precision and segmentation on an individual policy basis + Data management for better underwriting and more granular pricing decisions + Staff sp
Slide 6: Select Group of Agencies in States
SELECT GROUP OF AGENCIES IN 44 STATES 1,761 agency relationships with 2,376 locations {os of Maren 31,2019) Our Commercial Top Five = 38% Ohio, Illinois, Pennsylvania, Indiana, North Carolina Our Personal Top Five = 49% Ohio, Georgia, Michigan, North Carolina, Indiana Market Share Top Five P&C Marke
Slide 7: Acquisition of Cincinnati Global Underwriting
ACQUISITION OF CINCINNATI GLOBAL UNDERWRITING EXPANDS MARKET REACH, DEPLOYING MORE CAPITAL, FURTHER DIVERSIFYING EARNINGS + Supports agency-centered strategy with insurance solutions for accounts requiring specialization through Lloyd’s Expected to be accretive to earnings in 2019 + Assuming a combi
Slide 8: Cincinnati Financial at a Glance
CINCINNATI FINANCIAL AT A GLANCE Top 25 U.S. P&C insurer A.M. Best rating: A+ Superior $5.2 billion 2018 premiums: 61% Commercial 26% Personal 5% Excess & Surplus 5% Life 3% Cincinnati Re Agency-centered business model is time-tested + Agency relationships strengthened over time by in-person approac
Slide 9: Income and Shareholder Dividends
INCOME AND SHAREHOLDER DIVIDENDS Per share basis. $5.50 2017 netincome 2018 net income included $2.98 benefit included $2.44 net from net deferred investment loss $4.50 - income tax ability ‘while 2017 revaluation due to. included $0.89 net USS. tax reform investment gain $3.50 7 $2.50 $1.50 $0.50 |
Slide 10: Cash Dividend Payout Ratio
CASH DIVIDEND PAYOUT RATIO STRONG CAPITAL, CASH FLOW SUPPORT PAYOUT LEVELS 120% 73% average payout for 2009 through 2018 erode 100% 80% 60% 40% 20% 0% 2009 2010 2011* 2012 2013 2014 2015 2016 2017" 2018 | Dividend Payout Ratio — Net Income aDiaend Payot RAND Openg eome +2011 payout ratios (158% net
Slide 11: Property Casualty Reserves
PROPERTY CASUALTY RESERVES FAVORABLE DEVELOPMENT FOR 30 CONSECUTIVE YEARS Values shown are carried loss and loss expense reserves net of reinsurance Vertical bar represents reasonably likely range (ia millions) 1231-1 Low end $5,037 High end $5,481 Carried at 84" percentile $4,156 Calendar year deve
Slide 12: Commercial Casualty Ratios
COMMERCIAL CASUALTY RATIOS LOSS & ALAE BY ACCIDENT YEAR, DEVELOPED THROUGH 12-31-18 oom eK 51.3% 51.1% 51.1% “ae 30% - 18% Ratio for Paid at Various Measurement Points Lines om 2012 2018 Em ais” “Te@sano | 7@ZIno “TRAM feaTotal Loss & ALAE Paid-doveloped to date Pais 48 mo = = Paid 36.mo 266 Paid 24
Slide 13: Outperforming the Industry
OUTPERFORMING THE INDUSTRY FIVE-YEAR AVERAGE COMBINED RATIO 5.7 POINTS BETTER Statutory combined ratio Industry data excludes mortgage and financial guaranty 105% 100% —— __— - i 95% 90% 85% 80% 75% 70% 65% 2014 2015 2016 2017 2018 cincinnati - exe, cal losses E=IEst, Industry (AM. Best) exc eat. Lo
Slide 14: Market for 75% of Agency's Typical Risks
MARKET FOR 75% OF AGENCY’S TYPICAL RISKS 2018 NET EARNED PREMIUMS Consolidated $5.170 Billion Commercial E&S Lines 5%, Lines 61% Property Casualty $4,920 Billion Excess & Surplus. 3% ‘Other Commercial Homeowner 11% ersonal Au om — Personal Auto 12% Cincinnati Re 3% Cincinnati Re 3% Workers! ‘Compens
Slide 15: Investment Income
INVESTMENT INCOME 5% GROWTH IN 1Q19: DIVIDENDS UP 10%, INTEREST UP 1% pretax) (In milions) $625 $600 $575 $550 $525 $500 $475 $450 $425 2014 2015 2016 2017 2018 Protax bond yield: 4.76% 4.10% 4.60% 442% 425% (Bonds at amortize cost Pretax book yield for bonds acquired in 2018: 4.38% Pretax book yiel
Slide 16: Diversified Equity Portfolio
DIVERSIFIED EQUITY PORTFOLIO* BALANCES INCOME STABILITY & CAPITAL APPRECIATION POTENTIAL March 31, 2019 Portfolio Highlights at 19 Sector crc S&P 500 | . Microsoft is largest holding Weightings + 4\6% of publicly traded common stock portfolio : + 1.7% of total investment portfolio Information techno
Slide 17: Solid Reinsurance Ceded Program
SOLID REINSURANCE CEDED PROGRAM BALANCES COSTS WITH SHAREHOLDERS’ EQUITY PROTECTION Major Treaties Coverage & Retention Summary (stated 2079 coded premiums) (is of Janvary#, 2018) Property catastrophe For a single event {40 milon tomer * Retain 100% of first $100 million in losses ‘Treaty has one re
Slide 18: Financial Strength Ratings Comparison
FINANCIAL STRENGTH RATINGS COMPARISON Fiteh Moody's S&P [ao od . . . = ma ma Ta “IK [euty” La = = Lim | Fteman's Fane = = 2 i | Harleysville Lu = 3 La [Harton = a = ais i arial Waa * : : : cy x x a x [Me x ; [Franke x : Genera Gasualy x Be : Be Tas x * 7 * | Liberty Mutual Ly La Lo Ly Safeco x 7% ca
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