Cincinnati Financial Corporation · NASDAQ:CINF
Cincinnati Financial — Investor Presentation (June 2015)
16 slides from Cincinnati Financial's investor presentation, Jun 9, 2015
Slide 1: Cincinnati Financial Corporation Investor Handout
Cincinnati Financial Corporation Investor Handout 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 over 30% of in
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 5% Life 3% Excess & surplus >» Competitive advantages: — Relationships leading to agents’ best accounts — Financial strength for stability and confiden
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 — 2012 2018 Strategies for Long-Term Success > Financial strength for consistent support to agencies — Diversified fixed-maturity portfolio, laddered maturity structure + No corporate exposure
Slide 6: Improve Profitability
Improve Profitability > Enhancing underwriting expertise and knowledge — Ongoing enhancement inate for predictive modeling tools and analytics to improve pricing precision and segmentation on an individual policy basis — Data management for better undersritng and more granular pricing decisions; lon
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 > Our a
Slide 8: Appendix: Cash Flow Trends, Income and Shareholder Dividends
APPENDIX 1 & Cath Flow Trends Income and Shareholder Dividends $3.00 $250 $2.00 $1.50 $1.00 $050 $0.00 201 2012 2013 ‘<1Operating Income smaNet Income -a- Dividends decared er share basis ‘Copyright© 2015 Cincinnati Financial Corporation. Al rights reserved. Do not reproduce or post ening, n whole o
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% Cratmcae 38) 2001" 2002” 20032004 2005. 2008 2007” 200820082010 2011" 2012 2013 2014 [wovidena Payout Rao Wet income aDviend Payout Ratio Operaing cone] Zot pz
Slide 10: Strong Operating Cash Flow
Strong Operating Cash Flow Contributed to $324M 2014 Net Purchases in Investment Portfolio (amilions) $900 Record-high catastrophe losses in 2011 2010 2011 2012 2013 2014 Solid Reinsurance Program Balances Costs With Shareholders’ Equity Protection ‘Major Treaties ‘Coverage and Retention Summary at
Slide 11: Greater Pricing Precision
Greater Pricing Precision Is Improving Profit Margins ‘Commercial auto second-half 2014 renewal price increase averages and policy retention by modeled pricing segments illustrates pricing precision effects Mos adequate pales hal need us re ncearebaedon png adequcy expen remo pr pg mals ator adequat
Slide 12: Market for 75% of Agency's Typical Risks
Market for 75% of Agency’s Typical Risks 2014 Net Earned Premiums Consolidated = ess Lines $4,243 Billion incense EA utes. Property Casualty $4,045 Billion esa we Bem Homeomer One comer suis OE espa: commercial ‘Ac ‘Commercial Commercial Property 18% Casual 23% Premium Growth Potential Steadily Incr
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 Low end $3,922 In milions High end $4,296 Carried at 63°¢percentile Tiss Sana $3,811 seed $3,813 com oa
Slide 14: Investment Income
Investment Income 3% Growth in 1Q15: Dividends up 13%, Interest up 1% (pretax) Ci malionsy $550 $525 $450 $425 $400 2010 2011 2012 2013 2014 Pretax bond yield: 5.49% 5.31% 5.18% 4.90% 4.76% end aera cn) ‘Pretax book yield for bonds acquired in 2014: 3.88% Pretax book yield as of 12-31-14 for bonds m
Slide 15: Diversified Equity Portfolio
Diversified Equity Portfolio* Balances Income Stability & Capital Appreciation Potential March 31, 2018 Portfolio Hiahlahts at 331-15 + Apple - largest holding ap soo |” Be etptey rade common Sector crc eck proto ‘Weightings: + 1.2% of tetal investment portfolio Information technology AT.T% 19.7% |*
Slide 16: Financial Strength Ratings Comparison
Financial Strength Ratings Comparison Ames Fteh sw Valuation Comparison to Peers Ratlo of closing price on 05-20-16 to latest reported tangible book value PLIPLSPS OPE? ‘Copyright© 2015 Cincinnati Financial Corporation. Al rights reserved. Do not reproduce or post ening, n whole orin par, without wr
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