Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (June 2011)
17 slides from Cincinnati Financial's investor presentation, Jun 13, 2011
Slide 1: Cincinnati Financial Corporation
Cincinnati Financial Corporation June 2011 Bovey NASDAQ: CINF * This contains forward-looki 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 from those discussed. The f
Slide 2: Cincinnati Financial at a Glance
Cincinnati Financial at a Glance Profile 1Q11 Highlights = Top 25 U.S. P/C insurer * EPS of 38 cents vs. 42 cents = A.M. Best Rating: A+ Superior ~ Operating eamings of 33 cents per = $3.1 billion 2010 premiums: share were down 6 cents from ~ 70% commercial 1010, 10 cents from catastrophes. = 23% pe
Slide 3: Increase Value for Shareholders
Increase Value for Shareholders Measured by Value Creation Ratio (VCR) Target for the period 2010-2014: Annual VCR averaging 12% to 15% 008 2009 2010 ver jer MCR - P&C Underwriting VCR - Bond Portfolio Gains SVER - Equity Portfolio Gains +# Total Shareholder Return (TSR) Current Valuation Is Attract
Slide 4: Strategies for Long-Term Success
Strategies for Long-Term Success = Financial strength for consistent support to agencies - Diversifi ied fixed-maturity Portfolio laddered maturity y structure No corporate exposure exceeded Yo of bond portfolio at 3-31-11, nc Muniebal exposure exceeded 02% ~ 26% of investment portfolio in. common s
Slide 5: Improve Profitability
Improve Profitability Predictive modeling tools in use to improve pricing precision — Workers’ compensation line of business since the second half of 2009 — Homeowner enhanced version in 2010, personal auto since late 2010 ~ Commercial auto, commercial property and general ably: plan release to full
Slide 6: Premium Growth Potential
Premium Growth Potential " Historically, we earn approximately 10% market share in new agencies within 10 years after appointment — 4-5% share earned in 2010 for all agencies appointed in TX, NM, & WA — Over 5% share earned in 2009 for all agencies appointed during 2004-07 — $29 million of total inc
Slide 7: Appendix
Appendix Income, Dividend and Cash Flow Trends Underwriting and Premium Growth Trends Premium Growth Potential Investment Portfolio Structure and Performance Reserve Adequacy Financial Strength Rating Comparison rowan Income and Shareholder Dividends $55 million 1011 operating income, $62 million ne
Slide 8: Cash Dividend Payout Ratio
Cash Dividend Payout Ratio Strong capital and cash flow support current dividend payout level 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 vidend Payout Ratio — Net Income Dividend Pe Dividend as a Percentage of Net Cash Flow from Operations 60% id cash payout level 2000 2001 2002 2003 200
Slide 9: Operating Cash Flow
Operating Cash Flow $57 million 1011 net cash provided by operating activities 2005 2006 2007 2008 2009 2010 History of Outperforming the Industry Five-year average 98.2% is 1.3 points better than industry Statutory combined ratio 2008 2009 2010 mee. cat Loses Ciera nel at ses AEs: sy (AM Bes) neat
Slide 10: Commercial Lines
Commercial Lines 70% of 2010 GAAP combined ratio 120% * 1Q11 trend highlights: — Net written premiums flat, new s10% business premiums up 8% — 104.0% GAAP combined ratio including 4.9 points catastrophe 100% — 74.5% YTD loss & LAE ratio before cat losses and prior year reserve development = AY 10 at
Slide 11: Economy and Pricing Pressure
Economy and Pricing Pressure Requires disciplined underwriting Property casualty net written premium growth w Cincinnat’'s five-year compound annual growth rate of negative 0.7% is 0.2 points 2008 2007 2008 2009 2010 {m8 Cincinnati -S- Estimated Industry (AM. Best) Market for 75% of Agency’s Typical
Slide 12: Potential within Cincinnati Appointed Agencies
P ial within Cincinnati Appointed Agencies New appointments drive opportunity (Open Pasncies Oni) 2009 2008 2007 Cincinnati $3,024 $3,166 «$3,267 Agency Total $23,136 $21,843 $23,553 Cincinnati Agency Relationships: 1,180 1,133 1,092 [Cincinnati Share of Agency 3.14, 14.5% 13.9% Percent of Locations
Slide 13: Investment Portfolio
Investment Portfolio Invest for income and appreciation $11.6 billion fair value at March 31, 2011 mot Fixed Maturities $2,860 ‘Common Equities $2996, Taxable Fixed Maturities. —— Preferred Equities Bond portfolio fair value exceeds insurance reserves liability by 35% Bond Portfolio Risk Profile $8.
Slide 14: Bond Portfolio Diversification
Bond Portfolio Diversification At March 31, 2011 = No corporate exposure exceeded 0.7% of bond portfolio = No municipal exposure exceeded 0.2% of bond portfolio = Municipal bond portfolio overview - $2.860 billion fair value — Approximately 1,000 issuers — 80% of fair value is insured — 93% of insur
Slide 15: Investment Income
Investment Income 3% growth for 2010, 1% growth for first quarter 201I (pre-tax) ‘$600 $500 400 $300 $200 S100 so 2006 2007 2010 Aftertax yield to market: “3.7% aah Pre-tax yield to book for bonds maturing in 201 Property Casualty Reserves Favorable t for 22 ive years Values shown are cred loss and
Slide 16: Stability and Integrity
Stability and Integrity Insurer Financial Strength Ratings Property Excess & Life Casualty Surplus A.M. Best At A A (2 of 16) (3 of 16) (3 of 16) Fitch At n/a At (5 of 24) (5 of 24) Moody's AL n/a n/a (5 of 24) S&P A n/a A (6 of 21) (6 of 21) Financial Strength Ratings Comparison AM. Best Fitch Wood
Slide 17: Property Catastrophe Reinsurance Treaty
Property Catastrophe Reinsurance Treaty Coverage Summary as of January 1, 2011 $ in millions Loss Range Gross let Layer Loss Loss Retention $ 0-45 $45 $45 100% $ 45-70 25 10 38.5% $ 70-105 35 6 17.6% $105 — 200 95 5 5.0% $200 — 300 100 1 11.3% $300 - 400 100 5 6.5% $400 - 500 100 5 5.0% $500 $88 17.
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